Do you judge people by their cars?

Look at the two cars above. Can you tell which car is driven by a millionaire and which is driven by someone in debt living paycheck to paycheck?

No? Neither can I.

I have heard it said never judge a book by its cover. I am going to add a new twist on this saying. Never judge a person by the car they drive.

This is tough. I know better and I still  struggle with it myself.

If I see two cars side by side, it doesn’t matter if they are new or used. If one is a Mercedes and the other a Toyota. My first instinct is to assume the person in the Mercedes is rich or at least financially secure. I will further conclude the person driving the Toyota is middle class. This is what the marketing ads and society have taught you and me.

I, like you, would likely be wrong.

According to Dr. Thomas Stanley’s book “Stop Acting Rich: …Start Acting Like A Real Millionaire,” The number one make of car most recently purchased by millionaires was Toyota. Surprised? I was too.

What about people driving Mercedes? Surely they are rich?

According to Automotive News in September about half of all Mercedes are leased. This means that half of Mercedes seen on the road aren’t owned by anyone but the leasing companies. Instead these cars are driven by people who believe they will always have car payments. Since they will always have car payments, they might as well drive something nice. I have heard this too many times. I have even believed it myself in the past.

The people driving these leased and financed cars are more likely to be focused on only the monthly payments. They are more likely to believe if I can make the monthly payments, then I can afford the car.

This type of thinking is damaging to ones financial future.

It will leave you with a lot of nice photos of beautiful cars over the course of your life and little else.

The following questions should be asked of the owners with perpetual car payments. I’m also taking the liberty to speculate on their responses.

• Saving for retirement? I’ll get around to it someday.
• Children’s education savings? It is important, I will get to it  next year.
• Saving for a down payment on a home? Of course I want to own a home, but I can’t afford it right now. Things are tough and homes are just too expensive these days.
• Giving? Can’t right now, I am having a tough time making ends meet.

Do any of these answers sound like you?

If they do, I’ve got good news. I can help.

It is very simple. Not easy, but simple.

Sell your debt laden car  and drive something you can afford to buy with cash.

This will mean saving money and making sacrifice. It might mean giving up some things in your life to do so. Maybe you could drink coffee from home instead of Starbucks. Maybe taking your lunch everyday instead of eating out. Maybe canceling some of your cable channels.

This is all about choosing to be more intentional with your money.

If you can put your ego in check and drive a cash car you can truly afford there is a wonderful payoff. The payoff is you will be working to build your future and not the future of the company selling you the new/used car, financing your loan, or providing the lease.

According to Edmunds in an MSN article, the average car payment for a financed vehicle is around $464 per month. The average car lease payment is around $418 a month, also according to Edmunds in the same MSN article.

What could you do with this money if it wasn’t going to car payments?

Maybe you could…

• Save some to upgrade your cash car (you should be able to quickly with $460 or $418 a month)
• Build an emergency fund for your next financial crisis
• Pay off other debts like student loans and credit cards
• Add to your 401K, IRA, or retirement plan
• Start your child’s college fund
• Save for a down payment for a home
• Help a friend or family member in need
• Give to your local church or charity

These are just my thoughts regarding where the money might go. You may have other priorities. The point is, if you can stop making your car such a financial drain, you can focus on your own future.

I hope this post has given you a reason to think about your current situation. What car are you driving? What kind of car payment are you making? What else could you be doing with that money to improve your life and the life of your family?

Lastly, the next time you see someone driving a Toyota or Mercedes remember this question. Who is the millionaire? Who should I be emulating?

“If you want to be successful, find someone who has achieved the results you want and copy what they do and you’ll achieve the same results.” – Tony Robbins

Do you want to be a millionaire or just look like one? Choose wisely.

Please let me know your thoughts about this post. Also, please share it with your friends and family on Facebook or Twitter.

Question: What would you do with the money from your current car payment if you didn’t have it?