Are cars a big deal to you? Do you really like cars, and allocate a significant part of your budget to them?
Not me. At this point, I only spend on gas, oil changes, and the usual routine ongoing expenses with driving a car. The car itself is paid for, which is nice. What’s even better is that not much was spent on it to begin with. It’s a Honda Accord that I bought a few years back, and it was 2 years old when purchased.
Well, I suppose I shouldn’t say not much was spent, since I could have (should have?) picked up something cheaper. It just seems like an inexpensive car compared to what I see many other people driving, including some I know. Including a person who just recently told me that he bought an new Audi. This car goes for somewhere in the range of $50k when new.
I’m sure he makes a fair amount more than me, based on what I would assume about the situation. So, he can afford it while I can’t.
Sure I would like to drive that car. Sometimes it can be hard to avoid those little sparks of envy. After all, no matter how much I think keeping up with the Joneses is a waste of time, I’m only human. But I’d more like to be able to afford to have the choice to buy it. Knowing full well I wouldn’t actually buy it!
Analyzing how much more it cost to drive the expensive car was an exercise that made me feel better about it. Here’s the thing: the difference in the purchase price of those 2 cars is around $35k. Not a small amount!
Looking at this further, let’s assume that each car is driven for 7 years. This means that an incremental $5k per year was spent on the more upscale car by this guy. That comes out to just over $400 per month. It doesn’t matter if it was purchased up front or not, this is the effective price paid to use the car, regardless of payments.
Let’s assume he drives the car only 1 hour per day. That’s very likely too high of an estimate, since I believe he has a commute that isn’t more than 15 minutes each way. But let’s say 1 hour per day, to account for more driving on weekends. That means around 30 hours per month. To be even more generous, let’s go ahead and tack on another 10 hours. So let’s make it 40 hours of driving per month, which I’m guessing is more than what he actually drives anyway.
Doing the math, he’s spending $400 per month extra for 40 hours of an upgraded ride. Meaning, just over $10 per hour!
Would you pay $10 per hour of driving to upgrade your car? I sure wouldn’t. That wouldn’t make sense, or be worth it.
Yet, that’s essentially what this guy is doing, compared to a more modest yet solid alternative.
I know I’m probably rationalizing this a bit, but it makes me feel a lot better about the gently used car I bought and am still driving 🙂
My Questions for You
Have you ever thought of the costs of upgraded or expensive alternatives in this way?
Would you pay that much more for a better ride?
Are there any other purchases that you have made that have been worth the incremental costs, when viewed in this way?