Do you drive a hooptie? Alex doesn’t

January 6, 2014 — 19 Comments

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?

do you drive a hooptie?

Here’s an example of a car I found for Alex…

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.

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19 responses to Do you drive a hooptie? Alex doesn’t

  1. Dan — you don’t need to buy new to look rich. A car is meant to get you from destination A to destination B. Even cheaper cars are designed to look good. I used to buy 14K jewelry but don’t anymore. I get more compliments on my costume jewelry and no one ever asked if I’m wearing 14K or real gems.

    • Oh wow, great comparison with the jewelry! It is pretty amazing to see how the car makers have been able to get the price down on cars that look great (think Kia, Hyundai). If you took the logo off of them, most people would guess they’re luxury brands.

      • I guess being a car engineer the logic is a bit false. For some not all, some cars that cost more or as a result of the some of the parts. People saying things like why buy Mercedes when I can get a Hyundai for less it looks “luxurious” is always a funny one. I can almost guarantee you the quality inspection, fit and finish, use of materials, and corners cut of produce this great looking car is indeed a giant ticking time bomb waiting to explode. Not trying to justify the high cost of some vehicles but. trying to compare quality, feel, fit and finish is hilarious. As for this car meant to get me from A to B logic is getting old as well. The experience from A to B matters as well, otherwise there be no point making a better car each year. With that same logic I mind as well live in a two bedroom for the rest of my life as it is meant to sleep and provide shelter (logic i’m hearing).

  2. Love the post. We bought a 1999 Chevy Suburban with 40,000 miles on it for half price ($24,000). We then proceeded to drive it for 12 or was it 13 years, sold it for $3,000 with it knocking on 200,000 miles door. We just bought a “used new” Chevy 4-door truck for $24,000 with 6,000 miles. lol Yep. Our money’s in the bank. Not only did we not have a note all those years, but we paid a note to our savings account for when we had to buy another vehicle.

    • Donna – that’s awesome and what we plan to continue to do. That’s what people don’t understand, you can buy a great car, just save up the money in advance to do it 🙂

  3. The whole car thing always amazes me. I don’t think I will ever understand the amounts of money people put into a convenience. Some people even put better sound systems in their car than they have in their homes. This is something that has the sole purpose of moving us from point a to point b.

  4. I’m owned cars to make me feel and look good. It’s not worth it. I, like many, had to learn the hard way. I can say I did learn. Because of that I am now able to do what I’m doing … Yeah!

  5. When I bought my Mustang it wasn’t because I wanted a status symbol or because I was trying to compete with anyone, though it was pretty cool to be the high school teacher with the Stang in the parking lot. I just liked the way it looked and how much fun it was to drive. It was the nicest thing I’d owned up until that point and it meant a lot to me. There’s nothing wrong with taking pride in material possessions as long as most other areas of life are balanced. It’s not like coveting a nice car makes someone the Wolf of Wall Street. As long as a person isn’t taking on a payment that is financially detrimental, a person should be able to lust after and maybe own whatever car they like. I also probably spend more on groceries than many people as well, and I have a nice house (granted housing is super-cheap in Idaho). Oh wait, I guess should be driving a klunker, eating rice every night, and living in a cardboard box. JUST JOKING 🙂 This topic really gets me ranting for some reason.

  6. I drive an economical car, both from a payment stand point and a gas consumption stand point. Back when I was younger I drove old used cars. I did buy a new car in 2008 but I wanted something reliable for living in a rural area. It started out as a lease and then we purchased it. It worked out better that way. It does not have all the new fangled options and gadgets but it works for us for our needs. I don’t look rich, but I don’t look like I drive a piece of junk either.

  7. I have never even understood the lust for cars as a status symbol. Once it is parked who knows it is your car? A car for me should have 4 wheels, runs without breaking down, that I can get in and out without bumping my head (I’m tall) and that I can easily get in and out of (both knees artificial with limited bending). That’s it.

    At one point I drove a van that my folks sold me for 4 quarters and we drove it for around 6-7 years and then had to finally recognize that it was dead. Now have another used van for $6000. Unfortunately we couldn’t pay cash for it although our credit score probably could have gotten us a brand new van, but we knew we couldn’t afford it. That is what is weird is someone listening to a car salesman telling them they can afford so much for a car. Who knows your budget better than you?

  8. ehhh.. I’m having a major problem with the undertone of all these posts. Simply put, they are geared toward “average” car buyers and not enthusiasts. I am an enthusiast if there ever was one. Driving is my absolute passion in life. Whether driving to an autocross event or running down the street to pick up a gallon of milk, I am zeroed into exactly what the car is doing; feeling the suspension compress under load, rolling onto the throttle mid apex, maybe kicking the back end out a little for fun, heel and toe downshifting.. etc. Driving is so important to me. That being said, I like nice cars not because of the plastic (status symbol) reasons most have to motivate a nice car purchase, but because of the sheer enjoyment those cars bring to the driving experience. A car IS NOT about going from point A to point B for me.. it’s an experience. A to B just happens to be a perk.

    So here is where I have the issue; most of the comments seem to be from your typical skill less Toyota drivers (no offense) and not the enthusiasts. For the former, a car is more of an appliance than a lifestyle. Of course they’d be happy in some generic “nice” car for $15K. I just can’t do that. It’s a BIG DEAL to me choosing the right car. Pride and image have NOTHING to do with it.

    My goal this year is to lease a new BMW M3. I would be driving this car about 3 months out of the year due to the nature of my business and because of that, a lease is a very good option for me. This car is about $73K with the options I want. The lease with $5K down is just over $900/mo for 15K miles a year for 3 years. Lets not even take into account that just about every mile I put on this car will be a write off. Now, according to your theory, anyone making under $250k has NO business buying a car of this magnitude. That is just unrealistic. Look on the road.. if everyone followed your lead an actual NEW car would be as rare as a Ferrari. Maybe rarer. Also, not everyone in the car market is buying high(er) end simply to “look rich”.

    I’ve often found the truth usually lies in the middle somewhere. It might be prudent for some to follow your example, maybe even most. Definitely not all. The very best “deal” for most is CPO cars imo because they get a newer car with a full warranty. Not many of even these would qualify in being “affordable” according to your system.

  9. RoTimi Akinmoladun October 15, 2015 at 1:34 am


    Bravo to your well-written comment!
    I could not agree more with the words that you shared, especially your description of how a true car enthusiast would have a tough time trying to make sense of these suggestions.

    However, in all fairness, I believe that 1 of the primary points that Dan is trying to make in these posts is that proper planning and consideration needs to be made in purchasing a vehicle. This planning and careful consideration applies to anyone and everyone who decides to make such a hefty purchase.

    Avoid emotionally-driven purchases and instead focus on what it is you truly can afford with ease and discipline. The numbers you come up with for your own circumstance may ultimately be very different than Dan’s suggested allocation.

    If someone’s goals are to 1 day be “rich”, the reality is that we must be willing to look at things differently than the way that “most” people approach their finances. This may lead us into making sacrifices today that allow us to ultimately become that much “richer” tomorrow.

    I am also an avid car enthusiast and I do indeed plan to approach my upcoming car purchase a bit differently than this 1 size fits all 20% allocation concept due to my needs, wants, and must-haves. This is indeed A BIG DEAL for folks like us car enthusiasts!


  10. I’ve read several of your articles on purchasing cars and they’re great — but only for people who are savvy about purchasing used cars. When you tell the average American making $50k a year that he should spend on $10k on a car, his mind jumps to THE DEALERSHIP. He imagines the old, beat up Toyota Echo that he might pick up off the lot for that price. This IS a hooptie! Any self respecting young professional should NOT be driving this.

    Most Americans are simply not savvy about buying used luxury cars privately or through craigslist, like you’ve shown in this article. You’ve shown its possible to own a Volvo with great features for $11k. But most people have NO IDEA that you can:
    purchase a 7 year old Porsche Cayenne on craigslist in most cities for around $20k
    get a 7 year old Porsche Cayman for $17k in California
    get a 7 year old Audi S5 for 20-22k

    My point is that no one is going to follow your advice unless you demonstrate that how its possible to drive a nice car AND be frugal at the same time.

    Please write an article about these principles:
    Luxury cars depreciate fast (BUY THEM USED 5 YRS USED) but retain value (SELL THEM WITHIN 3-5 YEARS). Negotiate the price with a private seller. Get a pre-purchase inspection. After you’ve had your fun, sell them privately, BEFORE you start paying for expensive repairs.

    It is possible to drive a cool car on a budget.

  11. This whole concept is so flawed to me. I understand that some people are fine with being frugal to the point of becoming a laughing stock, but if the goal is truly to become a ‘millionaire’ (oooh!) in some distant future right before retirement, you can keep it. Working the expense side is never truly going to make you wealthy and you will have denied yourself so many of the things along the way that make life interesting . That’s foolish to me as we only have one life to live.

    One commenter said a nice car was folly as nobody knows who drives the car once it’s parked. Well, the person who owns it presumably enjoys it every time they drive it and who the hell is going to know, or care what your bank account is at 70 except for your kids who can’t wait for you to drop dead? 🙂 My philosophy is focusing on the income side instead, whilst obviously not going gung-ho on the expense side. Think about it, who is going to take a CFO that pulls into the parking lot in a beat up Corolla seriously?

    As an example, me and the missus are currently looking at custom ordering a Volvo XC90 T8 hybrid. That is going to run us around $70k. We make about $200k combined and have saved up about $150k in cash in the last 18 months as we are trying to save up for the downpayment on a house (SF Bay Area – it’s expensive). This has been achieved without any real sacrifices in lifestyle (guess we’re frugal overall). Quite honestly, the payment (approx. $1k/mo) isn’t going to impact anything very much and once we have the house payment (no more than rent, really), we’ll still be putting away thousands a month while the house appreciates for retirement.

    Also consider disposable income. If you’re making $30k a year, 10% of gross income is a LOT more out of your disposable income once all other necessities are paid for than if your income is $150k. Think about it; food, gas, utilities are the same for both in absolute terms (more or less), but vastly different in terms relative to income.

    I guess I just don’t understand the logic of trying to save yourself to some (let’s face it) modest wealth at the end of your life when you’re likely going to be too feeble to truly enjoy it. In fact, I would propose a revised version of the rule: spend no more than 10% of your income ANNUALLY on your car (i.e $100k allows for $10k car payments or a $50k car cash every five years). That way we don’t all have to ride old hoopties…

  12. Agree on the above few responses. I’d like to add that obsessing over saving rather than earning is a learned middle class habit. Concentrate your energy on earning additional income through a side hustle or other means so that you won’t have to obsess over such things.

    If you know know to use the internet, you can find a way to supplement your income. Don’t be a slave to your job. Stop watching Netflix. Go look for opportunities. Eventually, buy that car you like (preferably with cash). Continue looking for opportunities.

    • Hi John – thanks for stopping by. It doesn’t seem we’re too far off in our thinking, but I still think it’s important to focus on spending. Most people suffer from lifestyle inflation and no matter how much extra they make in a side hustle, they’ll easily spend it. My wife and I are currently traveling Alaska on our one year road trip thanks to these frugal habits. I actually thought I’d be able to make more on a side hustle (this blog), but pennies are the only things rolling in!!

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