Tuesday, May 3, 2011
Why I Drive a Crappy Car
For someone who makes and has as much money as I do, I drive a very modest car. I have been asked before why I don't get a better, newer car. There are times I have thought about it but in the end I can never bring myself to spend money on a new car. I'll explain why.
I bought the car new in 2002. It was a beautiful Honda Accord. I "splurged" a little bit by getting the V6 engine. It was my first new car; I had an even older, used, Honda Accord before this one. It was my first major purchase after college and I had never had anything so nice so I treated the car with kid gloves. I washed it regularly, maintained it to spec, and just kept it in really good condition. I could not have been happier.
The problem is, the high of buying a new car wears off quickly. Humans quickly adapt to stimuli. After the first few months of having the car, it was just a car. It became the means by which I got from A to B. I still took good care of it. I was still happy to have it when I compared it to the P.O.S I had before. But the same initial delight that came with the new car smell was gone.
Like anything in life, the new car could not keep me at a sustained level of happiness. This is often called hedonic adptation. People get used to good things (for that matter they get used to bad things too but that isn't the topic for today). This is why lottery winners are often no happier several months after winning the lottery than they were before winning. The initial euphoria of winning the lottery makes them ecstatic. But people have a natural level of happiness that is specific to them, and they soon return to it almost no matter what. So in my case, I spent $20,000 for a quick shot of happiness but it wore off as I continued with my life.
I am not trying to say I should not have bought the car. I needed it and am happy I got it. However, given the problem of hedonic adaption, my decision not to buy a new car should be a little more clear. A "better" car would probably cost me in the neighborhood of $40K to $50K, more if I really wanted to splurge. It is something I can easily afford but to what purpose? I'm not unhappy with my car. While a new car would be better, it would only bring me incremental happiness. Is this bump in happiness for a few months worth delaying my retirement by a year or two? No, it isn't.
This is not to say I will not someday buy a new, more expensive car. Someday, my current car will not meet my needs and I will want to look for something new. But I will not buy it just to satisfy some desire for "newness". Everyone should think about this when spending any amount of money they consider to be significant. Study after study shows that the pleasure received in buying things almost never reaches the level expected by the purchaser a few months, sometimes days, after purchase.