Want to Be a Millionaire? Drive a Used Honda Accord or Toyota Camry
Here at Torque News, we enjoy driving and testing expensive flashy cars. What's not to like? The truth is, we don't buy the cars we test. They are media loaners. Automakers want the public to have fair and honest reviews and commentary on their cars and we provide it. But would we recommend to a person who is not wealthy to aspire to an expensive car? Not this author. And financial expert Dave Ramsey helps explain why.
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Ramsey is a podcast and radio personality who promotes wealth building through good habits. He is a fan of paying down a mortgage before investing in riskier investments. He himself has been bankrupt and he has been wealthy. Beware financial experts who have only been one or the other.
In a recent video called What Secret Millionaires Don't Tell You, shown here in the Youtube link, Ramsey explains why millionaires often drive everyday cars. Before we try to explain his observation, it is important to know that Ramsey's ideas are not get-rich-quick schemes. Most of his advice is based on his studying and researching actual millionaires and then developing guidelines based on how these real-world wealthy individuals and families have behaved.
Ramsey finds that many Americans in the first stages of wealth, those with a net worth of between one and ten million dollars, have relatively modest cars. He says, by example, that many drive "Used Toyota Camry and Honda Accords." We've tested the Honda Accord and Toyota Camry here at Torque News and we have also owned them. We get why anyone might own one, regardless of how wealthy they were or were not. They are easy cars to love.
Ramsey says that most wealthy people don't buy things like cars and homes for other people. They buy them for themselves. In other words, they don't try to be flashy. They buy what they need and what they themselves honestly prefer. Ramsey says that these people generally do not impress valets who park their modest cars - until they get the tip.
Having known some high-net-worth individuals, those with wealth in hundreds of millions to billions, this jives with what this author has observed. One of the wealthiest individuals I have ever known kept a villa in Cannes France. When I visited him, I discovered that he drove a used Peugeot compact wagon. Possibly the least flashy car in France. Another wealthy individual drove an Outback. One who we knew that was a car nut owned a used Miata and a Subaru STI. Modest vehicles, but a blast to drive. And affordable to nearly any American.
If it were possible to sum up how we have come to view vehicles it might be this. Yes, the more expensive, generally the "better" the cars are. However, as the price climbs, the value equation doesn't follow. The value compared to the price declines sharply. If you don't believe that to be true, look at which cars hold their resale value best and which don't. You will find the flashier, more expensive cars drop in value as soon as they are off the dealer lot. Above is a chart from a just-completed iSeeCars.com study on cars with the largest drop in retained value after just a single year of ownership. Tell us what you notice about the cars on the list of least retained value.
John Goreham is a life-long car nut and recovering engineer. John's focus areas are technology, safety, and green vehicles. In the 1990s, he was part of a team that built a solar-electric vehicle from scratch. His was the role of battery thermal control designer. For two decades he applied his engineering and sales talents in the high tech world and published numerous articles in technical journals such as Chemical Processing Magazine. John's work has appeared in print in dozens of American newspapers and he provides reviews to many vehicle shopping sites. You can follow John on Twitter, and view his profile at Linkedin.