Law of Diminishing Returns applies to cars?

roastbeef · 08-02-2019, 02:55 AM

Quote:

Originally Posted by Humdizzle

Quote:

Originally Posted by roastbeef

i've always liked dave ramsey's approach to vehicles. one way he put it the other day was if you're buying a car for $50k and your net worth is $200k, and the car is going to depreciate almost 50% in the next few years, thats dumb. that $25k is 1/8th of your net worth and that is a hell of a hit.

Gotta spend money somewhere. People just have to decide what percent of their networth/income is worth it for their hobby. I'd rather spend my money on fast cars and fun and an average house... than a large house with an average car. although the latter is the better financial option since houses usually appreciate.

There is a careful balance to everything. My entire motivation for wealth building is my hobbies.

Grip Addict · 08-02-2019, 11:22 PM

Quote:

Originally Posted by roastbeef

There is a careful balance to everything. My entire motivation for wealth building is my hobbies.

I feel we have the same interests mineset, all I do is see you in the same threads.......

....anyway.

I had a discussion with a work colleague a few weeks ago.

Had I not wanted to increase positive gains in my hobbies, cars and guns etc.

I would not have the career drive. If I could just drive around in a blah consumer car I wouldn't have the drive to make more money to then afford a M3 or afford M3 mods etc.

If I were to put a number on it, I think every $7.5-10k a person makes they begin attempting to stretch into the next vehicle range.

eluded · 08-03-2019, 02:48 AM

[QUOTE=Grip Addict;25099903]

Quote:

Originally Posted by roastbeef

If I were to put a number on it, I think every $7.5-10k a person makes they begin attempting to stretch into the next vehicle range.

Exactly..... unless they are married or have kids or own a home or are over 30 or want to retire

Grumpy Old Man · 08-05-2019, 07:05 AM

Whoever said money can't buy you happiness just isn't doing it right
by DAVID BOOTH | AUGUST 2, 2019

https://driving.ca/features/feature-...ness-after-all

I have long held the belief that the “science” surrounding happiness is really just a ginormous crock of smelly brown stuff. I am not talking about just those idiotic self-help books — The New Good Life, 10% Happier, etc. — or even all those positive-thinking “life coaches” — I am looking at you, Tony Robbins — peddling the power of self-delusion. Even scholarly articles — titles like The Secret to Happiness are popular even amongst professional psychologists — perpetuate some truly outrageous fantasies, the most important of which, at least the most important to a car columnist, is that money can’t buy happiness.

Yes, I am really going to take on the oldest truism in pop psychology, a maxim so popular, so universally accepted, that I’m guessing every parent at some point in time mouthed it. Yes, you know it. Let’s say it all together …

Money can’t buy happiness.

Now, let’s never mind that no one in a third world country has ever mouthed these words. Or that it takes the barest amount of common sense to understand that, even in a worst-case scenario, it’s probably better to be rich and unhappy than poor and unhappy. Let’s just take those as givens, shall we? What I’d really like to talk about is this misconception that possessions — the things we are supposedly wasting our money on — can’t make us happy. Indeed, the accepted wisdom seems to be that said possessions make us decidedly unhappier.

The theory, as neatly explained by David Futrelle in Time magazine’s recent The Science of Happiness journal, is that, because we humans are adaptable creatures, we will always “overestimate how much pleasure we’ll get from having more.” We quickly adjust to our newfound wealth — the “hedonic treadmill,” Futrelle calls it — our increased affluence becoming our new paradigm. Thus, says the theory, the joy of the new car you just bought or the spanking new condo you just moved into will always be fleeting.

The reason, goes the theory, that that the new Porsche or BMW isn’t making us happy is that we are always comparing ourselves to our neighbours, H.L. Mencken famously quipping that a happy man is one who makes $100 more than his wife’s sister’s husband. Happiness scholars, says Futrelle, have found that “how you stand relative to others makes a bigger difference in your sense of well-being than how much you make in an absolute sense,” which is the reason why, says the author, in the case of cars, when the shiny newness of said new Porsche wears off, “you don’t question the notion that you can buy happiness on a car lot,” but rather your choice of car.

That’s why pretty much every author on the subject says that buying “experiences” is a surer road to fulfillment. “Things that don’t last create the most lasting happiness,” says Futrelle, mainly because, as he quotes Cornell University psychologist Tom Gilovich, “experience tend to blossom as you recall them,” not age like the suddenly tatty Chrysler in your driveway. Indeed, that seems to be the reason, according to a recent University of Colorado survey, that students got more pleasure out of “doing things” rather than “having things.”

It is also, however, where this whole eschewing personal possessions theory falls apart. Last time I looked, the majority of said experiences — certainly the majority of the experiences that bring me pleasure — require a certain amount of … let’s call it equipment. For instance, I loving racing cars round a track and, having done pretty much nothing but for the last 30 years or so, I can absolutely assure you said experience will be a whole lot more joyful in a brand new Lamborghini than it will be in a clapped-out Toyota Camry. Anyone not understanding that simple equation either hasn’t driven a Lamborghini — which, counter to Futrelle’s thesis, I can assure you will remain a source of contentment long after the newness wears off — or has no idea of how to drive a car. The same would apply for anyone looking to “experience” off-road Jeeping, long-distance boat trailering or just the ordinary act of hauling of cord wood. Anyone thinking that the quality — and, hence, the cost — of your possessions won’t add to the joyfulness of your experience is probably just a poor person fooling themselves.

Oh, I suppose one could make an argument for diminishing returns, that the rewards for trading up from a new $69,998 C8 Corvette to a $631,680 Lamborghini Aventador SVJ will not be commensurate with the monies spent. Or that possessing five Lamborghinis won’t make you happier than owning just one (though I can see an excellent argument to be made for having five Lambos stored at five different race tracks — let’s start with Laguna Seca — around the world).

But such relativism works both ways. Sometimes it isn’t the absolute amount you spend, but rather the relative expenditure that matters. As an example, I have weathered many a rainstorm aboard a motorcycle in both cheap and expensive rain suits, and let me assure you that my “experience” has always been far “happier” when I was not chilled to the bone. I am in possession of both Bell Revolver ($300) and Schuberth E1 ($1,000) modular motorcycle helmets. Both share almost identical spec sheets, but wildly different build qualities. Care to guess which one makes me happier? And no, I have yet to suffer what Futrelle calls “hedonic adaption” — that which is superior eventually becoming our new norm — despite owning the latter for more than four years. Indeed, I just went out and bought an identical Schuberth precisely because I knew it would make my long-term experiences happy when the current one wears out.

Indeed, the whole notion that “money can’t buy happiness” would seem to be based on the fallacy that the problem lies in the mere possession of a material good and not the reason to possess it. That trying to keep up with the Joneses will not make you happy in the long term — envy being, after all, the crack cocaine of emotions — is somehow still news absolutely baffles me. To blame the resultant lack of contentment on the possession and not the motivation is sheer idiocy. Indeed, even Futrelle quotes professor Gilovich as noting that people are “happiest when they are wringing experiences out of everything they spend money on.”

Or, to quote a famous Lexus ad: “Whoever said money can’t buy happiness just isn’t doing it right.”

ASAP · 08-05-2019, 08:02 AM

If we are strictly talking about new cars; I think the biggest jump anyone can make is from something like a Corolla ($20K) to something like a BMW 340i ($55K). No law of diminishing returns applies there... everything is far far better in that class for the price and the person that usually makes a jump like that is blown away by everything in the more expensive car... The moment you start going above that 55-60K range, things get better but at a much much more marginal level... It requires at least double that to get into another class... i.e. a 911 and it still wont impress as much as that initial jump from Corolla to BMW. Going above that 911 level, you get into absurdly expensive cars... I think above $60k (maybe outside of an M3 at $75K), is where the magic of used cars happens to get the best returns... Used cars in general (CPO 2 year old cars) will always be the best value on the market and will allow you to get into the best car at the best price... I had an Audi S3 at one point that retailed $52K. I paid $31K for it after 2.5 years with a 100K mile CPO warranty... At $31K it is an amazing value and I was impressed by it day to day; however, I could never imagine paying even $1 above $31K for that car. YMMV

baege · 08-05-2019, 08:06 AM

I tend to agree with the article, but I do think the question of whether jumping to seriously expensive cars is worth the jump depends very much on whether that jump is a real stretch for you.

Looking back the jump from the e86 coupe to the 981 cayman was probably worth it, but it wasn't that huge of a jump and my pocketboot wasn't too badly stretched.

this next jump would be a much bigger stretch...and one that would not be so easily reversible without some serious exposure

Lucky1 · 08-05-2019, 09:44 AM

Quote:

Originally Posted by dgoldenz

991.1 GT3. Drive one. Fall in love. Realize they have a 10 year 120k mile engine warranty. Marvel at their long term resale value. Buy one. Drive the crap out of it until 2024. Have no regrets.

Had no idea they had that kind of warranty. Sagely advice sir

Lucky1 · 08-05-2019, 09:55 AM

I can speak very closely to this subject as I recently did the unthinkable and purchased a 991.1 Carrera 4S way before its depreciation curve.

Listen closely. The amount of long term joy you will get out of stretching your budget to the point where it impacts short and long term life plans will decrease in equal proportions. In this circumstance I completely agree that the law of diminishing returns applies in full force.

Case in point: I bought my 13 year old Z4 MR with 20,000 miles on it for $22k. It was a bargain and is holding its value. It is an incredible, incredible machine for the price and I haven't had to put much maintenance into it.

Fast forward and now I've bought a Carrera 4S with 10,000 miles for three times the price.

Is the 911 3x $$$ as good a car? I say NO!.
Does it give me 3x $$$ worth of additional joy. Debateable but I say probably not. Don't get me wrong I love it and I am so happy I made the decision. But the Z4MR was by far and large waaaaaay better value for the money I spent. And everytime I drive it I can't believe how much joy I get from it vs the price I paid for it in comparison to the 911.

And now I have a new goal of a bigger house etc and it will have to wait.

This is definitely an emotional purchase. If you are on a budget and money and depreciation mean something to you make sure you're getting the best bargain in terms of acquiring a well maintained car at its depreciation curve. No way a well maintained depreciated sports car will cost you $50k to fix up and maintain in the long run

08-05-2019, 07:05 AM	#26
Grumpy Old Man Lieutenant Colonel 6470 Rep 1,966 Posts Drives: Porsche 993, 2015 MB GLK Join Date: Sep 2018 Location: Niagara on the Lake iTrader: (0)	Motor Mouth: As it turns out, money can buy you happiness after all Whoever said money can't buy you happiness just isn't doing it right by DAVID BOOTH \| AUGUST 2, 2019 https://driving.ca/features/feature-...ness-after-all I have long held the belief that the “science” surrounding happiness is really just a ginormous crock of smelly brown stuff. I am not talking about just those idiotic self-help books — The New Good Life, 10% Happier, etc. — or even all those positive-thinking “life coaches” — I am looking at you, Tony Robbins — peddling the power of self-delusion. Even scholarly articles — titles like The Secret to Happiness are popular even amongst professional psychologists — perpetuate some truly outrageous fantasies, the most important of which, at least the most important to a car columnist, is that money can’t buy happiness. Yes, I am really going to take on the oldest truism in pop psychology, a maxim so popular, so universally accepted, that I’m guessing every parent at some point in time mouthed it. Yes, you know it. Let’s say it all together … Money can’t buy happiness. Now, let’s never mind that no one in a third world country has ever mouthed these words. Or that it takes the barest amount of common sense to understand that, even in a worst-case scenario, it’s probably better to be rich and unhappy than poor and unhappy. Let’s just take those as givens, shall we? What I’d really like to talk about is this misconception that possessions — the things we are supposedly wasting our money on — can’t make us happy. Indeed, the accepted wisdom seems to be that said possessions make us decidedly unhappier. The theory, as neatly explained by David Futrelle in Time magazine’s recent The Science of Happiness journal, is that, because we humans are adaptable creatures, we will always “overestimate how much pleasure we’ll get from having more.” We quickly adjust to our newfound wealth — the “hedonic treadmill,” Futrelle calls it — our increased affluence becoming our new paradigm. Thus, says the theory, the joy of the new car you just bought or the spanking new condo you just moved into will always be fleeting. The reason, goes the theory, that that the new Porsche or BMW isn’t making us happy is that we are always comparing ourselves to our neighbours, H.L. Mencken famously quipping that a happy man is one who makes $100 more than his wife’s sister’s husband. Happiness scholars, says Futrelle, have found that “how you stand relative to others makes a bigger difference in your sense of well-being than how much you make in an absolute sense,” which is the reason why, says the author, in the case of cars, when the shiny newness of said new Porsche wears off, “you don’t question the notion that you can buy happiness on a car lot,” but rather your choice of car. That’s why pretty much every author on the subject says that buying “experiences” is a surer road to fulfillment. “Things that don’t last create the most lasting happiness,” says Futrelle, mainly because, as he quotes Cornell University psychologist Tom Gilovich, “experience tend to blossom as you recall them,” not age like the suddenly tatty Chrysler in your driveway. Indeed, that seems to be the reason, according to a recent University of Colorado survey, that students got more pleasure out of “doing things” rather than “having things.” It is also, however, where this whole eschewing personal possessions theory falls apart. Last time I looked, the majority of said experiences — certainly the majority of the experiences that bring me pleasure — require a certain amount of … let’s call it equipment. For instance, I loving racing cars round a track and, having done pretty much nothing but for the last 30 years or so, I can absolutely assure you said experience will be a whole lot more joyful in a brand new Lamborghini than it will be in a clapped-out Toyota Camry. Anyone not understanding that simple equation either hasn’t driven a Lamborghini — which, counter to Futrelle’s thesis, I can assure you will remain a source of contentment long after the newness wears off — or has no idea of how to drive a car. The same would apply for anyone looking to “experience” off-road Jeeping, long-distance boat trailering or just the ordinary act of hauling of cord wood. Anyone thinking that the quality — and, hence, the cost — of your possessions won’t add to the joyfulness of your experience is probably just a poor person fooling themselves. Oh, I suppose one could make an argument for diminishing returns, that the rewards for trading up from a new $69,998 C8 Corvette to a $631,680 Lamborghini Aventador SVJ will not be commensurate with the monies spent. Or that possessing five Lamborghinis won’t make you happier than owning just one (though I can see an excellent argument to be made for having five Lambos stored at five different race tracks — let’s start with Laguna Seca — around the world). But such relativism works both ways. Sometimes it isn’t the absolute amount you spend, but rather the relative expenditure that matters. As an example, I have weathered many a rainstorm aboard a motorcycle in both cheap and expensive rain suits, and let me assure you that my “experience” has always been far “happier” when I was not chilled to the bone. I am in possession of both Bell Revolver ($300) and Schuberth E1 ($1,000) modular motorcycle helmets. Both share almost identical spec sheets, but wildly different build qualities. Care to guess which one makes me happier? And no, I have yet to suffer what Futrelle calls “hedonic adaption” — that which is superior eventually becoming our new norm — despite owning the latter for more than four years. Indeed, I just went out and bought an identical Schuberth precisely because I knew it would make my long-term experiences happy when the current one wears out. Indeed, the whole notion that “money can’t buy happiness” would seem to be based on the fallacy that the problem lies in the mere possession of a material good and not the reason to possess it. That trying to keep up with the Joneses will not make you happy in the long term — envy being, after all, the crack cocaine of emotions — is somehow still news absolutely baffles me. To blame the resultant lack of contentment on the possession and not the motivation is sheer idiocy. Indeed, even Futrelle quotes professor Gilovich as noting that people are “happiest when they are wringing experiences out of everything they spend money on.” Or, to quote a famous Lexus ad: “Whoever said money can’t buy happiness just isn’t doing it right.”
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08-05-2019, 08:02 AM	#27
ASAP Major General 11007 Rep 9,135 Posts Drives: '23 X3 M40i Join Date: Sep 2012 Location: FL iTrader: (0)	If we are strictly talking about new cars; I think the biggest jump anyone can make is from something like a Corolla ($20K) to something like a BMW 340i ($55K). No law of diminishing returns applies there... everything is far far better in that class for the price and the person that usually makes a jump like that is blown away by everything in the more expensive car... The moment you start going above that 55-60K range, things get better but at a much much more marginal level... It requires at least double that to get into another class... i.e. a 911 and it still wont impress as much as that initial jump from Corolla to BMW. Going above that 911 level, you get into absurdly expensive cars... I think above $60k (maybe outside of an M3 at $75K), is where the magic of used cars happens to get the best returns... Used cars in general (CPO 2 year old cars) will always be the best value on the market and will allow you to get into the best car at the best price... I had an Audi S3 at one point that retailed $52K. I paid $31K for it after 2.5 years with a 100K mile CPO warranty... At $31K it is an amazing value and I was impressed by it day to day; however, I could never imagine paying even $1 above $31K for that car. YMMV
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08-05-2019, 08:06 AM	#28
baege Lieutenant Colonel 1444 Rep 1,662 Posts Drives: 2023 R8 RWD Coupe Join Date: Jun 2009 Location: Ontario, Canada iTrader: (0)	I tend to agree with the article, but I do think the question of whether jumping to seriously expensive cars is worth the jump depends very much on whether that jump is a real stretch for you. Looking back the jump from the e86 coupe to the 981 cayman was probably worth it, but it wasn't that huge of a jump and my pocketboot wasn't too badly stretched. this next jump would be a much bigger stretch...and one that would not be so easily reversible without some serious exposure Last edited by baege; 08-06-2019 at 06:44 AM..
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08-05-2019, 09:55 AM	#30
Lucky1 Colonel 716 Rep 2,114 Posts Drives: '08 M3 E90 Alpine White 6MT Join Date: Nov 2008 Location: Toronto iTrader: (0) Garage List 2008 M3 [0.00] 2015 Porsche 911 Ca ... [0.00] 2006 Z4 M Roadster [0.00]	I can speak very closely to this subject as I recently did the unthinkable and purchased a 991.1 Carrera 4S way before its depreciation curve. Listen closely. The amount of long term joy you will get out of stretching your budget to the point where it impacts short and long term life plans will decrease in equal proportions. In this circumstance I completely agree that the law of diminishing returns applies in full force. Case in point: I bought my 13 year old Z4 MR with 20,000 miles on it for $22k. It was a bargain and is holding its value. It is an incredible, incredible machine for the price and I haven't had to put much maintenance into it. Fast forward and now I've bought a Carrera 4S with 10,000 miles for three times the price. Is the 911 3x $$$ as good a car? I say NO!. Does it give me 3x $$$ worth of additional joy. Debateable but I say probably not. Don't get me wrong I love it and I am so happy I made the decision. But the Z4MR was by far and large waaaaaay better value for the money I spent. And everytime I drive it I can't believe how much joy I get from it vs the price I paid for it in comparison to the 911. And now I have a new goal of a bigger house etc and it will have to wait. This is definitely an emotional purchase. If you are on a budget and money and depreciation mean something to you make sure you're getting the best bargain in terms of acquiring a well maintained car at its depreciation curve. No way a well maintained depreciated sports car will cost you $50k to fix up and maintain in the long run
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