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Eh, I live in a fairly middle class neighborhood of homes priced between $400K-$800K and most people drive old cars. The few Maseratis and higher end luxury cars are usually heading towards the part of the hood with the biggest concentration of $1.5M+ homes.
If you were in my city and the home prices were between $400-800k, you'd be living next to professional baseball players, doctors, lawyers, etc...
According to Dave Ramsey, the typical millionaire drives a 3 year old luxury vehicle. Many of them might want to have a nice vehicle, but their desire to not lose tons of money on things you know won't appreciate keeps them from buying new vehicles. My wife and a H&W friend who are fairly wealthy small business owners...they make over a million a year, live in a very nice older home (1970's vintage) they have redone the interior however, but it's not extravagant. Until recently, their garage had an S-Class Mercedes, a mid 1980's Porsche, an early 2000's 911' Carerra Convertible...Within the last few years, they did ditch their 80's 911, and began leasing their fun car (a Bentley Continental GTC).
For my wife and I, solidly middle class, with about $85k of joint income drive two Volkswagen Jetta's, one new, and one six years old. We'll likely have both until they're about 10 years old...at least I plan on owning the older of the two for another 4 years...the newest one we might try to keep a bit longer...might give it to my daughter in about 16 years We'll see if we still have fuel by then!
With that being said, a new 3/4 ton diesel is pushing $70k, a loaded up SRT8 Challenger is over $40k, it seems like the average new vehicle is around $30k. Seems like these new cars make up much more than 6% of the vehicles on the road.
My wife and I combined make slightly more than that "average" income, have no debt other than a house and three old a $$ vehicles that are paid for and even for us I don't see how we could afford a new $40-50k vehicle. I think we've just gotten so used to not having a payment the thought of one scares us.
An SRT8 is not an average car. It's not a super expensive car, but it is more expensive than the average car.
With that being said, a new 3/4 ton diesel is pushing $70k, a loaded up SRT8 Challenger is over $40k, it seems like the average new vehicle is around $30k. Seems like these new cars make up much more than 6% of the vehicles on the road..
6 and 7 year loans, leasing, etc. make that happen. Gotta love inflation, eh?
Here's to seeing how this 6 year old car will last...I refuse to pay up
With that being said, a new 3/4 ton diesel is pushing $70k, a loaded up SRT8 Challenger is over $40k, it seems like the average new vehicle is around $30k. Seems like these new cars make up much more than 6% of the vehicles on the road.
My wife and I combined make slightly more than that "average" income, have no debt other than a house and three old a $$ vehicles that are paid for and even for us I don't see how we could afford a new $40-50k vehicle. I think we've just gotten so used to not having a payment the thought of one scares us.
Good points although I think you have the prices skewed up. Those are not the average new car being sold or on the road for price.
A lot of affordability will depend on a lot more than someone's gross income too. their personal debt to income ratios, their revolving expenses for things like utilities, housing, etc... will all come into play.
A debt free couple making $50K a year will be able to spend a lot more on a vehicle than the same couple with a big mortgage, student loans, living in a higher cost of living local, or other expenses.
Good points although I think you have the prices skewed up. Those are not the average new car being sold or on the road for price.
A lot of affordability will depend on a lot more than someone's gross income too. their personal debt to income ratios, their revolving expenses for things like utilities, housing, etc... will all come into play.
A debt free couple making $50K a year will be able to spend a lot more on a vehicle than the same couple with a big mortgage, student loans, living in a higher cost of living local, or other expenses.
I am thinking that a debt free couple making $50K a year will probably want to remain debt free and save for the next car so that they can pay cash for it. I mean if you have the home paid off, no student loan debt, no current car note, no concumer debt you are free and giving up that freedom is really hard. If you only have to pay living exspenses and property tax then you can save a lot of money during a 3 to 5 year period allowing you to pay cash for your next car or truck.
There’s some truth to the generalization that the “middle class” (however we define it) emphasizes self-affirmation through consumption, be it luxury cars, McMansions, fancy electronics and so forth. The “lower classes” can’t afford it, while the upper classes don’t need to flaunt it. Of course, the super-wealthy are buying the Ferraris and so forth, and not the aspirational upper-middles. But I concur with the observation that a person with $200K savings is more likely to be driving a $50K Mercedes, than a person with $2M in savings.
Also, by “wealthy” in this thread we probably mean not the hedge-fund types but the near-wealthy, who are millionaires in net-worth but don’t own Learjets. A lifetime of thrift and business-savvy has taught such people the importance of avoiding costly depreciating assets.
There’s some truth to the generalization that the “middle class” (however we define it) emphasizes self-affirmation through consumption, be it luxury cars, McMansions, fancy electronics and so forth. The “lower classes” can’t afford it, while the upper classes don’t need to flaunt it. Of course, the super-wealthy are buying the Ferraris and so forth, and not the aspirational upper-middles. But I concur with the observation that a person with $200K savings is more likely to be driving a $50K Mercedes, than a person with $2M in savings.
Also, by “wealthy” in this thread we probably mean not the hedge-fund types but the near-wealthy, who are millionaires in net-worth but don’t own Learjets. A lifetime of thrift and business-savvy has taught such people the importance of avoiding costly depreciating assets.
You are talking the middle class millionaires I would guess. People that lived within their means and saved. Many of them started their own business. A co-worker and his wife both make well over $100K a year. They have paid off two homes. (One of those homes they have lived in for well over 25 years now.) Paid off their 2 kids education. Both kids are productive citizens working on there own careers. They have funded their retirement accounts to the toon of $2mill for him alone. He drives a 2008 Honda Accord, on the days that he doesn't ride his bike into work that is. Vacations are paid for in cash as is everything else. They don't buy it unless the money is there to buy it. Interestingly the money is always there.
My wife and I are heading in a similar direction. For us that is the place to be if we never get to the private jet set or Ferrari driving household. Still, what a place to be.
You are talking the middle class millionaires I would guess. People that lived within their means and saved. Many of them started their own business. A co-worker and his wife both make well over $100K a year. They have paid off two homes. (One of those homes they have lived in for well over 25 years now.) Paid off their 2 kids education. Both kids are productive citizens working on there own careers. They have funded their retirement accounts to the toon of $2mill for him alone. He drives a 2008 Honda Accord, on the days that he doesn't ride his bike into work that is. Vacations are paid for in cash as is everything else. They don't buy it unless the money is there to buy it. Interestingly the money is always there.
My wife and I are heading in a similar direction. For us that is the place to be if we never get to the private jet set or Ferrari driving household. Still, what a place to be.
A couple making combined $200k a year is considered 'upper class' by most, including our glorious leaders in Washington.
They likely got to where they are by the frugal spending and debt avoidance you mentioned. I think the point of this thread is that middle class people stay middle class through decades of bad financial decisions, including leasing luxury cars.
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We'll see if we still have fuel by then!
