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Yeah when I was younger, used was a bigger risk but it's still a risk. I agree with the overall premise that you are going to have to eat a huge depreciation of a new car after you drive it off the lot so if you are not in the financial position to absorb that risk, as Ramsey says, then buy used.
I now look at cars as a portion of my wealth and from comments I've received, virtually no one else does. In the last 2 years, I've bought 2 new cars (Charger Hellcat and Jeep Grand Cherokee) and a used 2015 BMW 228I M sport. I buy these cars because I want them and I can absorb the loss of value and it really doesn't impact my financial position that much.
When I was younger and couldn't afford new, I did buy used, cheap and reliable.
You have a good taste! I used to have a 135i m sport, the inline 6s are rock solid, loved the car. I now have a 981 Cayman which I bought used, I spend less to maintain it than most of my friends who drive non luxury cars. I never buy CPO or warranties but I do lots of research prior to buying, never buy a new engine/trans design and I'm pretty handy. There are lots of BMWs and Porches I wouldn't touch, but others which are pretty solid. The M2 is an example of a solid BMW, it uses tuned up n55 which has been proven to be a solid engine for almost a decade now. Now the 4.4 v8s BMWs I wouldn't touch with a 10 foot pole.
While buying a new car is usually a bad financial decision isn't $1m in net worth requirement a little over the top? and putting any dollar amt on net worth is silly anyway, because it totally depends on the circumstances. A person living in San Francisco who loves dining out and hookers with a net worth of $1m is obviously much different situation than a retired really conservative person who lives in Kansas with a net worth of $1m.
Imo someone who has no mechanical abilities and has more money than time buying a new car is a good idea, regardless of net worth. Of course model matters, A $60 Jeep Wrangler is pretty stupid vs a $25k Honda unless you are pretty well off.
What a completely ludicrous statement for him to make. Do you know how many new cars would get sold if that was a smart rule. I can't think of anyone I know with $1 million net worth. In the past I knew someone who I was told did have more than that much. He was a fireman and worked only 2 days a week and had a part time job driving a cab and got inheritance money when his brother died.
So there are about 15 million millionaires in America. And about 17 million new cars are sold every year.
That means 2 million of you aren't following Dave's advice!
For what its worth, Ric Edelman reported that someone polled something like four dozen millionaires. Every single one of them followed two rules, the first of which had something to do with credit or savings - I forget.
But the second rule that all four dozen millionaires followed was they bought two to three year-old cars in good condition and drove them until their wheels fell off. Not a single one bought new cars.
^^ Depending on the demographics of the millionaires -- self-made? athletes? attorneys? doctors? media people? business owners -- the fact that all of them bought used cars likely has nothing to do with the fact that they are millionaires.
For all we know those people would have been millionaires whether they bought used OR new cars. Until there's a true causation established that poll doesn't impress me.
^^ Depending on the demographics of the millionaires -- self-made? athletes? attorneys? doctors? media people? business owners -- the fact that all of them bought used cars likely has nothing to do with the fact that they are millionaires.
For all we know those people would have been millionaires whether they bought used OR new cars. Until there's a true causation established that poll doesn't impress me.
You don't see a connection between spending less money, and having more money in the bank?
^^ Depending on the demographics of the millionaires -- self-made? athletes? attorneys? doctors? media people? business owners -- the fact that all of them bought used cars likely has nothing to do with the fact that they are millionaires.
For all we know those people would have been millionaires whether they bought used OR new cars. Until there's a true causation established that poll doesn't impress me.
You make a valid point. But Millionaire Next Door did talk about this topic at length. The short version is most millionaires, especially the self made variety (which is the majority), don't buy new cars. But that certainly doesn't mean all millionaires don't buy new cars.
In one of his later books, Stop Acting Rich, he talks about how there is a small segment of multi-millionaires who he refers to as "the glittering rich". These folks can buy the flashy cars and gigantic mansions and still be quite rich. But it's not the majority of rich people who can do that.
You make a valid point. But Millionaire Next Door did talk about this topic at length. The short version is most millionaires, especially the self made variety (which is the majority), don't buy new cars. But that certainly doesn't mean all millionaires don't buy new cars.
In one of his later books, Stop Acting Rich, he talks about how there is a small segment of multi-millionaires who he refers to as "the glittering rich". These folks can buy the flashy cars and gigantic mansions and still be quite rich. But it's not the majority of rich people who can do that.
The problem is that the word "millionaire" has a relatively concrete definition (commonly a $1MM net worth). But the word came in to use over a century ago, when every single person with a $1MM net worth would be in the "glittering rich". The term was not originally meant to cover the upper middle class positions it covers today.
Middle class in the 1950s might have been $10,000 a year, but if we called it "Ten K-ers" or something more concrete than "middle class", the term would lose a lot of its meaning today.
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