One of my favorite books of all time, and one of the few books I actually read twice from cover to cover, is "The Millionaire Next Door" (ISBN 0-671-77530-8), a bestseller first published in 1996 by university professors Stanley and Danko.
In this book the authors show how most of the general public envisions millionaires as people who don't need to budget and thus spend plenty of money on expensive things, such as fancy couture, prestigious watches, and late model luxury automobiles.
As it turns out, nothing could be farther from the truth. While there are certainly a few wealthy people, mostly newly-rich and celebrities, who spend money like there's no tomorrow, the typical millionaire and multimillionaire has accumulated wealth first and foremost by being frugal. He always put away at least 15-20% of his income for a rainy day and has invested it wisely since. He's shopping at department stores, wears a rather inexpensive watch, and in most cases buys his automobiles used. If, however, he buys a new car, he'll keep it for many years in order to level out the initial high depreciation.
So, if not the rich people, who's driving those brand spankin' new Escalades, Hummer H2s, and iDrive Bimmers with oversized chromed wheels?
Ironically, it's mostly people who believe that displaying status symbols indicates wealth: the wannabees and the big spenders! Clearly, these people are seriously misguided in their way of thinking. After all, someone who makes $120K annually and spends it all to support an affluent lifestyle is not going anywhere in life. But someone who makes $80K annually and puts $25K away, year after year and invests it wisely, will eventually be a millionaire.
As beautifully explained by former Vice President Al Gore in chapter three of his book "The Assault on Reason" (ISBN 978-1-59420-122-6), it all started in the 1940s when the former Austrian Edward Bernays introduced "the modern science of mass persuation--based not on reason, but on the manipulation of subconscious feelings and impulses" to the US. It changed our society's focus from needs to wants in order to promote profitable consumption.
Back in the day, people bought new shoes when the old ones would had been worn to a point of no return; today most of us buy new shoes because they look good, are fashionable, or, in case of those $250 signature sneekers our teenagers desire so much, are more than anything else prestige objects.
On the same token, before the late '40s to early '50s, people used to buy a new car or truck when they needed one. Thanks to the new direction in marketing, around that time people started crowding dealers' showrooms every time around August in anticipation of the new models to be released. Many Americans bought a new car every year, something that never happened in any other part of the World. Is it because Americans were wealthy and all the other people were poor? Nope, it's because the economic forces in this country would make us believe that that's what we ought to do, the American Way. It was a time when America started become a society of wasteful people, and we have never realized it and, until recently, never even questioned the sanity of it.
Fast forward to the new Millennium.
While only very few buy a brand new car every year, we have remained a society where cleverly implanted desires continue to be the dominating force for consumption. Unlike our parents, we don't have to save for something we want to buy; thanks to the almighty credit cards, we can have it now, with no money down and no payments until December of next year. We buy our new car on credit or, much worse, lease it, and when we feel there's a fancier new car out there, trade up with only a slightly higher monthly payment even before the old one is paid off. It's a catch 22, and lucky are those who realize it and managed to escape its fangs.
But there's another reason why buying a new car makes no sense: you can't buy good cars anymore. Not new models anyway.
Almost every car you can buy today is heavily obese and bloated, literally filled with more black boxes and computers than Apollo 13 ever had, and packed with features nobody needs, electronic gadgets that will fail, be expensive to replace, and thus eventually delegate even relatively young vehicles to the bone yard. People might think they need them and thus want them, but the reason behind it is persuasive and clever marketing, artificially implanted desire, not reasoning.
Let's say I could custom order a new passenger car. What would I want it ideally to be like?
Well . . . I like quality, durability, and Old World craftsmanship, so I would want a solid quality car with real metal fittings and fasteners, not cheap plastic snap-on panels that crack and fade eventually. The car has to age gracefully and to last for at least a couple of decades without needing attention from a computer expert, so no futuristic features, please. I want it to have chromed steel bumpers for superior protection, lightweight aluminum hood and trunk lid for weight savings, and analog instruments that won't flicker when a space ship hovers above. I want the car to be fuel efficient, and since my current family car gets up to 38 miles to the gallon, this naturally is the least I expect from my 2008 model.
Since I'm getting old and spoiled, I want a durable 4-speed automatic tranny (who needs a 7-speed?), power brakes, power steering, power door locks, power windows, power sunroof, and an easy-to-operate, high-quality radio with a round dial on the left for volume and on the right for changing the stations. If I can't operate it intuitively in the dark without reading the manual first, don't put it in my car!
What I definitely do not want in my new car is: power seats with memory settings and built-in air-conditioning, airbags and side curtains, ABS, ASD, traction control, tire-monitoring system (I check my tires' pressure regularly), anti-slip control, motorized cup holders, an 1000-watt sound system with motorized iPod dock and monitors in every headrest, 17-inch or larger diameter wheels with expensive but uncomfortable rubberband-thin super wide tires, digital gauges, iDrive, joysticks, Sony play station, a center console with a command center that requires me to work my way through a menu when changing radio stations or the temperature setting, drive-by-wire anything, a device that corrects my steering and even less things that belong into a space ship, naturally.
Can YOU tell me where I can order such a car? If so, please let me know, as I simply cannot find it anywhere!
So is there any reason to buy a new car, ever? How about environmental concerns?
According to several independent studies performed on this subject, the resources and energy required to manufacture a new vehicle are so high, that one could continue driving his current one for many years just to break even. So if someone proudly shows his brand new Prius (also read my article in Californiaclassix' Buyers' Guide on this subject), just by having this car manufactured he already put a huge burden on society and environment before even starting it up for the first time. Simplified stated, every new car manufactured will send an old one to the land fill. Unless someone accumulates an extremely high mileage annually, it is therefore environmentally much more friendly to continue driving an existing vehicle. Of course, they won't tell people that, because they want them to buy new cars, the more the merrier!
The same people who tell you it's environmentally friendly to buy a new car also build big SUVs, vehicles on which they make even more money. They can do that because the majority of SUVs are classified as trucks, so they don't have to meet the fuel consumption and emission standards of passenger vehicles. Why's that? Because the manufacturers have a lobby that makes huge contributions to politicians who in return pledge to return the favor.
Hence, you may wonder, what do hardcore car guys like Bill and I drive as daily drivers?
Well, Bill mostly drives his now third 1998 Jeep Grand Cherokee Limited with the one-year-only 5.9-Liter engine. He had several Jeeps before and about a year back bought an almost new 2006 model, assuming it would be a better vehicle than its predecessor. As he found out rather quickly, that's not the case, as it turned out to be inferior in about every aspect of its existence. Consequently, only 3 weeks later he sold it and resumed driving his trusty 1998 model which at the time of this writing has about 215K miles on the original engine. If you happen to know of any exceptionally clean, low mileage 1998 Jeep Limited 5.9 for sale, let him know and you'll get a sizable finder's fee.
My personally daily driver is a 1995 Mercedes E300D, now with 173K miles on the clock. I had older Mercedes cars before, but I will NEVER buy a newer one.
Bill and I also both own a pickup. I actually own two. All of them are Dodges. Bill and I each have a 1971 model, and I also have a 1992 with the Cummins TurboDiesel, my tow truck, with 180K miles on the clock barely broken in. All of 'em are parked outside, and all of them look like you would expect old pickups to look that have to work for their living. What these 3 pickups also have in common is that we will keep them as long as we live. That's right, we'll never trade any of them in for a newer one. Why? Because they serve their purpose perfectly and there's nothing a newer model could do better. Do they have airbags? No. Do they have leather seats that will crack? No, durable and easy-to-clean taxicab vinyl. Carpeting that will stain? No, full rubber flooring, all of them. How 'bout aluminum wheels? Nope, all of them have indestructible, factory steel wheels with identical dog dish hubcaps, arguably the best wheels for any pickup. So why would anybody, ever, put big and shiny aluminum or chrome wheels on any pickup? Because he assumes other people will think he's a cool guy.
Once you realize the often malevolent influence of politics and marketing to about every aspect of our lives, you most likely will also realize that you don't need a TV-monitor in your car. You don't need truck loads of electronic devices and computers to get from home to work and back. You don't need a tire monitoring system, if you make it a habit to check your tires' pressure regularly. You don't need a device that steers for you if you're distracted on the steering wheel, if you focus on driving when you're driving and refrain from reading a book, shaving, or doing your makeup at the same time.
Going through life aware, focussed, and informed will make you a better person, a better driver, a better consumer, and will save you lots of money in the long run.
If you like, you can use some of the money you saved by not buying a new car and buy the Classic you always wanted. A Classic has achieved its status because it is durable and desirable enough to have survived for decades. You'll always be able to completely refurbish a Ford Model T or A, a Volkswagen Beetle, an old Chevy or Ford or MG or Triumph, or any old Pickup for that matter. Basically anything without black boxes. Try to imagine restoring that 1990 Cadillac Allante or Mercedes 500SL in 2030, it ain't gonna happen.
Best of all, and unlike the new car you hopefully won't buy, a well-taken-care-of Classic in fine fettle will never depreciate. In fact, almost every Classic we sold in the past has appreciated since, some even have more than doubled in value, so it's not only a car and a hobby, but an investment as well.
It all makes sense . . .
Created on Tuesday, October 10, 2007.