Quote:
Originally Posted by sygazelle
I'm thinking there is no correlation between what car a person drives and their wealth. When I say wealth, I mean net worth: Total assets minus total liabilities.
How much one makes per year is not the best indicator of wealth because some people go through money like water and have nothing to show for it.
There are broke people driving really nice cars. There are wealthy people driving 10-year-old paid-for cars. When you see someone in an expensive car, its a zero indication of their actual wealth.
There are people who make average salaries and lease cars who are making perpetual lease payment. The attraction, of course, is that lease payments are less than loan payment on the same car, so they can drive more cars for the monthly payment. These people are driving new, nice cars at the very top of their depreciation curve and then do it again and again. I'm not saying that's a bad thing. Living for today has some appeal since you don't know what tomorrow brings. But the fact is, perpetually leasing fancy cars can make you look richer than you are and also have a bad impact on net worth. The exception, of course, is those that take the cash they saved leasing instead of buying and investing that money wisely, there is an argument that leasing is a financially viable option. My guess is the percentage of people who fall in this category is about the same as those who win in the long run in Las Vegas.
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This guy hit the nail on the head - couldn't have said it better myself. I personally wouldn't consider myself "wealthy", though both myself and my wife do pretty well (and have no kids, yet...), which certainly helps. What kind of car someone drives, to me, has minimal indication on their wealth - and really only tells you 1 of, or a combination of, a few things - 1) they enjoy driving nice cars because they enjoy driving, 2) they enjoy driving nice cars because of how it makes them look to others, 3) they may have perpetual lease payments allowing them to get into a higher-end car than they could otherwise afford through financing or paying cash for, or worse, 4) have taken a loan with minimal down payment and may very well be upside down in their car (car's value worth less than outstanding principal on the loan for said car).
I have always been taught by my parents that you don't buy more car than y ou can afford - which also applies to just about everything. My parents have always paid cash for their cars over the years, and are what I'd consider to be pretty wealthy - but they are the kind of people you'd never really know they've got money. Live in a pretty "average" home, nothing too flashy, mom hasn't worked in 20 years and dad retired at the age of 50, and while they do drive "nicer" end cars, they buy them, pay cash, and drive them until the wheels fall off. I actually just bought my father's old Volvo XC90 that he owned since new, with 210k on the clock - still runs great (gave him $100 for it...) - which is great, as I'm now likely to sell my Wrangler that was bought used (paid cash), and has likely depreciated about $3k despite putting over 40k miles on it in the last 4 years. My wife and I own 4 cars, all paid cash for, and we have 4 cars because I enjoy them. She has her Mazda CX-5, and I've got the e46 M, JKU Wrangler, and '20 M2C.
As others mentioned, there are absolutely some insane garages on this forum from reading the posts of many - but just because someone has or rotates high-end luxury/sport/exotic vehicles often, doesn't necessarily mean they are super wealthy - but at the end of the day, who cares? I have a really good friend who is now engaged, owns a home and lives with fiance (would be married if not for COVID-reschedule of wedding). This friend of mine makes very good money, but for the life of him, can't keep it in his pockets. I remember a year or so ago, he bought a new Model 3, and his fiance also wanted a new Model 3 - so they each got one. At the time, he was driving a LEASED Honda Civic, which he bought out when purchasing the Tesla. Silly me, assumed he must've paid cash for the lease buy out of his nearly 4 year old Civic - but NO! He took a loan for that buy out, took a loan for the new Model 3, and a loan for his fiance's new Model 3. I only ended up finding this out, as his fiance was requiring him to unload the Civic (which I initially said - meh, why not keep it? it's a "free" car to put miles on after all, bad weather, long road trip, etc.). She informed me that it actually had a loan on it still... and I was honestly dumbfounded. He ended up selling said Civic to my cousin, who paid in cash, and it took a good 6 weeks for the bank to release the lein on the car so that it could be titled/registered/insured by my cousin when he took ownership - total nightmare.
TL
R - Don't spend more money than you can afford on a vehicle (or a home for that matter), and no one gives a shit if you keep up with the Jones' or not.