When I was young, my elementary school had one of those Scholastic Book Fairs.
You know the type, the ones where you got an old catalogue printed on paper so thin it would make a newspaper wince. Inside, the company sold all sorts of books, gifts, and posters spearheading straight into the hearts of third graders everywhere.
From one of those catalogues, I bought a poster of a red sports car. A Ferrari Testarosa:
I hung it on my wall, and every night before bed I’d dream about growing up to be able to afford something as cool as a Ferrari.
It wasn’t until I was nearly 30 years old that I’d realized I’d been lied to my entire life.
The Myth of Status Goods:
Ask any car enthusiast, and they’ll tell you – a Rolls Royce Phantom is considered one of the finest cars in the world.
The Car and Driver website explains it clearly: “The Phantom is not only the ultimate status symbol, it’s the Holy Grail of handcrafted luxury automobiles.”
And they mean that handcrafted designation literally. The car is so hand-made, there’s literally a guy who’s entire career involves grabbing a fine-toothed paintbrush and painting ruler-straight stripes down the car’s side, by hand:
The price for all that handmade creation? An MSRP which starts at $425,000.
Wait… wait… wait…
Can we stop for a minute?
We live in a world where not only do rulers exist, but where machines can single handedly land airplanes and AI can create their own languages. Those same machines definitely mastered straight lines decades ago, and their efficiency could surely drive the half-a-million dollar sticker price of a Rolls Royce back down to earth.
But of course, Rolls Royce, and its Ultra High Net Worth clientele, don’t want this. Which exposes the farce of status symbols for what they really are:
Status symbols are no longer better. They’re simply different.
There was a time in history when status symbols were a race to perfection.
- A fur coat kept you warmer than any other material.
- A tailored suit fit your body better than the quickly manufactured sweatshop productions.
- An automobile was far faster than a horse-drawn carriage.
But slowly, over time, things became too good. When machines began perfecting straights lines better than humans ever could (and bringing the cost of those straight lines down to a price the masses could afford) the rich could no longer stand out with perfection.
Instead, they needed the lack of it.
So, the only way to drive up the price of status symbols was to flip the table in the other direction. Things started heading down a regressive, weirder path.
The Weird Path
James May, one of the most famous car-reviewers is the word, lives by an often quoted motto in the world of automobiles:
It’s more fun to drive a slow car fast than a fast car slow.”
It’s an attitude that’s left him, a guy who’s driven almost every car on the planet, citing a Fiat Panda as more enjoyable than the previously mentioned $500K Rolls Royce Phantom.
The Stig, James May’s mysterious co-host, likewise said that you couldn’t “just drive” the world’s fastest car, the Bugatti Veyron. Nor could you just floor it.
Instead, you had to look a football field in front of you at all times. You had to strategize in advance, and give serious thought to how hard you planned on pressing the pedal.
In other words, the Bugatti reached circus-like levels of performance so impractical, it was dangerous.
As middle-class people, we do not appreciate this. Even to this day, I find myself lusting over expensive cars.
But by any objective measure, even the Mazda 3 I bought for $13,000 is a “better” car for the average road.
- The Mazda 3 is more comfortable driven over long distances.
- It gets better gas mileage.
- And it can more safely navigate the speed limits of the road.
And the Mazda has one last, albeit minor advantage over the Bugatti.
It’s literally $1.2 million cheaper.
Do you really want something? Or do you just want what you don’t have?
Look, I’m not saying that that I’d pass on a Ferrari or Bugatti if you handed me the keys tomorrow. I have no doubt that one of these insanely expensive super cars would be tons of fun to drive. At least temporarily.
But there’s an important distinction for anyone wondering whether this whole saving money thing is really worth it. These status symbols are fun, first and foremost, because they’re different.
Not necessarily because they’re better.
A Rolex watch keeps time worse than your iPhone. They require frequent maintenance, and by nature of their design, become “fast” or “slow” after a while. But everybody owns an iPhone, so suddenly, the worse option becomes the more expensive option.
I suspect this is why people like Dan Bilzerian or Felix Dennis say that being rich is overrated. Because they essentially dedicated their lives to purchasing a novelty. And then, that novelty wore off.
I imagine it’s like getting let in on a secret you’ve been dying to know for ages, only to realize it wasn’t nearly as interesting as your mind had hyped it up. Or unlocking a new level in the video game, only to realize the levels you already had were better all along.
Avoid the temptation of status symbols by living in the sweet spot
There is one place where the quality and value of goods hasn’t yet been destroyed by the arms race of exclusivity.
It’s called the mainstream. And it’s everywhere around us.
- “Average” cars today are more practical, convenient, and affordable than any time in history.
- Long-distance commercial travel allows us to affordably see parts of the world our ancestors could only dream about.
- The internet grants more connection, entertainment, and knowledge than humans have ever experienced.
And even better? As long as you stay within the lanes of sensibility, these things actually benefit from their lack of exclusivity.
- The more people buy an average car, the cheaper those cars become.
- With more consumer emphasis on travel, the smaller the world becomes.
- The more people use the internet, the more knowledge we all share.
This should be the goal of your money. Aspire for happiness. Not novelty.
If you do that, your dollars will go farther. You can then use those excess dollars not to impress others for the sake of being different, but to work towards your own internal goals.
Before you know it, your savings will allow you to purchase a status symbol unlike any other – your financial freedom.
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This one really hit close to home. I love cars, Top Gear, and James May. I drive a 2013 Hyundai Sonata that I’ve owned for 7 years and I literally think about buying a new car every day, several times a day. I pour over car news and reviews, but I never pull the trigger. I never pull the trigger because I’m also deeply interested in personal finance. Most “car guys” I know go out and finance a car so expensive they have to finance it over a period of 84 months and still end up with a monthly payment of $800. I want to be a new category of “car guy” the kind that still has the knowledge, can tell you the difference between a carburetor and fuel injection, but saves up the entire cost of a “new” car and pays cash, I never want to finance another car again.
I’m a car guy. Bought new twice because it was what I wanted and “had to have” and then I learned that wasn’t a great idea since I’m going to get bored of the new car or want something different in the not so distance future anyway.
Now when I get bored of a car I just buy a different one — very very used – like sub $5k used.
It’s actually pretty fun.
And it helps when you can actually fix your own crap. (and also have a backup vehicle for the inevitable times you don’t want to fix your own crap before the next morning to get you to work)
Interesting take, Jay!
I had an awesome conversation with a “Corvette Guy” recently. He started talking about all the dirt cheap 10-20 year old Corvettes you could buy if you knew what to look for. He basically said that a savvy car guy could buy an old, really fun to drive sports car, drive it for a year or two, and then sell it for the same price (or more) than they bought it for. It opened my mind to the idea of seemingly unfrugal cars being surprisingly frugal.
Sounds similar to what you’re doing, and maybe something Alex could look into!
Hey Flapjack, Is there an option that makes the gumgum ads disappear for keeps once closed. I kept getting a Lexus ad. Your boy does not need a Lexus. Great article my dude!
Who’s Flapjack?
You should be able to close any of the banner ads. You’re stuck with the in content ads, unfortunately, unless you’re rocking an ad blocker or something. I can’t have the site losing money!
Hey Dudehammer, Okay that make sense. I’ll try ‘er out. Have the Wednesday of your dreams.
In The Millionaire Next Door, and The Millionaire Mind, by Danko and Stanley, they interviewed bunches of self-made millionaires. What they found was that most of them lived in homes that were 40 years old, and averaged 2,000 square feet of living space in nicer middle class neighborhoods. Most of them drove Toyotas, with Chevy and Ford coming in a close second. All of them used cars that were just a couple of years old. And the watch of choice was a $ 30 Timex. So you are absolutely on the money with this post! Awesome job!
One of them most important books I’ve ever read!
Pretty funny, I also own a $30 Timex and love it, haha!
What a fantastic article. I never looked at things this way, and I feel like you’ve really opened my eyes. Love it Money Wizard!!!! Keep the good stuff coming.
Thanks Steven!
This is what makes your blog stand out from the rest; the insights you make are original, relevant and force the reader to rethink the way society has taught us. I often point out to people that someone making $50K USD per year is able to live better than the world’s richest could 100 years ago due to technological advancement, medicine, etc. Also, CONGRATs on the engagement and I’m glad to hear the thief stole the wrong suitcase from you. I look forward to your next post, keep up the great work!
Awesome to hear, Andrew. Thanks so much man.
I’m a car but… and I certainly will continue to by sports cars. It’s not about the pure speed either.
But… it’s a relative situation. You don’t need a million dollar hypercar to have fun with cars. An older sports car will do just fine.
Truth, which is why I’m so intrigued by that Corvette Guy’s strategy. (mentioned earlier in the comments)
One of the best and most sane articles I have read for as long as I can remember.
Regards and thanks a heap
Thanks Peter!
Such an important lesson to learn. Nice write up.
It takes some introspection to really think about WHY you want certain things. I’ve found that pursuing status symbols triggers the treadmill effect. It’s never enough. There’s always a nicer car, house, watch, etc.
Thanks Dave. I agree, the why is the most important part.
Hi,
Avid car guy here. I have owned a lot of cars over the years and I have been able to drive most of my childhood dream cars.
My strategy is to find low mile, heavily depreciated cars through a private party seller. I stay under 15,000 and insurance is reasonable.
I drive the car for 1 to 2 years and then I sell it to a private party. I usually make money on the deal and then I look for my next car.
The fun part is finding the car. I keep a list of all the cars I still want to own and then scour the internet for them. You meet a lot of other enthusiasts on the way and it is a lot of fun driving all of the cars you wanted growing up
Very cool! This is almost identical to the strategy my Corvette Friend shared with me.
Just goes to show that much like saving money, retiring early, etc… almost anything is possible with a bit of planning and intentional living.
Hmmm… let’s see. You wrote,
” Aspire for happiness.”
Aspire: “to seek to attain or accomplish a particular goal”
I fully understand the intent of this statement but in a practical article about not spending money (foolishly), it is out of place.
How do you know when you have reached ‘happiness’? There is a visceral reaction within the mind when one spends money; therefore, could you be promoting spending money?
I think the better choice of something to aspire for would be contentment.
Contented: “feeling or showing satisfaction with one’s possessions, status, or situation”
If you are content you are not looking for something more – you are satisfied with what you have and are at peace with that.
Just food for thought.
Well said MoneyWizard! Status symbols are still all around us even in the mainstream too. For example, take designer handbags. They’re still “affordable” at $1000, but stupidly expensive at that price. Yet many people lust after these mainstream status symbols — like a new car, a big house, popular brand named clothing, the latest phone model… and so on.
So why do people lust after these things even though they’re not anything like a super expensive sports car? I think it might make them feel good about themselves. Affirmation that they’re doing OK in life.