Quote:
Originally Posted by I-Hate-Hulse
I find cars are the single biggest wealth killer amongst my friend group. So many subscribe to the "you are what you drive" theory.
For example - single income family living on his professional 6 figure salary. They have 2 toddler kids and are looking to upsize to a 3 row SUV from a 5 yr old 2 row. They could muddle through with the current vehicle, but are looking at a $60K 3 row. Frankly a $40K new minivan (let alone a used) would address their needs but its not even being considered as they "just can't do it" from an image point of view.
Then there's the flippers. Lease a new car every 3-4 years, not realizing you are paying through the nose eating the depreciation on these high end German cars. But they do this to be able to afford the latest and greatest that supports their image.
To fund all of this of course, means living in the far burbs so that they can get their 2,500sq ft house (complete with the latest Jillian Harris approved designer kitchen with quartz countertops). Which means their yearly km's driven approaches 15-20k km a year meaning they need new cars more often.
It's a vicious cycle with cars and wealth.
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Conspicuous consumption?
I mean, the issue isn't buying nice things. The way I've been explaining it to friends is that there's no point in spending money on non-essential things that you don't even like, especially if it's going to be a financial burden.
That Van vs SUV perception thing is so stupid though. The practicality of a van is amazing and they're pretty sprightly vehicles. I loved driving the family van more than the sedan. Sliding doors and young children tough... excellent. My wife struggled with the image of a minivan at first, but when her friends revealed they were green with envy of how easy and practical it was, she began to appreciate it more.
I used to be super against leasing vehicles, but I see the allure of doing so now. The main reason I would lease over finance is that the minor difference of around $500 per year is a good insurance if something destroys that thing before the lease term comes up and it'll bother you even if it's repaired (ie: massive hail damage). I still like the idea of buying a 3-4 year old vehicle, but with the little one in tow and time at an absolute premium, it's nice to nab a vehicle that in theory should not have a single major repair for at least 3-5 years (or at least it's all covered under warranty).