Car Guy vs Personal Finance Guy

     I’ve always considered myself a car guy.  I think that bright-colored, curvaceous sports cars are works of art.  I had Lamborghini Countach & Porsche 911 posters on my wall growing up.  I would look at car books in the library and read car magazines in the bookstore.  Even now, I watch every Doug DeMuro YouTube video that comes out.  I also like 4-wheel drive trucks, fast SUVs, and classic cars.  I’m a car guy, but unfortunately, I’m also a personal finance guy, meaning I’m not blind to the economics of automobiles.  I realize that cars are depreciating assets or liabilities if you finance them.  I understand you should buy used cars, as the depreciation curve is steepest when the car is new.  I know you should buy and drive a car for a long time.  I get that the car you drive is not an investment . . . but they are just so cool.  

My Car History

     In July 2023, I purchased a new car for the first time after 48 years and two months alive on this planet.  I’ve only daily driven five vehicles, all of which were used.  The first was my dad’s 1989 Ford Ranger, which I received in high school after he died.  I drove that truck until I was in my ER residency.  By 2002, it literally wouldn’t go over 55 MPH, and the roof had nearly rusted through.  As a responsible young ER doctor, I bought a bright red manual 2000 Audi TT.  To this day, it’s the only car that I’ve ever financed, and it was more than I could afford.  Buying a $20,000 used car when you make $36,000 a year is not smart.  But it was beautiful, and I loved it.  

              My (t)rusty Ranger and the TT

     I drove the TT for almost ten years until I bought a used 2008 Hummer H3 for $22,000.  That vehicle was simply more practical driving amongst the oilfield trucks of West Texas than the tiny TT.  I loved that Hummer and drove it until late 2019 when my wife convinced me to sell it for safety reasons.  I drove long distances through some remote areas of Texas, and the Hummer was no longer reliable.  My next purchase was a splurge: a used 2018 Jeep Grand Cherokee Trackhawk, which I still own and have no intention of selling because it is awesome.  Unfortunately, my driving patterns haven’t changed much, and I have put over 60,000 miles on it in 3.5 years, so I decided to purchase something else for my bi-monthly commute.  

My (almost) dream car

     I have also had two other cars, although they weren’t my daily drivers.  The first was a 2012 black BMW 328i, which I bought from an oilfield manager who got transferred overseas.  I didn’t need it, but it was $12,500, and I thought it would be fun to try a BMW.  This car taught me about black leather interiors in Texas and the dangers of run-flat tires (and no spare) while traveling long distances at night.  It didn’t last long, but at least I learned some valuable lessons.  Next, I bought my dream car.  I have dreamed about a Porsche 911 since I was a child.  I already mentioned the poster on my wall and have always wanted one, specifically a Targa top.  Once I became an attending, I could suddenly afford one.  For 11 years as an attending, I looked at the Porsche website, read Porsche articles, and watched Porsche videos.  I looked at them so much while on shift that my colleagues were like, “Just buy one already!”  So, in 2017, I finally purchased . . . a 2015 Porsche Cayman GTS.   

What?  No matter how much money I had, I couldn’t make myself spring for a 911.  The manual Cayman was a mid-engine blast at $70,000 instead of $100,000+.  The flat 6 made wonderful noises at high RPMs; it was fast, fun, exciting, and beautiful.  It was everything I always wanted, but I never drove it.  

     I couldn’t drive it in W.  Texas due to the potholes, large white F150s kicking rocks everywhere, and the lack of a dealership for 350 miles in any direction.  So, I left it in Austin and didn’t drive it.  My wife hates riding in manuals as the shifting makes her feel ill, and the transmission was also a pain in the ever-expanding Austin traffic.  Additionally, I got in two minor accidents during the three years I owned it.  First, an 18-wheeler blew a tire right in front of me on the interstate, causing me to run over a piece of steel-belted radial, damaging my front end, and puncturing the radiator—$ 17,000 in repairs for something that any other car would have driven right over.  Then, a moving van rear-ended me at a stoplight.  I have no idea why; just distracted driving, I guess.  It was just cosmetic damage, but it was still a significant inconvenience.  I loved looking at it in my garage, but for the last year or so, I just didn’t drive it.  My wife finally convinced me to sell it during the pandemic when used car prices were high, so fortunately,  I didn’t lose too much.  While I hated to see the car go, I learned a few more valuable lessons: insurance is expensive for a sports car that you never drive, repairs are costly on Porsches, depreciation is real even during a pandemic, police pull you over a lot when your car looks fast, and small cars are hard for moving vans to see (apparently).   

$17,000 worth of damage??

My New Car

     I don’t want to seem disingenuous, so I’ll plainly state that I am in a financial position to afford any car that I wish to, within reason.  While I can’t buy a 1967 Alfa Romeo 33 Stradale (the most beautiful car ever, in my opinion), I could buy a purple Lamborghini Huracan (which would make my younger son very happy).  Still fast, but more realistic, I could buy a new Tesla Model S Plaid, Porsche 911 Targa, or Mercedes GTR.  More practically, I could buy a Jeep Grand Wagoneer, Ford F-150 Raptor R, or BMW M5.  Besides being cool, what else do all these automobiles have in common?  While varied in styling, utility, and perceived value, all cost over $100,000.  So, yeah, I can afford to buy any car I want . . . but why would I?  And since my audience is primarily medical professionals who also can purchase any vehicle they desire, the better question is, why would you?

     After putting 60,000 miles on my beloved Trackhawk, I decided to purchase something else to absorb those commuter miles.  When making a significant purchase, I like to get all the facts on the table.  I am now a married man with kids, and my wife has an SUV.  I don’t drive the kids much unless it is in her vehicle, as it has three rows.  I drive 1800, mostly highway miles a month, and listen to a lot of music and podcasts.  I am also an ER doctor who sees lots of MVAs.  Put all this together, and I need a car to get me from point A to a distant point B in reasonable comfort and safety—no more, no less.    

      Using this, I came up with 10 essential factors, which broke down into just a few categories.  Budget (1-2).  Driving long distances through the Texas backcountry (3-6).  Safety (7).  Heat/Living in Texas (8-10).  When I lived in Chicago, this list would have been very different, including heated seats and all-wheel drive.    

     Using this list, I narrowed my choices to 3 cars.  I started off looking for used examples, but unfortunately, there just wasn’t anything available.  The main sticking point was that most cars have black leather seats.  However, ventilated seats are generally only on the top trim level, which was then over my self-imposed budget.  So, for the first time, I started looking at new vehicles and found a 2023 Honda Civic that fit everything on my list.  It is the base model with no upgrades or options except a “special color” (white).  The only extras were those the dealership added automatically to make more money (lojack and undercoating).  

My new car       

     So, I put a deposit down, waited two months, and got the car.  It is clean, smells good, and has 6 miles on the odometer.  The car was $25,300, but with taxes, etc., it was $29,500 out the door.  It meets every criterion on my list.  

Should I Be Embarrassed to Drive a “Cheap” Car?

     After having cooler and more expensive cars, was I embarrassed to drive a Honda Civic?  Should I care that nurses, residents, and patients might have a “nicer” car than I do?  Of course not.  First, 30k is not cheap, despite the average car price in 2023 being $48,000.  There are a lot of cars out there at a lower price point, but unfortunately, they didn’t meet all my criteria.  Additionally, I remember very clearly driving my 1989 Ford Ranger.  I was lucky to have reliable transportation and am grounded enough not to forget it.   

No One Cares What You Drive

     First, I genuinely don’t care what other people think about me, which might be one of my superpowers and/or might be a sign of serious self-absorption.  As Coco Chanel once said, “I don’t care what you think about me.  I don’t think about you at all.”  But let’s be honest, after high school, no one really cares what you drive.  No one is judging you in the hospital parking lot.  Your neighbors aren’t talking about you.  So many people drive around in $100,000 cars these days that no one notices.   As long as you have reliable transportation to work, your friends shouldn’t care what you drive.  If they do, find new friends.  

Modern Cars Are Great

     I’m old enough to understand that the worst car today is objectively and subjectively better than any car from 25 years ago.  I learned this lesson when my wife purchased a used $12,000 Chevy Cruze for our Au Pair to use.  One day, I had to drive it and found it roomy, sufficiently powerful, comfortable, and with a backup camera and Apple Car Play.  It was the perfect car to drive around Austin: easy to park, good gas mileage, reliable.  I would have daily driven it, but it was too small for the dangerous roads of West Texas.  The Honda Civic I just purchased is a nice car.  It is undoubtedly better than any car either of my parents ever owned.  It is exactly what I need to commute for the next several years.  

Wealth Is What You Don’t See

     Wealth is accumulated assets such as cash, investments, retirement accounts, and businesses.  If someone is wearing a Rolex, they have already spent the money to buy it, and that money is no longer working for them to increase their wealth.  Just because someone drives an expensive car doesn’t mean they own it.  They are often financed, creating a significant liability.  Even if you pay cash, you have purchased a depreciating asset that begins to erode your net worth.  What someone drives has very little to do with how wealthy they are.      

Why Do Medical Professionals Buy Expensive Cars?

     We’ve already discussed that cars today are safer, faster, more reliable, and more fuel-efficient than ever before.  They are also generally more expensive, so why would an educated medical professional purchase a “luxury” car that costs $100,000 or more?

Perceived Quality

     There is still the perception that certain car brands are better than others.  Historically, there was some truth to these perceptions, such as when comparing American to Japanese or European brands in the 1970s and 80s or when looking at the quality of early efforts from Korean manufacturers.  Today, these long-held beliefs are more myth and marketing than reality.  Are Volvo’s safer?  According to US News and World Reports, Volvo is currently tied for 3rd with Hyundai and Subaru.  Are BMWs still the ultimate driving machines?  Many argue they are heavy, bloated, and numb, the antithesis of the ideal driving experience.  Are Mercedes’ the most luxurious?  Have you checked out a Genesis lately?  Are American cars unreliable?  In 2023, JD Power & Associates ranked Chevrolet 2nd behind Toyota regarding brand reliability, while Hyundai ranked 3rd.  Do Korean cars have poor quality?  See Hyundai’s mention in the previous answers.  Discerning shoppers, especially those with science backgrounds, should base decisions on facts and research instead of propaganda and the carried-over beliefs of their parent’s generation.   

Entitlement 

     Medical professionals, as do their spouses, often have a sense of entitlement regarding cars.  The word deserve is one of the most dangerous in the English language, but I hear it a lot when it comes to cars and houses.  “My wife deserves this new house because she supported me during medical school and residency.”  “My husband deserves this car because of what I put him through during my training.”  The correct term would be desire.  Your wife desires the new house, and your husband desires the new car.  Learn to quell your desires and think rationally about your finances, especially at the beginning of your career.  What your family actually deserves is financial stability.    

Status

     Doctors and other medical professionals have a certain status within our society.  We are held to a high standard of professionalism, behavior, and ethics.  There is a perception that we make a lot of money and live a wealthy lifestyle.  Unfortunately, many medical professionals buy into this hype.  Too many community hospital parking lots look like Mercedes or BMW dealerships.  There is often the old-school country club vibe where you feel pressured to drive a luxury car to keep up with your peers.  I’m not trying to impress anyone.  I have never thought of myself as a medical student, a medical resident, or a doctor.  I still don’t.  One of the main reasons I went into emergency medicine is because I consider it the blue-collar specialty, and I’m a blue-collar guy.  Medicine isn’t my identity; it’s my job.  Our professional status grants us a certain amount of respect within the community, but our work and reputation solidifies it.  You don’t need a car to assist you. 

Car Advice

     Don’t be lured by the siren song of the expensive car, especially early in your career.  The decision to buy a less expensive car when you start your career could be worth more than $300,000 at retirement.  Continuously driving less expensive cars could be worth over $1,000,000!  If you want a breakdown of the cost savings from my new car purchase, please read “Navigating the High Cost of New Cars: Strategies for Smarter Purchasing”.  For the average medical professional, I recommend using the following 5 rules to choose your next “new” car.  

  1. Decide a price that fits your budget* and your long-term investing goal.  Pay cash for any subsequent car purchases.  
  2. Make a list of the things that are important to you, and label those that are non-negotiable.
  3. Your first choice should be a lightly to moderately used car.  If you can’t find anything that meets your non-negotiable criteria, look at new vehicles.  
  4. Stick to your price.  Beware price-creep.    
  5. Drive it for at least eight years.  Once your loan is paid off, save the same amount as your monthly payment so your next car purchase can be in cash.  

*Typical car buying rules, like 20/4/10, don’t apply as you make too much money to spend 10% of your gross income on a car.  This rule of thumb states that you should put at least a 20% downpayment on any vehicle you finance, with a term of no more than 4 years, and that your total automobile-related expenses (loan payment, insurance, repairs, gas, etc.) be no more than 10% of your income.  I suggest putting 20% down, financing for no more than 3 years, and paying no more than $1,200/month if you make >$200,000/yr or no more than $800/month if you make between $100,000 – $200,000/yr.  

              Drive your car for 8 years – My H3

What Do You Value?

     Ultimately, it doesn’t matter how much you spend on a car if you don’t spend more than you can afford and if you aren’t spending money on something you don’t value.  A colleague bought a Porsche 911 GTS about the same time I purchased my Cayman.  He hadn’t been an attending very long but could afford a $100,000 car.  He continues to daily drive the car six years later, has put tens of thousands of miles on it, and continually talks about how great it is.  He values the car, so for him, it was worth it.  His passion for that car and my lackluster ownership experience have taught me that I’m not quite the car guy I thought.  Although I love looking at and reading about sports cars, I don’t value owning and driving them.  I value saving and investing, ensuring my family’s financial future.  I cherish the freedom financial independence provides, allowing me the one thing money can’t buy: time.  

What I value