Advise accordingly . . .

SNL- Don’t Buy Stuff.   Hat tip Rob L.



Wow, that was surprising.

Monday’s column on buying a new car (or not) generated a lot of email and Twitter comments. I want to address some of those, plus add a few anecdotes there was no room for in the column.

I thought my premise was straightforward enough — spending decisions should turn on your unique and specific circumstances; there is no “One size fits all” advice beyond general statements like “Don’t spend more than you can afford” and “Save for the future.”

And yet, there was lots of the pushback missed this; I suspect some people never read past the headline.

A few examples:

What if you are retiring in 10 Years?
Of course, that is exactly the sort of specific factor that should enter your spending & savings calculus. 

My paid off 2002 Toyota Highlander has 200k miles, runs great and has all the latest safety features!
Yes, Toyota makes a great product, but no, your ’02 does not have all the latest safety features.

Isn’t all of this spending just so much more wasteful consumerism/materialism?
Yes, hence rule #3: “Figure out what matters, and spend accordingly.”

FYI Kawhi Leonard now drives Maybach instead of his 97 Tahoe
I could not confirm that, but I did find he owns a 1990s era Porsche 911.

On to the real life (admittedly first world) anecdotes:

• A client, knowing my interest in cars, asked my thoughts on his buying a new Ferrari. I gave him an enthusiastic yes. He could buy one every month for the rest of his life and it would not make a dent in his estate. He has told me how much fun the car is to drive, and wonders why he waited so long to get one.

• Another car buff asked about his kids’ cars, and I suggested a high-performance driving school. He took the whole family. Everyone had a great time — and are now all much better (and safer) drivers.
Note: I dislike short wheel base or high trucks for new drivers.

• An old friend wanted to buy a sailboat. He had little experience boating, had not spent much time on the water, and was in the midst of an (expensive) divorce. My advice was to wait a year for his life to stabilize, rather than making such a large commitment to an expensive purchase. He ignored that sage counsel, bought a lovely 44-foot Catalina anyway – and then 18 months later sold it, hardly ever used, for about half of what he paid for it. It was a painful and expensive lesson.

• I have a colleague who is a successful serial entrepreneur, practically lives in airports. He was sick of how much he travelled and being a NY-LON, how much time he spent away from his family. He looked into owning a private jet but was guilt-ridden over the cost of the purchase and climate impact. But here is the thing: a) he could easily afford a private jet; b) he travelled so much it would end up saving him 100s of hours per year. His solution: Share the cost of it with a colleague, and purchase carbon-offsets to resolve the climate change issue. (I was very supportive of this arrangement).

• A large holder of private company stock wanted to build 2 new homes — a new vacation property and a primary residence — at a total cost of ~$11 million dollars. The loan was secured by a lien on the company stock, which was expected to go public within a few years. I was not thrilled with this arrangement and said as much. At least, it was non-recourse (meaning, the lien was against stock/real estate but not the borrower personally). Still if there was no IPO, it would have been a painful and ugly unwind.

I have dozens more examples, and I bet you do, too. Speak to any wealth advisor or CFP and they can tell you 1000s of stories like these. In every one of the above situations, the lazy answer is to Just Say No.

There is no one solution to every possible spending issue for every conceivable set of circumstances. The wide range of attitudes and behaviors towards money are why those proclamations are so misguided as advice. Income, savings, lifestyle, future liabilities, family, goals, and more are what should guide your spending decisions. Just saying no isn’t advice —  its a Calvinist ideology.

Warning people about depreciation is fine; exhorting folks to live within their means is good advice. Informing people of the benefits of purchasing experiences over material goods is helpful. But not everyone reading finance columns are living beyond their means, or are excessively materialistic, or irresponsible with debt.

Advise accordingly . . .




No One Gets Rich by Shunning New Cars and Lattes (Bloomberg, January 13, 2020)

A Modest Defense of Money & Materialism (July 25, 2019)


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