My recent posts titled My Recent New Car Purchase and Why I Buy New Cars spurred a lot of good discussion/comments. A few days after posting them I read some interesting stats on millionaires and car ownership from Dr. Thomas Stanley, the guy who wrote The Millionaire Next Door and Stop Acting Rich and I thought you all would be interested in hearing them.
Here's the first -- from his post titled Frugal Millionaire with a Mercedes? I (in red) along with my comments following each:
Of the four types of buyers, one stands out as the most frugal and most productive in transforming dollars of income into dollars of wealth. On average their latest motor vehicle purchase represented less than 0.7% of their net worth. This group is referred to as the "used vehicle-prone shoppers." Its members buy only used cars and/or are aggressive shoppers of vehicles offered by individuals as well as a variety of dealers, leasing companies, financial institutions, consignment companies, auction companies and agents, Internet listing sites such as Craigslist, etc.
I almost always match (or beat) what Dr. Stanley suggests when it comes to frugality, but on this one, as you know, I veer from my usual path. I like to buy new cars (see the link above if you want to know why) and keep them for a long time. I'm not saying that I recommend this for everyone (or even most people), but it's something I prefer to do and I'm financially able to do, so I do it.
Footnote: in Stop Acting Rich, millionaires (those with investments of $1M or more) paid the equivalent of only 1.4% of their investments for the motor vehicle they most recently purchased.
I was a bit higher than the 1.4% he notes here -- but not by much. I paid 1.75% of my net worth for my latest vehicle. So I don't feel too bad about that. ;-)
And here's a thought from his follow-up post titled Frugal Millionaire with a Mercedes? II:
Too many Americans may believe that by driving a new car they are emulating economically successful people. But only 8.6% of those driving this year's model motor vehicle are millionaires [those with $1M in investments]. Don't ever feel degraded if you are riding around in a used motor vehicle.
I don't believe that by driving a new car that I'm emulating economically successful people. In fact I pay very little attention to what other people drive (or do for that matter.) I pay more attention to what I like to do -- which is buy a new car and keep it for awhile. So I guess I'm among the minority 8.6% again, huh? But I'll only be for the next year. After that, I won't be driving "this year's model motor vehicle" any longer, of course.
How about you? What percent of your net worth did you pay for your last car? And are you driving this year's model? (I think I know the answer to that last question for most of you, but I had to ask anyway.) ;-)