8 ms·

The road to riches is this simple: Drive a crappy car (2019)

46 points by indigodaddy 7y ago

himlion 7y ago
Or no car at all. I live close to the center of a city in the Netherlands with a family. For the rare case I need a car I can grab any of the umpteen pay by the hour rental options, they are available within a 30 meter walk from my front door. I like the freedom of not owning a car. (I realize this is not really an option for a lot of Americans.)
- moralestapia 7y ago
  (You beat me to it for a few minutes.) I second this, my work is 10 minutes away cycling, city centre is also about 10 walking. I know that not everyone has this privilege but it really puzzles me how most of my neighbors own (and use) cars to perform pretty much the same commute. Taking money out of context for a bit, when I used to own cars they also took a significant amount of time and attention from me. I know it may not be for everybody but switching to bike+bus+walk has been a liberating experience for me as well.
  - babayega2 7y ago
    As an African, I am used to drive on crappy roads in my country. But lately I got a job in the capital of a European country. I have chosen to live near my workplace (20 mins of walking distance) just to avoid to use cars, even metro. I ended up paying 50% the average price of a rent in the city but it's worth it. Also use German stores/supermarkets for shopping because that's very cheap in Europe
- jppope 7y ago
  This is totally an option for most Americans... they don't give themselves the option. Walking/ Biking is the best.
  - afarrell 7y ago
    > most Americans In which cities and on which incomes?
  - marcinzm 7y ago
    >This is totally an option for most Americans You mean if they walk half an to the bus which comes once an hour and take another hour to get to their destination where they have to walk another half an hour? Public transit in most of the US is really really bad.
    - ogre_codes 7y ago
      The person you replied to say Walk/ Bike, not bus. I'm in a small office in a medium sized city in Oregon and a quarter of the people at my work walk or ride in to work regularly. If you live less than 3 miles from where you work, biking is cheap and as fast as a car in a lot of cases. Even if you are 5 miles from work, it's less than a half an hour commute (and you are almost completely immune to congestion). eBikes make it even faster. Bus/ public transit are highly variable depending on where you live. For me it saves a trivial amount of time versus riding my bike so I don't bother, but our bus system is pretty good and if I couldn't pedal 7 miles, it's only 20 minutes on the bus versus 12 driving and I wouldn't have to deal with parking.
- retrac 7y ago
  I've rolled the numbers a few times, and at least in here in Canada, a place that's reasonably walkable with good transit ends up costing more in rent, about as much as a car costs to own.
- ogre_codes 7y ago
  I tried to convince my daughter to rent near public transit for exactly this reason. If you are young and broke, relying on a car you can barely afford to maintain is a recipe for disaster.
arbuge 7y ago
> The second part of that statement is crucial. There is nothing better than a paid-off car. There is no monthly payment, and most of the depreciation has already occurred. You are driving for free. There is no such animal. As the car ages, repairs and maintenance costs inevitably mount. Then of course you have constant costs like insurance, gas/electricity, etc.
- TheMerovingian 7y ago
  You're right. Being smart is also knowing when to buy a replacement. Being smarter is knowing how to treat a car well so it can see it's 20th year of service. Unfortunately, certain countries, such as Canada, are very hostile to cars. The weather and road salt take a toll.
  - ghaff 7y ago
    Most auto wear comes from miles but the big exception is winter in the snow belt. Things are a lot better than they used to be but driving a car regularly in winter in much of Canada and the northern US still probably limits life to a decade and change.
    - clarry 7y ago
      The average age of all the registered cars in Finland is 12 years currently. Think about that. It's not uncommon at all to run into 20+ yo cars in the neighborhood.
      - ghaff 7y ago
        I can’t speak to Finland just my experience in New England. I just got rid of a 20+ year old Honda del Sol and the dealer was amazed over about the past five years it hadn’t rusted out yet. (I kept it garaged in the winter for about the past 10 years or so. ) My general experience with cars I drove year round was a bit over 10 years before running into expensive rust related problems.
- ghaff 7y ago
morcheeba 7y ago
This article gives bad advice. It should say "Don't overspend on a car", or, more generally "live within your means" The example of the basketball player who makes $100MM driving a 20 year old car doesn't help. A new car would not alter his financial situation in the least, and he sure didn't get rich by driving an old car. I know people that can't afford to maintain and park a car. They got a job that offers a bus pass for $10/mo - much more affordable than driving their crappy car.
- deleted 7y ago
  [deleted]
- ogre_codes 7y ago
  It doesn't give bad advice, it gives advice based on assumptions about who the reader is. Considering the article is in MarketWatch, I suspect their normal readers are not having trouble making bus fare. As for the basketball player making millions driving a beater, he's a hell of a lot smarter than the pro athletes who spend 20 years driving Lambo's and living in $20 million homes then retire broke. There is obviously a point between those extremes where you are making good money and enjoying (reasonably) good things but erring on the side of driving the paid off car is almost always better.
  - seshagiric 7y ago
    Driving a crappy car saves money. Saving money stops you from going broke. So it is indeed good advice, but saving alone may not make you rich.
    - ogre_codes 7y ago
      If you have 2 people who have otherwise identical life choices save car purchase habits. If one drives an older but reliable car and the other buys a new car every 4 years, the one in the older car will be much wealthier. Saving $500-1000/ month in car payments over 10-20 years can make a massive positive effect on your net wealth over time. Whether that means they end up "rich" depends largely on their base lively-hood. For some it might just mean the difference between a modest retirement and not being able to retire at all. If you make a good living, it could easily be the difference between being rich and living paycheck to paycheck. I know a lot of people with great jobs who couldn't be unemployed for 3 months. Just making money doesn't make you wealthy, at some point you have to accumulate wealth and eliminate debt or you can easily end up under-water.
deleted 7y ago
[deleted]
tra3 7y ago
Get a budgeting system in place where you don't overspend (I like ynab [0]). Make sure you save for retirement. Thereafter spend anyway you want. If you wanna buy an expensive car do that. If you'd rather buy a $10 juice every day for the rest of your life do that. You can't do both though.. [0]: http://youneedabudget.com http://youneedabudget.com
- compiler-guy 7y ago
  Making financially responsible decisions about your housing and transportation makes up for thousands of mistakes in your daily drinking choices.
  - tra3 7y ago
    I guess what I'm trying to say is that if you have a system in place you are less likely to make a single mistake that will ruin you financially. But your point is well taken.
paulpauper 7y ago
A story very similar to this involving that same Toronto Raptors basketball player was submitted just 2 hours ago https://news.ycombinator.com/item?id=22210781 https://news.ycombinator.com/item?id=22210781
- ian1321 7y ago
  Yeah. I feel like this is some sort of social experiment.
- dang 7y ago
  People often post follow-up submissions like this. It's not the greatest thing, because it splits discussions and adds repetition to the story feed. It's better to link to a related article from the original discussion.
fullshark 7y ago
I don't see a problem with splurging on the moving box that many people spend hours every week/day stuck inside.
- ghaff 7y ago
  I don’t see anything wrong with it either. So long as you’re aware of what it costs.
- scottious 7y ago
  The problem is the opportunity cost. That money you used to splurge on a car is NOT being invested. Having a nice car now could literally cost you hundreds of thousands of dollars of compounded retirement money in missed stock/bond gains. Let's say for sake of simplicity you spend $500/month on a nice car instead of $200/month on a basic car. The difference of $300/month invested for 30 years at a 6% return is a whopping $292,353.89 IMO a better strategy is to change your values. Becoming the kind of person who doesn't value a nice car could be a very valuable asset.
compiler-guy 7y ago
Keeping your expenses low is absolutely a wise financial decision and will leave in you in a better place, all else being equal. But a person making say $10,000 with $9,000 of expenses is not better off than a person making $20,000 with $15,000 of expenses. You can't take your money with you, so balancing between long-term and short-term decision making is crucial. Short-term thinking is common, but blanket statements like this are way too simplistic. The author also misses the major point that buying a car is not lighting money on fire. Yes, it does depreciate, but you also get value of out it in the form of transportation, pleasure, and other utility. That doesn't mean you should blow all your money on a car, it just means you should live within your means, and that you should be sure you are getting good value out of your car for how you spend.
- ogre_codes 7y ago
  > But a person making say $10,000 with $9,000 of expenses is not better off than a person making $20,000 with $15,000 of expenses. The article doesn't suggest that. The article is in MarketWatch, most people in their target audience are able to make ends meet and are looking towards their future. The idea here is if the reader is earning $100k/ year, drives a paid off Honda Civic for 10 years, they are going to be significantly better off in 10 years than if they buy a $40,000 Camry every 5 years. > The author also misses the major point that buying a car is not lighting money on fire. Yes, it does depreciate, but you also get value of out it in the form of transportation, pleasure, and other utility. It's not just about depreciation, you are also paying a ton of interest, increased insurance, and increased taxes/ fees in most states. Yes, there is a ton of utility, but you can get that same utility for 1/8th as much buying a solid used car or just keeping your existing car nice for another 5 years. The example of the guy making millions driving a beater is extreme, but the number of people needlessly paying 10-20% of their income on car payments is quite high and that's the people this article is targeting.
  - perl4ever 7y ago
    I like all kinds of cars, but come on, you buy one $40K Camry in your life, you're not going to need another one. Regardless of how long you keep it.
reaperducer 7y ago
I only know one person making a seven-figure salary. And of all the people I know, he drives the crappiest car. He's not an executive or a director or a C-level, just an upper-level cog in the machine. But his skills and reputation are such that he can command that kind of money. More importantly, he has been with the company he works for over 25 years, and in his contract he gets a certain percent raise, plus merit pay. That percent over 25 years adds up. And the company is happy to pay it because it would rather not compensate him with extra time off like it does other employees. He drives an old pickup truck. He lives in a perfectly adequate home in a perfectly ordinary neighborhood and is a super nice guy. Maybe he tells stories that are too long, but I've never known anyone to dislike him. I don't know what he does with his money, other than he bought his parents a house a few years back. He's single with no children so I wonder what will happen to all of his money when he dies. Probably go to a charity or something. He is easily the happiest man I've ever met.
scottious 7y ago
> Where else can you take $40,000 and set it on fire in seven years? And pay a bunch of interest to the bank in the process? What a disaster. Where is this $40k number actually coming from? I read the linked articles but there didn't seem to be any detailed analysis that I saw... > The takeaway here is that your financial well-being is not the product of a million small decisions, but two or three big decisions. Uhh maybe it's both? I've done a detailed analysis of our finances for many years. I find that those little things really do add up. Changing my lifestyle such that I have cheap hobbies, don't eat out, don't drink alcohol (esp. at restaurants), and make coffee at home has actually saved me a lot of money. On the order of many thousands per year compared to my prior bad habits. Lifestyle creep really does happen if you aren't focused on stopping it. Yes, I can "afford" to eat out 7 days per week and go to Starbucks every single day and lease high-end cars. My bank account will actually probably still be growing even if I did this. However, it won't grow nearly as much as if I just cool my jets and live a modest lifestyle
- asdfasgasdgasdg 7y ago
  > Where is this $40k number actually coming from? Average new car in the U.S. is $36k. Maybe he was just rounding to the nearest $10k? https://www.cnbc.com/2019/10/22/car-prices-are-rapidly-increasing-heres-why-thats-bad-for-americans.html https://www.cnbc.com/2019/10/22/car-prices-are-rapidly-incre... Of course, that's according to Edmunds, so it might not be correct, and, moreover, the median would be less sensational.
- arielweisberg 7y ago
  When you are high or growing income I think it’s helpful to have a financial plan that gets you towards you end goals at the rate you want and then tune your lifestyle to that. So for instance driving a Corolla when you are making 500k a year and you are passionate about cars doesn’t make much sense. Living in a nice 500k house might make sense because it is adequate and leaves your money available for investment in higher performing things. I know what numbers I want to hit in 10 years. Anything beyond that is available for use living My best life.
thedance 7y ago
There are tens of millions of American families with dilapidated cars and without riches. This is a stupid article. The road to a rich society is to build cities where nobody, rich or poor, ever needs a car of any quality.
miguelmota 7y ago
I once bought a crappy car and ended up spending way more on repairs than expected that it would of made more sense to have bought a relatively new car instead. Crappy cars break down and you have to pay tow trucks, miss work, and spend more on repairs. I'd argue that it's worth spending more for a car that will be reliable.
- ghaff 7y ago
  I’ve mostly bought new but also belonged to the drive it into the ground (while maintaining it well) school. But I’ve definitely gone an expensive repair or two too many once or twice.
  - clarry 7y ago
    What kind of repairs were these? How much were they?
    - ghaff 7y ago
      The worst case was power steering line leaked and had that fixed. Then brake lines went out and had that fixed. It was basically all rust related. Should have just ditched the vehicle at the first rust-related problem. We’re talking at least a couple $K total. As I recall I had a prior vehicle that I also spent too much on near the end of its life. Recently donated an old car that started to have some sort of ABS brake weirdness. I had pretty much made the decision to not put any more money into it—and I didn’t drive it a lot anyway.
- lostmsu 7y ago
  What make/model was that?
  - miguelmota 7y ago
    Ironically it was a 1995 Toyota 4Runner. They're known to be really reliable and I love them but I just got screwed with that one because the previous owner seemed to have neglected maintenance on it but I wasn’t knowledgeable enough to have noticed potential problems at time of purchase.
decasia 7y ago
Just to put a little bit of economic perspective on this, a "gently used toyota" is easily 15k. A lot of people absolutely cannot afford to pay 15k in cash for a car.
- crispyporkbites 7y ago
  If you can’t afford it in cash you can’t afford it in credit. Seriously, don’t spend money you don’t have on depreciating assets. Only borrow to buy appreciating assets (housing, education, sometimes business expenses for most people).
donatj 7y ago
I've actually mentioned it on here before but I have had several cars cost me less than $1000 and last me for several years. I really don't understand the desire to own a new car.
- rebuilder 7y ago
  Can't get zero or low-emission cars very cheap, unfortunately.
  - crispyporkbites 7y ago
    A £1000 car will have net lower emissions than a new zero emissions car. Buying a new car is definitely worse for the environment
    - rebuilder 7y ago
      What calculation goes into that?
      - crispyporkbites 7y ago
        for every new car you buy a car has to go to scrap. It's unlikely that the emissions in creating the new car are less than the difference in emissions from running the old car vs the new car. So if you really want to save the environment stick with your old car until it falls apart and buy cars that would otherwise go to scrap. https://www.theguardian.com/environment/green-living-blog/2010/sep/23/carbon-footprint-new-car https://www.theguardian.com/environment/green-living-blog/20...
        rebuilder 7y ago
        I meant what numbers are you using. Googling around, I got 9-17 tons of CO2 to produce a new car. Let's assume 17. For a mid sized gas-powered car, I found an estimate of 0.133 kg CO2/km driven, and for an EV, 0.043 kg. Let's not count the CO2 the beater car's production put out, that's old news. Let's assume a new car gets driven 200 000 km before it is scrapped. For 200 000 km driven, we get these CO2 footprints: Beater: 26.6 tons CO2 EV: 25.6 tons CO2. So for those values, it's really pretty similar! The devil is in the details though - 17 tons of CO2 is a pretty rough estimate for production, one would hope to get more than 200 000 km out of a new car, and the means of electricity production has an effect on the EV's footprint per KM.
speedgoose 7y ago
You don't get rich by saving at maximum a few hundred euros/dollars per month.
- retrac 7y ago
  Well, you won't get rich. But it's also not chump change and can radically alter a person's quality of life. $200 a month tossed in a decent investment over a typical working life will yield something like $200,000 by late middle age. That can be the difference between near-destitution and reasonable comfort in retirement.
- scottious 7y ago
  a few hundred dollars per month is just for the car. Apply this principle to your entire life and it could be a thousand or more dollars per month. Literally. I had out-of-control spending until I did a detailed audit of my finances 5-ish years ago and I changed my lifestyle in lots of ways: cheaper car, very few restaurants, cheap vacations, cheap hobby, cheap mortgage... it literally has saved me about $1700 per month (yes, literally... I earn a good amount so I had lifestyle creep!). This savings promptly goes into an investment account. That amount over 20 years could become $775,000 if invested!
languagehacker 7y ago
Warranties have value. Included maintenance has value. Modern safety features have a crapload of value.
davewritescode 7y ago
The road to riches is simple: Make more money. Yes, lowering your expenses is a good thing but blanket statements like this are clickbait at best. I live in a pretty modest house in an area with relatively low taxes. My two “excessive” spends are my car and stuff for my kids. Thankfully I make enough to cover up most financial mistakes. Nobody is getting rich driving a beater car over a new-ish Toyota
- camjohnson26 7y ago
  But a lot of people are getting poor driving cars they don’t need and can’t afford.
- ogre_codes 7y ago
  > Nobody is getting rich driving a beater car over a new-ish Toyota. Driving a beater won't make you rich, but buying new cars every 3 years makes you a lot less rich. When you have a $600+/ month car payment and you get laid off, it's a lot more stressful than when you own your car free and clear. I don't buy beaters, but I do buy cars, pay them off quickly, and enjoy them for 8-10+ years. When you don't have a car payment you have a lot more discretionary money to enjoy on nice things and it's a lot easier to save for retirement.
  - perl4ever 7y ago
    Trying to make decisions for the next 30 years is pointless. If you signed a contract that said you'd get a cool million if and only if you had a latte every day and traded your car every 3 years, I guarantee you wouldn't make it. In fact, I think that's the best life advice that I don't notice people giving - try not to make decisions for multiple decades at a time because you will change over time. The way you know you're young is you haven't realized yet that in "a few" decades you will be old.
- RickJWagner 7y ago
  I disagree. The road to riches is easy to find. - Spend less than you earn. The less, the better. - Invest in equities, preferably low cost index funds. - Follow this pattern for at least 25 years. Many people have followed this formula with great success. Read more at Bogleheads.org
dba7dba 7y ago
How about The road to "staying just barely afloat financially" is this simple: Drive a crappy car Vast majority of people who drive crappy cars are doing so because they have no other option...
ajflores1604 7y ago
This advice really should be tempered with considerations of how safety features have improved over the years. Something I always see lacking in this conversation.
rusk 7y ago
I drive a 25 year old VW Golf Cabriolet, and as much as I love it it really is a labour of love. The extra costs in terms of insurance, tax and making sure she passes the annual car test probably cancel out any savings but I hope that in the sense of developing technical skills and forbearance maybe it will make me wealthy in the future? If not monetarily then perhaps spiritually? It’s really not for everyone though. I don’t drive for work and mainly use public transport so it is in a sense an indulgence. If I was dependent on having a reliable car I’m not sure it would be so wise, but she is sweet and I always get complements on it, so I’ll be driving it for a while to come ...
purplezooey 7y ago
Once most of them get above 120k miles or so they start needing very costly repairs and suffer in reliability. Sure there are exceptions, and some people are OK with that.
stanski 7y ago
Those kinds of articles are always written by people who don't care much about cars in general. Sure, buy within your means, and sure, some people only buy expensive cars as a status symbol. There are however some somewhat pricey cars that are a blast to drive (mostly legally) and totally worth the money if that brings you joy. Meanwhile if you're fine with putting around in your Toyota, then just do so. And write articles about how it's the same thing as driving a Porsche but cheaper. Puke.
- RickJWagner 7y ago
  I'm somewhere in the middle. I'm a car fanatic, but also somewhat 'frugal'. My last car was a 2004 STi, I bought it new and drove it over 14 years. Good car. I sold it for a 10-year old (2008) Lexus IS F. Both good enthusiast cars, the Lexus had low miles, so I'm hoping to get quite a few good years out of it, too.

46 points by indigodaddy 7y ago

Or no car at all. I live close to the center of a city in the Netherlands with a family. For the rare case I need a car I can grab any of the umpteen pay by the hour rental options, they are available within a 30 meter walk from my front door. I like the freedom of not owning a car. (I realize this is not really an option for a lot of Americans.)

moralestapia 7y ago
(You beat me to it for a few minutes.) I second this, my work is 10 minutes away cycling, city centre is also about 10 walking. I know that not everyone has this privilege but it really puzzles me how most of my neighbors own (and use) cars to perform pretty much the same commute. Taking money out of context for a bit, when I used to own cars they also took a significant amount of time and attention from me. I know it may not be for everybody but switching to bike+bus+walk has been a liberating experience for me as well.
- babayega2 7y ago
  As an African, I am used to drive on crappy roads in my country. But lately I got a job in the capital of a European country. I have chosen to live near my workplace (20 mins of walking distance) just to avoid to use cars, even metro. I ended up paying 50% the average price of a rent in the city but it's worth it. Also use German stores/supermarkets for shopping because that's very cheap in Europe
jppope 7y ago
This is totally an option for most Americans... they don't give themselves the option. Walking/ Biking is the best.
- afarrell 7y ago
  > most Americans In which cities and on which incomes?
- marcinzm 7y ago
  >This is totally an option for most Americans You mean if they walk half an to the bus which comes once an hour and take another hour to get to their destination where they have to walk another half an hour? Public transit in most of the US is really really bad.
  - ogre_codes 7y ago
    The person you replied to say Walk/ Bike, not bus. I'm in a small office in a medium sized city in Oregon and a quarter of the people at my work walk or ride in to work regularly. If you live less than 3 miles from where you work, biking is cheap and as fast as a car in a lot of cases. Even if you are 5 miles from work, it's less than a half an hour commute (and you are almost completely immune to congestion). eBikes make it even faster. Bus/ public transit are highly variable depending on where you live. For me it saves a trivial amount of time versus riding my bike so I don't bother, but our bus system is pretty good and if I couldn't pedal 7 miles, it's only 20 minutes on the bus versus 12 driving and I wouldn't have to deal with parking.
retrac 7y ago
I've rolled the numbers a few times, and at least in here in Canada, a place that's reasonably walkable with good transit ends up costing more in rent, about as much as a car costs to own.
ogre_codes 7y ago
I tried to convince my daughter to rent near public transit for exactly this reason. If you are young and broke, relying on a car you can barely afford to maintain is a recipe for disaster.

arbuge 7y ago

> The second part of that statement is crucial. There is nothing better than a paid-off car. There is no monthly payment, and most of the depreciation has already occurred. You are driving for free. There is no such animal. As the car ages, repairs and maintenance costs inevitably mount. Then of course you have constant costs like insurance, gas/electricity, etc.

TheMerovingian 7y ago
You're right. Being smart is also knowing when to buy a replacement. Being smarter is knowing how to treat a car well so it can see it's 20th year of service. Unfortunately, certain countries, such as Canada, are very hostile to cars. The weather and road salt take a toll.
- ghaff 7y ago
  Most auto wear comes from miles but the big exception is winter in the snow belt. Things are a lot better than they used to be but driving a car regularly in winter in much of Canada and the northern US still probably limits life to a decade and change.
  - clarry 7y ago
    The average age of all the registered cars in Finland is 12 years currently. Think about that. It's not uncommon at all to run into 20+ yo cars in the neighborhood.
    - ghaff 7y ago
      I can’t speak to Finland just my experience in New England. I just got rid of a 20+ year old Honda del Sol and the dealer was amazed over about the past five years it hadn’t rusted out yet. (I kept it garaged in the winter for about the past 10 years or so. ) My general experience with cars I drove year round was a bit over 10 years before running into expensive rust related problems.
ghaff 7y ago

morcheeba 7y ago

This article gives bad advice. It should say "Don't overspend on a car", or, more generally "live within your means" The example of the basketball player who makes $100MM driving a 20 year old car doesn't help. A new car would not alter his financial situation in the least, and he sure didn't get rich by driving an old car. I know people that can't afford to maintain and park a car. They got a job that offers a bus pass for $10/mo - much more affordable than driving their crappy car.

deleted 7y ago
[deleted]
ogre_codes 7y ago
It doesn't give bad advice, it gives advice based on assumptions about who the reader is. Considering the article is in MarketWatch, I suspect their normal readers are not having trouble making bus fare. As for the basketball player making millions driving a beater, he's a hell of a lot smarter than the pro athletes who spend 20 years driving Lambo's and living in $20 million homes then retire broke. There is obviously a point between those extremes where you are making good money and enjoying (reasonably) good things but erring on the side of driving the paid off car is almost always better.
- seshagiric 7y ago
  Driving a crappy car saves money. Saving money stops you from going broke. So it is indeed good advice, but saving alone may not make you rich.
  - ogre_codes 7y ago
    If you have 2 people who have otherwise identical life choices save car purchase habits. If one drives an older but reliable car and the other buys a new car every 4 years, the one in the older car will be much wealthier. Saving $500-1000/ month in car payments over 10-20 years can make a massive positive effect on your net wealth over time. Whether that means they end up "rich" depends largely on their base lively-hood. For some it might just mean the difference between a modest retirement and not being able to retire at all. If you make a good living, it could easily be the difference between being rich and living paycheck to paycheck. I know a lot of people with great jobs who couldn't be unemployed for 3 months. Just making money doesn't make you wealthy, at some point you have to accumulate wealth and eliminate debt or you can easily end up under-water.

deleted 7y ago

[deleted]

tra3 7y ago

Get a budgeting system in place where you don't overspend (I like ynab [0]). Make sure you save for retirement. Thereafter spend anyway you want. If you wanna buy an expensive car do that. If you'd rather buy a $10 juice every day for the rest of your life do that. You can't do both though.. [0]: http://youneedabudget.com http://youneedabudget.com

compiler-guy 7y ago
Making financially responsible decisions about your housing and transportation makes up for thousands of mistakes in your daily drinking choices.
- tra3 7y ago
  I guess what I'm trying to say is that if you have a system in place you are less likely to make a single mistake that will ruin you financially. But your point is well taken.

paulpauper 7y ago

A story very similar to this involving that same Toronto Raptors basketball player was submitted just 2 hours ago https://news.ycombinator.com/item?id=22210781 https://news.ycombinator.com/item?id=22210781

ian1321 7y ago
Yeah. I feel like this is some sort of social experiment.
dang 7y ago
People often post follow-up submissions like this. It's not the greatest thing, because it splits discussions and adds repetition to the story feed. It's better to link to a related article from the original discussion.

fullshark 7y ago

I don't see a problem with splurging on the moving box that many people spend hours every week/day stuck inside.

ghaff 7y ago
I don’t see anything wrong with it either. So long as you’re aware of what it costs.
scottious 7y ago
The problem is the opportunity cost. That money you used to splurge on a car is NOT being invested. Having a nice car now could literally cost you hundreds of thousands of dollars of compounded retirement money in missed stock/bond gains. Let's say for sake of simplicity you spend $500/month on a nice car instead of $200/month on a basic car. The difference of $300/month invested for 30 years at a 6% return is a whopping $292,353.89 IMO a better strategy is to change your values. Becoming the kind of person who doesn't value a nice car could be a very valuable asset.

compiler-guy 7y ago

Keeping your expenses low is absolutely a wise financial decision and will leave in you in a better place, all else being equal. But a person making say $10,000 with $9,000 of expenses is not better off than a person making $20,000 with $15,000 of expenses. You can't take your money with you, so balancing between long-term and short-term decision making is crucial. Short-term thinking is common, but blanket statements like this are way too simplistic. The author also misses the major point that buying a car is not lighting money on fire. Yes, it does depreciate, but you also get value of out it in the form of transportation, pleasure, and other utility. That doesn't mean you should blow all your money on a car, it just means you should live within your means, and that you should be sure you are getting good value out of your car for how you spend.

ogre_codes 7y ago
> But a person making say $10,000 with $9,000 of expenses is not better off than a person making $20,000 with $15,000 of expenses. The article doesn't suggest that. The article is in MarketWatch, most people in their target audience are able to make ends meet and are looking towards their future. The idea here is if the reader is earning $100k/ year, drives a paid off Honda Civic for 10 years, they are going to be significantly better off in 10 years than if they buy a $40,000 Camry every 5 years. > The author also misses the major point that buying a car is not lighting money on fire. Yes, it does depreciate, but you also get value of out it in the form of transportation, pleasure, and other utility. It's not just about depreciation, you are also paying a ton of interest, increased insurance, and increased taxes/ fees in most states. Yes, there is a ton of utility, but you can get that same utility for 1/8th as much buying a solid used car or just keeping your existing car nice for another 5 years. The example of the guy making millions driving a beater is extreme, but the number of people needlessly paying 10-20% of their income on car payments is quite high and that's the people this article is targeting.
- perl4ever 7y ago
  I like all kinds of cars, but come on, you buy one $40K Camry in your life, you're not going to need another one. Regardless of how long you keep it.

reaperducer 7y ago

I only know one person making a seven-figure salary. And of all the people I know, he drives the crappiest car. He's not an executive or a director or a C-level, just an upper-level cog in the machine. But his skills and reputation are such that he can command that kind of money. More importantly, he has been with the company he works for over 25 years, and in his contract he gets a certain percent raise, plus merit pay. That percent over 25 years adds up. And the company is happy to pay it because it would rather not compensate him with extra time off like it does other employees. He drives an old pickup truck. He lives in a perfectly adequate home in a perfectly ordinary neighborhood and is a super nice guy. Maybe he tells stories that are too long, but I've never known anyone to dislike him. I don't know what he does with his money, other than he bought his parents a house a few years back. He's single with no children so I wonder what will happen to all of his money when he dies. Probably go to a charity or something. He is easily the happiest man I've ever met.

scottious 7y ago

> Where else can you take $40,000 and set it on fire in seven years? And pay a bunch of interest to the bank in the process? What a disaster. Where is this $40k number actually coming from? I read the linked articles but there didn't seem to be any detailed analysis that I saw... > The takeaway here is that your financial well-being is not the product of a million small decisions, but two or three big decisions. Uhh maybe it's both? I've done a detailed analysis of our finances for many years. I find that those little things really do add up. Changing my lifestyle such that I have cheap hobbies, don't eat out, don't drink alcohol (esp. at restaurants), and make coffee at home has actually saved me a lot of money. On the order of many thousands per year compared to my prior bad habits. Lifestyle creep really does happen if you aren't focused on stopping it. Yes, I can "afford" to eat out 7 days per week and go to Starbucks every single day and lease high-end cars. My bank account will actually probably still be growing even if I did this. However, it won't grow nearly as much as if I just cool my jets and live a modest lifestyle

asdfasgasdgasdg 7y ago
> Where is this $40k number actually coming from? Average new car in the U.S. is $36k. Maybe he was just rounding to the nearest $10k? https://www.cnbc.com/2019/10/22/car-prices-are-rapidly-increasing-heres-why-thats-bad-for-americans.html https://www.cnbc.com/2019/10/22/car-prices-are-rapidly-incre... Of course, that's according to Edmunds, so it might not be correct, and, moreover, the median would be less sensational.
arielweisberg 7y ago
When you are high or growing income I think it’s helpful to have a financial plan that gets you towards you end goals at the rate you want and then tune your lifestyle to that. So for instance driving a Corolla when you are making 500k a year and you are passionate about cars doesn’t make much sense. Living in a nice 500k house might make sense because it is adequate and leaves your money available for investment in higher performing things. I know what numbers I want to hit in 10 years. Anything beyond that is available for use living My best life.

thedance 7y ago

There are tens of millions of American families with dilapidated cars and without riches. This is a stupid article. The road to a rich society is to build cities where nobody, rich or poor, ever needs a car of any quality.

miguelmota 7y ago

I once bought a crappy car and ended up spending way more on repairs than expected that it would of made more sense to have bought a relatively new car instead. Crappy cars break down and you have to pay tow trucks, miss work, and spend more on repairs. I'd argue that it's worth spending more for a car that will be reliable.

ghaff 7y ago
I’ve mostly bought new but also belonged to the drive it into the ground (while maintaining it well) school. But I’ve definitely gone an expensive repair or two too many once or twice.
- clarry 7y ago
  What kind of repairs were these? How much were they?
  - ghaff 7y ago
    The worst case was power steering line leaked and had that fixed. Then brake lines went out and had that fixed. It was basically all rust related. Should have just ditched the vehicle at the first rust-related problem. We’re talking at least a couple $K total. As I recall I had a prior vehicle that I also spent too much on near the end of its life. Recently donated an old car that started to have some sort of ABS brake weirdness. I had pretty much made the decision to not put any more money into it—and I didn’t drive it a lot anyway.
lostmsu 7y ago
What make/model was that?
- miguelmota 7y ago
  Ironically it was a 1995 Toyota 4Runner. They're known to be really reliable and I love them but I just got screwed with that one because the previous owner seemed to have neglected maintenance on it but I wasn’t knowledgeable enough to have noticed potential problems at time of purchase.

decasia 7y ago

Just to put a little bit of economic perspective on this, a "gently used toyota" is easily 15k. A lot of people absolutely cannot afford to pay 15k in cash for a car.

crispyporkbites 7y ago
If you can’t afford it in cash you can’t afford it in credit. Seriously, don’t spend money you don’t have on depreciating assets. Only borrow to buy appreciating assets (housing, education, sometimes business expenses for most people).

donatj 7y ago

I've actually mentioned it on here before but I have had several cars cost me less than $1000 and last me for several years. I really don't understand the desire to own a new car.

rebuilder 7y ago
Can't get zero or low-emission cars very cheap, unfortunately.
- crispyporkbites 7y ago
  A £1000 car will have net lower emissions than a new zero emissions car. Buying a new car is definitely worse for the environment
  - rebuilder 7y ago
    What calculation goes into that?
    - crispyporkbites 7y ago
      for every new car you buy a car has to go to scrap. It's unlikely that the emissions in creating the new car are less than the difference in emissions from running the old car vs the new car. So if you really want to save the environment stick with your old car until it falls apart and buy cars that would otherwise go to scrap. https://www.theguardian.com/environment/green-living-blog/2010/sep/23/carbon-footprint-new-car https://www.theguardian.com/environment/green-living-blog/20...
      - rebuilder 7y ago
        I meant what numbers are you using. Googling around, I got 9-17 tons of CO2 to produce a new car. Let's assume 17. For a mid sized gas-powered car, I found an estimate of 0.133 kg CO2/km driven, and for an EV, 0.043 kg. Let's not count the CO2 the beater car's production put out, that's old news. Let's assume a new car gets driven 200 000 km before it is scrapped. For 200 000 km driven, we get these CO2 footprints: Beater: 26.6 tons CO2 EV: 25.6 tons CO2. So for those values, it's really pretty similar! The devil is in the details though - 17 tons of CO2 is a pretty rough estimate for production, one would hope to get more than 200 000 km out of a new car, and the means of electricity production has an effect on the EV's footprint per KM.

speedgoose 7y ago

You don't get rich by saving at maximum a few hundred euros/dollars per month.

retrac 7y ago
Well, you won't get rich. But it's also not chump change and can radically alter a person's quality of life. $200 a month tossed in a decent investment over a typical working life will yield something like $200,000 by late middle age. That can be the difference between near-destitution and reasonable comfort in retirement.
scottious 7y ago
a few hundred dollars per month is just for the car. Apply this principle to your entire life and it could be a thousand or more dollars per month. Literally. I had out-of-control spending until I did a detailed audit of my finances 5-ish years ago and I changed my lifestyle in lots of ways: cheaper car, very few restaurants, cheap vacations, cheap hobby, cheap mortgage... it literally has saved me about $1700 per month (yes, literally... I earn a good amount so I had lifestyle creep!). This savings promptly goes into an investment account. That amount over 20 years could become $775,000 if invested!

languagehacker 7y ago

Warranties have value. Included maintenance has value. Modern safety features have a crapload of value.

davewritescode 7y ago

The road to riches is simple: Make more money. Yes, lowering your expenses is a good thing but blanket statements like this are clickbait at best. I live in a pretty modest house in an area with relatively low taxes. My two “excessive” spends are my car and stuff for my kids. Thankfully I make enough to cover up most financial mistakes. Nobody is getting rich driving a beater car over a new-ish Toyota

camjohnson26 7y ago
But a lot of people are getting poor driving cars they don’t need and can’t afford.
ogre_codes 7y ago
> Nobody is getting rich driving a beater car over a new-ish Toyota. Driving a beater won't make you rich, but buying new cars every 3 years makes you a lot less rich. When you have a $600+/ month car payment and you get laid off, it's a lot more stressful than when you own your car free and clear. I don't buy beaters, but I do buy cars, pay them off quickly, and enjoy them for 8-10+ years. When you don't have a car payment you have a lot more discretionary money to enjoy on nice things and it's a lot easier to save for retirement.
- perl4ever 7y ago
  Trying to make decisions for the next 30 years is pointless. If you signed a contract that said you'd get a cool million if and only if you had a latte every day and traded your car every 3 years, I guarantee you wouldn't make it. In fact, I think that's the best life advice that I don't notice people giving - try not to make decisions for multiple decades at a time because you will change over time. The way you know you're young is you haven't realized yet that in "a few" decades you will be old.
RickJWagner 7y ago
I disagree. The road to riches is easy to find. - Spend less than you earn. The less, the better. - Invest in equities, preferably low cost index funds. - Follow this pattern for at least 25 years. Many people have followed this formula with great success. Read more at Bogleheads.org

dba7dba 7y ago

How about The road to "staying just barely afloat financially" is this simple: Drive a crappy car Vast majority of people who drive crappy cars are doing so because they have no other option...

ajflores1604 7y ago

This advice really should be tempered with considerations of how safety features have improved over the years. Something I always see lacking in this conversation.

rusk 7y ago

I drive a 25 year old VW Golf Cabriolet, and as much as I love it it really is a labour of love. The extra costs in terms of insurance, tax and making sure she passes the annual car test probably cancel out any savings but I hope that in the sense of developing technical skills and forbearance maybe it will make me wealthy in the future? If not monetarily then perhaps spiritually? It’s really not for everyone though. I don’t drive for work and mainly use public transport so it is in a sense an indulgence. If I was dependent on having a reliable car I’m not sure it would be so wise, but she is sweet and I always get complements on it, so I’ll be driving it for a while to come ...

purplezooey 7y ago

Once most of them get above 120k miles or so they start needing very costly repairs and suffer in reliability. Sure there are exceptions, and some people are OK with that.

stanski 7y ago

Those kinds of articles are always written by people who don't care much about cars in general. Sure, buy within your means, and sure, some people only buy expensive cars as a status symbol. There are however some somewhat pricey cars that are a blast to drive (mostly legally) and totally worth the money if that brings you joy. Meanwhile if you're fine with putting around in your Toyota, then just do so. And write articles about how it's the same thing as driving a Porsche but cheaper. Puke.

RickJWagner 7y ago
I'm somewhere in the middle. I'm a car fanatic, but also somewhat 'frugal'. My last car was a 2004 STi, I bought it new and drove it over 14 years. Good car. I sold it for a 10-year old (2008) Lexus IS F. Both good enthusiast cars, the Lexus had low miles, so I'm hoping to get quite a few good years out of it, too.