Rich people buy old cars

My memory kinda sucks, ask me what I ate for dinner 3 nights ago and I’d struggle to tell you. But there are certain life memories and particular conversations that come with life lessons and stick.

I grew up in a New Jersey suburb. Quiet town about 20 miles outside of New York City. Because of this, a lot of people in town would commute into Manhattan for executive jobs in finance.?One of these guys was my neighbor, Greg. G.

I was a teenager, so I was never quite sure what Greg did for work, but I knew that he had his own investment fund.? He lived in a 4 bedroom house, on about .3 acres.?The house was a little dated, and his two kids went to our well known local public school.??

One day, Greg had a used Lexus convertible parked in front of his house and a huge smile.? I’d never seen it before, it was nice, but probably 5-7 years old.? I asked my Dad if he knew anything about it, but he said no.? So, I caught Greg outside the next Saturday as he was packing up the car for his son’s baseball game. I let him know I really like the car, and asked him why he got it.

“A gift to myself. We sold the firm,” he said. I congratulated him and asked him what he’d be doing next.? He let me know that he would take some time to be with kids, and begin to explore spending more time in Florida.?

I mentioned what I found out to my Dad, and his ears perked up.? He knew that Greg was a founding partner and owned a third of an investment fund, so he Google’d the news.?Turns out that Greg had sold the firm for $180 Million dollars, pocketing around $60 Million for himself.?

I was shocked…why then buy a used car for probably 30k?? “A few reasons”, my Dad said (a shrewd investor himself). These have become sort of principles I want to share.

You are your habits.?

Greg had likely always been principled in his spending. In a certain cost range, buying depreciating assets, like a car, are a massive waste of money. The same habits that kept him principled in not buying businesses for his firm that would lose money, he applied that same sound behavior to life. As the saying goes, “How you do one thing, is how you do everything.”

While I’m sure he orders what he wants off the menu and takes luxury vacations, a guy cut from his cloth couldn’t stomach buying a brand new car for 100k, knowing when he drives it off the lot, it’ll be worth 65k. An instant 35% loss.? He’d be violating every principle that got him to where he is in the first place.??

There are plenty of cool things to buy that go up in value.

Later in the year, Greg bought a stake in the Tampa Bay Devil Rays MLB team.? The team was about 5 years old at the time in 2004. At that time, the team was valued at $152Mil.? Currently the team is worth 1.1Billion dollars.? Later he bought property in Florida and made it his permanent residence.? Nice to buy a cool house in a tropical climate, and skip out on state income taxes.? Florida’s housing market has been booming over the last decade, so I’m sure this value appreciated assets did well too.? Lastly, he donated a new building at his alma mater in Philadelphia, reciprocating to a University that had done so much for him.?

Expensive things can draw the wrong type of attention

Never wear your wealth.? People treat you differently when they think, or know, that you’re rich.? Getting your car repaired will cost more, your barber will charge you more, your friends will expect you to pay for group dinners, romantic partners will pursue you for the wrong reasons.? Sadly, people will tend to treat you differently and relationships are often lost.? I remember wearing a nice watch around a few acquaintances, to then only be asked by 5 of them a week later to invest in their business, give them a loan and pay for our meal out.? I should always remember to follow Greg.

If you are primarily spending on experiences and assets that increase in value, keep going.? Here are some validating facts that can light your way toward financial freedom.

While rich people don’t buy new cars, here are some things that they do do.

1. Only 23.5% of millionaires owned a car from the current model year. In fact, 55% of millionaires owned a car older than 2 years old.
2. 84% of rich people did not bet on sports and 94% did not play the lottery
3. Nearly three-quarters of the millionaires have never carried a credit card balance in their lives!
4. Only 31% of Millionaires averaged earning over $100,000 a year over the course of their career, and one-third never made six figures in any single working year of their career.
5. Millionaires spend on average $200 a month on eating out. That is less than low income earners

What do you drive? What drives you?

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