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December 01, 2010


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I once dated a guy -- who sneered at my 10 yr old Honda Accord. He drove a brand-new Prius!

I found out later that his father bought it for him and also that he was a jerk. The day I dumped him I went out & bought myself a new car --for 3% of my net worth. Oh well!

14 months ago I purchased a 2006 Lexus ES330 and paid cash for it. Without a doubt the nicest car that I have ever driven. I have had new cars and vans through the years being a sales rep for major corps and was reimbursed for their use.

I retired 4 years ago and I don't need new cars in my garage for what driving my wife and I do now. A 10 year old Honda that we bought new in 2001 serves as a bad weather car.

Since purchasing the used Lexus our investments have returned about 2 times what we paid for it. As Dave Ramsey says, "live like no one else so that one day you can live like no one else."

Nice net worth my friend. Well done.

My most recent car purchase was my junior year of college. Brand new Pathfinder. And if I recall, it was about 90% of my net worth. Fortunately, 12 years, 140K miles later, it is still plugging away.

Today same purchase would be 3.5% of our current net worth. And the next car we buy will most certainly be used. Fortunately, we live in the city, so we do not drive much anymore.... who knows when that will be.

Kinda wish I hadn't done that calculation.

My wife bought her Camry LE in 2005 for $20,000, about 1.1% of net worth at the time. It still has several years to go. I drive a 2002 Ford Windstar LX minivan(good vehicle for youth sports)for which we paid about $26,000 or 1.6% of net worth at that time. I'm looking to buy a new Honda Odyssey next year.

>>But only 8.6% of those driving this year's model motor vehicle are millionaires

Looks to me like millionaires buy new cars more than the article wants us to believe. Unless millionaires are more than 8.6% of all auto owners.

Further, isn't it the millionaires who own many of the high-end 'classic' cars? Nobody gets points for frugality if they're driving around in mint-condition 1953 Rolls.

My first house cost $46k. A while back my brother had a corvette that ran about $65k at the time. He asked me if I wanted to take it for a drive and I told him I do not drive cars that cost more than my first house.( ha ha)

I don't go for the cheapest or the most expensive. Just right for me.

Having a hard time determining net worth in that is a pension considered an asset? If you get a $2k benefit then that is a lot of money you would need to have in a 401k?

I rent on the rare occasions I need a car, so I generally am driving a new vehicle! My total auto expenses (rent, gas, tolls) average about $80/month.

I last purchased a vehicle in 2005. It was slighty used (about 14 months old) and had nearly 10k miles. I still drive the vehicle today, it currently has about 70k miles. I paid around 30k for the vehicle which was about 20 percent of my net worth at he time. I also financed the car for 60 months but paid it off nearly a year early so I incurred some interest costs too. I will likely purchase another vehicle in 2012, it will be new or slighty used and I will likely keep it for a decade. I'm looking at a 4runner.

Again, I see some serious misuse of statistics. Saying that 8.6% of those driving new cars are millionaires is a meaningless statistic! Obviously, millionaires make up a small percentage of the total population so one would expect them to make up a small percentage of new car drivers as well. The question is how this number compares with the total percentage of millionaires in the general population.

For instance if 1% of the total population are millionaires (I totally made that number up for illustration purposes), then millionaires represent a disproportional amount of new car drivers.

The other statistic that would be of interest would be the percentage of millionaires who drive new cars vs used cars. Even though they represent 8.6% of new car buyers, it may be that 75% of millionairs drive new cars.

Bought a 2004 used Honda CRV in the summer, for about 12% of our net worth. Of course, we're in our early 30s. If you count the $$$ we got from selling another car, knock it down to 10% of our net worth.

Great post! Love this: "only 8.6% of those driving this year's model motor vehicle are millionaires"

MBTN, et al, here is the further statistical analysis.
Bloomberg does an OK job of tracking this-here's the 2009 study.

7.8 million families have 1 million dollars in non-housing assets. There are roughly 114 million American households (, page 6), so millionaires make up 6.8% of American families. So they drive new cars at about the same rate as the general population. In 2008, there were 13 million new cars sold. ( There were fewer in 2009, more in 2007. Its a reasonable estimate. By my calculations, 8.6% of those new cars is 1.1 million new cars, or approximately 14% of millionaire families have at least one new car. Basically, though they are the richest Americans, they don't generally go overboard in terms of buying new cars.

Oh, and I'll confess to having never bought a car. My parents bought me a car in high school, and then one for my wife and I when we were married, and we inherited my father's car when he passed away. I expect to spend about 10% of our net worth on a solid used car in the next couple of years when one of our two cars go the way of all flesh.

StL Pastor:

Thank you! Those statistics add clarity to the discussion. It would seem though millionairs buy new cars in about the same proportion as the general population.

My wife and I passed through the millionaire barrier more years ago than we care to remember.
I love my 1991 Black Opal Mercedes 560SEL that I bought used in 1996.
She loves her 1998 Artic White Mercedes 230C that we also purchased used in 2002.
They are both low mileage, run beautifully, and look great.
It does help that they are used in a very moderate climate and these days they seldom venture far from home. We have no plans at all to replace them.

I'm with you FMF. Driving a new car is a nice experience and treat for working hard. My wife and I buy our cars new and drive them for 8 to 10 years. The only exception was a lease we just finished but that was for our business. One good thing about a business is the depreciation and/or miles which can be deducted.

I've bought one new car in my life and drove it for 11 years. I loved that car when it was new, but never stopped enjoying it. Cars in England are far more expensive than in the US and so I've bought 2 year old used cars for cash and driven them until they become unreliable. With my spouse about to retire, we'll only need one car, so I will sell mine. I've come to really appreciate public transport in the snowy weather we've had lately!

I'm pretty much in agreement with the original author. Like him, I have a history of buying pretty expensive new cars, but only every 10 years or so. Typically this purchase amounts to about 1.5% of our net worth. When I leave a car dealership after negotiating a price, the dealer is usually happy to see me leave. I generally don't go to dealerships to make frinds, only get the lowest possible price. I look at it like a sporting event, albiet every 10 years or so. I try to keep my cars looking like new, both inside and out. By doing this, I prolong the feeling of driving a quality car. I travel often for work out of the country for weeks at a time and consequently average about 500 miles per month on my primary car. We also have a "junk car", in this case a 2000 VW Passat which serves as my utility vehicle including trips to the airport. It is interesting to note, based on my own data that all of my efforts to keep my primary car in top condition and their low miles don't have that much of an impact on the price I can get when I sell them. I never trade in a vehicle through a dealership, always opting to sell to a private party. Despite the fact that I usually sell the car to the first or second person who actually sees the car, keeping it in good shape seems to add only a few thousand dollars to its resale value.

Like the original author, I know I could save a few bucks by buying a 2-3 year old car with low miles but I like the feel of a new car and the security of knowing that I'm the only owner. Also the 48 month warranty is helpful even though I typically will have only 20,000 miles or so on it when the warranty expires. By the way, I've had Mercedes, and Volvos but the best cars I've owned have been Acura's. I've never had a BMW because I don't like the stigma attached to them and have had freinds with BMWs who end up paying a fortune in repair and maintenance costs. Acuras, on the other hand (at least the three I've owned), seem close to flawless, especially compared to the Mercedes I owned.

My last car purchase was a year ago and I bought a 2006 BMW 325I for $15,500. It looks and runs like new. Despite popular opinion, they are NOT more expensive to maintain/repair versus an American car. Just like any other car situation, you need to find a good independent mechanic as a dealer (domestic or import) will charge you more.

There are always exceptions to statistical norms but recent information I have read shows that BMWs are close to the bottom when it comes to relaibility and cost effectivity of ownership.

I have always found the new/used car debate to be a little odd. People talk about depreciation of a new vehicle when it leaves the lot and used cars are cheaper. I think a vehicle is not an investment like stocks and bonds it is a consumable good and as such the value should be rated on how much it cost me to use it. Here is some information I looked up this afternoon. I live in Southern Maryland and visited a local dealer’s website. Since FMF just bought a new Toyota Highlander that’s what I did my search on. I also went to CarMax and search for a V6 Toyota Highlander using my zip code (20622). I assumed all new cars had 100 miles on them.

The results:

Local Dealer

MSRP Cost/Mile @ 100,000
Year Lowest Highest Miles
2011 $36,200 $40,800 100 Average: $0.3854
Highest: $0.4084
Lowest: $0.3624

Price Cost/Mile @ 100,000
Year Lowest Highest Miles
2011 $25,700 $37,600 100 Average: $0.3168
Highest: $0.3764
Lowest: $0.2573

Year Price Miles Cost/Mile @ 100,000
2009 $29,000 20,000 $0.3625
2009 $36,000 12,000 $0.4091
2008 $25,900 74,000 $0.9962
2008 $26,000 55,000 $0.5778
2008 $29,000 62,000 $0.7632
2007 $22,000 47,000 $0.4151
2006 $18,000 65,000 $0.5143
2006 $18,600 86,000 $1.3286
2005 $17,500 60,000 $0.4375
2004 $13,000 97,000 $4.3333
2003 $17,000 28,000 $0.2361
2003 $12,500 96,000 $3.1250
2002 $15,000 66,000 $0.4412

From these numbers I determined the 2003 for $17,000 with 28k miles on it is the best deal at approximately 24¢ / Mile the second place was the lowest price new Highlander from CarMax at Approximately 26¢ / Mile. The difference in price over the life of these two vehicles is 2k. now this doesn’t take into consideration maintenance of the vehicle or resell value at 100,000 miles those things are a gamble and I don’t buy a vehicle as an investment tool I purchase it for transportation needs. There is some compelling information here to new being a better deal than used but as with all financial decisions you have to look at the numbers each and every time to get the best deal.

I drive the cheapest car of all -- none! No insurance, gas or parking costs for us urbanites. That said, getting out of town is a pain in the butt. I need to sign up for a car share service.

The last car I purchased was a 5 year old Camry. It was about 1.2% of my net worth and was only about 2 months take home pay.

I prefer that people think I'm poor. That way they don't think I'm cheap when I don't splurge on stupid stuff.

When I see big stupid cars, I immediately think that it's someone who's either bad at math or doesn't care about money.


The BMW 3 series has a good record of reliability and a number of recommendations. A little searching will prove that out (look at edmunds for example). It is a car that is very easy to get 200,000+ miles without much difficulty.

@Greg: I don't understand your calculations. I calculate my cost of a car by adding up all my costs other except fuel (maintenance, insurance, license) plus the purchase cost, subtract the selling price when I ACTUALLY sell it, and divide by the number of years owned. If you want to do this by mileage, then divide by number of miles instead of number of years.

When I was young (not THAT long ago!), my target was $1000 per year. I now allow myself $2500 per vehicle per year. I drive a Lexus SC 430 and my wife drives a Lexus RX 350. No I did not buy them new, because I would have to keep the SC about 50 years to make that pay off.

If you want to estimate your annual cost of ownership, do all the above each year, but use the Kelley Blue Book average condition price as a ballpark estimate of current vehicle value each time you run the numbers.


I wish you the best of luck with your BMW. I'm sure you've researched this and are the type to keep your car well maintained.


I can easily afford to pay cash for a new Mercedes or whatever, but have bought Corollas for many years now. All I want is a car that is modestly priced and reliable. But if flashy cars are so important to others, they can go ahead and buy them as long as they don't default on payments, because I will then end up paying for their cars in one way or another. Does everyone realize the many ways that hardworking people get stuck with fees and the like when lots of people walk away from their debts?

Yes Becky, I realize it. What do you do for a living that gives you the ability to pay cash for a new Mercedes or whatever? I bet you'd look pretty hot in a new red convertible MB.

oh man - i have no idea what percentage of our net worth my husband's car was when we bought it. He had a 2-seat 12 yr old Ford Ranger, so not upgrading his car wasn't an option when we decided to start a family. I just bought a new car this year, after my 9 year old car with 150K miles on it became more expensive to repair than what it was worth. Again, this was a large percentage of our net worth, mainly because we just bought a house this year and put a sizable chunk of our savings down. We will have both cars paid off this month though, so hopefully that net worth will start moving up!


In theory, buying a new house should not have had any impact on your net worth.
It should have just represented a transfer in equity, assuming the house didn't experieince a huge drop in value the day you closed. Sounds like you and your husbamd have the right idea as far as cars go ....get 'em paid off.

I bought my first car my junior year of high school. I paid $5k plus tax, all cash. That was about 85% of my net worth. It was '96 Chevy Camaro V6 3.8l manual shift with ~75,000 miles on it. I put about 30k miles in 5 years. Within 5 years I had to replace two tires, headlamps, a battery and a fuel pump. Fuel pump was the most expensive fix and ran me about $600 with an independent retired mechanic.
Now, I drive '03 Nissan Altima, I got it in 2008 with 45k. It was a very generous gift from my mom. I paid 4.5k for it. I have almost 60k miles on it. The only cost was all new tires and a battery.

@Felix - true - for some reason I thought the article had mentioned non-housing networth. Although the networth for my husbands car it wouldn't have mattered - despite putting over 20% down, we were underwater on the condo that we lived in at the time. So that's a negative impact on our networth.

Great tips! I am a big advocate of driving used cars myself as the depreciation that happens within the first year alone is a huge waste of money! Driving a safe car is more important than driving a new one!

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