patrick.net

The same reason they spend it on houses - status, prestige, "safety". Watch a couple of TV ads and look no further. Then turn off the TV and stop paying the cable bill. Your life may improve drastically ;)

It depends. If you enjoy that or designer label clothes-fine buy it. I myself buy cheap clothes and cheap cars. But when I used to tow a bit for recreation, I bought a 40k Ford F350-really enjoyed it. Now some may wonder why a single guy wastes his money on a car and a truck? But whatever floats your boat-speaking of boats, one of my co-worker had a really fancy shmancy boat that he put on the house-well home equity loan.

Then there are those that never spend on anything and lose it all in a divorce or bad investments/business. Plus if you have ever driven in Nevada and the eastern sierra nevadas -you can put some speed on those puppies on those roads. Now of course when you approach the itty bitty towns, the cops will give you a ticket for going 1 or 2mph over the absurd speed limits-especially for out of state plates.I once drove on Highway 50 from Utah back to the bay area and pretty much blasted it 110-115 mph on big chunks. I discovered that even though my odometer was 160mph, my car was set to not go faster than 120mph. Aah-youth!!!

you can buy a used 2007 bmw 7-series for under $25k; which is about the cost of a new camry.

they aren't expensive if you buy used. now the cost of maintenance and repair on one of these bitches once the warranty runs out is an entirely different story.

edvard2 says

Why do people waste so much money on cars?

Hysteresis says

now the cost of maintenance and repair on one of these bitches once the warranty runs out is an entirely different story.

Yeah. I had a neighbor who had a BMW 5 series and the headlights stopped working. $1,200 later they were fixed. The issue? The lights were hooked up to some complicated computer system and hence the whole thing had to be replaced.

The reason? Because people have been trained to want things. And the biggest things people can lease or rent from the bank (nobody buys these things) is a car.

The USSA is a borrowed life. wage slavery for a house. (not a home). wage slavery for a borrowed car to look like one has wealth.

Cars allow more people to live a fake dream than houses do. So thats why people buy them.

I have no debts. None. My net worth is positive, unlike most of the people giving financial advice.

And the winner is Dan.

I would agree, although I am guilty of this. Wife and I only put 5,000/yr on each of our cars. Her car, Volvo with 26K miles, is paid off. I have a three year old Hyundai Sonata, which I love. It's leased though.

Thinking of leasing two new cars, selling the Volvo and also the Hyundai for more than the residual. I would then use the extra money to pay the monthly lease cost so driving two new cars cost me only $300/month. I have both owned and leased. After the depreciation on the car and today's low money factors, it isn't a whole lot more monthly to get a new car.

As for driving twenty year old cars, personally I wouldn't. Cars over the past 5-10 years have gotten remarkably safer, with airbags and crumple zones everywhere. That's why the automobile accident death rate has gone down dramatically. If my kids and wife got into a big accident and didn't survive or were seriously hurt because I didn't want to spend the money to keep them safe, I would never forgive myself.

BTW, I have no debt other than my big mortgage. ;-)

Speaking of airbags...Dan's post addresses this.

Frugality is no virtue.

Get what you want. If we lived by what we need we would still be living in caves.

Peter P says

Frugality is no virtue.

Get what you want. If we lived by what we need we would still be living in caves.

Being frugal in some areas doesn't mean you miss out on others. I plan on retiring by the time or before I'm 60. That would not as easily happen if I decided to blow 60k on a luxury car every 5 years.

We started looking for a new car and a big nice-to-have is a collision warning system.

Also, it is important to have at least 200 lb-ft of torque available at low rpm for merging and passing.

Things like xenon lights and backup cameras ought to be standard safety features.

I strongly want a car that weighs at least 4000 lb. Fuel efficiency is overrated. Gas is cheap in America.

Nowadays a basic car costs 40k. 100k is hardly luxury car territory.

edvard2 says

Peter P says

Frugality is no virtue.

Get what you want. If we lived by what we need we would still be living in caves.

Being frugal in some areas doesn't mean you miss out on others. I plan on retiring by the time or before I'm 60. That would not as easily happen if I decided to blow 60k on a luxury car every 5 years.

I gave up on retirement planning. It is more important to have pleasant surprises. I need more convexity.

How can you plan 30 years ahead financially? After reading Nassim Taleb I changed my plans.

Peter P says

Get what you want

If you can afford it ;)

Peter P says

Nowadays a basic car costs 40k. 100k is hardly luxury car territory.

Huh? I rented a Chevy Cruze a few months back that had power-everything, safety everything, got around 40MPG and was priced at just over 20k.

Peter P says

How can you plan 30 years ahead financially? After reading Nassim Taleb I changed my plans.

If you don't plan and don't save then you'll be broke and that's for certain

Why do people waste so much money on cars?

Because they are horribly stupid.

I gave up on cars a while ago. The wife got one, but I use public transit for work and bike every else I need to go. Nice not having to worry about gas prices, insurance, car maintenance, etc. In a crunch I got the wife's car, or in a real crunch I can taxi. Easy as pie. If I feel that rush of testosterone I just request a sporty taxi and pay the driver more to break the speed limit. ;)

I still drive my 1995 Ford Escort that I bought new in October 1995.
The last car I bought 3-4 years ago is a 1999 Oldsmobile that I paid $500 for, and only had 19K miles on it at the time and still is essentially a new car.

I never got new car love. If it gets me there, is not a money-pit, and the AC and radio works, I'm happy.

mell says

Peter P says

Get what you want

If you can afford it ;)

Affordability is all about framing.

no car for 40 yrs. bike only all the way! people say i look a lot younger than my years. i say it’s cause i bike everywhere. saves time, money, and my looks.

SFace says

From a purely financial perspective, of course you want to drive the refrigerator Honda for 20 years. From my perspective, mental health is the key to wealth. I rather focus on the top line, not below the line.

A happy person is more productive, healthier and ultimately richer. I'm not going to neglect my working years for the sake of retirement. It makes no sense to me. I try to treat every year equally.

So is that saying that people who drive "regular" cars, as in Hondas and so on will suffer from mental health issues? What about the person who buys a Bimmer and spends countless hours at the dealership having its overly-engineered drivetrain and electrical system fixed for the 15th time? Most luxury cars brands with the exception of the Japanese makes are fairly unreliable and failure-prone.

Believe it or not, I'm perfectly happy with my beaters. Lots of good memories with them as Ive had them for as long as I have.

Even a well-equipped Honda Accord is pushing 40k now.

Fact is people are holding on to their cars for longer and longer, currently 10 1/2yrs!

I would suggest a lease, full dealer warranty, 100% maintenance free, no oil change costs, no wheel rotation and balancing costs. You get pick up and drop off, loaner all for free!

I have had numerous leases and still have built thousands and thousands in EQUITY! I have had ZERO in MAINTENANCE COSTS in 8 years and I get to drive a BRAND NEW CAR DAY AFTER DAY!

Peter P says

Even a well-equipped Honda Accord is pushing 40k now

Where do you shop?

I bought a new car 10 years ago and never would again.

For my next car I'm thinking of getting a classic (60's) and just using it as a daily driver. Old cars are only expensive if they are show quality (numbers matching/all original etc.). You can get a decent runner pretty reasonably. More stuff will break, but parts are cheap and you can actually do some of it yourself unlike today's computerized vehicles.

SFace says

Life is hard. The biggest thing is to keep it going. Everybody needs their form of release: fishing, vacations, shopping, hobbies.

With vacations, hobbies, fishing etc, well yes- I would agree. But as far as cars? Most people will grow bored of whatever they buy no matter how much the car cost. Its human nature. Hence why its a waste to blow a large horde of cash on something you'll soon drive as a commutermobile.

Thedaytoday says

Fact is people are holding on to their cars for longer an longer, currently 10 1/2yrs!

Its because cars are better than they used to be. Back when I was a kid in the early 80's you'd be lucky to get 100k out of a car before the thing was totally worn out. My brother had a car that made it past 300k just fine. None of the cars I own look or behave like old cars despite the large number of miles.

varmint says

For my next car I'm thinking of getting a classic (60's) and just using it as a daily driver. Old cars are only expensive if they are show quality (numbers matching/all original etc.). You can get a decent runner pretty reasonably. More stuff will break, but parts are cheap and you can actually do some of it yourself unlike today's computerized vehicles.

I own a classic myself ( 50's car) and my advice is I wouldn't drive a classic as an everyday driver unless you have a very short commute. Unlike new cars, old cars require constant maintenance. You need to adjust the points, clean and adjust the carb, lube all of the chassis parts, and so on and so on. Additionally almost all old cars are just big steel boxes on frames with very little safety cage, lap belts, hard dashes, and no crumple zones. They're not in any way safe compared to new cars.

I will say mine is very easy to work on and repair and has been surprisingly reliable. But I still only putter around town in it.

edvard2 says

Its because cars are better than they used to be.

While I appreciate your anecdotal evidence, the answer is yes and no.

The truth is financial not reliability.

Cars have become more expensive to run, maintain and hence people hold onto their car longer. Newer cars cost more and more to maintain by deisgn.

varmint says

you can actually do some of it yourself unlike today's computerized vehicles.

Dealing with the computerized stuff is not difficult at all. I'll take fuel injection over a carb every time!

treatmentreport says

Peter P says

Even a well-equipped Honda Accord is pushing 40k now

Where do you shop?

Sorry, I was looking at the crosstour. Didn't realize that it is no longer considered a style of Accord.

It is about 37k pretax.

edvard2 says

I own a classic myself ( 50's car) and my advice is I wouldn't drive a classic as an everyday driver unless you have a very short commute. Unlike new cars, old cars require constant maintenance. You need to adjust the points, clean and adjust the carb, lube all of the chassis parts, and so on and so on. Additionally almost all old cars are just big steel boxes on frames with very little safety cage, lap belts, hard dashes, and no crumple zones. They're not in any way safe compared to new cars.

I will say mine is very easy to work on and repair and has been surprisingly reliable. But I still only putter around town in it.

I agree. The reason I feel I can get away with it is that my commute is only 10 miles. I bike it sometimes when I'm in the mood and can do public transportation as well (though cycling is faster for me).

Trust me guys, LEASE. ZERO MAINTAINABLE COSTS! Get a good deal, ZERO DOWN! MIN! and you will build equity year over year.

Make sure you pick a vehicle with a very high retained value , forget the additional extras, leather seats and you will be driving a FREE CAR NOT TOO LONG!

It may take 3 or 4 leases but you will get your free car.

You will need to be a good driver, and keep the vehicle in good condition for the period.

Thedaytoday says

Fact is people are holding on to their cars for longer and longer, currently 10 1/2yrs!

I would suggest a lease, full dealer warranty, 100% maintenance free, no oil change costs, no wheel rotation and balancing costs. You get pick up and drop off, loaner all for free!

I have had numerous leases and still have built thousands and thousands in EQUITY! I have had ZERO in MAINTENANCE COSTS in 8 years and I get to drive a BRAND NEW CAR DAY AFTER DAY!

Yep. I lease new European cars and buy used Japanese cars.

Lease cost is very sensitive to initial depreciation, actual discount, and money factor. I only lease when the number makes sense.

Peter P says

Lease cost is very sensitive to initial depreciation, actual discount, and money factor. I only lease when the number makes sense.

Yup, if your smart you will realize that the avg running cost are $250 a month. Lease at this figure with zero down and it's all equity after that.

Trade in at the end is key. Maximize your vehicles equity while getting your new vehicle at a low price.

SUBARU have incredible residuals and incredible trade in and lease options!

All Wheel Drive is STANDARD this will save you apx $10k on any other vehicle.

They have just refreshed the line for 2014, bigger , better and great value!

With low interest rates, premium used cars are cheaper than ever, go out and look.

If you can't afford an egregious mansion, at least you can tool your sorry ass around in an 8 cylinder eco-burner to try to impress everybody.

Thedaytoday says

While I appreciate your anecdotal evidence, the answer is yes and no

No, that wasn't ancedotal evidence. All you have to do is look up the average problems per vehicle indexes over the past several decades to see that industry-wide, the stats show less problems per vehicle overall. Advancements in manufacturing along with an increase in automation as well as more extensive testing has led to higher quality and reliability. Todays average econo-car has tighter tolerances, fit and finish, and overall quality than the luxury cars of 20 years ago.

Thedaytoday says

Trust me guys, LEASE. ZERO MAINTAINABLE COSTS! Get a good deal, ZERO DOWN! MIN! and you will build equity year over year.

The cost to maintain my two Toyotas is minimal. Partially because Toyota makes very reliable products to begin with. But I can personally tell you that the single most expensive thing I ever had to buy for either of these cars over the years was a rear hub and ABS assembly, which was about $350. I always do the work myself. I also only ever use the cheapest oil and oil filters. That's worked out just fine. I just change the oil every 3,000 miles in the garage and call it a day. Other then that these cars require very little in terms of upkeep and maintenance and they were paid off 15 years ago.

edvard2 says

Thedaytoday says

While I appreciate your anecdotal evidence, the answer is yes and no

No, that wasn't ancedotal evidence. All you have to do is look up the average problems per vehicle indexes over the past several decades to see that industry-wide, the stats show less problems per vehicle overall.

It's anecdotal unless you provide the information or link. It is also irrelevant as most people cannot afford a new car!