[e92phreak]

This article talks about buying a Camry instead of a BMW, spending $10,000 less on your car, and using the 10k to invest for 20 years.

True that the 10k can become 100k or more, or even less, over that period. Just in mods, I'll be close to 10k, if not already LOL...

I agree with the logic, but I say if you have the extra 10k, buy the BMW and experience a better drive. I have other money already invested, making money.

Here's the article:
http://online.wsj.com/public/article...nal_primary_hs

You Can't Take Car Envy to the Bank
By DOUGLAS R. SEASE
April 20, 2008

Here's the question: How many people do you admire or respect because of the car they drive?

Note I said "admire or respect," not "envy."

No one, huh?

So now that we've established that you don't care what someone else drives and that no one else cares what you drive, let's get serious. The fact is that for most of us after our houses and maybe college educations for the kids (at a really, really good college) cars will take more of our money than anything else. And Detroit (and Nagoya and Stuttgart) want as much of that money as they can possibly get.

Hence all the expensive advertising trying to convince you that you'll feel better about yourself -- and others will feel better about you, too -- if only you drive a particular car.

What hogwash! Get past the marketing and advertising and when you buy a car you're buying something very simple: a steel box with wheels that contains about 150,000 miles. You can buy an expensive box of miles, a mid-priced box of miles or a really cheap box of miles (read "used cars") and you'll generally get the same thing: 150,000 miles (less, of course, the number of miles a previous owner put on a used car). The only difference is how much you pay to go each one of those miles.

Hidden Cost

But here's the real catch: any one of those cars winds up costing you a lot more than you think. Sure, there's sales tax and operating costs and insurance, all of which take an additional toll on your wallet. But what I'm really talking about here is opportunity cost: every additional buck you spend on that box of miles is a buck that you no longer have to invest and watch grow in value for years to come.

If you save $10,000 by buying a Toyota Camry instead of a BMW and invest that $10,000 in stocks with an average annual return of 10%, at the end of 10 years (about when your Toyota is coming up on that 150,000-mile mark) you'll have $25,937.

At that point, save another $10,000 by buying a less expensive car, invest it, and the combined savings on those two cars will, 10 years from that second purchase, be worth more than $93,000. (That's $67,275 from your initial $10,000 investment 20 years ago and another $25,937 from your latest $10,000 savings.) Can driving a car that is $10,000 more expensive than another really be worth nearly $100,000 to you?

More Than Money

Now there are certain criteria that a car has to meet if you're going to drive it 150,000 miles. Over the years I've found that the things that are important to me, in descending order, are reliability, safety, efficiency and comfort. Reliability might not seem that important in the overall scheme of things -- most people would initially choose safety -- but the fact is you won't keep a car that's unreliable for 10 years.

The real point, though, is that all four criteria are important, and you'll have to make some trade-offs. You can't have the most efficient car while still having the right balance of safety and comfort. That's why over the past 30 years I've invariably wound up driving a Honda or a Toyota. Cars from those manufacturers consistently get high ratings for reliability, safety and efficiency.

When I was working in The Wall Street Journal's Detroit bureau many years ago, a very, very high-ranking Ford executive told me off the record that the challenge facing his company was to be able to build a car as good as Honda's Accord. From everything I read today, Ford still hasn't accomplished that goal, nor have Chrysler, GM or various other global manufacturers.

Sure, the car freaks may find Toyotas and Hondas boring, but for $100,000 in savings over time I'm willing to be really bored, as long as I have reliability, safety, efficiency and comfort.

Replace That Box?

Having said all this, I acknowledge that there may be circumstances in which you shouldn't keep a car for 150,000 miles. The advent of antilock brakes and air bags were such significant strides forward in safety that they made it almost imperative that you get out of a car without those features and into one that had them.

We may be approaching another such threshold in terms of efficiency when the major auto makers begin offering plug-in electric vehicles a few years from now. We'll have to wait to see how reliable, comfortable and safe they are. But plug-ins will be a significant step beyond today's popular hybrids, which so far seem to be more expensive than they're worth in terms of overall fuel savings.

Still, the bottom line remains this: Every dollar you spend on a car (or anything else that costs more than a few hundred dollars) is a dollar that you're not saving and investing for tomorrow.

[ChineseGuy]

Or you can walk and invest more money.

German cars are for people with REAL money.

10K isn't really that much if you think about it.

If money is a problem, don't get a BMW.

[rocketman]

Exactly.... Live within your means.
If you dont have it then don't spend it.

[darkcloud]

At times I wish I would have been a little more humble with my first car purchase(I was 23 not some 16y/o btw). In all reality the payment change wasn't a lot. I went from a financed 2002 Toyota Celica GT-S paying $365/mo to a leased BMW 325i paying $440/mo. I still feel the $75/mo difference is well worth it but there are times, not many, that I wish I would have even went down from the $365/mo payment to something lesser for a few more years.

I still have a decent amount of money set aside for my age considering absolutely none of it was handed to me. Not .01 cents of the money I have saved since graduating college has been gifted, handed over, or by any means not earned by myself. So yeah sometimes theres an urge that I could be saving more money then I currently am, but at the same point the ultimate questions crosses my mind.

Who can tell me when I'm going to die and on an exact date? No one can. I've wanted a BMW since my aunt brought home a 97 M3 when I was around 12y/o. I now have my BMW. If I die tomorrow, I'll have owned the brand of car I've desired for so many years. So everyone can do what they want, but I say take that $10k saved and buy something you REALLY want. People need to have some fun in their lives and stop worrying about when their 65y/o. You might not even live to 65, think of that? So buy the BMW and go fuck the Camry!

[TofuTurkey]

I think the writer completely ignored the value factor. By his reasoning, why not eat instant noodles instead of steak? Or rent a toilet and live in it instead of buying a house? We can go on and on but the fact is that the value of the object differs from person to person and in many instances is influenced by society (I'm pretty sure most people still think bimmer drivers are more well-off).

The article seems pretty shallow to me...

[TurboFan]

Originally Posted by ChineseGuy

Or you can walk and invest more money.

German cars are for people with REAL money.

10K isn't really that much if you think about it.

If money is a problem, don't get a BMW.

And yet how many people on this board bitch about the price of premium over regular gas ($3/tank!!), or are too broke for a simple mod, or spend well over 50% of their income on a BMW while living in a residence which they neither own or even pay rent (aka mom and dad pay)??? I'd hardly say that the majority of the people active on this board have real money.

Originally Posted by rocketman

Exactly.... Live within your means.
If you dont have it then don't spend it.

I agree. But in response to the author of the article, how many people will invest the difference? Most people buy their cars on loan or lease, so they'd be sending maybe $300/mo to the investment over 36 mos. Still substantial, but it takes discipline.

Originally Posted by darkcloud

At times I wish I would have been a little more humble with my first car purchase(I was 23 not some 16y/o btw). In all reality the payment change wasn't a lot. I went from a financed 2002 Toyota Celica GT-S paying $365/mo to a leased BMW 325i paying $440/mo. I still feel the $75/mo difference is well worth it but there are times, not many, that I wish I would have even went down from the $365/mo payment to something lesser for a few more years.

I still have a decent amount of money set aside for my age considering absolutely none of it was handed to me. Not .01 cents of the money I have saved since graduating college has been gifted, handed over, or by any means not earned by myself. So yeah sometimes theres an urge that I could be saving more money then I currently am, but at the same point the ultimate questions crosses my mind.

Who can tell me when I'm going to die and on an exact date? No one can. I've wanted a BMW since my aunt brought home a 97 M3 when I was around 12y/o. I now have my BMW. If I die tomorrow, I'll have owned the brand of car I've desired for so many years. So everyone can do what they want, but I say take that $10k saved and buy something you REALLY want. People need to have some fun in their lives and stop worrying about when their 65y/o. You might not even live to 65, think of that? So buy the BMW and go fuck the Camry!

I bought a 2000TL brand new when I graduated from college. Interest rates were about 6% at that point. I bought it, not leased it, so the payments were brutal. I wish I would have gone with something much cheaper at that point. Sure, it was nice to drive, but 8 years later...meh, who gives a shit?? I'd much rather have the money, and have driven a Maxima or something similar (Maxima was the other car I considered at the time).

So I agree, you never know when you'll die, but owning a particular brand of car is just submitting to marketing hype. So many more things I could have done. Now I build my budget with house and car coming in LAST! I budget for everything else, then with what's left over, I determine how much house I want / need and what kind of money I'm willing to sacrifice for cars. At 32, I'm finding when I look at it that way, for the car that I'm contemplating buying right now the Toyota (Sequoia) is much more appealing than the BMW (X5 4.8).

However, when you get to be 65, wouldn't you like to have some kind of lifestyle other than homeless???? You can't count on Social Security, and it doesn't pay enough to live on anyway, esp if you're accustomed to driving a BMW! I see far too many people that would love to retire at 65, but will likely work until they die becuase they spent it all when they cashed the paycheck. I agree you need to live today, but it's a good idea to plan for tomorrow as well.

Originally Posted by TofuTurkey

I think the writer completely ignored the value factor. By his reasoning, why not eat instant noodles instead of steak? Or rent a toilet and live in it instead of buying a house? We can go on and on but the fact is that the value of the object differs from person to person and in many instances is influenced by society (I'm pretty sure most people still think bimmer drivers are more well-off).

The article seems pretty shallow to me...

I'd say your reasoning is also a little on the shallow side. Please correct me here if I'm wrong, but your statement implies that you believe people think you're better off because you drive a BMW?

I agree that buying a house is also not a wise financial move. Most people don't understand that, and they buy as much as they can afford. Then they are house-poor, and miss out on other investments. The historical returns on your house, after inflation, interest, taxes, maintenance and repairs, BTW, is usually negative.

I'm getting ready to buy a new house, and the same scenario is holding true as when I bought my current house - the bank is willing to lend me a whole lot more money than I want to shoulder. I'm not willing to commit that much of my budget to housing, and miss other opportunities.

Steak instead of noodles, or food in general, is not a like for like comparison. you can change your food budget at a moments notice if you need to cut back on spending, or if you are having a party and want to make a nice dinner. Your house and car are a little less liquid, and it's much more difficult to reduce your spend on these.

[darkcloud]

Originally Posted by TurboFan

I bought a 2000TL brand new when I graduated from college. Interest rates were about 6% at that point. I bought it, not leased it, so the payments were brutal. I wish I would have gone with something much cheaper at that point. Sure, it was nice to drive, but 8 years later...meh, who gives a shit?? I'd much rather have the money, and have driven a Maxima or something similar (Maxima was the other car I considered at the time).

So I agree, you never know when you'll die, but owning a particular brand of car is just submitting to marketing hype. So many more things I could have done. Now I build my budget with house and car coming in LAST! I budget for everything else, then with what's left over, I determine how much house I want / need and what kind of money I'm willing to sacrifice for cars. At 32, I'm finding when I look at it that way, for the car that I'm contemplating buying right now the Toyota (Sequoia) is much more appealing than the BMW (X5 4.8).

However, when you get to be 65, wouldn't you like to have some kind of lifestyle other than homeless???? You can't count on Social Security, and it doesn't pay enough to live on anyway, esp if you're accustomed to driving a BMW! I see far too many people that would love to retire at 65, but will likely work until they die becuase they spent it all when they cashed the paycheck. I agree you need to live today, but it's a good idea to plan for tomorrow as well.

Oh by no means am I implying that I nor anyone else not plan for their future. I see my dad who to my knowledge has no retirement set aside and I just want to smack him upside the head. What I'm saying is it's OK to have fun with your money within means. I had the ability to go out and get a Porsche and live super fly and not save a dime, but I chose the BMW and still saved a nice chunk of change. I just can't help to think what I would have been able to save with even a lesser car. I love my car though and if I have to wait till I'm in my 40's to own a BMW again it would have been more then worth it that have one now as well.

You bring up Social Security and that is what will drive the US economy into the shitter. In 50 some years when the pot is depleted and the masses sue the US Govt. for their money they where lead to believe they would be getting back, then our economy will truly reach a full fledged recession, not this half assed people screwing themselves going home poor and then blaming the lender for their own fuck up not reading the contract before signing.

[iatacs19]

"average annual return of 10%"

HAHAHAHA

Where is this magical stock or mutual fund or whatever it is??? I have my life savings I want to throw at it.

[jaiman]

Originally Posted by iatacs19

"average annual return of 10%"

HAHAHAHA

Where is this magical stock or mutual fund or whatever it is??? I have my life savings I want to throw at it.

SPY

[CRZ410S]

If everyone followed the author's theory in all aspects of life brands like Coach, Louis Vuitton, Hilfiger, Polo, etc would all be out of business. Life is about balance. Balancing living for today with saving for tomorrow. Each person must find their own comfortable balance. Some people are fortunate enough to drive a BMW and save for the future!

[e92phreak]

Originally Posted by ChineseGuy

Or you can walk and invest more money.

German cars are for people with REAL money.

10K isn't really that much if you think about it.

If money is a problem, don't get a BMW.

Right on, brotha!

[Hawkeye]

With his logic you could spend 1G on a bicycle and invest the other 30K and make even more.... lame.I'll spend an extra 100K over 20 years to enjoy every minute spent in my car for those 20 years... the fun factor is worth more than mere money to me

[Hawkeye]

Originally Posted by iatacs19

"average annual return of 10%"

HAHAHAHA

Where is this magical stock or mutual fund or whatever it is??? I have my life savings I want to throw at it.

and +1 on this... in the last year my 401K has lost money....

[TofuTurkey]

Originally Posted by TurboFan

I'd say your reasoning is also a little on the shallow side. Please correct me here if I'm wrong, but your statement implies that you believe people think you're better off because you drive a BMW?

I agree that buying a house is also not a wise financial move. Most people don't understand that, and they buy as much as they can afford. Then they are house-poor, and miss out on other investments. The historical returns on your house, after inflation, interest, taxes, maintenance and repairs, BTW, is usually negative.

I'm getting ready to buy a new house, and the same scenario is holding true as when I bought my current house - the bank is willing to lend me a whole lot more money than I want to shoulder. I'm not willing to commit that much of my budget to housing, and miss other opportunities.

Steak instead of noodles, or food in general, is not a like for like comparison. you can change your food budget at a moments notice if you need to cut back on spending, or if you are having a party and want to make a nice dinner. Your house and car are a little less liquid, and it's much more difficult to reduce your spend on these.

Yup, maybe I am shallow But that's not the point I was trying to make. I am saying that the situation varies from person to person: some people buy bimmers just so (they think) it makes them look better. It's a materialistic world, I don't blame them for it. Personally I don't care, but that's just me

I think the article focuses on a particular point of view, the author's. Let me give an example: I think that smoking is bad because it can cause high chances of getting lung cancer etc. Once, I tried persuading a colleague of mine to give up smoking, and his response is that smoking helps him lower his stress level, and to him, that's more important than dying of cancer. I didn't know how to respond, but I learned to see things from his perspective. We can't force everyone to think the same way we do, we need to respect each other's view. This is what I meant by shallow, but yes perhaps I phrased it wrong and too strongly.

Like others have said, one of the factors that alter value is the amount of money we have. For someone filthy rich, he probably wouldn't have to depend on Social Security. For a car enthusiast, he can value a well-modded car better than a bigger house. For a couple deep in love, they value that love more than, say, the disapprovals of their parents (for whatever reason). There isn't any definite right or wrong, it's just points of view.

[ArmyBimmerDude]

Originally Posted by Hawkeye

and +1 on this... in the last year my 401K has lost money....

Precious metals is where its at right now.

[picus]

I'm sure I'll enjoy all that money I've saved up when I'm dead.

[Brunotheboxer]

Originally Posted by picus

I'm sure I'll enjoy all that money I've saved up when I'm dead.

if my wife passes before i do there wont be enough money left to give me a proper burial so they'll probably have to throw my body in the ocean or a dumpster.

[Neurorad]

Originally Posted by CRZ410S

If everyone followed the author's theory in all aspects of life brands like Coach, Louis Vuitton, Hilfiger, Polo, etc would all be out of business. Life is about balance. Balancing living for today with saving for tomorrow. Each person must find their own comfortable balance. Some people are fortunate enough to drive a BMW and save for the future!

1. If everybody's IQ went up 10 points, those brands would be out of business.

2. +1 balance. Why would you buy anything if you weren't saving also? Answer: see #1. You're an idiot if you're not putting money aside every month; you're living beyond your means.

Edit - I plan on enjoying my retirement, if I live that long. Since I don't know when I'll die, I'll plan on saving up, and living longer.

[darkcloud]

Originally Posted by Neurorad

1. If everybody's IQ went up 10 points, those brands would be out of business.

2. +1 balance. Why would you buy anything if you weren't saving also? Answer: see #1. You're an idiot if you're not putting money aside every month; you're living beyond your means.

Edit - I plan on enjoying my retirement, if I live that long. Since I don't know when I'll die, I'll plan on saving up, and living longer.

1. So your IQ needs to go up as well then, right, cuz your dead lying if you don't like higher end brands since you do have a BMW.

2. True, but there are certain situations where someone can't save EVERY month. In a perfect world, yes you should be setting something aside monthly but by not doing so does not mean your living beyond your means.

edit - I think everyone plans on enjoying their retirement. Yet like picus said..

Originally Posted by picus

I'm sure I'll enjoy all that money I've saved up when I'm dead.

Not to say don't save at all but to try to have fun while saving is the key.

[iatacs19]

Originally Posted by picus

I'm sure I'll enjoy all that money I've saved up when I'm dead.

I'll be at your funeral with your money, I'll make it rain on you.

Originally Posted by Brunotheboxer

if my wife passes before i do there wont be enough money left to give me a proper burial so they'll probably have to throw my body in the ocean or a dumpster.

That's illegal!

[Brunotheboxer]

Originally Posted by iatacs19

That's illegal!

who gives a shit, i'll be dead!

[Kiemyster]

Originally Posted by ChineseGuy

Or you can walk and invest more money.

German cars are for people with REAL money.

10K isn't really that much if you think about it.

If money is a problem, don't get a BMW.

no one has said it better to date.