The Freedom Crushing Power of Expensive Cars
Long live corporate serfdom! Working professionals spend a lot on cars, and that ultimately indentures them to a bad situation for a very long time
My first car was an old faded yellow Volvo that cost around $500.
For such a cheap car, it ran beautifully.
I remember its large diesel engine, which would come alive with the rhythmic clicks and clatters usually reserved for an eighteen-wheeler. When I floored it, an enormous billow of smoke poured from the exhaust. (This feature, of course, confirmed my suspicion that my car once belonged to James Bond and this was the proper maneuver to evade would-be assassins.)
My car was slow and it was boring. And that was ok with me because it was also reliable and safe and mine. In my first two years of college, I drove eighty miles a day without fail. Even in the cold winter, when an old diesel is sluggish and stubborn and wants to hibernate until Spring, my car kept going.
I can empathize with the young car buyer who is ready to upgrade the wheels of their youth. We start making some real money in our twenties and we grow tired of all of the little quirks a very used car has (my second car required me to exit the vehicle and slap the left headlight before it would illuminate).
As we get older, we want to be taken more seriously. A 28-year-old using their ratted teenage car to take a client to lunch or to go on a date is right at the top of the awkward scale.
Pragmatically speaking, cars are safer now than ever before, with vastly superior technology, performance, and reliability. So it makes a lot of sense to ditch that faded yellow Volvo that smells a little like gasoline and dirty socks inside, even if it was a Bond car.
But if you haven’t noticed, in 2022, things are a little insane right now.
Cars were expensive 5 years ago. Today, they are really expensive. Cars are not only costly to buy, they are costly to drive, and costly to maintain. And then there’s depreciation.
I have mentioned in prior musings that I’m no stranger to lifestyle creep. I’ve owned nine cars over the years, starting with the old Volvo all the way up to a Tesla. I’ve lost plenty of money due to poor negotiation, bad trades, and depreciation. I’m in no position to waggle my finger at anyone who goes full YOLO and buys their dream car. But I am here to lay some truth down for those who want to hear it.
For the 1 in 8 Americans buying a new car every few years and making payments of $1,000 or more, they will have spent more than $140,000 over a twelve-year period. When the last payment clears, they will be the proud owners of a car that has lost half its value.
The same thousand dollars a month, invested over twelve years with only average market returns, would leave them with an estimated $220,000 portfolio. And that portfolio would likely be paying out another $4,000 in annual dividends.
I have flashed figures and dollar signs all over this post, so what I write next is going to seem strange.
It’s really not about money. It’s about power.
A $220,000 portfolio is power.
I want ordinary people to be powerful.
Why? Because our career will take from us whatever we agree to give it.
I’ve worked overnight shifts after already working a full day, guzzling Red Bull while driving drowsily back into work. I’ve canceled vacations due to project deadlines. I’ve spent other vacations on the phone because of some work crisis. I’ve regularly sacrificed my own physical and mental health to meet arbitrary deadlines and expectations because I lacked the necessary leverage and power to simply say no.
For years I dismissed these issues. This is what hard work is, I would tell myself. This is why you make the big bucks, Allen. People would kill to have your job, Allen. Be grateful. It doesn’t take long for that inner voice to begin rationalizing a big expenditure to make you feel better. Buy that Tesla, Allen! Go on! You deserve it!
There’s a rush of dopamine when we have a novel experience such as buying a new car. It does make us feel better. But it’s only temporary. John Prine put it best. “Sweet songs never last too long on broken radios.”
I want ordinary people to retake control of their time and energy. To be in a position to say no to things. To ignore work while on vacation or with family. To have the confidence to be more candid, firm, and ultimately more creative with difficult clients, peers, and leaders. To be able to retire before they are retired.
That last paragraph, though! I want the same thing for others, which comes with finally realizing your self-worth and looking at your retirement portfolio to give a little perspective to help shape your goals, make some moves, and be open to new opportunities/possibilities. What a time to be alive!