Driving Into Wealth
Scott and [BMW steering wheel] leather go together like birds of a feather …
… so, I knew that he would be the first in on this post (and it would be full of all the right ‘brands’)
Sounds like Scott’s on to a good deal with his employer’s largess, right?!
With this next post, we are analyzing our current vehicle situation and how it applies to our financial health. I must first start by saying that this has been an area of weakness for me for quite some time. I am very knowledgeable about and really into high-end, luxury and sports cars. Particularly fine German and Italian sports cars, ala BMW, Porche, Ferrari and Lamborghini. The trouble is, like most people, for years I was caught up in the idea that a car was something that you HAD to finance. And HAD to go for as new as possible and as much car as you could “afford”. Like most, paying cash for a car and not financing wasn’t in any stretch of my imagination, so like most people, I financed, then I financed, then I financed, one car after another, then another, etc…Sometimes(like most people) even rolled over the negative equity that I had with a vehicle into the NEXT car finance. And often these weren’t even good financing terms. Doing what ‘normal’ people do and financing a car always kept me strapped financially of course, because of course, you gotta buy the most expensive car you can afford. So I bought in to this nonsense and probably ‘bought’ myself an additional 10 years worth of work and not living my life’s purpose.
I would say that somewhere around the year 2005, I began to wake up from my long financial slumber, in which I pretty much ignored finances, didn’t think about the future much (why should I? For I was fast becoming a high paid Doctor, and that’s more than anyone can ask for, right?) and definitely didn’t think about the possibility of purchasing a car out of necessity and buying used with cash, as to avoid car payment and wasted funds that could be used to invest with.
Once I awoke from that financially mindless sleep and began to read books on financial mastery, take seminars, seek out advice like that which is given here, on 7million7years.com and shareyournumber.com, I naturally began to see a car loan as ‘bad debt’ for the first time and simply added this bad debt to the debt avalanche and paid it off the same as I would a personal unsecured loan, a credit card debt, etc..
Now, I can say that my wife and I have had no car payments for a long time. We, however, aren’t hurting in the function and style department though in that we currently have 2 cars with one of them being a fairly new, 2007 BMW 3 Series. The other, a 2002 GMC Envoy.
The Envoy was my wife’s SUV when we first met. This car was a brand new concept for GMC that ‘officially’ came out in 2002, however, her’s was one of the original showroom demo models that came out in the Spring of 2001. She purchased it with around 15k miles on it for 32k. And this purchase was done while she was making around 35k in salary! Ahh the brainwashing that we get and the things we believe we are ‘suppose’ to do. Buy a car for the amount of money that equals your yearly salary, and finance it! Under poor terms! I believe she purchased this car when she had poor credit and got a 13% loan on it! (Interesting how we both now have excellent credit, knocking on the door of 800 scores and wouldn’t dream of financing a car, lol).
Currently, it’s still sitting in the driveway, running just as good as ever, still washed, babied, loved and actually looking like new. People still comment on it, thinking that it must be nice to be driving a ‘new car’, when in fact, she’s had it for 7 years since 2002. It currently has 122k miles on it, is worth just under 6k and all maintenance has been meticulously performed on it and it’s running like a dream. It is fully loaded with every option you can get on these, but most of all, it has been PAID FOR for a while now and we have no intention on selling it, upgrading it or anything. We are planning on driving it until the axle falls off, LoL. This is the official family(and pet) get around wagon.
As for our second vehicle. About a year and a half ago, while I was in the midst of working my way up in a group practice franchise here that I basically started my career up with in Louisville, KY, my employer ‘bonused’ me for the hard work I was doing (and the hundreds of thousands of dollars I was producing for him in the practice that HE owned) and decided to lease me a vehicle. A BMW. He knew that I liked BMW very much and knew of my future goals to own one. He picked out a then brand new, 2007, BMW 328I and told me that all I had to do was go pick it up and he would make the payments on it completely for the duration of the 3 year lease. Now, I’m a strong man, but saying no to a “FREE” BMW was not something that I had the strength to say no to!
So the rest is history. I still have the car and it’s about half way through it’s lease. Still 18 months to go and still it’s free to me. Even the maintenance is free (BMW provides free maintenance, oil changes, etc.. for the first 4 years or 50k miles, whichever comes first). So, I basically get to drive around in the car for free, except for the cost of gas and insurance, which are both very cheap, seeing as though this isn’t the M3 model and is considered very safe by insurance standards. It also seems to average around 27 miles to the gallon with my everyday driving and close to 30 on long trips, not too bad.
Unfortunately however, when the lease is up in 18 months, I’ll have no second car to call my own. But not to worry, we will be paying cash on a VERY used, fairly high mileage, high gas mileage, BMW something, I’m sure in 18 months. Right now, my wife and I have found deals on older models that fit what we are looking for in the neighborhood of 5-8k, cash. Probably 2 generations old.
So we will continue to buy used, high-end, high quality cars for cash, dirt cheap and take our sweeeeeet time looking for the best deals we can find while waving cash in the sellers face during the midst of a recession.
I plan on doing this when we reach our Number as well, only the cars will be much more high end, but the same principles will be applied and they will be paid for with passive income.
Used Porsche 911 Turbo, anyone?