In 2017, Monica and I bought a brand-new Volvo XC90 for $76,000. In the past year alone, we spent $6,529.43 on repairs. Luxury cars are not an investment, and we learned that the hard way.
I am sharing our story so you can make a smarter choice than we did.
Why we bought it
A few years ago, we lived in NYC. We were broke, but we were living it up.
We thought we were doing well for ourselves, and we wanted the world to know it. So we bought the Volvo.
We paid it off fast because we wanted to be debt-free. At first, it felt like a great choice. We thought we were investing in comfort, and we felt like we were riding in style.
What it cost us in one year
It did not turn out that way. Over the past year, we spent $6,529.43 on repairs and upkeep.
That does not include oil changes, gas or car insurance. It also does not count how much value the car has lost since we drove it off the lot.
Here are the receipts.
This was a huge waste of money and a wake-up call.
Cars lose value every year
Luxury cars look nice and feel great to drive. They also cost a lot to keep running.
A home or a stock can grow in value. A car loses value the moment you drive it off the lot, and it keeps losing value every year. On top of that, upkeep on a luxury car often costs much more than on a cheaper car.
What $76,000 could have become
If we had put that $76,000 in the S&P 500 instead, it would be worth $191,479.18 today. Thinking about that makes me sick to my stomach.
Rich people drive cheap cars
Some of the richest people in the world drive cheap cars.
| Person | Net worth | Car | Car cost | Share of net worth |
|---|---|---|---|---|
| Warren Buffett | Over $100 billion | 2014 Cadillac XTS | About $45,000 | 0.000045% |
| Mark Zuckerberg | Over $100 billion | Honda Fit | About $16,000 | 0.000016% |
| Ingvar Kamprad, founder of IKEA | Over $50 billion | 1993 Volvo 240 | About $1,500 (used) | 0.000003% |
Now compare that to the average American.
| Average American | Amount |
|---|---|
| Yearly income (U.S. Census Bureau) | About $70,000 |
| Car cost (Kelley Blue Book) | About $37,000 |
| Share of yearly income | 53% |
The richest people in the world choose plain cars. They know a car loses value, so they put their money where it will grow.
The average American spends a much bigger share of their income on a car. Those stats are wild.
What we will do next time
As a nurse, you work hard for your money. Spend it wisely and put it into things that bring you value for years.
Skip the luxury car and look at cheaper, reliable cars. Our next car will be a used car that we can pay off in full, or in less than 1 year.
We always push smart money choices. That includes where you live and work, so you can earn more and save and invest more. Our post on setting financial goals as a nurse is a good place to start. To see how this plays out at a much bigger income, read about the couple who earns $3.7 million a year and still feels broke.
We learned from our mistakes. We want you to learn from them too.
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Written by Jason, RN. I went from $37 an hour in New York to $143 an hour in California and paid off $128K of debt in under a year. I share our numbers in the Nurses to Riches newsletter and on YouTube.