About a week ago, one of my best friends called me for advice on a financial move he and his girlfriend were considering making. As a couple, they had already hashed it out. But he wanted an objective, second opinion. So he begins explaining to me how his girl has a fairly new Toyota, in great condition with less than 50k miles, and it’s paid off. However, she’s really been itching to get this Audi, and was thinking about trading her Toyota in.
His advice to her, instead of trading her Toyota in, she should keep it as her “running around” car, and have the Audi as her “styling” vehicle (I’ve learned from him that the DMV area isn’t too kind to vehicles). He then says to me that he was thinking about having a “running around” car and a “styling” car as well, and asks what I thought about the idea. First, I had to confirm that I was hearing him right… “Sooo you guys are talking about going from two cars to four?” He answers affirmatively. Okay… so me being the loving, forthright friend that I am, I informed him that I thought it was excessive.
Given his reaction to my advice, I don’t think I told him what he was expecting to hear. I went on to explain to him that the reason I believed it was excessive is because it would mean double the insurance, double the maintenance on the car, double the annual tag renewal fees, and (in his case) double the car note. Now if you’re ballin’ like that, by all means, do your thing. But as good a paycheck as my friend and his girlfriend bring home, an honest assessment shows that they really don’t have it like that. Yes they can afford the “payments,” but technically, they can’t afford the final price tag (if they could, they wouldn’t need to finance this endeavor). And if you can’t afford the final price tag, you don’t have it like that.
As the conversation continued on with my friend, I became more and more concerned for the mindset he carried. And he didn’t carry it because he’s not a smart guy. On the contrary, he’s highly educated with both book and street smarts. However, society had conditioned him to think in a manner that only benefits big business. He was infected with consumerism, yet had never been diagnosed.
How did I know he was infected? Well remember last week how we talked about society changing the definition of affordability from one of, can I afford this final price tag, to one of, can I afford the payments? In listening to his logic, I could tell that he was asking himself the latter question. He was more focused on the payment, than the total money he would shell out over the long term. Good rule of thumb, always focus on the final bill, never the payments. Because creative financiers will always find a way to make the payments fit your budget, yet they have no concern for how long it’ll take you to pay it off, nor how much money you end up spending over the long term.
Another indicator that he was infected… he talked about buying a home as if a 30-year mortgage was the only way to purchase one. I believe his exact words were, “I want to buy a home before I’m like 35. Because I don’t want to buy a home at 40 and still be paying for it until I’m 70.” This particular line deeply pained me. Because I knew he had resigned himself to thinking that he would be trapped in a mortgage for 30 years. Why this resignation? Because he was exhibiting the first symptom of consumerism. What I’ve dubbed as, “Ninja Killer Syndrome.”