750 LI

Last Saturday I took my youngest son to his weekly guitar lesson at George’s Music in North Wales. It’s located in one of those dying strip malls, with a vacant decaying Hollywood Video store, a dumpy Thai restaurant, a nail salon, and chiropractor. I sit in the car for the 30 minutes reading a book and minding my own business.

I pulled into a parking space and my son went in for his lesson. Being easily distracted and always looking for something to think about, I noticed the car parked directly in front of my Honda Insight. It was a BMW 750 LI. Anyone who has read this site for awhile knows that I’m not a car person. I’ve never spent more than $20,000 for a vehicle. I buy a car, pay it off as soon as possible and drive it as long as I possibly can. I consider a car nothing more than a way to get from point A to point B.

I do know that the higher the number of a BMW, the more expensive the car. I figured the car in front of me was fairly expensive.

I had no idea the rather normal looking vehicle in front of me retails for $90,000. After about fifteen minutes an Asian woman, about my age, and her teenage son arrived and got into the car. My guess is that she might be the owner of the dumpy Thai restaurant. She didn’t appear to be a uber-wealthy.

This is where I have a mental disconnect with a vast swath of America. This country is consumed by the status symbol representation of the vehicle they drive. The MSM and economists judge our economic progress based upon the number of vehicles sold per month. It doesn’t matter that most people essentially rent their vehicle for 3 or 4 years before renting their next one. Many people select a vehicle in order to impress family, friends and coworkers. They may be in debt up to their eyeballs, but if they are driving a BMW, then people think they are a success. The appearance of success is more important than doing what it actually takes to become a success (hard work, saving, investing).

I have trouble comprehending spending $90,000 on a car. I paid $100,000 for my first house. I could buy 4 Honda Insights and have $10,000 left over for the amount this lady spent on the BMW 750 LI. But, we all know it is highly unlikely that she bought the car. The BMW website says the car can be financed for 3.9% for 60 months. That comes to a monthly payment of $1,650. Why pay that, when BMW is offering a 3 year lease for the low low monthly payment of $989? Even this option requires $6,200 cash due at signing. Driving a car like this strikes me as foolish and vain.

The reason I have a hard time understanding the thought process of people who drive these cars is that I refinanced my house this week at 3.25% for 30 years and my monthly payment for a 2,200 square foot single family house in a nice suburban neighborhood is now $689. Renting a car for $300 more per month than it costs to own a home seems a tad excessive in my book.

My Honda Insight has four wheels, four doors, an engine, a stereo and a steering wheel. So does the the BMW 750 LI. My Insight gets 45 mpg. The BMW gets 14 mpg. I have one payment left on my Insight. I paid it off in three years at a 0.9% rate. I will drive it for at least seven more years and pay $0 per month. The money not spent on a car payment will be saved. The nice Asian lady will impress her neighbors while paying $989 for eternity as she is likely caught in perpetual leasing hell.

I will never understand people whose egos and vanity override prudent financial decision making.