I recently received a comment from a reader who doesn’t want to drive a hooptie:
So let me get this straight. I make 51k a year. 20% of that is 10,200. I’m not driving around in a $10,000 hooptie are you insane? I’m a grown ass man. If that’s all I had aspired to I would have offed myself years ago.
When this comment came in a few weeks ago, I couldn’t help but turn it into a full post. First off, it’s hilarious, but second, I think it’s a reality for most people. Alex left the comment on “How Much Car Can you Afford” where I advocate that you shouldn’t spend more than 20% of your annual income on a new car.
According to the rule, only rich people should be able to drive nice cars – that definitely doesn’t sound fun for the rest of us! In fact, some rich people still buy older cars, so only the REALLY REALLY rich people should be able to buy the REALLY nice cars!
The more I describe it, it sounds like I’m in favor of putting us into a caste system like we found in India where only the really rich people are allowed to look and be rich! However, it’s actually a totally different logic which I’m advocating. I’ll try to state my position in two easy points:
1. The US gives us the ability to go from “poor person” to “rich person” without a caste getting in the way. However, if we spend all of our time and money trying to “look like a rich person” then we’ll surely never be rich. As Dave Ramsey says, “If you live like no one else, later you can live like no one else.” Buy a car you can afford, save up more money, later you can buy an even nicer car.
2. Who says we need payments of $500/month to buy a nice car?! Just as this guy did, you can find great looking cars for way less and without a huge car payment (he spent $16,000 cash on a great looking 2006 Mercedes). My 2002 Volvo was $10,000 when I bought it in 2007, and it was a great looking car. In fact, in about 30 seconds I found a 2008 Volvo with 76k miles on it for $11,000 today on Craiglist! Is that still considered a hooptie?
In the end, I go back to the saying that most people can either look rich or be rich; very few can do both. Also, as a final note (and jab), if a car status is all you aspire to, maybe you need to look at your priorities.