Why your $80,000 car doesn’t impress me any longer

Published September 21, 2015   Posted in How to Think

I will admit that, once upon a time, I gushed over nice looking, expensive cars.  In high school, when I saw some impeccably maintained BMW M-series or Porsche rolling down the street, I’d look.  And maybe gawk.  I’d take in the sound of the engine note like a true “connoisseur”.

Expensive cars no longer impress meTo say that I was just “impressed” was an understatement. The truth was, in my mind, I immediately connected what I considered to be a logical web of dots in my head about not just the car, but the person driving the car. I wanted the car. I wanted to drive the car. But more than that, I wanted a lifestyle that would allow me to have such an expensive piece of machinery. I wanted the life, not the car.

“That guy must be filthy rich,” I often thought to myself.  I wanted the LIFE as much as the car.

But hey, I was in freaking high school!  My understanding of the real world was as sound as Kanye West’s understanding of tact and grace.  I had very little income, hardly any expenses and worked at a grocery store after school and on the weekend for money.  At this point in my life, anyone who could afford an energy drink had a leg up on me.

Honestly, what the hell did I know about the reality of money and driving stupid-expensive cars?

Not much.

Rich people don’t drive stupid cars

I now know that wealthy people tend not to drive around in expensive vehicles.  They also aren’t wearing $5,000 watches, $1,500 designer suits and living in large McMansions in well-to-do areas of the city.  This is why they are wealthy.

Let me say that again: this is why they are wealthy!

Instead, the “real rich” drive 10-year old Honda Civics or Toyota Camrys.  Seriously.  An Experian Automotive study found that 61% of wealthy people drive Toyotas, Hondas and Fords.  They also live in “normal” communities with the rest of us and very often look for sales on their clothes and shop at “regular” stores like JC Penney and even Target.  They tend not to shop Lord and Taylor, Neiman Marcus, Talbots or other expensive establishments.

Truly rich people do not blow through money like your typical $80,000 car owner might.

For example, Stop Acting Rich author Thomas Stanley wrote that the median price that millionaires pay for their cars is a meager $31,367.  On his blog, he argued that luxury brand automakers are largely supported by the pseudo-affluent – those who spend quite a bit of money but have very little REAL WEALTH to show for it.

And so, your stupid expensive car just doesn’t impress me.  

I don’t care about the car. I never have. Instead, I cared about the life. But if that life is fraught with debt and complication, then I don’t even want that after all.

  • It does not impress me that you’ve racked up significant debt to drive around in a vehicle that costs more than some people make in a year.
  • It does not impress me that you believe your vehicle represents a status symbol and imparts upon you some pathetic sense of superiority.
  • It does not impress me that you want to feel wealthy by driving around in a car that you believe the wealthy drive.
  • It does not impress me that you want to be “one of them”.

This shit doesn’t impress me because, well, I’d like to retire before I hit 60.  Actually, I retired at 35 – BMW-free.  I don’t want stuff.  I want freedom.

High income does not necessarily imply “wealth”

It is prudent to briefly discuss the difference between a high income and wealth because this difference cuts directly to the heart of the matter.  In short, those with high incomes do not necessarily possess a high net worth – or wealth.

The truth is that the majority of research finds that expensive luxury cars are owned by those with higher levels of income, not necessarily by those who are “wealthy”, or rich.  Income is much different than wealth.  When we use the term “wealth”, we are referring to how much you are worth – in other words, what you have to show for yourself.  Think investments, home equity, real estate, savings, etc.

Those with a high income but relatively low net worth prefer to spend the large majority of yearly earnings on things like big homes, expensive cars, clothes and jewelry.  They do not save.  They do not get ahead.  Their high-consumption lifestyles are killing their chances of building an investment nest egg that we all need to comfortably retire.  From a financial perspective, these people are not worth very much.  They are neither rich nor wealthy.

Where is their money going?  Much of it is used to fund a high-consumption lifestyle.  Spending money on expensive things because they earn significant amounts of money and believe they can afford the “nicer things in life” (read: they believe that they are rich).  Things like $80,000 BMWs, or $25,000 Rolex watches, or 3,500 square feet homes with big yards and granite counter tops in ritzy areas of the country. Expensive dinners. High priced alcohol.

Their high incomes lull them into a false sense of wealth.

In truth: these people are NOT wealthy because they spend the majority of their income. 

Readers of the book “The Millionaire Next Door” will know what I am talking about.  People who rake in $500-grand a year but only have $200,000 in investments.  Yeah, these people.

Let’s switch gears and talk about the real rich.

In contrast, our nation’s rich people – people with significant net worth – save the majority of earned income.  They do not buy expensive cars or big homes.  They choose to live reasonably!

The real rich aren’t rich because of their incomes.  Instead, they are rich because they save.

They dress just like the rest of us.  They shop at the same stores you and I shop at and enjoy saving a buck just like we do.  This impresses me.

This level of wealth, enabled by a reasonable lifestyle, is what impresses this humble early retirement blogger.

This is what I want.  And, this is also what my wife and I have worked so hard to achieve.

Today, when I see a Porsche struttin’ down the road, I pity the driver.  Is there a chance that the driver is already retired with a gigantic nest egg, making that car easily affordable?  Sure, it’s possible.  But, it’s also not likely.  The Porsche, or BMW, or Mercedes, or Jaguar is usually just the beginning of what these high-income individuals spend money on.

We see evidence of over-consumption everywhere.  For example, I used to work with a guy who drives Audis and collects absurdly expensive watches (in the neighborhood of $10k a pop).  A couple weeks ago, I noticed a mid-30’s woman loading up her kids into her $60,000 Infinity SUV.  The weekend before that, a well-maintained red Ferrari sat in the gym parking lot as its owner worked out.

At one point in my life, all this expensive machinery would have impressed me.  But once I understood the reality of how true wealth interacts with expensive purchases, I came to realize something important:

The large majority of these people are in debt.  Debt doesn’t impress me.  So many of these people need a high income just to maintain their high-consumption lifestyle.  There is nothing enviable about finding yourself in a position where a high income job is required just to make ends meet.

I do not want these cars because they are financial nightmares, notoriously inefficient and a drain on my ability to quit the rat race.  I realize now that drivers of expensive vehicles are generally not in a good financial position.  Contrary to my petty high school thought process, these people are typically not truly rich. Instead, they lead destructive high-consumption lifestyles through a high income.

In the end, I’ve learned that rich people are not rich because of high yearly incomes or reckless consumption.  Instead, they are rich because they save.  They invest.  They live responsibly.  They are, in a word, sensible.

We track our net worth using Personal Capital


132 responses to “Why your $80,000 car doesn’t impress me any longer”

  1. I agree. I used to be impressed by really nice cars and fancy houses. Well, I still look at nice cars and nice houses and wish I could have them. But I also realize those people are probably in tons of debt and I don’t want to be in a ton of debt.

    • Steve says:

      Hey Savvy – more times than not, they are in pretty significant debt, and there is nothing enviable about that position regardless of the type of car that you drive. 🙂

  2. Come on… don’t lie – you still gawk! I know I do haha. But I hear you. I’d say you’re right a majority of the time and people buying this things are high earnings, but maybe don’t have high wealth. Working in accounting though, I’ve come to realize how many people are out there (mostly entrepreneurs, but then you have bankers, upper management in large companies, etc.) who are making 7 figure incomes (it’s a lot). To them, an $80k Porsche is less then 10% of their gross income in a year. But then again, there is probably a sliver of a sliver of a population that is FI and driving around in Porsches 🙂

    • Steve says:

      Hey Fervent – the trouble is the Porsche probably isn’t the only thing that those people spend really, really good money on. You can’t park an expensive Porsche in a small garage. You need the big house to go along with the Porsche, and the country club membership, and the designer suits, and the…before you know it, that $1m a year is being spent on a lifestyle that is completely unsustainable for very long post-retirement.

      It’s a wicked cycle! 🙂

  3. Maggie says:

    All of the really nice cars, I just think “how impractical! I couldn’t fit my family of five in that!” – I’m not attracted to SUVs. We got the smallest car we could fit three carseats into the back seat. 🙂

  4. I once work with a guy who lived at home with his mom, in his late 20s, but owned a car that was almost a supercar. I asked him about it once, and he said, “All I’ve ever wanted is to have a car like this, but I’m not willing to go into debt to do it. So I live at home!” Not the trade-off I would have made, having driven the same $16,000 Honda Civic for the last 12 years, but I respected that he was willing to make sacrifices for his priorities. (Though I’m sure living at home was a big downer for dating!)

    We definitely love following the Millionaire Next Door model. We don’t need our neighbors to know how much we have saved up (in fact, we’d prefer they don’t!), and like that nothing about our lifestyle looks flashy or screams “wealthy” — which is as it should be. There are other perks, too, like not getting hit up by fundraisers, Plus, the money some people spend on cars these days could support us for multiple YEARS in retirement. We’d take freedom over a car any day. 🙂

    • Steve says:

      Wow! Honestly, I’d be hard pressed to let my 20-something kid live at home while he drives around in some expensive super car. My folks certainly wouldn’t let me do that even if I wanted to. 🙂

      And I agree: freedom > car every day of the week.

    • Jolly Tilo says:

      But don’t you think buying a house is a LOT LOT LOT more expensive and for some, you have to pay A LIFE TIME for it? So I don’t get people laughing at people who are still living in their parent’s house while they are single and saving money and yet they are paying the rest of their work life just to say.. they own a house which isn’t fully paid until they are 55 or something.

  5. Jason says:

    I am impressed by those cars. My impression is how much they are hocked up to their eyeballs or if they leased it. And that is the truth. Everytime I see a luxury car that is newer I wonder how much their payments are and think how dumb. Even our next door neighbors, who was their BMWs every weekend, I wonder how much stupidity created just to look good. My 2009 Sentra isn’t pretty, but it is paid for.

    • Steve says:

      I’ve rented many-a-Sentra when traveling. Good car, does exactly what we need it to do. Good choice, and definitely agreed on your other points. Those cars are generally funded by DEBT.

  6. We tend to be in harmony with timing the subject of our articles Steve. I took a slight contrarian approach this time. You used the case of a BMW M series car when describing a consumption lifestyle; I went for the Learjet 60 as my example! 🙂

    You are dead on when describing real wealth. The Millionaire Next Door opened my eyes to the misconceptions about who is wealthy. The appearances of wealth by owning possessions are deceiving. When you spend a majority of your “income” on a lifestyle, it becomes nearly impossible to build “wealth”. Our focus has been on building wealth to support the spending we feel is right for us. This enables us to retire early.

    However, I still like to look at those nice things and dream…..

    • Steve says:

      Yup, nothing wrong with dreaming. In fact, dreaming is good! But yeah, a Learjet is definitely another wonderful example of excess, of course. The sad part about this is the lifestyle that some of these people are designing for themselves is analogous to a jail cell, and a high salary is the guard that you pay off to let you out every once in a while to experience a taste of freedom. 🙂

  7. I agree! A fancy car is a liability, not an asset. I do like to think of other people’s over-priced cars as a free opportunity for my husband & kids to gawk at something we’d never own.

  8. Mr. SSC says:

    Interestingly, when we moved into our current neighborhood we noticed that almost every house had a Mercedes, or BMW or both or a ridiculous clown truck. Not even MMM style ridiculous clown truck, but a “for real” clown truck with boosted shocks, big knobby tires, and enough custom work you wouldn’t want to risk knocking any of it off in the mud. After 2 years, I’ve never seen any of them muddy. I digress…

    We realized that we could afford one of those cars if we wanted to, but we don’t want to. I find myself repeating that to my family a LOT. They point out ALL the time, “You can afford that, you should get it.” That isn’t the problem anymore, it’s that I don’t want to afford it.

    I’d rather use that extra coin to get me to my Lifestyle Change 6 months earlier, or maybe a year earlier. That’s a luxury I’d much rather choose to “afford.”

    • Steve says:

      The “you can afford it” is always an interesting statement. To me, I can afford it when I can pay cash for it and not blink and eye. Homes might be an exception, but even then, a 50% down payment will always help to bring real estate into affordability.

      I agree, I’d much rather afford to retire years sooner and continue driving around a normal car. Right now I just have a motorcycle while my wife takes the car on her commute. Rain or shine, I’m on the bike cruising away! 🙂

      • paul says:

        Make sure you don’t get hit and killed on your cheap commuter bije

      • paul says:

        Author is forgetting some people can actually afford to have a super nice car without any stretching to get there. Some can easily afford it. And if these people love nice sports cars or luxury high end SUV or whatever, they should be able to drive them with their heads helps high with people like this author judging them.

        Do the author: stop being so judgemental.

        • Joe says:

          Sounds more like you’re the one being judgmental… cheap commuter bike? I don’t think those who can legitimately pay in cash and still be financially sound should be shamed for owning a high end vehicle, but it doesn’t make them special, either.

  9. My brother used to always ask when I was going to treat myself to a nice car. Then, a couple years ago, I told him about my ER plans and he doesn’t ask anymore. Instead, he now reads MMM and has made drastic improvements with his own finances. Most people don’t realize there’s an alternative to the consumer culture that surrounds us.

    • Steve says:

      It’s true, so many people don’t realize that there are other ways to live your life, ways that will truly maximize happiness. I didn’t fully realize it either until I got more involved in the personal finance and early retirement community. This stuff just ain’t hard! It can take some time, though…

  10. Stevie Wonders says:

    For the longest time I puzzled over where all these high paying jobs were that seemed to allow so many to live like aristocrats. Began suspecting an illusion, after encountering statistics indicating much less wealth and income than appeared to be on display. Stanley’s books confirmed this suspicion beyond a doubt.

    • Steve says:

      It’s amazing, isn’t it Steve? High incomes don’t mean you’re rich, and very often the more expensive your possessions, the less rich you tend to be. It’s an interesting phenomenon for sure.

  11. […] Why Your $80,000 Car Doesn’t Impress Me Any Longer by Steve, thinksaveretire.com. I work for a Fortune-500 company, and these cars are everywhere. But I also see people who have no other purpose in life except for their job, so I guess it kind of fits in certain situations. Not for me though! […]

  12. […] the difference between want and need.  You might want a car, but you probably don’t NEED a Mercedes.  It is the “I can afford it” line of thinking that keeps so many Americans working […]

  13. Luke says:

    Yes there are a lot people with cars they can’t afford but “rich” people don’t drive around in Honda Civics people who make less than 100k might choose to although they could do better.

    If a luxury car makes someone happy, why can’t they buy it. If they focus on MAKING money instead of SAVING money they’ll have enough left over to retire at half the age any of you “savers” will.

    Just remember when you’re driving home in your civic, counting all the pennies you SAVED by taking your wife to McDonald’s for your 20th anniversary, I’ll be be the guy in the Porsche passing you at 100mph thinking about what I’m going to do with all the money I made today. Maybe I can take my kids on a dream vacation or take a month off to travel with my wife, maybe I’ll donate to a favorite charity.

    Anyway at least my dollar will actually be doing something since it won’t be hoarded away from some penny pincher.

    • Steve says:

      Hi Luke! If anyone figures out how to retire at 17.5 (half of my age, as one of those “savers”, at retirement), I’ll be the first in line to shake their hand. Well done, Mr. Teenager. You retired at half my age, and you did well for yourself! 🙂

      As adults, I think we are all more than capable of making our own decisions about the cars we drive and homes we live in. I get the feeling that you probably drive around in an expensive automobile because you believe it makes you happy, and that’s perfectly okay. You made a choice about how to spend your money, and I sincerely hope you get maximum enjoyment out of your money spent. Have lots of fun!

      Like we learned in “The Millionaire Next Door” (and, quite frankly, from my experience with life in general), truly wealthy people tend not to drive expensive cars (those with high INCOMES do, but income is very, very different than wealth). In fact, a Jeep Cherokee is the most common car driven by those who are truly wealthy.

      To me, the question comes down to whether I’d rather drive an expensive sports or luxury car or be retired.

      I chose retired. 🙂

  14. Mr. 1500 says:

    Man, this one hits home. All of my software developer friends who live check to check (despite 6 figure incomes) drive BMW and Lexus. My millionaire neighbors drive an old pickup truck and live in a modest ranch home. The one set of people that I suspect to be millionaires in my family drive old Fords and live in a modest 200K split-level.

    When I was a kid, I was obsessed with cars. I was the one who plastered my bedroom wall with Dave Kimble drawings. I used to dream about nice cars. I’d then wake up and be pissed/disappointed that the Ferrari 355 wasn’t actually in my garage. Somehow, even when I started making good money, I resisted the urge to buy a Corvette (sorry 🙂 ), S2000 or NSX.

    Now that I have the money to have just about any car I want, it just doesn’t matter that much. I admit that I’m not fully enlightened and still think about nice cars every once in a while, but the desire is mostly quashed.

  15. E says:

    Amazing. Thank you for your inspiring article. I earn amazing money, but ten years ago gave up the cars and the ridiculous lifestyle and “trappings”. And gold digger girlfriends… Real wealth brother I’ve come to find is laying my head on the pillow at night and knowing I could live on the money I’ve actually saved and accumulated over the past ten years , with not even investing it, for the next 50 years. I do however love anonymously gifting the needy I meet, where they don’t even know it’s me doing it, and working in a food bank outreach program and soup kitchen, I probably tithe to the needy 20% of my income, most of which I cannot write off on my taxes, but who cares? I know that’s not what this article is about, but I’m a strong believer, if we give from the heart, that energy repeats and returns right back to us ten fold. There is no greater wealth or richness of life than driving my 5 year old well maintained Toyota and wearing good clothes that I enjoy. I don’t “own” much at all really. I take joy in life’s simple things. And I live very comfortably. By the way, I’m only lucky because I made this conscious choice, and anyone can do it too. And really get rich in more ways than one.

    • Steve says:

      Love it, E! You have the right attitude about this and have found what true happiness is all about. You also know what “enough” truly means to you and resist the temptation to go overboard. Well done, sir!

  16. Cory says:

    Jesus Christ.. Read about the first 10 paragraphs and couldn’t go on.. You sound really jealous of people who drive nice cars.. What the heck is considered rich? So if you’re saying people who don’t spend any money aside from necessities and don’t plan on living life until they retire. . well I don’t want to be rich. I get one life. . youth is wasted on the young enough as it is.. I’m not going to drive a piece of crap if I don’t have to. And sorry, but my goal is not to impress you.. I love driving… And spend about an hour per day doing it. That’s going to end up being a significant portion of my life.. I shouldn’t do it in style because that would impress you if I didn’t eh? No thanks . .

    • Cory says:

      I also couldn’t care less what other people or other wealthy people do.. Why would I base my decisions on theirs?

    • Steve says:

      Hi Cory! First, no need to address me as Jesus Christ – though I am very confident, I don’t consider myself a deity. Second, you have every right to drive whatever car that you feel makes you happy. Go forth, my friend, and be well. 🙂

    • Ethan says:

      Cory, you must drive then. Drive the hottest car you can buy. Nothing in this blog is telling you not to. This blog is only saying that life is not about materialism, it’s about relationships and love and making sound financial decisions so you have peace and joy in your life 98% of the time. Most people are discontent and miserable 98% of the time, because they never examine these issues.

    • Roger says:

      Do what you want. Strive to be happy. I believe the point is that most people can’t have complete financial independence and retire very early AND have all kinds of fancy things like very expensive cars. So the vast majority of folks have to choose.

      If you choose things like fancy cars and that makes you happy — then more power to you. You can have my next one, since every time I looked, I didn’t like the idea of paying for things like a fancy engine upgrade that cost me as much as my ENTIRE car — I’d feel stupid every time I got in the fancy thing.

      Just because people are expressing joy at having a different set of priorities than most people have doesn’t mean you are being demeaned in any way. It’s just an alternative which anyone is free to choose, if they wish.

    • Roger says:

      Cory and others who seem upset by the comments about horrendously expensive cars by the frugal folks.

      I think it’s about value. Once you are used to a lifestyle of frugality, it’s hard to ignore the value equation.

      So for cars, one solution is to buy luxury (if you feel you must have that and don’t mind what it does to your wealth accumulation plan), but buy RELATIVE value.

      After a lot of looking and discussing with peers who are savers and are in or near early retirement, I came upon another solution. Buy a good USED “luxury”, or near-luxury car. These can be quite affordable, in relative terms.

      For my example, I wanted a good motor, safety, reliability, and some fun. Not to show off and not to have the latest gadgets, but admittedly a toy.

      After a friend suggested the used CPO (certified pre-owned) luxury angle, which I’d never thought of, always being afraid to buy used and buy someone else’s problems (idn’t have time for that, working many hours a week), my dilemma went away.

      I got the car I’d wanted for decades (and refused to buy it because it interfered with my “save massively” program), used, low mileage and aside from a few paint chips, in new condition as far as I could tell. I got it for about $25,000, which is far less than the roughly $33,000 people are paying for new cars on average.

      I still have over a year on the full warranty and over 3 years on the unlimited mileage powertrain warranty, and Consumer Reports says the car is quite reliable — more reliable than average.

      Now, mind you, I can easily afford this now. I’ve been retired 9 years. I’ve given over ten times this much money to friends in serious need, family to bolster their savings plans, and charity, so this doesn’t “hurt” me. As it’s just a “fun” second car for me and I plan to take care of it, I expect it to last me for many years.

      But it also doesn’t set off the mental “stupid”/waste alarms I got every time I looked at a BMW M series car or a Mercedes AMG S series, etc. in the $100,000 range, new.

      So, there is more than one way to skin a cat here, for those who just can’t stand it. I picked the 2013 Infiniti G37 with 20K miles. Near luxury and lots of fun, but at an affordable price. Plenty of downsides in terms of things like the interior — but I don’t care about that. A similarly equipped 2016 Q50 (new version of basically the same car, after it was discontinued) costs roughly $60,000, and Consumer Reports is concerned about the likely reliability of the new model as well.

      Saving $30,000+ for a few paint chips, plus getting 3 levels higher on the Consumer Reports reliability scale makes this no contest for me.

      One final thought. I’m in my late 50’s. This might well be the last time I would even want a sporty car. This is the only expensive/luxury thing I’ve ever bought or probably ever will. Don’t confuse this decision with “falling off the wagon” and becoming a big spender.

      • Ethan says:

        He’s not jealous. “Luxury Cars”. A mythological idea, a mythological American concept. Mark Zuckerberg drives a Prius. Warren Buffet drives a1991 Lincoln. Most really successful people don’t buy cars or clothes and actual have money.

        • Steve says:

          Thanks Ethan, and you’re right – there are a lot of super rich people in this world who don’t drive super expensive cars, live in huge homes or wear gold watches. Some just don’t need that stuff…

          • Ethan says:

            Brother in intelligence…

            We’ve got to be wealthy and rich inside, via our relationships, and friendships, and our health… I love money… But when I realized it was limiting me, and limiting who I was hanging out with, and who would hand out with me… I realized, that I still love it… But I’d rather be sleeping on a mattress with $80,000 stuffed under it… Than own the $80,000 car, lol. I sleep a lot better that way. Well you get the point… Keep up the good work!!!

          • Steve says:

            “But I’d rather be sleeping on a mattress with $80,000 stuffed under it… Than own the $80,000 car, lol” – Amen to that, Ethan! Me too…all the way. 🙂

  17. daniel says:

    Do something with your life, and enjoy the nice things as well as putting away plenty for the future.
    This sounds like it was written by a McDonald’s worker with goals of retiring with 10 million in the bank.

  18. Basiima Jadson says:

    am moved I was almost moving to that kind of life but thank God I’ve been enlightened now.forewarned z forearmed

  19. Adam says:

    I got rear ended in my Honda coupes few weeks back and almost fell into temptation. My rationalization was my beloved Honda was totaled, I work my ass off and have made it to VP of an Internet company. I *could* afford a nicer car!

    After test driving a Dodge Challenger, a Mustang, an Audi I went back to Honda and bought the 2016 version of the same car I lost in the collision.

    I figured I wouldn’t regret the decision (I don’t) because I’d loved driving the car for 1.5 years already and it was $10-25K less than the other options I’d been looking at. Like the author, time is the most important currency. I want to spend time with my wife and daughter, not have to work to pay off an extravagant car.

    • Steve says:

      Good on you, Adam! Letting that money actually compound for you, rather than sitting in some other company’s bank account, is definitely money well spent…or I guess in this case, SAVED! 🙂

    • Roger says:

      You drove the same cars I was interested in (but I liked the Charger better, I admit), and rejected. Just think how you’d feel if someone rear-ended you in your $50Kish (or much more) Audi!

      It reminds me of the line in the Millionaire Next Door about how the school teacher, Josh (as I recall) didn’t mind driving a 4 year old Honda Accord. I remember remarking to my dad later (I was maybe 35 at the time, and a lifetime saver), “A 4 year old Honda. That’s as good as it gets!”

      The other thing that got me about such cars (I also looked at the Mercedes C class) is that their quality, per Consumer Reports, is often horrendous, as far as rates of repair. Having my expensive car in the shop all the time would be like instant Karma for wanting an expensive car.

  20. Cat says:

    The fact that you lump Neiman Marcus and Talbots together as expensive stores is laughable. And where’s the argument for spending the same amount of money but having fewer things? I’m big on quality over quantity. One “expensive” pair of pants will last me forever (okay, maybe 10-15 years) instead of one or two per year, every year at Target or JC Penny because they are of poor quality. I buy what I like, and can afford (without going into debt), so that I can ENJOY life and shame on you for making me feel guilty for doing so. I save, I invest, I don’t spend to show-off, and I’m not trying to impress you or anyone else.

    • Steve says:

      Amen to that, Cat! There is no need to impress me – so long as you are comfortable with your level of spending, that’s all that really matters. 🙂

      Thanks for your comment.

      • Stanley says:

        you should shoot yourself steve or get a life. No one cares about you peasants. we just want nicer things so we can live more comfortably. Only peasants like you think about such things.

  21. Roger says:

    You’re right, of course. I felt certain I detected “The Millionaire Next Door” in your early paragraphs, and sure enough, you cited Thomas Stanley in your piece.

    I’ve recently discovered something else when I pondered getting a “weekend performance” car, now that I can afford one and am retired and have the time to enjoy it.

    The values you cite that makes one “rich” (i.e. comfortably financially independent) from a lifetime of frugality and wise financial decisions puts you in a place where you mentally just don’t want to buy something as STUPID as a fancy high piced car — whether you can afford it or not.

    So when I ask myself, if this car X I’m considering worth 3 to 5 times my wonderful late model Toyota Corolla — every time I’m forced to answer, “not even close”.

    So that may be the downside — that you may end up having no desire to live the lifestyle your wealth affords you, in terms of material things.

    OTOH, NOTHING can make up for the complete financial freedom of not having to answer to “the man”, so my primary goal continues to pay dividends every day.

    • Steve says:

      Thanks for your comment, Roger. You’re incredibly well-spoken (written?) and must agree wholeheartedly with what you’re saying. It’s true, there’s nothing like the feeling of complete financial independence and your point about not having to answer to “the man” is a great one. Great one indeed!

  22. J says:

    We pay a lot less for fun cars than you think, I’ve got a 2009 Cobalt SS with 300hp, lots of fun, and was only 9K, cheaper on gas and insurance than a Civic. Friends of mine have 2001 Audi TT, bought for 8k, and yes, even Porsches for 15k.

    These cars are certainly not as expensive as you think they are, and often times are cheaper to own than Honda Civics or Toyota Corollas. Many of us also get our enjoyment from our cars, they are well worth our money.

    • Steve says:

      Now that’s the way not to over-spend on cars! My article wasn’t necessarily an indictment about the type of car you buy…rather, it’s the price. 🙂

  23. jacob says:

    Good article. Hopefully now I can stop being jealous of all the bmw, Mercedes, Porsche, corvette, people at the gas pump next to me.

    I should be more thankful my 07 altima with hell damage and faded paint is paid for and still runs.

    • Steve says:

      You can get some amazing mileage out of older vehicles. So long as you aren’t worried about them leaving you out in the middle of nowhere… 🙂

  24. Brady Sherman says:

    Millionaires do not usually show how rich they are. My parents are millionaires and my dad has a 2017 Audi Q7 and a 2006 Honda Pilot. My mom has a 2013 Volvo XC60. We buy cars that will last us 10 years, but we still like some luxury. However, we do not go overboard. Although we can afford much more, we like the cars that we buy to be under $80,000 and still be luxurious and reliable. Reliability and safety is the thing we look for the most in a car. One of my friends has a 10,000 square foot house they are very wealthy. They drive a 2009 Honda CRV and a 2014 Volkswagen Passat.

    • Steve says:

      It’s funny how that works, isn’t it? If you aren’t concerned about showing your wealth, you tend to keep that wealth longer, and the more content you tend to be with what you have. Good things, indeed!

      • Tyler says:

        I went both ways… Been frugal and also spent money on luxury items

        One thing you forgot to leave out ..

        If you own a business, especially in certain jobs like real estate or where people look at you and want to know you do well, I found having a luxury car has enabled and helped me get more sales because even if you frugal people don’t think cars mean shit, 90 percent of the population does. Also, it’s given me more opportunities of people wanting to join what im doing because it appears wealthy. Sorry but it’s true !

        • Steve says:

          It’s awesome to be able to point to your car as a helping factor in getting sales. Unfortunately, it also helps to prove how utterly vane our society truly is, which is sad. But ultimately, we need to do whatever works best for us!

  25. Celeste says:

    if YOU don’t have the money don’t buy it. Invest / build a portfolio that creates a passive income and allows you to Enjoy The fruits of your work or investments! ! you can drive a nice car and build wealth at the same time. spoil yourself a bit..life it’s short.

  26. Kevin says:

    My counter tops are granite, I own gold Rolex’s, I got the new Jaguar XJ, today I was wearing my LV sneakers and for dinner I had an expensive gourmet pizza… but I am not in debt.. just a mortgage on my luxury condo by the water. . I am 36 but I can pass for a 26 year old. Yeah… I am basically debt free I own 2 condos worth over a million dollars combined.. just have those mortgages on the condos that build wealth for me by appreciation each year. So when you see me drive by in my $100k car with my gold Submariner hanging out the window, dont feel bad for me or anything… but look and enjoy the purr of my supercharged engine and the artistry and craftsmanship of my Swiss made watch. 🙂

  27. Dawn says:

    Thank you for this post! I’m sharing with my friends. They’d always tease me for driving a Honda Civic. Honda’s are reliable, dependable, affordable and I could careless a what anyone thinks. I love my Honda. Everyone else can keep their Lexus, Benz, BJS or whatever. I’m glad I’m a sensible person!

  28. Mike says:

    What’s the point of having money if you don’t spend it? My parents are multi-millionaires and the most expensive car they’ve ever owned is an Avalon. When they pass away they will leave my sister and I with what most likely will be 7 figure inheritances. While this is great for us, it just means my dad worked far longer and harder then he actually had to. He liked his job however, so he didn’t want to retire early. If I were him I’d probably go out and buy a Ferrari. What I’ve noticed is that once you’ve lived a certain way for a while, you never really change. My dad is perfectly happy to drive around in his Camry. While I agree with most of this article my wife and I will probably be buying an M3 with cash in the next few years. I’m still on track to retire early (55-60), but I see no reason to be so cheap. If you don’t have a good amount of money when you retire what are you going to do with yourself? For us, we love cars, but at the same time we don’t buy expensive clothes and we purchased a house about 1/4 of what we can afford.

    • Steve says:

      Hi Mike,

      I think there is a very profound difference between spending money *after you have it* and spending money during your accumulation phase. I believe that after we retire and have a real good handle over our finances, THAT is the time to begin spending a little more money on the things that truly bring you happiness. If that means you’re buying a super expensive car, then so be it. If you can afford it – and I mean *truly* afford it without going into debt, I say more power to you.

      If you’re able to buy an M3 with cash and still not affect your financial situation, then I’d say you’re in a good place in life. So yeah, splurge a little bit if you’d like. There’s nothing wrong with that provided your finances are in order and you aren’t putting yourself in a position of weakness in order to drive around in a more expensive automobile. It definitely doesn’t sound like you’re putting yourself into a weak position in your case, so yup – I agree with you. If you have the money, enjoy it!

  29. Ron says:

    I am 45 and built savings over 3 million by being financially responsible while earning 250k a year. I want to buy a luxury vehicle because buying a 30k honda or 50k lexus doesn’t change much in my life. I can make or lose 50k in one day on the stock market. The problem is I still have a hard time to let myself buy some luxuries as one has said, you can’t just open the spending tap when you have been a saver for most of your life. Knowing I have more money that I will ever need, I am upset at myself for not letting go more and I appreciate the people that can spoil themselves and not be as attached to their money. I know I shouldn’t care what other people think, but being pre judged if I do decide to buy a luxury vehicle does bothers me. I don’t know why I always want a nice car with gadget while for others, it’s just a mean for transportation.

    • Steve says:

      Hi Ron – yup, I know what you mean. When you are so used to saving money all of your life, even when you CAN afford to purchase a more expensive car, it still feels like you’re doing something “wrong”, or at least different. Personally, I don’t think there is anything wrong with driving around in an expensive automobile – so long as you can afford it. It definitely appears *YOU* can afford it, but that’s definitely not a common characteristic among others who are driving around in similar vehicles. 🙂

    • Ethan says:

      Friend I hear you. I sympathize with you as well. Here’s the shocking truth though. It would be more sane to rent everything and own nothing. I’m not saying lease, I’m saying rent. Ownership is cumbersome at best, a nightmare at worst. I say buy no car. Go to Enterprise, or other car rental establishment, and long term RENT any luxury or average car or SUV that you like. A new car will cost you 2.5 times what you think you’re paying for it, even with cash backs, no money downs and incentives, even with that free oil change. Don’t lease either, it’s a scam as well. Leasing isn’t renting. Try a new car every three or six months. Always drive a fresh new car with low miles. A rental with insurance for damage will cost you less than ownership. I invest too. I love to do things and use things, and play. But ownership is a prison. There is no “Pride in Ownership”… it’s all mythology. You’re hard won $3,000,000 should be preserved and doubled. It’s that feeling of peace when you lie your head on the pillow at night. You are not all messed up in your feelings. You’re one of the few who are smart. Only peace I wish to you, get off your own back. Sexy is healthy and wealthy. Not a fancy car. PS. LOW KEY AND QUIET WEALTH IS SAFEST AND BEST POLICY!!!!

      • Rick says:

        It seems like most people here are just poor making average american salaries. I built my tech company now I’m making 40k to 50k a month so what’s wrong of taking a month or 2 to buy a nice car.

        • Ethan says:

          There are absolutely nothîng wrong with that. But there’s also nothing wrong with you. You’re checking in with yourself. And you’re smart. You ask and struggle with good questions. By the way cingratulations regarding your successes… may they continue for you for a long time to come.

  30. bongstar420 says:

    LOL..you thought money=value


    People’s value is intrinsic. No matter their financial situation, their value is independent of it.

  31. I absolutely agree. I mean hey my dad thinks paying off his new Mercedes for my step mom is more important than my families child support. It’s absolutely asinine, literally. You buy a car worth 115,000 dollars yet don’t even own a home. Check this out, they even canceled the Verizon home services such as wifi, television, and telephone to afford a miraculous car that’s lost about 20,000 dollars of value. Cars don’t impress me anymore. Ostentatious people just drive me nuts

    • Steve says:

      Thanks Sean. It’s pretty incredible what cars can cost, and they certainly don’t hold nearly the same appeal with me as they once had. In fact, it’s not even close! 🙂

  32. Randy K. says:

    Well, I am a proud owner of a Lexus and I didn’t buy it because it is a status symbol. Oh, did I mention it’s a 1998 Lexus es300 w/161K miles on it? I love it and if I find another good used Lexus for under $10K, I’m going to buy it.

  33. Jolly Tilo says:

    I think you have to balance your luxuries and savings.. not too much on both. Live a little but not be too frugal.. for life can always end in an instant and you just won’t know when.. a year from now, 5 years from now? You just won’t know it.

    All I am saying is.. don’t bet too much money for time and timing and youth is also important.

    There are things you just can’t do when you’re old no matter how much you have.

    Also think of the quote “It’s better to regret something you did, than something you didn’t do”.

  34. Matt says:

    I very much agree with this article! I’m 34 years old and am on my way to early retirement, likely by the time I hit 40. I save most of my income and live reasonably.

    However! I do have a small collection of watches, including a few Rolex’s. Unless you’re a watch geek like I am, you might not be aware that if you buy the right watches, they will actually GO UP in value, unlike most cars (Although some folks do collect cars and make millions). SO, not every fool with a Rolex is a fool. 🙂

    Cheers to early retirement.

    • Steve says:

      Hey Matt! True, there are some things out there that truly are investments. Cars, if restored, can definitely turn into investments…if you really, really want them to! 😉

  35. Kris says:

    A thing I notice about a lot of people, including the commenters here, is that they see cars solely as appliances. Something to get you from place to place. Nice cars are merely status symbols and nothing more. Don’t pretend you like cars when you only see them in terms of price and features.
    The people who buy high end cars at least encourage manufacturers to develop. Technology trickles down to the lesser, and hopefully the whole industry. Additionally, there is always the dilemma of used cars. I am in total support of used cars, but if we don’t have people buying new cars and people buying high end models, then there would not be any used cars!

    What bothers me the most are those who don’t maintain their cars, those who don’t drive their cars, and those who don’t know how to drive their cars properly. Desirable cars that end up in possession of people who purchase with debt are not able to keep up maintenance. I lament the loss of those cars. Some desirable cars that end up in possession of people who can actually afford them are locked away in a garage and rarely driven, if at all. This takes that car out of the market and drives up prices to stupid levels for what should be a reasonably priced car. Thus making them a non-option for many people, especially for enthusiasts, of which I consider myself one. Now, for the really nice cars that are actually driven. That’s great, but then you have people with more money than sense that equate money to skill. There’s a difference between having fun and actually enjoying driving. Most people are just ‘having fun’. I’m not sure which is worse, a wrecked car or one locked away forever. They are both taken out of the market. Actually, at least it would have died doing what it was meant to do rather than rotting away. The best thing is to LEARN how to drive so you don’t wreck while ‘trying to have a little fun’.

    Sorry for my rants but I wanted to put my thoughts down. Let the irresponsible keep buying recklessly so companies can make more fun cars for me. And please stop ruining older cars and artificially inflating prices. I guess what I’m trying to say is that its great if you’ve chosen to stick with your base Civic or Corolla, but regardless please take care of ALL your cars please. I don’t even know what I’m getting at anymore.

  36. […] Wealthy people are wealthy because they don’t buy that stuff. […]

  37. TG says:

    Then it’s a good thing I’m driving my expensive luxury car for myself and not to impress you

  38. Alex says:

    So I’d like to take a moment, if I can, to dissect some of the errors in this post. If love to correct them all, but unfortunately that would involve rewriting most of it, and I just don’t have the time.

    Let’s start with some of the assertions about what people with money look like, both for high earners and high net worth individuals:

    “This is why they are wealthy.” – No. Sorry, but it isn’t. Pinching pennies will never make you wealthy. Period. Not in any meaningful sense. You say you want to retire by 36? Well, to do it through frugality, you would need to save an average of about $3,000 a month from the day you turn 21 to have $1,000,000, which is the absolute bare minimum you would need to have invested to be able to live on. Every year you miss, that number goes up by an exponentially increasing amount. And a million dollars in investments isn’t even really enough, since in order to be able to live solely on the returns without touching the premium, you’d need to keep the money in a relatively high-returning vehicle like stocks, which is an incredibly risky proposition when you have 50-odd years left to go. A single bad decade, like the one we just had, will completely wrote you out since you won’t have any cushion to weather a major decrease in the market.

    You just can’t get wealthy by saving it you don’t already have a high income. It’s not going to happen. Flukes and anecdotes notwithstanding, wealth is created through above average income.

    “From a financial perspective, these people are not worth very much. They are neither rich nor wealthy.” – From an “actual facts based on research and not wishful thinking” perspective, almost all high earners are wealthy. Thee average 1%er earns about 25-50% of their income (which starts at about $300,000 per year) from investments (the discrepancy is die to how you define investment -it actually breaks down to 25% ‘investments’ and 25% self-employment income). So let’s take a hypothetical household who have just made it into the 1%. They would be expected to make at minimum $75,000 per year from investments (25%). At a ‘paltry’ return of 8% annually (they’re invested entirely into a low-cost market ETF), they would be expected to have just shy of $1MM in investments. This is in purely income-deriving investments, and doesn’t count unrealized capital gains and value from other assets not typically counted such as primary residence, art, etc.

    The pattern actually bears out to about the 90th percentile (to 10%). Unless you’re defining a high earner as “anyone making more than $80k power year”, typically high earners also have high net worths. There are exceptions, but they are much rarer than most people like to think.

    And this is also ignoring the fact that most high earners literally cannot help but accrue real wealth. It’s almost unheard of to have an income of over $100k and not receive equity. When I took my first $100k+ job as a director-level employees, I was given 0.5% of the company in the form of stock warrants. That’s higher than typical, sure, but even in a typical scenario, for highly paid positions, it’s customary to expect at least an additional 10% of your salary in some form of equity.

    “Their high incomes lull them into a false sense of wealth.” – It’s not a ‘false sense of wealth’. It’s the understanding that past a certain point, all of your income becomes discretionary spending. I’m leasing (yes, leasing – for a variety of reasons) a $130k Jaguar beginning in January (about the same price as a relatively ‘entry level Porsche’). Could I take that $1,700 a month and add it to my retirement savings? Sure. But why would I? It would represent a paltry percentage of my savings, and wouldn’t really affect my retirement in any meaningful sense. That’s the reality for the majority of people who drive new luxury vehicles, if for no other reason than that the banks simply will not give you a loan for a $100k car if your finances aren’t top notch. There are no middle class people living paycheck to paycheck and driving new 911s. There are very few seriously overextended wealthy people doing so. Because again, the banks will not cover it.

    There ARE plenty of middle class people driving BMW 3-series and Mercedes CLAs, but those cars start in the $30s – hardly what most people think of as ‘luxury’. That’s about the cost of a new, nicely loaded Camry. There are also plenty of people driving used luxury cars, but again, the costs on those are hardly back-breaking. A 5 year old 911 base will set you back less than $40k, if you shop around and wait for a model change.

    From the contents: “before you know it, that $1m a year is being spent on a lifestyle that is completely unsustainable for very long post-retirement.” – I’m beginning to see the problem. You seem to be under the impression that it’s easy to spend a million per year and have nothing to show for it. It’s not. It’s actually pretty much impossible. Unless you rent exclusively, by the end of the first year of your mortgage, you will have more equity in your home than most people will ever have in their retirement account. When you buy a $20k Rolex (which, just an FYI, is not a brand that is purchased by anyone who is not a new money Chinese billionaire or someone who just lucked out and got a $100k settlement because their trailer exploded), you can be relatively sure that that watch will be worth at least $15k for the rest of your natural life. My fiance just purchased a $1200 handbag from a limited run collection by a small and exclusive designer. That bag will always be worth at least $1,200 on the secondary market, and I would be shocked if it hasn’t doubled in value by next year.

    The problem is that you are trying to take a household budget for a median income and extrapolate it onto a high income, and it just doesn’t relate at all. If a typical 1%er saves just 10% of their income, they will STILL have more money in the bank at the end of the year than a median income earner will have made in total in that year after taxes. A typical guideline for budgeting for transportation is to count in it taking 10-15% of your monthly take-home. If a typical high earner did that, we’d all be driving around in gold-plated Bentleys. The lifestyle and the choices afforded to high-income individuals are so different from those available to middle income workers that it’s sheer folly to look at your budget and then try to use it to draw inferences about my budget.

    And keep in mind that high-earners almost never retire early. It’s not because we can’t afford to. It’s because a) we are high earners because we genuinely love what we do which has allowed us to perform at a much higher than average level, and b) we already enjoy the freedoms that most middle income workers pine for. I travel a minimum of four weeks out of every year (usually cost to two or three months). I don’t live in fear of losing my job, since I typically have 4 or 5 unsolicited pending job offers at any given moment. I set my own schedule at work, meaning I can duck out whenever I want to to see my daughter’s soccer game or piano recital or to catch a opening night of a performance in interested in. I’m not saying this to brag, but to point out the very unsubtle way in which the lives of high earners have virtually no relation to the lives of the middle class. Comparing my spending to the spending of a household making under $100k is as ludicrous as comparing my spending to the spending of a household with a net worth of over $50MM. It’s just not realistic.

    • Steve says:

      Hey Alex – a very big thank you for setting me straight. It definitely appears like you have this whole “money” thing figured out. Congratulations on all of your success, and I hope that you enjoy driving around in your $130,000 leased car.

      Be well, my friend. And most importantly, be happy. 🙂

  39. NotADouchebag says:

    Living in a family that owns an $80,000 Infiniti SUV, around $100,000 in other cars, and a $400,000 house that are all paid off, I must say that I disagree with you. ¯_(ツ)_/¯ Some of these people may be in debt, but I wouldn’t insinuate that nearly all of these people are. If you can afford the lifestyle and you’ve worked for it, I think that you deserve to live it if you wish.

    • Steve says:

      Actually, I completely agree with you, good sir. If you can truly afford to spend that much money on those things, then more power to ya! Enjoy success in the way that makes you the happiest. 🙂

  40. Tyler says:

    Interesting article Steve! I agree with many of your points. Buying expensive items just in the name of obtaining some type of “pseudo-prestige” is far from admirable and not a trait of those who are truly wealthy. However, there are some expensive-car owners, albeit likely a small percentage, that buy Porsches and the such not for the attention it attracts but rather for the feeling it gives to the owner. I myself love nothing more than carving up mountain roads in my manual 911. At the end of the day, if you’re spending money on something because you truly love it and it brings happiness to your life go for it, if you do it to be someone you are not, you probably need to look further to find something that’s lacking from your life and pursue that instead.

    • Steve says:

      I know how you feel, Tyler. I drove around in a supercharged Corvette for many years, and that sucker definitely did make me feel like a different person. I didn’t exactly spend Porsche kind of money on it, but definitely more than I should have! 🙂

  41. Mocheen says:

    I grew up on welfare, but I was always admiring nice vehicles. After college I ended up making a six figure salary. I put my wife through school and once she graduated she was also earning a six figure salary. We were able to live off of one income and save the rest for a down payment on a house. We are still avid savers and investors. I am still driving around in a 27 year old Toyota truck. I did purchase a 3 year old BMW M3 with only 30,000 miles on it for $34,000. My dream car is a Porsche 911 although I refuse to pay that much for a car. I love driving the M3 on the weekends and it is something that i have always wanted. I feel that you should have a balance between saving and enjoying life. We take vacations to Hawaii every year, but stay with family. Just because somebody has a nice car does not mean they are living beyond their means. I also have a special edition Rolex that I purchased to hold for my son when he graduates from college. He is only 10 right now, but the watch has more than doubled in value. By nature I am very frugal and am always looking for a deal. I do wonder how some young kids can afford to be driving around in nice vehicles, but many of my friends are millionaires who have multiple houses and nice cars.

  42. annonymous says:

    I gotta say that I disagree with you on this one. You make some very fair points, especially about debt, but there are some parts that in my mind, seem incorrect. In my opinion, somebody who chooses to drive a normal car and live in a middle class neighbourhood, yet has insanely high amounts of cash on hand is not rich, they are frugal. Even if they are making big bucks, one must ask themselves, what makes a person rich? Is there any point in being rich if you choose to live a normal life? Sure, they may not have debt and they are probably putting money aside for there kids and there retirement but, how much is necessary?
    First, lets make something very clear. There are smart rich people and there are… not so smart rich people… But don’t get me wrong, being a smart rich person in no way shape or form means that there life is any less glamorous then the not so smart rich person. A smart rich person invests and if they are really smart, they know that the smartest investment is in their home. Rather then buying a big house on the shores of Mexico or in the tuscans of Italy, a smart rich person buys Realestate in cities, big cities. The thing about real estate in big cities is that most of the time, the prices of Realestate don’t stop going up because the population doesn’t stop going up either. Lets look at Vancouver for example. If you were to buy a home there, close to the Shaughnessy Neighbourhood (arguably the most expensive neighbourhood in Vancouver), in 2015, you could buy an old house for about 3 million dollars (most of the lots are the same size). 2 years later, in 2017, that same house will sell for 5 million in under a month. I say this with confidence because I have seen it time and time again. Mind you, this is not just 1 or 2 particular houses, this is actually the inflation thats happening all over the city and the more expensive the neighbourhood, the higher the inflation. That being said, a smart rich person could go and buy the most beautiful mansion, and heck, lets say they spend 20 million dollars just on there house. Does that mean they got ripped off and lost 20 million dollars? of course not. That house is an investment and if they did buy it in a good location with the right market, they will almost certainly make MILLIONS of dollars at the time of resale. The same thing can be said about a 10m, 5m, 1m, heck even a 500k dollar house (but they probably wouldn’t make as much on a lower priced house).
    Now lets talk cars. When a rich person goes out and buys, as you used in your example, an 80 000 dollar car, that money does not disappear. First of all, Lets say that the average rich person gets a new car every year. Using the Porsche Cayenne as an example, a used, 2016 Porsche Cayenne with 10 000 km sells for about $10 000 less then a new 2017 Porsche Cayenne will cost. That being said, a rich person could potentially do a one-time $80 000 payment on their first car and get a new cars every year with the exception that they would pay $10 000 a year. The $80 000 might be heft at first but for a rich person, paying just $10 000 per year on a car is nothing. Not to mention that you would get a BRAND NEW PORSCHE EVERY SINGLE YEAR!!! This same “loop hole” applies to most mid range luxury cars and even high end ones. For example, the Porsche Cayenne Turbo S costs $180 000 but again, after 1 years use and 10 000km, its only a $10 000 price drop. I didn’t feel like looking up quotes for other cars but I highly doubt that they would be significantly different unless you are looking at super cars which I don’t feel like looking up either.
    Now, lets talk jewelry. Believe it or not, jewelry is also in itself, a form of investment. Rich people from all over the world invest in gold, so why not pay somebody a little bit extra to make it look nice so you can wear it. Just because it looks like a wring or necklace or full on gold chains doesn’t mean its worthless. A lot of rich people have high amounts of gold jewelry so when they get tired of one design, the can pay somebody a few hundred to smelt it and turn it into something new. Heck, lets say you don’t want to smelt it so keep buying more and more, it doesn’t matter. It still has value. Maybe when that person passes away, there kids and grandkids inheritance could be in gold. Does it matter? Not really. Maybe even the value of the gold will go up. Dozens of countries economies are supported by Gold so it’s value can’t really have any significant drop.
    At the end of the day, if a rich person is smart with their money, even if they spend all of it, they are never actually spending all of it. They are simply turning it into something else. Even if they have no cash left at the time of retirement, There net worth would most likely stay fairly unchanged, seeing that your net worth is not just your available cash, but your assets as a whole. Lets go back to the example of the 20 million dollar mansion. lets say you bought that house in your 40’s and now, 20 or 30 years later you are ready to retire. No elderly person wants to live in a mansion. Unless you have multiple people working for you, most elderly people prefer a small, easy to maintain residence. So lets say they decide to sell the house. Could you imagine, after those 20 or 30 years, how much value that land has built up?The number is mind boggling. Now, for simply the sake of an example, lets say it builds up no value and you sell it for 20 million. After all those years, you would have payed off the mortgage (if they got any) So for retirement, 20 million doesn’t seem so bad, does it? So, when you look at these examples, you can see that if money is available, living rich isn’t actually that expensive. It all comes down to your house. The value that can potentially be built up on a house in the right neighbourhood is enough to cover all your lavish desires from travelling the world, to driving luxury cars, heck, want someone to feed you grapes off the vine, I’m sure some people still pay for that too. The only problem is that most people can’t afford to buy one of these houses in the first place because of there ridiculous price tags but once your in the fish tank, your set for life. Some like to live in the house and build up value while others constantly buy, renovate, and sell multiple houses at the same time all while they sit nice and comfy in their own house that is completely separate and out of the picture (but is still also building up value) I have been unintentionally observing housing markets in big cities all my life (because I live in one) and I have seen how astronomical the numbers can be. In no way am I exaggerating these price increases. Im sure the situation is similar in the expensive neighbourhoods of New York, Toronto, Japan, Tokyo, UAE etc…
    So, those people which as you say, “rake in $500-grand a year but only have $200,000 in investments.” are not necessarily irresponsible or bad spenders, it’s just that different people have different definitions of investments, so for this reason, using that term is redundant. What you should be considering is their net worth. A persons net worth is the NET VALUE OF EVERYTHING THAT THAT PERSON OWNS, and that is what really matters. Those people with the high incomes that, “lull them into a false sense of wealth.” Have a much higher net worth then those “real rich” people who drive around in Nissans and live in normal houses. The thing is, even if the high income rich person is in debt, if they did what I mentioned about housing, once they sell, they might even have enough money for their grand kids to have the retirement that a “real rich” Nissan driver would have. I’m not saying that rich people should spend all their money on different forms of investments, I’m just saying that just because somebody has expensive things, it doesn’t mean they are in debt, bad spenders, or irresponsible. Most of the time, it’s the people that we think are fools who end up outsmarting the rest of us.
    ******PS. in no way am I trying to start an argument or make a comment section war, I’m just stating how much more rich an already rich person can become******

  43. Emily Cate says:

    This is very interesting but I think you have to look at it as a percentage of income. If you’re making mid-6 or 7+ figures annually a $40-80K BMW isn’t a huge expense…assuming your housing, savings, and other expense percentages are all in line too. How is that different than owning a 5K car if you make 50K. That being said, having lived briefly in the USA (originally from Canada) I did see a lot of young people driving vehicles way beyond their means. I knew a young man who worked infrequently and lived at home who went out and LEASED(!!)) a brand new Mercedes SUV. Saw this behaviour all the time in the USA.

    • Steve says:

      That’s very true, Emily – if you really do earn a great deal of money, then a single $40k purchase probably isn’t a big deal. But, remember that big houses, expensive jewelry, exotic vacations and other huge expenditures are *probably* in the picture as well. It all adds up to something fierce! 🙂

  44. […] of others without being aware that I was just as bad. When I see middle-aged guys drive around in BMWs and Infinities, I know they are stuck in the very same spiral of waste that I […]

  45. Bill says:

    I am living in the car culture, Southern California, but drive a 13 year old economy Toyota. And yes I can quit the rat race if I want to now. I saved and invested nearly 30 years. The expensive trinkets are no indicator that you have the option to just walk out. Being debt free is not a badge you wear. It is the same thing with the sacrifices you make to get very fit. The strict healthy diet and counting calories and sessions at the gym. It takes work and tha ”tis not a status symbol. But to be able to wear inexpensive clothes and still look great in them is something that can be shown at least. I don’t tell anyone I personally know about my achievements and am pretty much shunned because I am a dull guy, brown bagging healthy lunches, rarely dining out, and dedicated to fitness and saving. I do like my work, which is why I don’t quit yet. And I have the chance to someday telecommute, and I would do that in Arizona as soon as I am allowed. I lived there before and I know it is far less expensive and house prices are not insane.

  46. Stanley says:

    your opinions are so hilarious. so people can’t purchase a nicer more luxurious car? Most wealthy people own nice cars. I live in Beverly Hills and none of my neighbors have a toyota. You peasants don’t know anything about cars and lifestyle. I know that there are people that drive prius’s but thats it. dont make a stupid article about how your so jealous of others because you cant afford such a car.

  47. Samuel says:

    If they are happy, then they are happy. Even if they are in debt for buying an 80k Maserati. In the end it comes down to them and it is their decision. If they are paying for their car, but are in debt at the moment.. who really cares? It will be paid off eventually. I’ve thought about living in a super small house so I can buy my dream car, a Ferarri 458 Italia. Living opposite of what most people do. And if I was happy living that way.. then I don’t really care what anyone else would think about me. Everyone is different and we all see things different. That’s why I kinda don’t agree with you 100%.

    • Roger Geyer says:

      I agree with you, to a point. IFF (if and only if) you live so that you can pay your bills AND are saving enough to be financially secure in retirement, then drive whatever you want, and enjoy it. And that goes for houses, vacations, etc.

      HOWEVER, if you are driving a supercar or buying anything else that is preventing you from being comfortably financially secure in retirement, I have a problem with that. BECAUSE, you will (if you live long enough) be joining a huge group of retirees “without enough money” who will be asking (through government rules/mandates) the responsible people like ME to make ends meet for you.

      Thus, every time I see someone in a Lexus, etc., what I wonder is if they can REALLY afford it AND be financially truly secure. If they can’t, then IMHO, they should have bought something much cheaper UNTIL they are truly financially secure.

      (This from the guy who didn’t buy an Infiniti until he was 57, comfortably retired, and then he bought used, paying less than the average price for all new cars — from a lifetime of demanding value for what he buys as a habit).

      And I agree 100% with your observation about everyone being different and seeing things differently. This is just my perspective. (I’m happy to help people who are in a bad way and can’t help it. Not so much people who fail to plan due to irresponsibility. But in my experience, very few people will admit failing to plan WAS their responsibility so they usually expect “the government” to take care of them).

    • Steve says:

      I agree, Samuel – people will (and should) do whatever makes them happy. Truly happy. 🙂

  48. Great, fun article and so true. Wastefulness doesn’t impress me. Discipline, vision, purpose, and executing goals, does. Those are all the hard things, but extremely valuable things to do in life. A monkey can spend the money they’re given on a loan. But it takes a warrior to transform their life into an experience of happiness, purpose, and value to themselves and others. I admire warriors.

  49. John Hughes says:

    I think we had the same experience in high school. I, too, gushed over all the fancy cars. It’s funny though because my 65 year old uncle made the comment the other day, “Remember when you wanted all those fancy European cars when you were younger? I couldn’t give you one today because you wouldn’t want to pay for the insurance, taxes and registration fees!” This is so true. I’m happy with my 2011 Mazda 2 with 100 horsepower. And besides, I can usually catch up to the Ferrari at the next red light! LOL!

    • Steve says:

      Yup! Stop lights really do screw with our progress, don’t they? I drove around in a supercharged Corvette back in the day, and yeah, those same red lights messed with me, too! 🙂

  50. Jim says:

    Steve, I just happened upon this article of yours, and it’s full of a great deal of wisdom that I wish I’d followed in my younger years. I have a very healthy 6 figure income but always spent what I made on the most expensive things I could find along the way. To me, that was being rich. I’m now facing a load of debt that I hope to pay off in the next couple of years now that I’ve got some sense about me. No more Harlan Estate purchases anytime soon!

    I loved reading the comments, and I commend you on how well you handled some of them. Haha! You can lead a horse to water, but sometimes that horse turns out to be a jackass who isn’t interested in the water. They’ll unfortunately find themselves very thirsty at some point. 😉

    By the way I have an M3 in the garage that I’ll sell for a good price. 😜

    Anyway, thanks again. Wonderful article.

    • Jim says:

      As an addition I’m finally aware of the concept of building wealth instead of conspicuous consumption for the sake of being conspicuous. My greatest asset, my income, is basically hamstrung by making payments instead of building wealth via investing. Hard lesson learned!

  51. sarjoo a says:

    LOL. This is the stupidest shit i’ve ever read. RICH people live an ordinary life style? Then whats the fucking point of having all that money you if you want quality things like nice, cars houses and clothes? That’s plain dumb. Probably some hater who still couldnt get “rich” is hating.

  52. RLM says:

    I have 2 Ferrari’s. I invest in my future. I live a nice life and I thank GOD everyday to be self employed with 14 great employees. We live modestly, but like and have some nice things. Yet, we keep our debt pretty low and are in an equity position on our luxury items.

    GOD is 100 percent in control and I get to enjoy his money and live in his world corrupted by man. You have to share, take care of those that you serve and serve you. My cars are stupid, but the smiles for miles cannot be replaced. To each his own for his or her joy. Share, give, spend and save, but you cannot take it with you. When you are done, it is done. Do not hate, but realize that spending makes this world go round. Cheers!

  53. Joi van says:

    Wow exactly how I have always felt
    You are so so right!!!
    Noses in the air ha ha remember the bumper sticker don’t laugh it’s paid for? That’s me and I
    am very happy 😀

  54. Adam says:

    Wow, such judgement. If you hate your job, and every dollar is a burden, then by all means save it as quickly as possible and get out. For me I enjoy building businesses and working, and having fun. Plus I don’t work for the man, really, unless it is me. Some days do suck, but other day rock so I will chalk it up to life. I won’t go into my finances heavily, but the richer I think the poorer I realize. Nobody gets truly ahead scrimping or saving, so what if you die with a few million bah humbug, means nothing. I’m also not saying my way is not the only way, however I mostly enjoy what I do, paid off a modest but nice home, save for retirement, money for child’s education and buy high performance cars I want. I’ve got new Porsche’s that don’t lose me any or much, but my daily driver is a 5 year old Touareg. Travel 3-4 star (nah, can’t live rich everywhere), but a family cottage is fine, and we have more than we need coming in each year. plus just one kid. Yeah, really some of you families have 3 or 4 kids so of course you have to scrimp and save, plus find time, and it comes with other rewards. I get it, just don’t judge everyone who seems to live rich as dumb. Some struggle owing money on your homes, with 2-3 kids and working jobs you hate with little financial freedom and if you do it for your family very noble. I pivot wherever zero debut plus plenty of cash, so your judgement is flawed. My Porsche, house, retirement, businesses and child’s education are paid for in full already at 45, but I still look for deals, not building a mansion, or big cottage, divorce, or fancy boat, or even looking to retire fully at 55. Really, find something you like to do and the money is FREE. Seriously enjoy your life every day, and if it means lots of kids, or a big house, or a Porsche who is anyone to judge… Or all of it and a few wives if you can REALLY swing it 🙂

  55. Loopyboy says:

    The average 80k car now days is exactly that. Average. If it’s something common enough you see them everywhere, like every mass produced car, they don’t seem as special or impressive. The real WEALTHY people drive 200k cars.

  56. Bobby Sythme says:

    Some good advice on this article. I’ve always wanted a high end sports car but realized it would kill my retirement thus save like crazy in my 401K and paid off my home. At the ripe age of 55 I finally got my car (2017 Ford GT350 Shelby) and it was $60K which I could live with. I wanted a 2017 Dodge Viper but they were all priced at $140K plus which I could’ve reached for but too much in my eyes. Also, I saved enough for my daughter’s college (529). PS- I drove a lexus gs300 for over 15 years while investing for my retirement and was a little jealous when a Corvette Z06 would blow by me while coming come from work lol!

    • Bill says:

      Awesome on that saving and getting the Shelby you wanted! I did the same as you (except only invested in stock mutual funds, have no kids, no mortgage). Net worth $2,000,000 now. I am approaching 58 and would get a Lexus but I live in an apartment complex and pay $1400 per month rent – it would look kind of funny driving the high end Lexus I want ($60k I think). Plus I would have to pay another $100 for renting a garage. Plus, I don’t drive much. I live only 8 miles from my office. I do like high end wines though. Sitting on my desk here at my office is a box of three $80 wines. I mostly consume $10 bottles but I need to indulge some. I got a lot of financial room to do so.

    • Steve says:

      Gotta admit that I love the look of the Dodge Viper. If I had all the money in the world (or at least plenty to waste), I’d definitely waste some on a Viper. 🙂

  57. Bobby Sythme says:

    Here is handy tool to see what you can afford—help you to live within your means…


  58. I agree with some of your points, however, owning a nice car does not mean you are in drowning in debt.

    Im a software developer and I make around $47000 per year (really not that much), I’m single, I live alone and pretty comfortably.

    I always wanted a BMW Z4, its been one of my favorite cars ever and I plan to buy one probably within the next months, Its an expensive car, im still deciding wether to buy a new one or a used one but I’ve been saving for a while now and I have absolutely no debts, I currently drive a 2007 Nissan Sentra and even if its a great car and still works fine at the age of 30 I feel like I deserve to give me something I want and i would enjoy using, I have a long commute and spend around 2 hours per day driving so If im going to spend so much time on the road I might as well do it in something I love.

    At the end of the day, life is short, and you have to treat yourself to something nice every once in a little while. There is nothing wrong with that at least in my opinion.

  59. Eddis says:

    The fact is, the other 40% of rich people ARE living THAT life, driving THOSE cars and living in expensive neighborhoods. 40% is a substantial percent. So you’re whole rant doesn’t really make sense.

    • Bill Martin says:

      Eddis, what are “rich people” – please quantify. I think people with a net worth of $3 million in California are equivalent to being independently middle class. Such people would be driving vehicles that are no more flashy than their neighbors’ cars. Why draw attention to criminals who want some of their wealth?

  60. jo says:

    I agree to an extent, I always live well below my means, never have debts, credit card balances etc. I have a cheap smart phone not an iphone( even though I could afford 100 of them anyday) , but I love cars, to me they are not a status symbol but something I just love. I cant stand boring slow cars. I’m lucky I drive a daily 60k car ( its free, its a company car) and at the weekend I drive my 911, again, its paid for, never any loans etc, and Ive had it for 8 years and will keep it till it dies. You could argue why buy a 911, you could save the money, well yes but there comes a point where you have money saved away that you never use, whats the point in having money you never use? it then becomes just a number, so what does the number matter. For example lets suppose you have 100k in an account you never touch or use, well if it was 150k instead, its still just a number so why have it and not use or enjoy it. Theres comes a point where as long as you have to live on and retire etc, then its just wasted. I can never understand rich people who have millions but still chase the dollar, do crappy game shows or adverts. Its a bit like going up to someone in a bar who has ten pints of beer on the table and saying , hey do you want another. I hate waste of money though , I’ll fix my own stuff, recycle stuff etc. I’m lucky though I guess from my upbringing, I grew up in a very traditional British middle class family, where we always had enough, but never wasted it, we always wore basic clothes and shoes and bikes etc, we never had to try. There were always the poor kids at school who always wore brand name trainers and clothes and bags etc, but we never felt envious like they did within their own peer group, they would always compare with themselves. To them life was very competitive and they were always to prove something to each other. It was hard for them as we had streaming at school, so the guys in top set would always be from the nice areas and be in the sports teams etc. In fact the geographical location would 90% of the time determine the academic set you were in. I would turn up in my dunlop green flash shoes, but they never said anything as I would go home to my nice detached house and my dad would play golf and they would go back to their council houses with two kids to a room. I’m not being a snob here, I’m just explaining how it was and why I never have the feel to need to compete. Because as the OP said, I never needed to display conspicuous wealth to feel comfortable. I can see though how people who have always had to struggle, compete, feel the need to have the lastest phone etc, its conditioned in them from birth, they have always felt second class so want to regain some pride.

    • Bill says:

      Great point. What’s the use of saving money if you never indulge? Here I am, turning 58 in a couple days. I worked out the math and if I retire in four years, based on what I saved, and based on my asset allocation, I can earn an average annual gain a little bit more than my current salary. I could do the road trips that I put off over the years. But I would not be comfortable in my small Toyota with the 41″ legroom that I don’t mind on my short commutes to the office. And I would like something fun to drive. I have no wife, no kids (no college expenses) and no debt. I do enjoy fine wines though. I lived very cheap for a long time, brown bag lunch, make my own meals and all are very healthy meals. Time to live it up is approaching! I would probably choose a Lexus, as I own Toyota stock. A very high end Lexus.

  61. Mocheen says:

    I am typically a very frugal person at heart. I grew up poor being raised by my grandparents after my father left us. My grandparents lived through the Great depression so they were very thrifty. They had drawers full of old string and rubber bands. They never tossed anything. We lived in a small apartment and I spent most weekends doing chores for my allowance. I was always sweeping the stairs, basement, and yard for the apartment building. i often helped to paint, tile, repair plumbing or repair things. I never realized that my grandparents owned the apartment building. They also owned nine others like it throughout San Francisco. The apartments have appreciated quite a bit and are bringing in a sizable income today. They always seemed as though they never had any money to enjoy themselves.

    I earn a pretty decent living, but I strive to find the balance that they never had. I did purchase a used BMW E46 M3 over 10 years ago from a wealthy dotcom millionaire. He sold it to me for half price. The car was practically new and sat in the garage along with several new BMWs and Porches. I paid cash for the car and I am still enjoying it to this day. Sorry if I am looked down upon for purchasing something material which I use as my getaway during the weekends. It was a guilty pleasure.

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