Sunday, October 10, 2010

Pretending to be Rich

A few notes from the co-author of The Millionaire Next Door and author of new book Stop Acting Rich: ...And Start Living Like A Real Millionaire (Amazon.com) in the Washington Post:

  • Eighty-six percent of all prestige or luxury makes of motor vehicles are driven by people who are not millionaires.
  • Typically, millionaires pay about $16 (including tip) for a haircut.
  • Nearly four in 10 millionaires buy wine that costs about $10.
  • In the United States, there are nearly three times as many millionaires living in homes with a market value of less than $300,000 than there are living in homes valued at $1 million or more.
  • Forget the Manolo Blahnik high-priced shoes. The No. 1 shoe brand worn by millionaire women is Nine West. Their favorite clothing store is Ann Taylor.
I think too many of us have been spending too much with borrowed money particularly in the US and Canada. That being said, these are personal choices we all make, and the lessons we learn while far from ideal, are healthy ones. With choices come consequences, and unfortunately I doubt we've truly dealt with the full aftermath. Not sure that I think things are this dire but follow on thoughts here from James Quinn @ FinancialSense (via Instapundit).

12 comments:

Sigivald said...

On that first stat, remember that used luxury make cars can be quite inexpensive - and that stat talks about who drives what make, not new sales.

It's no surprise that someone driving a 10 or 20 year old Merc or BMW or Lexus isn't necessarily rich.

(Just as it's still good advice to not buy a new one unless you're staggeringly wealthy. But that goes for all makes, not just luxury ones.

New cars are a great way to throw away a pile of money.)

ken in sc said...

We drive Lexus, always at least 5 years old. Our net worth used to be above 1 million, but not any more. Our life-style has not changed. We still do everything we always used to do. We don't do a lot of rich people stuff--never did.

jeff said...

interesting Sigivald. It didnt occur to me, but I drive a BMW that went for 30+ back in 2000. I paid considerably less for it. I wonder if that puts me in those statistics.

Dan King said...

I bought a new Mercedes E430 in 2001 for $55K, including taxes, etc. I still drive it, and expect to for the next 10 years. It's a good car and it's met my needs.

Before that I bought a new Ford Taurus in 1989. I drove that for 12 years before trading it in for the Benz. Don't recall what I paid for it.

My habit is to buy a new car and drive it to dust. I don't see any point in buying a used car since I already have one.

But, as this blog post would predict, sadly I'm not a millionaire

Charlie said...

1. It is easier to look rich than be rich.

2. It is better to be rich than look rich.

Sarah said...

My mom's used Caddy cost her 40% less than my used Chevy.

maryjane75 said...

Before my dad passed he was offered an incredible deal on a Jaguar. He insisted mom needed it and I take great joy in seeing her motor around town in it. Appearances be danged, as children of the depression its a source of great pride when she tells anyone who will listen, "and he paid six whole thousand dollars for it!"

Rich Vail said...

When my wife's 7 year old escourt collapsed and died of od age...with only 125k miles on the ticker...I talked her into buying a 1988 Jag XJ6 Van Den Plaz, with 100k miles on it. We paid 20% of it's new cost (a little over $4k, including necessary repairs) and ended up driving it for 10 years and putting another 100k miles on it.

It died 4 years ago, we've been looking for another one ever since. I strongly recommend buying an older luxury mark and keeping it up. They drive like a dream and while a little more expensive to repair (Jags can be a nightmare if you don't do routine maint), they are well worth it.

Rich Vail
Pikesville, MD
http://thevailspot.blogspot.com

Jamie said...

I'm chuckling at all the car comments - the other stats spoke much more loudly to me! I bugged and bugged my husband to start going to somewhere other than Supercuts for a haircut because they did such a crummy job on his (very tricky, cowlicky, curly) hair, so now he spends more like $40 on a haircut. But I JUST found a great local barbershop that's right in that $16 range, so I'm going to encourage him to switch.

We USED to be worth about $2mil. Clawing our way back up, from our suburban house with our public-school kids and our old minivan and Pathfinder...

andrew.bontje said...

I live in a trailer. Yeah, a house that you could put wheels on, in the middle of 80 acres.

Drive a 2008 toyota tundra and a 2000 BMW motorcycle.

Have a 100k a year job, and over a million in 401k, IRA, mutual funds, savings, etc.

Cracks me up to see people in McMansions struggling to make the payments. Materialism sucks. Except when it involves weapons.

halojones-fan said...

You can't save yourself rich. You can be thrifty, and that'll help you stay rich. And, of course, you can be insufferably smug about BEING rich, congratulating yourself for a triple when you were born on thrd base.

What these stats say to me is not that rich people are thrifty on average, but that a lot of people with middle-class tastes and behaviors have net worths that put them in the "rich" category.

DWMF said...

I buy 10 year old Jaguars, and have done since 1990. Looking forward to an XF-R in 2020...