The automakers at BMW has been using this slogan since 1973 and it is featured on all advertising for BMW automobiles and motorcycles.
Their tagline explicitly uses the word pleasure to describe driving. And if you want that pleasure its’s going to cost you, at a premium.
New cars are now averaging $700 per month.
The University of Maryland College Park (UMD) has an annual Room and Board that is about this cost of $700 per month for that new car: Room (Standard 2-person w/AC, includes Telecom fee) $8,860.
https://reslife.umd.edu/
For some perspective, keep in mind that $700 times 12 months = $8,400.
A mere $260 more will keep you housed and fed on a university campus at the UMD, which is considered a Public Ivy, for an entire year.
Penn State and other public and private colleges are even higher.
When looking at these new car prices, you may see why some Facebook engineers chose to live in their cars rather than pay $3,000 rent on top of that car payment.
Most folks just do not have $3,000 per month to shell out on just rent and car payments, let alone $3,700.
Therefore, before you decide to start writing that check out for $700 every month, I want you to stop and consider this. Gas prices are topping $3 per gallon. Insurance keeps on moving on up like The Jefferson’s!
Expenses for the average joe in the middles class keeps on going higher and seems never ending.
Instead of paying $8,400 a year to floss in a new BMW, you can invest that money instead.
Let’s say the car payment will last you seven years. During that time if you put that money into stocks you could have a nice head start on your retirement savings. That sounds real good considering the average portfolio is worth about $30,000 for folks under 30.
Please also take note that I said to invest in stocks and not cryptocurrency. No Dogecoin, Bitcoin, Ethereum, Tether or Binance USD. After the FTX bankruptcy, no one can call these investments safe.
Going back to the new car payment being invested instead, over a seven-year period with a rate of return (ROI) of 10%, you could have $87,661 in your 401(k).
Please note that the ROI of 10% is doable as that is what the stock market has averaged. The historical average yearly return of the S&P 500 is 10.356% over the last 100 years, as of end of November 2022. This assumes dividends are reinvested.
If you decide not to invest another penny, over 26 years, you would have 1,044,764. Not buying a new car can literally make you a millionaire.
Maybe that is why Jim Cramer decided to keep investing in stocks even though he couldn’t afford rent and had to live in his car. He knew what it could mean for his future. By the age of 45, he had amassed a $1.5 million dollar nest egg in his brokerage accounts.
Remember those people on Pimp my ride from the MTV show. Wonder if they still even have those cars from back in 2008.
With all the money they spent on custom rims and tricked out this and that, if even one car was repossessed, it was all for naught! #*k cars!!
Buy the product. Own the business. Get the stock. Let those dividends pay for your future car with cold hard cash.
Take a lesson straight out of South Park’s playbook.
However, instead of foreign stocks, I prefer to just stick with domestic, as most companies are international and provide you with global exposure.
You just have to decide which one you want more: a new car or financial freedom sooner rather than later.
Just one huge monthly payment could be killing your ability to build wealth. He hit the nail on the head with that statement.
I have first-hand experience with this one. I shared my experience on how I put like $200,000 in my retirement accounts just from paying off my $448.65 monthly car payment.
Cars are a financial suck for sure.
The average car payment in US is now $499. That is straight up stupid. That much invested would be over $5M at retirement.
The FT is basically doing the math that consumers need to do before making any major purchases like a new car. It was noted that, “The quality of the car park has gone up.” Meaning if you walk down many British streets you are more likely to see expensive cars.
That came straight from a report from the Federal Reserve Bank of New York stating Americans are unable to pay their bills.
Considering that the jobs report that recently came out stating job growth has surged by 266,000; it is missing key metrics in regards to whether or not families are staying above the poverty line.
If you are working multiple jobs and in line at the soup kitchen because you can not make ends meet, then something is seriously wrong.
For families that are employed, they have to get back and forth to work. Meaning a car is almost a necessity these days.
California Dreamin’ is better in a Mercedes-Benz than a Hyundai
The West Coast is infamous for its pricey luxury cars. Especially in places like California. Think Fast and the Furious.
Did you see Vin Diesel rolling around in a Prius?!!! Of course not.
Lift up the hood of any of those cars and you could find $100,000 worth of product.
As the F&F series progressed, the cars got more expensive not less!
Movies are prone to production inflation just as individuals are to lifestyle inflation.
For example, the 2014 Audi R8 featured in Furious 7 has a 4.2 coupe with manual transmission starts around $119,150 while the V10 model starts at $155,450, each including destination fees and a $3,000 gas-guzzler tax. Say what??!!!
And my favorite on the Fast & Furious list, the Lykan Hypersport, which was been unveiled at the 2013 Qatar Motor Show. W Motors will limit numbers of the car, which it heralds as “the first Arabian hypercar,” to just seven, each priced from US$3.4 million. What the heck will an oil change cost on this beast?!
Lycan Hypersport
Did the cast of The O.C. drive down to Tijuana (TJ as they called it) in a Kia? Absolutely not! Those young high rollers were riding around in high-quality luxury vehicles!
Places like San Diego and Silicon Valley do not have a mass public transit system the likes of the ones on the East Coast in New York or Washington DC metro. No sir. Those folks have to drive.
And if you have to drive everywhere from the In-And-Out Burger to CVS, then who wants to sit all day in traffic rolling around in a tiny Chevy Malibu.
You want the creature comforts you have at home on the road.
You are willing to buy all you can afford if you have to drive around every day in a car.
I understand why people are shelling out BIG BUCKS on the West Coast to drive Cadillac Escalade’s and BMW’s. Not only are they impressive driving machines, but comfortable too!
Luxury cars have a price beyond just the pricetag
Prestige vehicle sales are driving borrowers bankrupt. If you have to put $500, $600, $700 or even $900 into one household bill on top of a mortgage, then you can drive yourself right into the poorhouse quite literally!
Let’s do a little math. If you save $500.00 per month, your savings may grow to $2,797,302.30 after 40 years. This includes a starting balance of $0.00 and a 10% annual rate of return.
Starting amount
$0.00
Years
40 years.
Additional contributions
$500.00 per month
Rate of return
10% compounded annually
Total amount you will have contributed
$240,000.00
Total interest
$2,557,302.30
Total at end of investment
$2,797,302.30
That is a high price to pay just to have the BMW emblem on your steering wheel.
A lifetime of luxury car ownership and payments can leave your savings tank on $0.
Don’t do it.
With more American retirement savings on life support or at $0, you can make sure this doesn’t become your fate.
Forget buying expensive fast cars. I’d rather you drive a paid off Honda and get rich slow.
You ever drive by a neighborhood that ends in Estates or Hills and look in the driveway?
There are usually enough European cars around for these folks to start a dealership down the street and give Audi a run for their money.
You figure places like Beverly Hills, Miami Beach, and New York are places that can afford these types of cars, but what about places you would think those people may not make the type of money it requires to have those vehicles?
Unfortunately, in my few decades on this earth, I have seen things that you would not believe.
Since, many of you out there know my absolute fiscal pet peeve is new car ownership, you understand my ire as I write this.
I can teach you to get rich without having to sign a car loan document or sell your soul. I’m not Ursula. I will give you back your voice.
I rejected that notion that I must own a luxury car to feel good about myself and feel important. I paid off over $50,000 worth of debt so I could start investing more money in Mr. Market.
The goal was to try to always be increasing my investment portfolio by $20,000-$25,000 or more per year. It took me a decade, but I hit that goal. It’s raining dividends right now. All from just rejecting new car ownership.
I am going to share with you a few car buying horror stories that may very well give you nightmares. So hide the wife. Hide the kids. This is the part in the movie theater where you turn your heads, close you eyes and take a deep breath.
I am about to lift up the hood on the numbers behind what buying new cars will be in opportunity costs in this series of posts on rejecting new car ownership. So buckle up, sit back, and enjoy the ride.
Drip so hard or broke so much
First let me explain what drip is.
It is a slang term many rappers use and there are more or less elaborate definitions of “drip.” Offset and Cardi B use the term to refer to their diamonds and wealth, while Atlanta rapper Gunna told Billboard that “drip” refers to fashion: Drip is your attire, the clothes you wear.
For instance, he doesn’t own like 50 Rolex watches or chains, but only rotated the same like three on Instagram because on the world of gram it’s all about appearances.
He also has stated he had $8 million in Bitcoin, but really he owns $0. He just made up $8 million out of thin air! Why put on this show? For likes of course, what else?
This is nothing new. People inflate their salaries, income, accomplishments, and credentials all the time. What makes this case so sad is that he is telling the world, not just a few friends having a round of drinks while playing a poker game down at the local watering hole.
I have noticed that once you actually stop looking and start listening to what people have to say about their finances, that is when you uncover the truth. Behind all the expensive cars, clothes, and homes most people are stressed and broke.
What is wealth
I gave my definition of wealth in a previous post. Really it means you can meet all your basic needs and have some left over to last you several decades without you sweating whether or not the bills get paid.
For regular folks, a good week looks like this – there’s milk in the fridge, none of the kids got into a car accident or ran over any mailboxes this week, and all the bills got paid on time.
For the wealthy, a good week looks like this – enough food in the cupboards to feed an army, you taking the Rolls to work this week cause the Jag is in the shop being detailed, and you earned more in dividends than you spent last month.
Wealth is every bit as good as it sounds. Let us see the other side of the coin and how the lack of having enough coins can cause despair.
Dream cars are only for those with money in the bank
Here is where the horror stories are about to begin folks.
Brace yourselves.
I knew a guy who loved his dream car so much that it was keeping his bank account in the red. Let’s call him Edgar. Edgar grew up without a father. At one point, he was living in a shelter. After years of toiling in the salt mines, he was able to get an apartment and get on better financial footing.
At the ripe old age of 28, he decided to “treat himself” because he “deserved it” to a $30,000 BMW convertible and eventually he got a girlfriend to ride in that car beside him.
He felt that he had paid his dues so he should have a nice car.
I don’t know about all of you out there, but I look at paid dues as 10, 20, 30, or 40 years of busting your hump to build a security and a solid foundation for your future self and family. Buying a luxury car that costs $500 a month is not the way to having a life of abundance.
How else could he have spent that money?
Let’s say he saved up the $30,000 ($6,000 a year over five years) by taking public transportation to work and invested that money instead of trying t impress people with his wealth…er uh I mean debt that is masquerading as wealth in the form of a nice financed luxury vehicle. He could have also saved up a few tax returns and got a beater to get back and forth to work.
If you save $100.00 per month your savings may grow to $731,411.74 after 30 years. This includes a starting balance of $30,000.00 and a 10% annual rate of return.
Starting amount
$30,000.00
Years
30 years.
Additional contributions
$100.00 per month
Rate of return
10% compounded annually
Total amount you will have contributed
$66,000.00
Total interest
$665,411.74
Total at end of investment
$731,411.74
Year
Additions
Interest
Balance
Start
$30,000.00
$30,000.00
1
$1,200.00
$3,064.06
$34,264.06
2
$1,200.00
$3,490.46
$38,954.52
3
$1,200.00
$3,959.52
$44,114.04
4
$1,200.00
$4,475.46
$49,789.50
5
$1,200.00
$5,043.01
$56,032.51
6
$1,200.00
$5,667.32
$62,899.83
7
$1,200.00
$6,354.01
$70,453.84
8
$1,200.00
$7,109.45
$78,763.29
9
$1,200.00
$7,940.38
$87,903.67
10
$1,200.00
$8,854.41
$97,958.08
11
$1,200.00
$9,859.87
$109,017.95
12
$1,200.00
$10,965.86
$121,183.81
13
$1,200.00
$12,182.43
$134,566.24
14
$1,200.00
$13,520.67
$149,286.91
15
$1,200.00
$14,992.74
$165,479.65
16
$1,200.00
$16,612.02
$183,291.67
17
$1,200.00
$18,393.24
$202,884.91
18
$1,200.00
$20,352.54
$224,437.45
19
$1,200.00
$22,507.80
$248,145.25
20
$1,200.00
$24,878.59
$274,223.84
21
$1,200.00
$27,486.45
$302,910.29
22
$1,200.00
$30,355.08
$334,465.37
23
$1,200.00
$33,510.59
$369,175.96
24
$1,200.00
$36,981.65
$407,357.61
25
$1,200.00
$40,799.79
$449,357.40
26
$1,200.00
$44,999.79
$495,557.19
27
$1,200.00
$49,619.76
$546,376.95
28
$1,200.00
$54,701.76
$602,278.71
29
$1,200.00
$60,291.92
$663,770.63
30
$1,200.00
$66,441.11
$731,411.74
Back to Edgar’s story.
One night while going to see his soon-to-be ex-girlfriend, he was so tired (he would get tired doing like two sit-ups) that he fell asleep at the wheel. He got into a major accident, the car was in the repair shop for months, BMW lent him a loaner, him and the girlfriend broke up (she may have been with him for the car) and he got to drive that DREAM car for all of like 8 months!
He did eventually get it back, but I noticed that every couple of months or so the car would have an issue and need to go in the shop.
He bragged how he was so smart to get an extended warranty or the repair bills would be like $2,000 or more. However, what he is failing to realize is that when that warranty runs out, you will be the one paying those expensive repair bills because luxury comes at a price. A very expensive one.
Last time I laid eyes on him; he still had that car, was still single, and had moved into a more expensive apartment. Instead of investing money, he spent every dime and his bank account stayed on empty.
If he would have been willing to give up the car, he could have saved a small fortune. I tried to run the numbers with him, but he wasn’t really interested. Little did he know that his dream car was turning his life into a nightmare.
After he lost his job, he couldn’t afford to make the payments. His mother had to step in and help him. Maybe if he put the money he spent on those expensive Xbox video games in the bank instead, he might have had the money to pay his bills himself. He needs to keep that devil-may-care attitude in the video games where it belongs.
Dante in Devil May Cry for Xbox
And his motto was “live for the day.”
If living for the day means being broke for a lifetime, I’ll pass. He may have had a great car that made him feel like he had arrived and look like he had money, but he was really BROKE.
Do cars really equal freedom or are they a debtor’s prison on four wheels
I have owned only two cars in my entire life.
They are expensive money-pits with all-wheel drive.
I have seen people spend so much money on car repairs that it makes me want to cry. I have also seen people own three, five, or even seven cars by the age of 25!
Many people never even go on to pay the car off. They just roll over negative equity onto the latest new car purchase. Putting them in a never ending spiral of debt payments.
And do not even think about not purchasing gap insurance.
Gap insurance is an optional, add-on car insurance coverage that can help certain drivers cover the “gap” between the amount they owe on their car and the car’s actual cash value (ACV) in the event of an accident.
Even this can be something only the well-heeled can afford.
Gap can cost hundreds or thousands of dollars additional on top of what you are paying to purchase your vehicle. It must be paid for up front at the time of vehicle purchase. If you cannot pay out of pocket, they will add it to your loan. You are now paying interest on this insurance coverage.
Why do you need gap? I have a friend. Let’s call her Pam. Pam likes nice cars. However, Pam is in-between jobs right now, is several months behind on mortgage payments, and has been in two car accidents in two years.
At one time, she owed an Audi. When a maintenance issue arrived and the repair bill came in at $3,000, she couldn’t afford it so she sold it.
Speaking of repair bills, I have heard stories of people leaving the Jiffy Lube or car dealership after getting the repair quote, which they cannot afford, then go on to say, “I know someone that will do it for cheaper” or “I’ll fix it later” or “I’ll take it to my mechanic.” All just mean the same thing: Broke.
When you cannot pay the repair bills on your car, then how can you possibly afford to save for retirement?
Getting back to Pam, she ended up with gap insurance from a third party. Therefore, she was going back and forth trying to get the money for the car for over four months!
I don’t know many folks that can go without a car for this long. Her quality of life immediately went down. You could feel it with every passing month when you were around her.
One word. I will give you one guess. You give up? It rhymes with repair. Of course I mean despair.
She also has no cash savings and no retirement.
She was very young at the time. Maybe 22. This is what she could have done if she saved up that money and invested it instead.
If you save $100.00 per month your savings may grow to $1,464,646.73 after 40 years. This includes a starting balance of $20,000.00 and a 10% annual rate of return.
Starting amount
$20,000.00
Years
40 years.
Additional contributions
$100.00 per month
Rate of return
10% compounded annually
Total amount you will have contributed
$68,000.00
Total interest
$1,396,646.73
Total at end of investment
$1,464,646.73
Year
Additions
Interest
Balance
Start
$20,000.00
$20,000.00
1
$1,200.00
$2,064.06
$23,264.06
2
$1,200.00
$2,390.46
$26,854.52
3
$1,200.00
$2,749.50
$30,804.02
4
$1,200.00
$3,144.46
$35,148.48
5
$1,200.00
$3,578.92
$39,927.40
6
$1,200.00
$4,056.80
$45,184.20
7
$1,200.00
$4,582.47
$50,966.67
8
$1,200.00
$5,160.72
$57,327.39
9
$1,200.00
$5,796.80
$64,324.19
10
$1,200.00
$6,496.47
$72,020.66
11
$1,200.00
$7,266.12
$80,486.78
12
$1,200.00
$8,112.74
$89,799.52
13
$1,200.00
$9,044.00
$100,043.52
14
$1,200.00
$10,068.42
$111,311.94
15
$1,200.00
$11,195.25
$123,707.19
16
$1,200.00
$12,434.76
$137,341.95
17
$1,200.00
$13,798.25
$152,340.20
18
$1,200.00
$15,298.06
$168,838.26
19
$1,200.00
$16,947.87
$186,986.13
20
$1,200.00
$18,762.67
$206,948.80
21
$1,200.00
$20,758.93
$228,907.73
22
$1,200.00
$22,954.83
$253,062.56
23
$1,200.00
$25,370.31
$279,632.87
24
$1,200.00
$28,027.34
$308,860.21
25
$1,200.00
$30,950.07
$341,010.28
26
$1,200.00
$34,165.09
$376,375.37
27
$1,200.00
$37,701.60
$415,276.97
28
$1,200.00
$41,591.74
$458,068.71
29
$1,200.00
$45,870.92
$505,139.63
30
$1,200.00
$50,578.02
$556,917.65
31
$1,200.00
$55,755.83
$613,873.48
32
$1,200.00
$61,451.41
$676,524.89
33
$1,200.00
$67,716.54
$745,441.43
34
$1,200.00
$74,608.19
$821,249.62
35
$1,200.00
$82,189.02
$904,638.64
36
$1,200.00
$90,527.91
$996,366.55
37
$1,200.00
$99,700.71
$1,097,267.26
38
$1,200.00
$109,790.79
$1,208,258.05
39
$1,200.00
$120,889.85
$1,330,347.90
40
$1,200.00
$133,098.83
$1,464,646.73
I have actually seen people own multiple cars even though they can only drive one at a time. However, you have to maintain and insure all of them. Just give up the ones you are not using and fund your retirement with that money.
Instead of that money going into a 401k, the lender and insurance company was getting rich off these never ending payments they receive. Put that money to work for yourself by investing it.
Tow truck companies are winning
Have you ever seen that show on A&E called Parking Wars? Some of the saddest things I have ever seen to do with cars was on that show.
The struggle is real in the city of brotherly love. So many people in Philadelphia were getting their cars towed and booted for failure to pay parking tickets it was crazy.
Those meter maids were making like $20,000-$30,000 a year and they were on a mission! Giving out those tickets like gumdrops! And making revenue for the city in the process.
I have seen and heard some stories so heartbreaking it made my eyes start watering. I have seen or heard people lose their jobs, then their homes, and finally get their car repossessed with all their belongings in it.
One guy came out running to his car while they were lifting it on the tow truck. He had almost every valuable possession he owed in that car including the photo albums of his deceased family members.
All he asked is if he could go in the trunk and get his stuff (clothing, personal hygiene, photos, credentials). The tow driver said no.
Unfortunately, once the car is on the lift, it can’t be stopped unless you pay or have already paid and can PROVE IT!
And that guy went from being homeless and living in his car, to being homeless on the street.
I have seen people give up their cars due to debt, gambling, substance abuse, you name it.
I know someone who saved up $8,000 and sink every penny into a new car just to have a $100 lower monthly payment. Never mind that she was still living with her parents at the age of 42.
I have also seen people have to choose between paying the gas, electric, or phone bill on-time or pay the car note.
I even had an ex-coworker get her car repossessed twice! She just had to have an SUV. She was making like $12 bucks an hour at time and was only 20. She destroyed her credit and the possibility of home ownership for at least a few years just for the sake of looking rich instead of actually saving towards becoming rich.
She was broke. She had no wealth whatsoever! The little she had, she mailed in monthly installments to Chevrolet.
Society would like you to believe that owning a nice brand new luxury car will make you look like you have achieved success.
It really only means someone has allowed you to borrow money from them and pay them back with interest for the privilege of loaning you their money.
Real wealth cannot just been seen by the naked eye in the form of fancy condos, clothes, jewelry, furs and luxury cars. It is usually shielded from prying eyes in the form of investments and inside bank accounts.
For most folks, a luxury car does not mean you have wealth; it means you have debt. Reject new cars like I have and I promise you will actually start to build wealth.
The other day I overheard people talking about being 90 days late and past due…blah blah blah I couldn’t make out the rest, but I heard enough to fill in the blanks. Debt, debt, and more debt.
Two of the biggest culprits are house and car loans. Some may disagree with me, but cars are wealth killers! At least Dave Ramsey agrees with me.
Then it hit me.
After three years of blogging, I found my niche.
This blog is really all about rejecting new car ownership to become financially independent (FI). That’s right. I refuse to buy new cars so I can become FI.
When I hear people complain about having no money but paying $600 a month for their car, all I hear is the same sound Charlie Brown’s teacher makes. Cut the excuses!!!
Obviously, reminding people why they should reject buying a NEW CAR bears repeating.
However, you and I both know that those are small potatoes compared to what some folks are shelling out. We gotta Keep Up With The Joneses’ today or life just plain sucks!
There are now new luxury vehicles coming off the assembly line with an MSRP of $80k! MSRP stands for the Manufacturer Suggested Retail Price — also known as “sticker” price — which is a recommended selling price that automakers give a new car. A dealer uses the MSRP as a price to sell each vehicle; it’s different from invoice price on a car, which can stand thousands below the sale price.
Vehicles have become so expensive that dealerships are offering 84 month car loans! I have no intention of owing the man that type of moola.
Especially, considering that the REPO Man is out there lurking in the shadows, ready to take my car if I miss even one single car payment.
And BTW the REPO Man tends to show up at the worst possible times; such as when you are already 20 minutes late picking up your kids from soccer practice, while the Walgreen’s pharmacy is texting you that this is the last day to pick up your $600 EpiPen or else it goes back on the market.
I actually have a friend that was unable to continue making payments on her BMW. Before, we get into this story here is a little background. She owns a home with an ARM and payments can fluctuate wildly from $1500 to $2400, is finishing her bankruptcy payments, and calls herself a Glam Ma and not Grand Ma.
She used to use dating apps after her divorce, but stopped after one guy told her he was looking for a place to stay. Hard pass. No more Bumble Bee for her! She likes her independence. Always has, always will.
For instance, her son recently asked if his mother would be willing to watch his newborn infant after she is born to save on daycare costs, which is astronomical in America and can cost people one whole paycheck, to which she replied, “not unless she got ID to sit with me at the bar on Friday’s, then no I can’t watch her.”
Getting back to the car situation, she decided to stop all car payments due to financial constraints.
Therefore, she stopped paying for two years.
Two whole years!!!
Since she knew she could no longer afford it; she just strategically stopped paying and put that money towards other obligations. The same way a squatter strategically walks away from an underwater mortgage. No reason to raid the retirement accounts and then end up completely broke now is there.
Anyhoo, she kept the car clean and left nothing in it in case the repo man ever showed up to take it. Well that day finally came and they took it right out of her driveway.
She then decided to hail cabs, and take Lyft and Uber rides until she got her tax refund and then she bought her next car with cold, hard cash baby! Lesson learned. If you own it, no one can take it.
Setting money on fire
Cars are making people go broke. SUV’s are some of the priciest on the market.
According to Business Insider, Ford made a game-changing decision in April when the company announced it would dissolve its entire line of sedans and compact cars that includes Focus, Fusion, Fiesta, and Taurus by 2020. Other cars that will be discontinued this year and beyond include the Alfa Romeo 4C Coupe, Chevrolet Sonic, and Cadillac ATS.
Maybe this is why Aston Martin has rolled out its latest car with a pricetag of this: New $189,000 SUV.
You could wind up spending $2500 a month just to own this luxury monster!
Let’s do a little math
I’m going to pull back the curtain on this and show you why you need to take off your BMW rose-colored glasses.
Buying a 2020 BMW truck will cost you about $176,000 after all is said and done.
Item
2020 BMW X6 SAV M50I AWD
Interest:
Maintenance:
Gas:
Total Cost over 7 years:
Cost
$104,095
$104,095 x 3% = 31,228 BMW of Alexandria website
$3,122.85 x 7 = $21,859.95 Setting aside 3% of purchase price
$50 x 52 = $2,704 x 7 = $18,928
$176,110.95
You get to basically drive to work, the grocery store, gym, and Pottery Barn for the low, low price of almost the cost of a house in Georgia.
20 Marietta St NW Unit 6B Atlanta, GA 30303
$179,000 Price 2 Beds 2Baths 1,156 Sq. Ft.$155 / Sq. Ft. Redfin Estimate: $175,558 On Redfin: 70 days Status: Active
Redfin Listing
That is also more than three times the median salary of an American adult making $56,000. Even Rappers are buying into this crap before the ink is even dry on that million-dollar deal they just signed!
That video came out the same year I bought my car.
Maybe if I had seen this, I would have done something different.
Hopefully seeing this here will help all of you out there.
Put that money into Mr. Market
I know this is the part where your eyes glaze over but please bear with me.
Here’s my story. In 2003, I decided I needed a new car. BIG MISTAKE! I previously had an Nissan Altima that cost about $8k and I was paying $229 per month for it. Then it started having problems so I decided to trade it in for a new Ford Explorer.
Original MSRP was $30k, but I got it on sale for $24,000. Stupid. I had a negative equity balance on the Altima so I rolled it over onto the new loan. I went from owing $6k to $32k in the span of 5 hours at a car dealership from the time I walked in until I signed the papers.
The payment on the Explorer was $448.65 a month for about 5-6 years. Therefore, from 2003-2009 I was paying on this car instead of investing that money in Mr. Market. DUMB!!!! For 6 whole years, I could not do much of anything because the car payment was always due.
Want to go on that trip to Dominican Republic? Sorry guys, can’t do it. The gas guzzler has got to get paid.
Want to buy new socks and clothes because yours are worn out and have holes in them? Sorry, no can do. The car note is due on the first, which is same time as the rent. Sucker! They got me good.
I was even paying over the phone for faster processing at the tune of $5 a pop!
All that changed once I paid it off. I got down to $1500 and just paid it off. I was free b#tche$!! Can’t nobody hold me down…oh no…I got to keep on moving!!!
I haven’t had a car payment in over 10 years! Not since Steph Curry was selected as a draft pick in the NBA.
I took that money and started investing in stocks. Before I know it, I had like a couple hundred grand in Mr. Market just from rejecting new car ownership.
How would you feel having $200,000 working for you everyday 365/24/7 in the market paying you just for having a pulse?
When it comes to cars, people can blow more money than a newly signed NBA player or first round pick of the NFL draft.
It was recently reported that Americans are spending $18,000 a year on non-essentials. Which makes it pretty hard to stack those Benjamins; and even harder to be saying stuff like Drake and Lil Baby : Got M’s in the bank, like: “Yes, indeed.”
I have found that either you can be rich or act rich; you cannot be both.
However, don’t feel bad. Lots of people take years to learn that lesson. That is why this latest post is going to be a two-parter. 😉
So don’t drop that top just yet playboy or playgirl, cause we’re equal opportunity like that here, because we’ll be right back later with part two of this post.
As soon as Springtime hits, more people are lining up at the convertible dealership faster than Punxsutawney Phil can make his prediction and see his shadow.
People are blowing major dough on their rides. If you are old enough to remember the MTV show Pimp My Ride, then you know its serious out here in these streets. $5,000 rims? You know it. Got to have that tint too? No problem. $2,000. Custom sound system? It will only set you back $8,000. And have to be like Three-Six Mafia and Stay Fly in the new whip by dropping $2,500 for a new pair of tennis shoes, $250 for Illesteva sunglasses, and $700 for new gear.
A new BMW can run you $40,000 and fully loaded could cost you over $100,000! Why not invest that money you say? The problem with investing in stocks and bonds is they’re boring as hell. A boss turns their garage into a Bentley dealership, stockpiles platinum Rolex watches, collects houses like chess pieces, turns their closets into a fashion house, collects $500 shoes like monopoly pieces, and opens up nightclubs. Got it, nerd? So light a Cuban cigar with a hundred dollar bill, pour your most expensive champagne in that crystal glass and put your feet up on a diamond-encrusted ottoman as Greenbacks Magnet presents Beamers, Benz, and Bentleys or a GMC Truck?
THE PRICE OF LUXURY All things come with a price tag. Food. Water. Houses. But when it comes to cars, people are willing to drop some serious coin. I’m talking enough to put down a 10-20 percent down payment on a half a million-dollar home.
Remember cars are now coming more high-tech; like Lil Baby says, “Brand new whip got no keys.”
So what is the price of all this luxury?
Let’s take a peek.
For goodness’ sake, a GMC truck will run you $20,000-$30,000. Buy a decent quality car one-time and you’re done for like a decade!
When you have to start putting gas and groceries on plastic, then you are in some serious trouble.
If you can drop $75,000 on a new S-Class Mercedes-Benz, but your credit card gets denied while in the drive thru for a double-cheeseburger, then you need to check your priorities at the door of the Range Rover dealership.
If you are only able to make the minimum payments on $55,000 of credit card debt, then at that rate it would take you over half a century to get back in the black. No one should stay in the red that long!
TURNING HEADS LIVING LARGE AND TAKING CHARGE If your theme song starts off like this, “rain drops drop top,” then you may be in trouble.
Trying to impress people with stuff usually leads you down to a life of misery and penury.
Personally, I have seen too many people get taken to the cleaners trying to impress family, friends, and acquaintances at stop lights for 20 seconds. That is a quick way to end up in bankruptcy court. Don’t believe me. Check out the NBA or NFL player’s union, stating that over half of NBA players are broke within five years of their retirement and even less for NFL ballers (there’s is three years).
I even read an article discussing how men that drive fancy sports cars are less likely to want long-term relationships! Is that why so many pro athletes owe millions in alimony and child support! Then show up in court crying and telling the judge they can’t afford payments like T.O. After making more M’s than the M&M’s can put on its candy, it’s hard to feel sorry for you. But we hear you out there. It’s hard out here for a pimp.
FINANCIAL DISASTER ON FOUR WHEELS I guess I don’t have to tell you that overspending on cars is dangerous. What I do not get is when I see people not bat an eye at paying $50,000 for a new car, but then loss their minds if they get overcharged $0.50 for an ice cream sundae (um, what?)
Pinching pennies on small items and dropping G’s on blackjack tables and designer car seats. That makes no sense.
You want to keep your fixed expenses low. That includes mortgages and cars. Why? So you can save and invest of course.
In order to try and retire early, it usually takes most folks saving 50% or more of their income.
Tough to do if you have to spend $3,000 every 3 months on repair bills at the BMW dealer. But because you are unwilling to negotiate at the farmers market or wait in line at Target or Costco, you spend like your life is made up of 75 hours instead of 75 years.
In order to avoid this fate myself, I paid off my car in 2009 and have not had another car note since! I then went from saving $1 a day to over $1,100 per month! I calculated that if I could save $13,333 a year, then I would have over $100,000 of cold hard cash within 8 years! And I would be that much closer to saying “Got M’s in the bank, Yes indeed!”
“Fashion is not about utility. An accessory is merely a
piece of iconography used to express individual identity.” – The Devil
Wears Prada
I am sure many of you have seen or heard of the film The Devil Wears Prada. It was released in 2006 and based on a book written by Lauren Weisberger in 2003. The film starred Anne Hathaway, Emily Blunt, Stanley Tucci, and Meryl Streep. The film was a financial success and grossed millions at the box office.
What really made it great was the dialogue in the film. If you can decipher all the quips in the film, you can get some valuable money and life advice. All fiction has some truth.
Check out some hilarious, but honest, dialogue from the film.
This scene was particularly truthful and funny, but on point.
Let’s see him actually use facial expression to get his point across. 😂
“Yes, because that’s really what this whole multibillion-dollar industry is all about, isn’t it? Inner beauty.”
So, with no further ado, I give you lessons I learned while watching the film The Devil Wears Prada.
Let’s go!
SPENDING ON HIGH-END FASHION CAN MAKE YOU BROKE
I will not bore you with the details of countless celebrities who post their closets or other lifestyle choices on social media only to find out years later they are BROKE!
I have reviewed and studied many bankruptcy filings over the years. For work when necessary. And outside of work to satisfy my curiosity. In addition, to reading books on bankruptcies, I seem to notice the following patterns.
Tons of credit card debt (usually more than $25,000)
Huge mortgages (for celebs this can be in the millions!)
Exotic Automobiles (BMV, Range Rovers seem to be favorites)
Property liens (foreclosures and short sales)
Thousands owed to the IRS (several celebs such as Willie
Nelson and Chris Tucker owed the IRS more than $10 million dollars!)
In the film, Andy (played by Anne Hathaway) gets a job as the second assistant to Miranda Priestley (played by Meryl Streep) and works with the first assistant Emily (played by Emily Blunt) and staffer Nigel ( played by Stanley Tucci).
They regularly and casually name drop designer labels such as Tom Ford, Yves Saint Laurent, and Oscar de la Renta.
If you look up any of these haute couture designers, you will find clothing that ranges $500 to $10,000. You could drop $25,000 in their establishments in a single visit easy. The fact that you could turn that money into a fortune from investing is lost on those that buy these clothes.
I am not saying not to buy clothes. I am not saying not to
buy designer clothes. What I am saying is that I need people to recognize that
if you truly cannot afford to spend like the Queen of England, then you should
act your wage. Buy what you can afford. If you want pricey clothing items or
fancy toys, then buy them when you have made your first $1 million or second,
but not before.
If you ever watched that Chris Rock comedy special where he talks about the difference between a job and a career, then you understand what I mean by this.
A job pays the bills.
You watch the clock waiting for it to hit 5 o’clock and rush
out of work like the building is on fire.
With a career, there is never enough time. You don’t watch
the clock. You work for the sheer joy it brings you. The paycheck is a bonus in
recognition of and a result by dint of hard work in excelling at what you do
because of your drive and passion.
In the movie, Andy is working in this job to land a bigger and better one down the road. That is all well and good, except for the fact that Miranda is a slave driver.
If you do some research, you can find what are the most
expensive zip codes in America and the world.
According to Forbes, this would be 94027 in Atherton, CA
where the median price of a home is $9,686,154.
You see the stark contrast of living conditions in the film.
Andy lives in a small walk-up apartment in New York, while Miranda lives in the
modern day equivalent of a palace with several floors and spacious rooms that
could easily set you back for $2 million in New York.
One of the biggest expenses in any budget is housing. The
trifecta of expenses is housing, food, and transportation.
While listening to a podcast on BiggerPockets, I learned
about house hacking.
House hacking is
when you live in one of the multiple units of your investment property as your
primary residence, and have renters from the other units pay your mortgage and
expenses.
If you can cut your expenses in this area, you are g2g (Good
to Go). 😉
Please do not get caught up in the zip code and school
district rat race. I say this because people will buy properties they cannot
afford in good school districts and pay astronomical property taxes instead of
investing that money. This can lead to retirement shortfalls if you are not
careful.
My advice is to buy what you can afford and save the
difference. Truth be told, when I looked up profiles on Facebook, I noticed
that folks I knew that went to private school ended up going to the same
colleges as everyone else including myself.
Matter of fact, I know folks that were “C” students in high
school and still managed to eke out an existence and graduate from a flagship
university while some private school kids went to second tier state schools. Go
figure.
You could live in a safe but affordable neighborhood, drive
Hondas, and put that money to work in a 401k or 529 college savings plan instead
of paying high mortgages and property taxes. That would pay for college right
there. I’m just saying.
BEAMERS, BENZ, AND BENTLEYS
There was a hilarious scene in the film where she tells Andy not to take public transportation. EVER!
I cannot say I agree with this. Let me tell you why. Public
transportation can save you thousands in annual costs sue to lowering the cost
of mainteannce and repair bills on your car. You could also forgo a car all
together and have no car payment or maintenance and gas to deal with!
So, many people are working the 9-to-5 grind and in the rat
race living check to check, but at the end have very little to show for it.
Nothing in savings. Nothing in retirement. Nothing in the bank period.
For every dollar you earn, I suggest you find a way to stash away 5% of what you earn and slowly start increasing your savings rate monthly or annually by 1% or more. This will get you in the habit of saving and also allow you to start building an emergency fund.
During the film, Andy talks about getting some amazing job as a writer. However, this job is all about paying her dues.
You do not get something for nothing. You have to give to
get. That’s the bottom-line.
Building strong relationships is to key to growth and a
happy life. People rarely look back and say I wish I could have worked more!
Take pictures today. In 20 years, you will be glad you did. In
reality, people think more about the things they didn’t do instead of the
things they actually did.
So, stop and smell the roses while you can. Right now! Bend
down and smell the flowers, take that trip, go visit family, make those phone
calls, send that email, write that letter, hit send on that text message and
stay in contact with those you love and care about.
No one cares about who dies with the most toys. People care
about what type of person you are.
If you remember that episode of Golden Girls, Sophia wanted
to know who would show up at her funeral, so she spread the word of her
passing.
The people who show up are the ones who care.
Your legacy is not built in things, but lasts in the minds and memories of the people whose lives you’ve touched or changed in some significant way.
Money will not and cannot buy true friendship or loyalty. If
you are watching the news right now, you can see that for yourself firsthand
with Michael Cohen.
Focus your energy on doing good things and good work so you
will not ever have to look back and regret.
