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The key takeaway here is that very few what we consider "rich" people drive cars that we associate with "being rich."
More and more, "rich" and "wealthy" are being smashed for the frugal minded who over decades save, or those who made smart choices.
Folks who earn a lot of money in their wages tend to splurge more and end up worse off in the long run. I work with a number of coworkers who drive BMWs, Audis, or Caddys, but they are all earning within 10, maybe 20% of me, and they made a conscious decision to have their car payments and maintenance rival their mortgage payments. One guy I know who drives two BMWs, a daily driver and a tuned one, said he only had one kid because he likes to race and couldn't afford a second kid.
I did it before ... bought a used Z4. Drove it till I crashed it after six years. Now I have a Ford Fusion AWD. Never again will I spend so much money on a car. The maintenance alone I calculated, after the warranty period ended, to be around $250 / mo, after I did my own stuff like change brake pads and rotors, tires, oil, spark plugs, sensors, etc.
Won't stop a lot of people from leasing or buying a car they can't afford. Boggles my mind.
It's funny, most wealthy people I know drive pretty modest cars.
Probably because most wealthy people I know are contractors or farmers, I also know a IBMer and a very rich foot doctor family friend lol.
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If you're a farmer/rancher, small business owner, contractor, etc, chances are you write your vehicle off for business usage. My dad's a RETIRED farmer and he still writes off a new truck every few years after he depreciates it out to the point where it's more financially advantageous to simply buy a new one than keep one that's three years old.
Anyone I know who has their own business does the same and the best vehicle to purchase for writing off is a new truck and trade up every few years.
I've unfortunately never been lucky enough to have this perk.
What's the point of being rich if you don't have the things you enjoy?
Maybe cars are not the only things there are to enjoy. I think the only reason people who are already rich continue to waste their remaining years multiplying their wealth is because it gives them power, the only pleasure that never wears out and gets jaded. And more power always costs more money, unlike things that have a price cap.
That book contrasts the insecure folks whom you see all the time on the road, driving late-model, high-end MB, BMW, Audi, and Cadillac vehicles--all bought on credit or leased for the short term--vs the genuinely rich folks who drive less ostentacious cars, pay cash for them, and keep them for the long-term in order to extract maximum value from their purchase.
In case you are interested, I pay cash for non-ostentacious cars, maintain them flawlessly, and drive them for about 10 years--until I get tired of them. I won't tell you my net worth, but I will say that my neighbors would be amazed if they found out just how much this outwardly-modest guy was actually worth.
I have an old friend who feels the need to lease a new Cadillac every couple of years, and who likes to flaunt some flashy (junk) jewelry when he goes to Atlantic City each week to lose most of his money. He and his wife live in a tiny apartment in a dodgy urban neighborhood, and essentially live from paycheck to paycheck, while I am financially secure.
I am not a gambler, simply because I hate to lose money, and I pride myself on being very self-disciplined in terms of my finances. I own my house free and clear (current value in excess of $450k, on a 1 acre lot, in a very nice suburban/rural area), and my car was paid for in cash, while my old friend struggles to pay the rent on that dodgy flat of his. But...he has to obtain that damn leased Cadillac every couple of years, simply because he is so incredibly insecure.
While this is a generalization, I have found it to be true in a vast majority of the cases:
Those who are financially secure rarely feel the need to impress others with outward signs of their wealth. On the other hand, those who are so insecure about themselves that they have to make themselves feel better via visible trappings of wealth, will lease cars that they could never afford to buy, and/or will go into hock for loans on cars that are far beyond their real fiscal status.
Or...in other words...don't fall for what you perceive to be signs of wealth, as they could be extremely inaccurate.
Or, to put it another way, those who pizz their money away by leasing/financing expensive cars frequently are those of somewhat limited means, but who don't want others to know their real financial status.
My employer is one of the wealthiest people I have ever met. He is in his 80's, and owns apartment buildings, commercial buildings and mini-storages in Santa Barbara, Ventura, Santa Maria and San Luis Obisbo. He is truly a self-made man, having never inherited anything and building this all on his own. He drives a 1992 or 1993 Buick LeSabre. His wife drives a 2000 something Volvo.
He sounds like a guy I used to see in Morro Bay many years ago who drove a clapped-out Ford Ranchero. He looked like a handyman or house painter, but actually he owned several motels and other properties on the Central Coast.
Sorry, Retriever.
I know MANY genuinely rich people who are not trying to impress anyone who drive some really fancy cars.
I'm with Stan.
The Millionaire next door isn't my definition of rich, but instead financially comfortable.
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