In their book, You Have More Than You Think, David and Tom Gardner said that one of the most common financial mistakes people make is buying an expensive car using borrowed money. Here are some excerpts:
"...When you purchase an automobile, on average it loses 30 percent of its value one year after the purchase - and sometimes does so at the moment you roll it out of the lot....
We know you need a car. We do too. But from an investment standpoint, it's never a good idea to covet expensive automobiles, and buying it on credit. On average you'll pay 10% interest anually on the loan plus the value of the car depreciates by 30% the first year and 10% per year subsequently. In the business world, they'd call this sort of leverages transaction "dumb". We are gentler; we'll call it a mistake.
Buy transport. Buy utility. You are not your car.
Our recommendation is simply that if you can swing it, you pick an automobile that you can buy with cash, or the next best thing to do, as much in cash as you can. Remember, you are not your car. Impress your friends with your heart, your mind, those natural good looks, and your sense of humor...."
In another book, The Millionaire Next Door by Thomas J. Stanley and william Danko, after 20 years of profiling the wealthy, surmise that , "the flashy millionaires glamorized by the media actually represent only a tiny minority of America's rich. Most of the truly wealthy in this country don't live in Beverly Hills or on Park Avenue -- they live next door."
The authors say that the typical wealthy individual is a businessman who has lived in the same town for all of his adult life and owns a small factory, a chain of stores or a service company. He lives next door to people with a fraction of his wealth. Their survey indicated that while the paycheck-to-paycheck crowd drives new cars, most millionaires don't. They're not wearing expensive clothes and watches and their houses are relatively modest compared to their financial status.
Note to self: Live simply.
1 comment:
Salam,
Talk about living in debt an constant credit. Yay! We are copying the Americans!
Thank god that I still have a (beating) heart, a (relatively sane) mind, (winning but waning) natural good looks, and (corky at times nauseating) sense of humor. Hmm...who shall I impress next?
Dont you wish there's a steady and reliable public lines in our hood? Utill then, I'll be wheeling my rusty 'ol can, clunking deligently the pavement of KL.
So, not an adieu to you Audi just yet, huh! Otherwise, Adoi!
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