"If you can lease/finance it...

[azphx1972]

Fascinating thread. It sounds like a lot of folks plan for the best case scenario, whereas most of us on here plan for the worst and hope for the best.

On a related subject, I'm currently struggling with whether to upgrade my (nearly) 10 year old vehicle, even though it's running fine. I think most of us would agree that it's unwise to buy things just to impress other people, but on the other hand I think you have to present a certain level of success if you want people to take you seriously (unless you're a well known individual like Warren Buffet, Sam Walton, etc.). I guess the trick is to figure out what the optimal balance is so that you spend enough to achieve the desired effect, but still remain financially prudent. I'm trying to determine that for myself, and this thread is definitely food for thought, so thank you for posting it cawiau.

[bean29]

azphx1972,

Did you see the what do you drive thread posted here a while back. It was interesting to read because many of those here who are fairly well set financially are driving high mileage cars. I guess it is a good reason to stay attached to a community like this. It keeps our feet on the ground and helps us reach out for financial stability in all aspects of our lives - cars, groceries, investing etc.

I hear what you are saying about "presenting" a level of success if you want people to take you seriously. DH bought himself a used BMW. He mentioned the other day how many people notice and comment on what he is driving. He was laughing b/c on friend's GF made a big deal about his USED BMW but her BF is driving a new Land Rover and he bought her a New Four Runner? He said her car is worth way more than his.

[stats45]

Leasing companies look at your ability to pay for a new obligation. They could care less if you are saving 15-20% of your income (or more), and they are more than happy for you to throw money their way instead of in savings/retirement/investment. Same for housing debt, credit cards, etc.

I think that people who defer gratification are more inwardly motivated. They have financial goals that they set for themselves that other people don't see. That is why they don't really care much about what they drive or display to others. Their mind is elsewhere.

People who don't defer gratification well though are often more focused on the immidiate. They want the external representation of wealth or success and receive gratification from the display or comments from others.

Both groups usually get something that makes them feel better, but the people in the first group have a much more lasting feeling of success and happiness.

[formerexpat]

Another reason leasing isn't the best idea is that they often embed higher interest rates into the lease payments. Generally, when you work backwards using the purchase price and the residual, you find out that based on your payments, they're charging you about 6-8%. We just got our financing for our car at 2.74% and that was for a residual value balloon payment 60 month loan.

[elixir2011]

To him it made sense because: people don't know or can't see where he lives but they can see what he drives. So it's more important to him to drive a nice car than live in a nice apartment.

If thats your concern and you don't want to spend too much money on your car or do not wish to pay the hefty sum of depreciation cost, then buy a luxury brands like Lexus, acura with over 100,000 miles on it, which looks just as pretty as a new car. there are lots of cars like that. they are cheaper to maintain because most parts made for honda fits acura and most parts made for camry fits lexus. make sure that you know a reliable independent mechanic. Now you drive a nice shiny luxury car at the maintenance cost of regular cars and you pay next no nothing on depreciation cost.

[azphx1972]

Apr 19, 2011 15:00:46 GMT -5 bean29 said:

azphx1972,

Did you see the what do you drive thread posted here a while back. It was interesting to read because many of those here who are fairly well set financially are driving high mileage cars. I guess it is a good reason to stay attached to a community like this. It keeps our feet on the ground and helps us reach out for financial stability in all aspects of our lives - cars, groceries, investing etc.

Thanks bean, I agree that having a supportive group of people such as on this board helps me keep my resolve with my finances (it's also one of the reasons I joined networthiq). It's true that the truly financially well off tend to drive older and high mileage cars, as described in The Millionaire Next Door. I think what I'm going to do is keep driving my car for now, and continuing saving for a replacement vehicle. This is my second brand new vehicle, and I'm happy to have been able to get almost 10 years out of it so far.