The Millionaire Next Door famously states that “Only a minority of [millionaires] drive the current model year automobile.” And about 33% of those millionaires-next-door only buy used cars.
At a glance, it may be hard to understand why they’d choose to drive a used car, or to buy a new car and then hang onto it instead of replacing it regularly.
“If I were rich,” you might think, “I’d drive a really nice car.”
After all, you’d think a millionaire could afford a brand new car. So why not get the latest and greatest?
Lottery mentality vs. work
If someone handed you a million dollars today, of course it’d be tempting to go out and get your dream car. Free money!
But if you got to be a millionaire through hard work, you’d know the value of a dollar — what it takes to earn it and keep it. And so you’re much less likely to just fritter that away on an asset that on average will depreciate 20% the moment you drive it off the lot.
I don’t know about you, but if I bought a new car for $30,000 — which is the average price of a new car — I’d be irked if I knew it would be worth $24,000 just a few minutes later.
While I’m not a millionaire myself (yet!) I don’t see any point in wasting that kind of money when I can probably get a nicer used car for less.
But it’s not just about the math
I suspect a large part of it is plain old about being content with your life and belongings. If you like your stuff, why replace it? Especially if it’s given you good value over the years, and continues to do so by needing only normal maintenance items + the occasional repair.
You enjoy it, it does the job, and you don’t see the point in getting a new one. Or maybe you’re just not into cars. Also, you probably don’t get too worked up about what other people think of you, because you know that’s none of your business.
Point in fact: The car pictured at the beginning of this post? That’s my 23-year-old Miata, mostly patched up after its run-in with a tree. I know it doesn’t look like much right now, but it runs awesome and is a ton of fun to drive. I’d rather have it than any of the cars I test drove when I thought it couldn’t be repaired.
And that’s what it’s really all about: choosing the things you value over the things you don’t and then enjoying the heck out of them.Posted in Money Management on 06.19.13 with 7 comments.