[evil-G-nius]

Originally Posted by The J-Man

Other than housing, what exactly is more expensive about California? I hear people complain about this, but I don’t get it. Food? Utilities?

Literally everything. Rent is high, taxes are high, gas prices, utilities...everything. I mean in 2018 (I think it was) gas was cheaper in Honolulu than it was here in the Bay Area. Its stupid honestly

[Xx__xs]

my m6 was 46k but everyone thinks im rich when i drive it around

[roastbeef]

Want to see the preferred vehicle of someone well on their way to being a net worth millionaire?

[Lady Jane]

House and bike paid for. I have no dependents except my Huskies. The X3 is leased because I like to get a new vehicle every three to four years always on warranty and free service.

A nurse practitioner makes $100k+ a year but because the private clinic I work for has reduced hours because of COVID, I'm on a call list with three regional hospitals. Call backs are extremely lucrative especially if it's a week-end or Holiday. I stop taking calls when it makes no sense financially because of taxes.

So essentially, I'm comfy.

[MKSixer]

Originally Posted by Lady Jane

House and bike paid for. I have no dependents except my Huskies. The X3 is leased because I like to get a new vehicle every three to four years always on warranty and free service.

A nurse practitioner makes $100k+ a year but because the private clinic I work for has reduced hours because of COVID, I'm on a call list with three regional hospitals. Call backs are extremely lucrative especially if it's a week-end or Holiday. I stop taking calls when it makes no sense financially because of taxes.

So essentially, I'm comfy.

This.

Debt free but for ex-wife's home which I still pay for and in a car holding-pattern until my daughter graduates from law school. I'm giving her the same gift our parents gave us...a debt free start in life.

[dmatre]

There's really no correlation between net worth and vehicle worth.

In the past ten years, our net worth has increased significantly (far more than 100%). We're still driving the same cars. This means trying to determine our net worth by vehicle value makes no sense at all.

[MKSixer]

Originally Posted by sygazelle

I'm thinking there is no correlation between what car a person drives and their wealth. When I say wealth, I mean net worth: Total assets minus total liabilities.

How much one makes per year is not the best indicator of wealth because some people go through money like water and have nothing to show for it.

There are broke people driving really nice cars. There are wealthy people driving 10-year-old paid-for cars. When you see someone in an expensive car, its a zero indication of their actual wealth.

There are people who make average salaries and lease cars who are making perpetual lease payment. The attraction, of course, is that lease payments are less than loan payment on the same car, so they can drive more cars for the monthly payment. These people are driving new, nice cars at the very top of their depreciation curve and then do it again and again. I'm not saying that's a bad thing. Living for today has some appeal since you don't know what tomorrow brings. But the fact is, perpetually leasing fancy cars can make you look richer than you are and also have a bad impact on net worth. The exception, of course, is those that take the cash they saved leasing instead of buying and investing that money wisely, there is an argument that leasing is a financially viable option. My guess is the percentage of people who fall in this category is about the same as those who win in the long run in Las Vegas.

Great post!

There are so man permutations of income, wealth, net worth, cash-flow, etc. I learned from the late Bruce Williams as a young man that the best combination to purchase a car was a 3 year-old car paid for in cash or financed for 3 years, max with a 25% down payment.

And as far as the leasing goes, it depends on too many factors to make a blanket statement. There are certain tax advantages to leasing as well as the type of car one selects, etc.

Two of my fav quotes from Judge Learned Hand:

"In America there are two tax systems: one for the informed and one for the uninformed. Both are legal."

“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one's taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”

Tax management and the acquisition and maintenance of wealth are inextricably connected.

I know I've wandered a bit far afield...

[Murf993]

We are finally debt free. House and cars all paid for, our kids are all off on their own and like MKSixer said we send we started them off with no student debt. I'm retired with a decent pension and my wife can retire but she has a great job in a senior leadership position, she's hanging onto it until this Covid stuff settles down as we are concerned about the economy moving forward. We got married 15 years ago after both having nasty expensive divorces. We have both worked hard, I always had a side job for extra $$$. We have made some good choices and been really lucky too, we are blessed. Neither of us have university degrees. My wife was excepted into the Vet medicine program but couldn't afford to go, later she had to drop out of her MBA program due to a difficult pregnancy. She has had senior rolls with a number of fortune 500 companies, all on smarts and hard work. I tell my kids, work hard, make good choices, and work hard. They are all smart so if they want they can succeed. Time will tell, now it's time to spend their inheritance.

[MKSixer]

Originally Posted by Murf993

We are finally debt free. House and cars all paid for, our kids are all off on their own and like MKSixer said we send we started them off with no student debt. I'm retired with a decent pension and my wife can retire but she has a great job in a senior leadership position, she's hanging onto it until this Covid stuff settles down as we are concerned about the economy moving forward. We got married 15 years ago after both having nasty expensive divorces. We have both worked hard, I always had a side job for extra $$$. We have made some good choices and been really lucky too, we are blessed. Neither of us have university degrees. My wife was excepted into the Vet medicine program but couldn't afford to go, later she had to drop out of her MBA program due to a difficult pregnancy. She has had senior rolls with a number of fortune 500 companies, all on smarts and hard work. I tell my kids, work hard, make good choices, and work hard. They are all smart so if they want they can succeed. Time will tell, now it's time to spend their inheritance.

Well done, my friend. Well done.

Now about that spend down. kscarrol and myself have a list of places to visit when you and your wife make it down this way. We will make an excellent contribution to your spend-down plan.

I know, I know...you can thank us later.

[Murf993]

Originally Posted by MKSixer

Well done, my friend. Well done.

Now about that spend down. kscarrol and myself have a list of places to visit when you and your wife make it down this way. We will make an excellent contribution to your spend-down plan.

I know, I know...you can thank us later.

What could possibly go wrong?

[MKSixer]

Originally Posted by Murf993

What could possibly go wrong?

I see no possible downsides with this plan. No downsides. Nope. None. Not a single one.

[Bonk!]

This sounds a bit old school but I've never purchased anything I couldn't pay cash for (except real estate). When I was starting out professionally I put any raises/bonuses into a separate account, figuring I could live without it. That was my 'next car' account and I drove the same thing until that account grew enough that I could afford the next one. Age 55 and no debt except an affordable mortgage.

[Fast.F10]

Its all about the drive within and planning.

[Buckeye///M]

OP: You should read the book ‘The Millionaire Next Door’.

[Dino GT]

Summer/Vacation home

[flybigjet]

Originally Posted by Dino GT

Summer/Vacation home

Quit posting pictures of my house online!

Sheesh.

[zx10guy]

Originally Posted by Sara504

I have a daughter and three horses. I’m broke forever

Ha. I see your daughter and three horses and raise you my daughter, three motorcycles, and a sailboat.

[The J-Man]

Originally Posted by Lady Jane

I stop taking calls when it makes no sense financially because of taxes.

What does this mean?

[Murf993]

Originally Posted by The J-Man

What does this mean?

I can help you there, she's in Canada. We get the shit kicked out of us in taxes and when you hit a certain threshold it sometimes feels like the extra hours aren't worth the effort. When I worked a lot of overtime it wasn't unusual to see half of it go to taxes on your pay check, I could lucky bank my OT as time and then take a cash payout in smaller amounts or in time off. Obviously the more money you make is yours but it is a bit of a psychological thing sometimes. Time and a half works out to about 75% of regular pay before taxes.

[Murf993]

Originally Posted by Dino GT

Summer/Vacation home

That's "Fuck You" money. Isn't that from a real estate listing a year or two ago?

[ROASTM]

Originally Posted by sygazelle

I'm thinking there is no correlation between what car a person drives and their wealth. When I say wealth, I mean net worth: Total assets minus total liabilities.

How much one makes per year is not the best indicator of wealth because some people go through money like water and have nothing to show for it.

There are broke people driving really nice cars. There are wealthy people driving 10-year-old paid-for cars. When you see someone in an expensive car, its a zero indication of their actual wealth.

There are people who make average salaries and lease cars who are making perpetual lease payment. The attraction, of course, is that lease payments are less than loan payment on the same car, so they can drive more cars for the monthly payment. These people are driving new, nice cars at the very top of their depreciation curve and then do it again and again. I'm not saying that's a bad thing. Living for today has some appeal since you don't know what tomorrow brings. But the fact is, perpetually leasing fancy cars can make you look richer than you are and also have a bad impact on net worth. The exception, of course, is those that take the cash they saved leasing instead of buying and investing that money wisely, there is an argument that leasing is a financially viable option. My guess is the percentage of people who fall in this category is about the same as those who win in the long run in Las Vegas.

This guy hit the nail on the head - couldn't have said it better myself. I personally wouldn't consider myself "wealthy", though both myself and my wife do pretty well (and have no kids, yet...), which certainly helps. What kind of car someone drives, to me, has minimal indication on their wealth - and really only tells you 1 of, or a combination of, a few things - 1) they enjoy driving nice cars because they enjoy driving, 2) they enjoy driving nice cars because of how it makes them look to others, 3) they may have perpetual lease payments allowing them to get into a higher-end car than they could otherwise afford through financing or paying cash for, or worse, 4) have taken a loan with minimal down payment and may very well be upside down in their car (car's value worth less than outstanding principal on the loan for said car).

I have always been taught by my parents that you don't buy more car than y ou can afford - which also applies to just about everything. My parents have always paid cash for their cars over the years, and are what I'd consider to be pretty wealthy - but they are the kind of people you'd never really know they've got money. Live in a pretty "average" home, nothing too flashy, mom hasn't worked in 20 years and dad retired at the age of 50, and while they do drive "nicer" end cars, they buy them, pay cash, and drive them until the wheels fall off. I actually just bought my father's old Volvo XC90 that he owned since new, with 210k on the clock - still runs great (gave him $100 for it...) - which is great, as I'm now likely to sell my Wrangler that was bought used (paid cash), and has likely depreciated about $3k despite putting over 40k miles on it in the last 4 years. My wife and I own 4 cars, all paid cash for, and we have 4 cars because I enjoy them. She has her Mazda CX-5, and I've got the e46 M, JKU Wrangler, and '20 M2C.

As others mentioned, there are absolutely some insane garages on this forum from reading the posts of many - but just because someone has or rotates high-end luxury/sport/exotic vehicles often, doesn't necessarily mean they are super wealthy - but at the end of the day, who cares? I have a really good friend who is now engaged, owns a home and lives with fiance (would be married if not for COVID-reschedule of wedding). This friend of mine makes very good money, but for the life of him, can't keep it in his pockets. I remember a year or so ago, he bought a new Model 3, and his fiance also wanted a new Model 3 - so they each got one. At the time, he was driving a LEASED Honda Civic, which he bought out when purchasing the Tesla. Silly me, assumed he must've paid cash for the lease buy out of his nearly 4 year old Civic - but NO! He took a loan for that buy out, took a loan for the new Model 3, and a loan for his fiance's new Model 3. I only ended up finding this out, as his fiance was requiring him to unload the Civic (which I initially said - meh, why not keep it? it's a "free" car to put miles on after all, bad weather, long road trip, etc.). She informed me that it actually had a loan on it still... and I was honestly dumbfounded. He ended up selling said Civic to my cousin, who paid in cash, and it took a good 6 weeks for the bank to release the lein on the car so that it could be titled/registered/insured by my cousin when he took ownership - total nightmare.

TLR - Don't spend more money than you can afford on a vehicle (or a home for that matter), and no one gives a shit if you keep up with the Jones' or not.

[zx10guy]

Originally Posted by roastbeef

Want to see the preferred vehicle of someone well on their way to being a net worth millionaire?

That's if they survive any substantial crash.