Do I Need/Want a New Car?

Question of the week:

Here is my car purchasing dilemma.

I was raised in a blue-collar city in the Midwest, in a community where people had to really work hard to stretch the dollar as far as they could. I also come from an immigrant family and my grandfather left a very impressionable message by the way he lived, helping us understand the value of the dollar and understanding that you should take care of yourself, but never felt a need to go over-the-top or to live a “showy” lifestyle. He was known for generously giving to charity and helping his grand-kids schools, and instead enjoying simple luxuries instead of an extravagant lifestyle.

I have grown-up always living frugally as my parents spent the bulk of their decent size income on our private education. That’s what was important to them, and they really couldn’t afford any luxuries after paying tuition.

Fast forward 20 years, the frugal mentality of a small-town boy is still ingrained in me, although we live in a community surrounded by much more affluent people who are a bit more materialistic.

I still drive a 2011 Toyota Corolla since it is paid off, and it serves its purpose. I bought my wife a luxury car since she was embarrassed to drive in a beat-up Sedan, but I’d prefer to put away our money and save-up towards future investments instead of buying a new car for myself. I’d rather take the short-term embarrassment if it means a brighter and more comfortable future.

Which leads me to my question. To be totally honest, I too am growing slightly embarrassed of driving my Corolla despite its decent condition. According to AJW, is there a point where I should get over my frugality and spare myself the embarrassment? I am also SLIGHTLY concerned that since a car is such a strong status symbol, I could end up depriving myself of future networking and friendship opportunities since after-all, we human beings ARE extremely judgmental.

Sincerely,
David

Dear David,

Your letter raises such great issues. Where does the happy medium lie between being an irresponsible spender and being too tight with money? Your family legacy taught you to appreciate both hard work and the value of a dollar. These are tremendous gifts.

At the same time, you are realizing, correctly, that frugality can have a downside as well. While large parts of our society, with its fascination with social media, encourage people to give false impressions of wealth and happiness, it is nonetheless true that people, quite reasonably, judge you on how you present yourself. For example, we have always wondered at those who turn to thrice-divorced marriage counselors. If you are in the financial industry, it is reasonable for potential clients and referral sources to notice if you present yourself as barely making a living. Their first impression will not inform them that you could afford a better car but choose not to buy one. From that perspective, a more recent car is a business investment. (Apparently, for multi-millionaire celebrities, dressing in jeans with holes and in tattered sneakers is cool.)

Partially because of the semiconductor chip shortage, car prices are skyrocketing right now. We certainly wouldn’t encourage you to buy a new car if that is an irresponsible step at the moment. However, we would say that shifting your mindset to realize that some things that your grandfather would have seen as luxuries may be closer to necessities in your life. In that vein, we are glad that you opted to have your wife drive a car that fills her with pride in your economic success rather than being embarrassed. We don’t for a minute think that she mindlessly splurges on unnecessary items. In that case, if this was important to her, you were wise to recognize that.

David, you and your wife sound like a couple on the path to greater financial and marital success. Treasure the precious teachings of your past while you stay open to being flexible to the shifting realities of the present.

Onwards and upwards,
Rabbi Daniel and Susan Lapin


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12 thoughts on “Do I Need/Want a New Car?”

  1. Froylan Farias

    That’s a great response Rabbi and Susan! I too faced David’s issue. I did finally upgrade vehicle when a good opportunity came. Thank you for sharing. God bless always!

  2. Alessandro Mecle

    David has raised complex questions that many of us have pondered to some extension. I would like to add another perspective, related to my reality as someone who lives in Brazil. Here, besides the question of drawing the line between financial responsibility and lifestyle, we also have to consider the threats from crime. It is something to be managed with balance, otherwise, one’s lifestyle can make him a target for criminals. Each reality has its own challenges.

    1. That is certainly true, Alessandro, that each society and circumstance has its own rules and conventions that one needs to take into account.

  3. Hello Rabbi Daniel and Susan Lapin, I first met you on the radio on the Dave Ramsey Show. One possible direction for David might be to set a new car as a goal and save weekly so he can eventually purchase the car with cash. I believe that it would give David the satisfaction of a goal accomplished and being frugal at the same time. I really enjoy reading your emails!!

  4. Jason Determann

    Being that you can rarely get an honest deal trading the car in and trying to sell to the public is too much of a pain in the butt, the best way to get your $$ out of a car is to run it into the ground. Then just junk it and get another one. If looking “professional” is a concern then you really need two cars one just for show and another you can afford to play bumper cars with the insane traffic of today. Better still, just rent a fancy car when you want to look good. Remember, junker cars have cheap car insurance rates.

  5. Memories: Memories:
    We bought our first house in 1987. It cost $17K to walk into the front door. I had $17K in the bank. I then borrowed an addition $3k from my father in law, so I could buy food and pay utility bills. Over the next eight years, I drove a 1966 VW bug without air-conditioning. This allowed us to pay off a 30 year mortgage in roughly 9.5 years. Mortgages ran 9% back then!
    A couple of years later, I was able to pay cash for a 1988 Chevy Nova, a car that was a Toyota Corolla with a different badge made in the same plant, for my wife. Back in those days, the wife always had the newest car, with air-conditioning. It was a law of nature.
    Today I drive a 2019 Lexus GS 350 f-sport. I call it my, “I love me car.” If I owned it when I was eighteen, I would have known for a fact if its top speed was 142 mph. Given my advanced years, I can only attest that it can pass a truck on the Interstate at 85 mph.
    If you pay cash for every car you ever buy, the effect over the course of a lifetime is quite remarkable.

    1. I assume, Henry, that it is mathematical calculation alone that let you know that your car loves going 85 mph.

  6. I’ve been seeing, recently, a couple of news bits about the price of used cars being up (around 45%). My guess is due to chip shortage which is affecting the high price of new cars. Me personally, I would rather have a car with no software, and has roll-down windows. I’ve worked with software enough to know the issues that can accompany it.

    I have an interest in post-apocalyptic books and films. One fictional book I recommend reading is ‘One Second After’ by William Forstchen. It’s about an EMP attack. The only cars that are able to function are an old Army jeep and a Ford Edsel.

    1. Rabbi Daniel Lapin

      Dear Catherine-
      Thanks for your interesting letters. I know what you mean in writing that you’d rather have a car with no software and wind down windows (manual). I recently had the chance of driving a late ’60s muscle car the subject of my adolescent dreams. It was actually rather terrible when compared even to a Hyundai today. We forget how much cars have improved. It’s not just the software and windows. It’s suspension, steering, seating, and many other aspects of driving.
      Cordially
      RDL

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