Survive and Thrive Tip #3: Kill the Lust for Luxury Vehicles
Posted by: AC Johnson ⋅ Mar 30, 2017
Before writing this, I thought of the impact this article may be on those who read this. Lifestyle is a personal matter and by writing this article, I have stuck my nose on things that mean a lot to many people. It is not my intention to hurt the reader or cause someone to resort to the world of denial. The purpose of my blogs is to help or inspire others. So here I am taking the risks needed....
Living in a suburb of a major city has exposed me to thousands of vehicles on a daily basis. On my way to work, I pass by a number of high-end vehicles like Lexus, Cadillac, Jaguar, Mercedes Benz and others. There is nothing special about our suburb, a lot of people are anywhere between mid-level professionals to senior-level professionals, my guess based on the county's household per capita income of $86K. We also have a few of apartment complexes, but not many.
According to a November 2014 article on the New York Times by Paul Sullivan "In Sales of Luxuries, Geography Matters", the median income of the luxury car owners in Georgia and California, which accounts for 14% of car owners in those states, is only $96-99K. A C class Mercedes sedan is about $40K. In the US, the average income of these luxury car owners is $99K (Source: TGI, Kantar Media). Basically, the person who owns a fairly new luxury sedan would be spending $800-$1,000 a month for 5 years to own that vehicle. Leasing would be cheaper. As these vehicles get older and need repairs, the costs are twice or four times more than an economy car.
Basically, in order to get that fully loaded, air-powered lumbar support, butt-warmer of a car, I gotta pay $400-$600 more a month. No thanks! I asked my coworker who was born and raised in the area why the stretch of unnecessary lifestyle. She said there is a lot of "wanna-be millionaires" in this area. Having moved from a small town at the time, I didn't believe what she said until after almost a decade of living there. Many people are working a second job, or are struggling with credit card debt, or have no college money set aside for their children. At times, when a person in a two-income household loses a job, the family loses a home. It's a sad realization that some people are barely surviving in a 2.5-job household. So it's all about priorities!
This is a stark difference from living in Western Europe where the majority of the people in the city and surrounding areas rent a condo or apartment. A small portion of households can afford a home but they are mostly well off. And what I mean by that is they have to be cash-rich to afford a home. And a family might have one car everyone shares while others take public transportation.
So much of American culture thrives in debt. There seems to be a competition for nicer possessions. There is a never-ending lust for the biggest house, latest car model, the newest furniture, and plenty of toys.
I read an article on buying cars wisely. The expert said that in order to not have car payments, as soon as you buy a car using cash, start putting away what you would have placed as monthly payment on a special savings account just for a car. As soon as your car is too old to maintain repairs, generally about 10-15 years, you would have all or majority of the cash you need to purchase a newer vehicle. And he did not say brand new, either. You would save thousands of dollars on interest payments alone!
Next time you find yourself dreaming about buying that Acura, Audi, BMW, Infiniti, Jaguar, Lexus, Mercedes, Porsche, and the list goes on..., snap out of it and think how much money you can save staying humble. Forget the air-powered lumbar support, fully loaded, ego-driven and air on each passenger's face features. Yes, forget all of that and just go for the safety ratings at the minimum.