What's the matter with the car that I'm driving, can you tell it's out of style?

After the Odenton Winterfest last Sunday, my friend bsom and I were pulling into a Glen Burnie shopping center to poke through clearance stuff at Target and stock up on off-brand cookies at Aldi's when I noticed a small blue sports car pulling up to one of the stores. The driver parked in front, taking up about three spaces. As I got closer, I realized that the car was a Lotus Elise.

bsom: what a jerk

mad anthony: Hey, that's like a $70,000 car. If I had one, I wouldn't want it to get dinged either.

bsom: well, he's an idiot for spending that much on a car.

I'm a car guy. Not the hard-core kind who spends hours working on his own ride, but a casual enthusiast, the kind who can identify pretty much anything on the road and who keeps a pile of Car and Driver mags on top of the crapper at home. I currently drive a Ford Ranger, which I selected for very practical reasons - it was pretty much the cheapest truck-based 4wd vehicle I could buy, and has a pretty good reputation for reliability. But when I get bored at work, I'll surf used-car websites and try to figure out if one day I can afford to either buy a second car or trade it in for something fancier.

When I'm driving, I tend to notice really fancy vehicles - the Hummers, Escalades, 7-series beemers, big-body benzes, Porches - and they always make me feel like a failure, especially when they are driven by people close to my age. If they drive such a nice and expensive car, they must be better than me - more successful, wealthier, better-liked, and probably better looking. They must look at my little pickup and think "what a loser".

Of course, driving an expensive vehicle doesn't mean you are rich - you could just be in a lot of debt. I've posted similar articles before, but this LA Times Article about how much people are getting in debt to buy cars is worth a read. The numbers in the article are shocking - the average amount financed in the US for a car is over $30,000 - which, using my truck as a benchmark, is like a Ranger and a half. The average American is over $4000 upside down on their vehicle (they owe 4 grand more than what it's worth). The woman the article profiles was thrilled that her payment was "only" $700 a month - about 2.5x the month payment on my Ranger, and over half of my mortgage payment.

So clearly driving a nice car doesn't mean you are rich and successful - you may be, or you may be up to your eyeballs in debt. And not driving a nice car doesn't mean you aren't rich. Years ago, I read the book The Millionaire Next Door, which looked at the lifestyles of people with a net worth of over a million, not including real estate. They found that most of the people in that income bracket lived fairly simple lives - lived in reasonable homes, shopped at Sears and JC Penny, and drove fairly practical cars - Buicks and Grand Marquis being among the more popular - and they often bought those cars used.

When I put the down payment down on Casa De Mad, I remember thinking that I probably could have used that money to buy a used Escalade instead. The housing market might be softening, but at some point it will probably bounce back. The Escalade market, however, will always keep going down - cars are depreciating assets, money down the hole. If you can afford a nice car, if it's something that brings you enjoyment, and you can pay for it and still pay your mortgage and put something away for retirement, than there is nothing wrong with it - but if you have to go deep in debt to do it, than it's stupid to.

I know that. But I'll still feel a little self-conscious every time some 25-year-old cuts me off in his H2 Hummer.