The $7 Million 7 Years Wealth System

Mark,

It warms my heart to find another Ebay Motors customer. I’ve purchased two cars that way. One successfully and one was a disaster.

My wife has officially banned me from buying on Ebay motors again. I think the place is ripe with bargain automobiles and your approach of using a third party inspector makes a lot of sense. I didn’t think to do that in my experiences. I guess it’s really not that much different than getting a home inspection.

How much did you have to pay for the inspector?

Mark, I know what you mean about stepping down. During college I owned a 2002, 330xi. Needless to say, I really liked it, but soon after college I sold it to pay off most of my student loans.

The good thing about the e46 generation 3-series are the straight six engines are basically indestructible.
How many miles do you have on the car now?

@Jeff – The inspector cost me $100 but it saves me some money in negotiation with the seller. Yes, you can still negotiate the price after the bid ends. I’ve called and spoken to the seller prior to the bid and he is open to negotiation. The inspector used a paint sensor and discover some paint thickness which indicates some repair. It is minor and not recorded in vehicle history obtained via Carfax. I think I negotiated an additional $500. I’ve friends who have used eBay Motors. One of them actually bought a Porsche 911 Turbo.

@Josh – I hope I made the right choice 🙂 Actually the 2002 model is better than some later model. They actually overcompensated the power steering in one of the later models. However, the power windows for 2002 are quite unreliable, I’ve replaced 3 out of the the 4 window actuators (not the motor). I’ve clocked additional 50,000 miles since. It is now at 126,000 miles.

@ Mark – You will want to get that conversation in writing, otherwise the Seller could decide to get nasty and complain to eBay (who will ‘pull’ your account) … otherwise, a great idea: lock in the sale => have the vehicle inspected => renegotiate the price!

Assuming that you have NO other assets, you are the first of the 7MITs to actually meet the 5% Rule. Congrats!

Just don’t go out and celebrate by buying a new(er) car 😉

PS If my wife’s Lexus SUV Hybrid is any indication, the gas savings are WAY more than offset by the cost of the vehicle 🙂

Where are all these rules coming from? Did I miss a bunch of information in the brochure?

If I understand correctly, we have the 20% rule for home equity vs. net worth, 25% rule for mortgage vs. income, and now the 5% rule for cars.

I may need a pointer (link) to where that one was discussed. It seems like all you’d need to do is wait a bit and eventually your car will depreciate enough to be under 5%.

Does anyone really count their cars as part of their net worth? I view them more as a disposable item and not something that I try and calculate my net worth with.

Thoughts?…Jeff

@ Jeff – Yes, the ‘brochure’ is my blog (7million7years.com) 😉

The basic idea is to have AT LEAST 75% of your assets invested (i.e. NOT in your home/car/stuff/etc.) at all times.

I have found that 4/5 of what’s left (i.e. 20%) is a very good number to have in your house (at most) leaving 1/5 of what’s left (i.e. 5%) for everything else, including your car:

http://7million7years.com/2008/04/12/applying-the-20-rule-part-ii-your-possessions/

Thanks Adrian.

@Adrian – The 5% rule is definitely quite strict on what we can buy. The car is definitely one of the big ticket item. How about other items of value – jewelry, electronics, furniture? I tend to think my Wii and PS3 is of some value 😉

@Jeff – Actually in both Quicken and NetworthIQ, cars are part of the asset column. But if we follow Robert Kiyosaki’s notion of asset then both our cars and primary residence are not.

@ Mark – the 5% Rule is for ALL of your ‘stuff’: car/s, jewelry, electronics, furniture … yes, and those ‘valuable’ Wii’s and PS3’s. Together with the 20% Rule, it’s designed to keep 75% of your assets in real investments at all times.

BUT … the nature of true assets (appreciates) and ‘stuff’ (depreciates) actually allows us to SPEND more on ‘stuff’ every so often than you may at first realize. Life is meant to be rewarding AND fun 🙂

@ Jeff – the difference b/w what NWiQ and Robert Kiyosaki class as ‘Net Worth’ is best explained in this post:

http://7million7years.com/2008/03/06/calculating-your-investment-net-worth/

… again, our 20% and 5% Rules help you manage the differences b/w the two; that’s their power/simplicity/and (yes) beauty.

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