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Having a choice is a wonderful thing. Something that I suspect many of us take for granted. Which vocation to pursue. Which meal to order at a restaurant. Which car to buy. To even have the luxury of a choice means we are in a very fortunate position, relative to so many in the world.
And with every choice, we actually make two decisions – what we accept, and what we reject. I was pondering this whilst reading an old article by Mr. Quinn as he wrestled with the logic of purchasing a Bentley SUV.
Some luxury car owners will have such abundant wealth that the purchase will just mean a slightly lower inheritance to their heirs. So the choice is relatively easy and with little impact. But I suspect for many of those driving their dream luxury vehicle, they have made the choice of a car, and rejected some financial benefits that they might otherwise enjoyed.
Where I live, I would be happy to bet you $1,000 that we won’t see a Bentley SUV this year. But motor vehicles still seem to be imbued with status. A fully optioned Ford Ranger or Toyota Hilux, or maybe a 300 Series Toyota Landcruiser, will certainly generate lots of comments around town.
And everyone that purchases a 300 Series Landcruiser for about A$110,000 has spent about 1.5 times the median annual Australian income. The 300 Series is an amazing vehicle. Powerful, comfortable, high towing capacity. But you have spent 1.5 times the Australian median income! That is a lot of money that you have chosen to use for owning a motor car, and you have therefore rejected lots of other things. That money could have been invested for retirement, funding education, family holidays, charitable donations or myriad other things.
Personally, family holidays, minimal debt and retirement investments are far more important to me than a motor car. So that is what drives my choices.
But I get it. People have different motivations and aims, and therefore make different choices. But I do wonder if people viewed each choice as two choices – what did I accept, and what did I reject – would it change their behaviour?
When my oldest and now 38 year old son was in high school he asked me why I didn’t drive a nicer car. “You could afford it dad.” (At the time I was driving a 6-year-old VW Passat.) I gently explained to him that I chose to drive the car I did so that there would be money available to help pay college tuition for him and his two younger siblings. Now, more than twenty years later, He’s a dad who drives a 6 year old car as he plans for his daughter’s future. While it was not my intent at the time to teach him about the value of deferred gratification or the importance of considering the impact of choices he makes, it appears to have had a lasting effect. (In retirement I bought a very comfortable EV, not top of the line but very nice.)
Overall I like to buy, not the best but say the second best, is that is the most value for your dollar. From a car experience, I want a soft ride, and a comfortable ride. My choice lately is a Lexus RX350. I am 6 ft so I fit in easily and like the accessories. And right, I do not need a Porsche, or other expensive car similar. If I get into a Corvette or the like, I may have to live in there because at 80 it is difficult to get out.
Thanks William. We probably sit more in the middle ground – we don’t buy the very best available, but also don’t buy bargain basement. We have found that by buying “mid-range” and using carefully, that we get very long and reliable life from cars, appliances furniture etc.
By the way, the RX350 looks like a beautiful motor car.
Opportunity cost is a real dilemma that people often overlook when making spending choices like the ones you describe.
I have zero desire for a car like a Porches, Lamborghini, etc. I once road in a Ferrari. Most uncomfortable car I have been in.
Greg, your article reminded me about how Spouse and I were hoping to get a convertible or sports car when the kids grew up. We had a generous friend who gave our son an older Camaro that we drove to visit our folks. It was so low to the ground that we had trouble getting in and out of it. And we are short! LOL! Needless to say, our dream of a sports car changed. Thanks for the laugh and good memory. Chris
When we went out to lunch yesterday with friends who own a Mercedes sedan we took our Subaru Outback because it is much easier to get in and out of.
Chris – when I was younger, and my kids were very young, I would tell them that when they were independently wealthy I wanted an arrest-me-red Porsche 911 Turbo with a whale tale and a rollbar. They are not yet independently wealthy so I must be content with my self-purchased Subaru Forester. They last time I rode in a serious sports car, I had the same experience as you, as it was a struggle to extricate myself from the vehicle.
Every choice we make has a ripple effect, some ripples being more like tsunamis. I like your concept of looking at each choice as two. I’ve been working on a similar article idea, but from a different perspective.
Similar to the ripples caused by the old, “missing a bus”, analogy could change your future life. Sometimes opportunities for better or worse. Just different.
Thanks Dan. I look forward to your article – I’m sure it will tackle the concept more eloquently that I did!
Trust me, Greg, it won’t🙃
Nah, it wouldn’t change their behavior. In my experience the majority of people don’t actually behave rationally like that. Sure, some people “save up” for something and then buy it, but that’s an old fashioned notion. I am younger than many people on this platform and have young adult kids. Between my father and I make choices more like my dad, but I’d by lying if I said my boys aren’t having an influence on my decision making. I am more apt to make choices now without overthinking things or seeing things in accept/reject terms.
I tend to agree that it would likely not change behaviours. But it would be an interesting experiment to challenge people with what they are giving up as a result of each purchase they make, to see what arises.
I don’t get the luxury car thing. I just want a vehicle that’s comfortable to drive that will get me safely from point A to point B. Fast would be nice. However, this article is applicable to a lot more than cars. Houses, restaurant meals, clothes, jewelry, even universities.
Agreed – this wasn’t meant to be an article about motor cars, I just chose that as a “vehicle” to deliver my thoughts. Pun well and truly intended.
It applies to every dollar we spend. I get this, but what did I give up?
Nice pun! We recently toured a museum which had some antique automobiles on display. I learned that back then, car bodies were typically designed and built by horse drawn carriage companies. Hence the name “horseless carriage”. Which got me to wondering whether some earlier buyers of horse drawn carriages were drawn to certain models because they were deemed more “prestigious” than others.
By the way, nice article!
What? You don’t want a car that says “Hello Kathy, welcome back? You don’t want be able to ask the car to turn on the steering wheel heat?
And, you don’t appreciate seeing a special display on the 12” screen for each holiday or asking the car to take you home? Or having it park itself?
Oh, yeah, also saying you forgot your phone upon exiting and warning you there is a pothole ahead while driving.
Gee Kathy, there is more to driving than getting from A to B 😁😁😁😁😁
And then there is the ride, that comfy ride. 😎
No, I don’t. Nor do I want a car that tells its manufacturer (and/or a collection of insurance companies) where and how I am driving it. When I finally buy another I car I will have to spend a lot of time reading the manual and turning things off.
On the other hand, I do want a car with a backup camera, blind spot detector etc. Did you see where I said “safely”? Unfortunately, that will mean I have to go car shopping, an activity I hate.
Yes, safety is critical. My car has six cameras and sensors on all sides. It warns you if a car is coming behind you as you pull out of parking space.
If you stray over a center line it vibrates the steering wheel and gently steers you back to the center.
It measures your speed and if you get too close to car in front it warns you.
it shows you a picture as you pull into parking space and warns you you are getting too close to curb or barrier.
If you start making a turn or change lanes without using your directional it warns you.
If you are using route guidance it puts the upcoming turn on the display screen so you can see the intersection in advance.
Last but not least if you are on a long drive it suggests you take a break at certain points.
Also, so you aren’t distracted with controls, Virtually everything you might want to do is done by telling the car what to do.
Safety first, but I suspect someone or something always knows where you are and where you are going.
We have a Subaru Outback that all of those things except a front camera. Blind spot monitoring is probably my favorite.
My 2007 car can’t tell anyone anything. It is true that my phone can, if I use Google maps, but I don’t always do that. You don’t have to buy a luxury car to get the latest safety features.
I’ve always been a practical thinker and spender. Yes, I’d love a luxury car, but my practical side says, “Jeff, you don’t need that.” My last new car purchase was in 2006. I still have that Ford F150 today. 🙂
Quite right. If buying a luxury vehicle or anything else comes down to a choice among other far more important things as you mention, there is no responsible choice but to not purchase the vehicle.
In some cases that’s why many of those cars are leased. It is easier to rationalize a more modest monthly payment, but it’s a false rationale. It actually says you can’t afford what you want IMO.
I wanted a Mercedes from age 17 when I first drove one. I got it at age 70 after all the other life obligations were met and I could pay cash. But even the appearance of a Mercedes is misleading. My car cost no more than a well equipped Ford F-150 and that’s the largest selling vehicle. Go figure.
Thanks Dick. I think you make a good point that at different points in life, what you reject changes. When you have a young family and a mortgage, a large purchase will have a large impact on other parts of your life. Later in life, the things that you reject when making a large purchase may well be far less significant.
Last night we ordered a new washing machine. There was a time when we would have agonised over this purchase a lot more than we do now. Simply because in the past the impact on our finances would have been more acutely felt. What we rejected would have meant more.
Greg, as always, a thoughtful article. From a relatively young age, I knew I wanted to retire sometime in my fifties. By my mid-thirties, I’d crystallised a crude rule of thumb for large purchases: how many months will this add to my working life? Is the trade-off worth it? I found it a useful lens for filtering my choices, and it consistently steered me away from excess.
Thanks Mark. I would often consider a purchase in terms of “how many hours / days / weeks of work does this equate to?” Once considering a potential purchase in those terms, I usually walked away.