There’s an old saying in golf, “drive for show, putt for dough.” Hitting a massive 300-yard bomb looks beautiful, but what really counts is accurate putting. Well let me introduce you to a new saying, “Own one car for show and another car for dough.”
I can’t tell you how many times I’ve lost money on the golf course because I three-putted instead of two-putted. I’ve also occasionally won money squeezing in an eight-footer. Those knee-knockers, when all is on the line during an Aloha bet, are intense!
Give me a regular 250-yard drive and incredible putting accuracy over a 300-yard drive and putting yips all day long. The same goes for cars.
I’m a one car type of guy. Owning a car is expensive, especially if you don’t follow my 1/10th rule. With the proliferation of cheap ridesharing options that have emerged since 2009, not owning a car is making more and more sense.
But over the years, I’ve had a tremendous number of complaints that my 1/10th rule is too restrictive. Instead of limiting the median American household to only spending $6,200 on a car, many people feel the typical American should be able to spend much more.
If you want to spend more, it’s totally up to you. Don’t let me tell you what to do. I’m just offering a simple rule to follow to help you achieve financial independence sooner, rather than later.
For those of you who love cars and want to own two or more cars, I suggest owning at least a Dough Car. If you do, you might build your net worth quicker than the rest. You might even better keep yourself out of trouble.
The First Car For Show
Your Show Car is also known as your splurge car. No one really needs more than a five-year-old Toyota Corolla to get from one place to the next. Thus, your Show car might be a luxury sports car or a rare classic car. Or your Show Car may just be simply nicer than a used economy car.
A Show Car is your choice ride on the weekends. You may take it on the backroads with your buddies who are in your car enthusiasts club. This car is really just for your personal pleasure.
Even though you adore your Show Car, you don’t want to be seen driving it by people who could cost you money. For example, colleagues, competitors, school administrators, etc.
The Second Car Is For Dough
Alternatively, your Dough Car is your every day, unassuming ride. It is your 8-year-old Honda Civic with a dent in the passenger side door. Or, perhaps your Dough Car is a dirty old truck with dents in the side and mismatched tires.
This is a great car to drive around town because you don’t care what happens to it. If someone bashes your bumper when parallel parking, who cares!
Your goal is to be seen in your Dough Car by everyone. Ideally, your show car is your beater car and not some fancy electric car.
Benefits Of A Dough Car
I’ll give you two recent examples which demonstrate why having a Dough Car is important. I’ll also give a third example from when I was working.
1) Gain Customers
Once when I was remodeling, I had an appointment for a window treatments saleswoman to stop by my house. The consult was free with the hope that she would sell me a bunch of window shades.
When she arrived, she rolled up in a brand new ~$70,000 BMW X5. As soon as I saw her car, I frowned. Based on her expensive car, it was likely her products would be very expensive. I was hoping to make a good deal but now had doubts.
When she came up to my house, I was even further dismayed. She was wearing $800 Manolo Blahnik shoes and $600 Prada sunglasses.
We spent the next hour looking at samples until I picked my favorite. As she departed, she said she would email me by the end of the day with a quote.
My budget for 11 windows was $5,000 but she came back with a quote for $9,181!
Wow that’s expensive. All I could think about was how huge her profit margins must be. Even though I was able to change a few options and get the price down, I decided to look at a different vendor.
When want to win customers, driving up in a Show Car could be detrimental. Every financially savvy potential client will think your fancy car is from profiting too much from your clients.
2) Increase Your Chances At Financial Aid
Three preschools we applied to asked what type of car we drive. The reason they ask is related to seeing who qualifies for financial aid. It wouldn’t make a lot of sense to subsidize parents driving a luxury automobile versus those who are driving a used economy car or taking the bus.
So perhaps you can increase your chances of getting financial aid if you own a Dough Car. But you’ll likely have to provide a copy of your tax returns or pay stubs in any case.
However, one potential downside is a Dough Car could lead an elite school to perceive you as too poor and lacking in status to be admitted. Ridiculous yes, but that’s the BS, competitive society we live in today.
Ultimately, be aware that many academic institutions and employers make assumptions about your wealth based on the car you drive.
3) Get Paid More And Promoted Faster
I’ve told this story before, but while I was in banking, I once hired a 22-year-old first-year analyst. Unfortunately, he turned out to be a pretty cocky and immature guy.
He drove a $50,000 Acura MDX SUV to work, which was more expensive than 70% of the cars in the employee parking lot. Everybody quickly found out that his parents bought it for him. He already had a bad attitude working against him. And then his expensive car made things even worse.
His year-end bonus was slashed by $10,000. The bonus committee felt that not only was he underperforming, he didn’t need the money since he was already rich. That $10,000 went to pay someone else.
Later, he ended up getting fired after his second year.
Owning Only A Show Car Is Not Ideal
If you are only going to own one car, you should own a dough car that will help you get ahead and make money. Owning only a show car is a suboptimal financial move.
If you only own one car, and it is a Show Car, this could put you in a bind. On the one hand, you want to own the nicest car possible since you will only have one. On the other hand, however, owning a Show Car might make you a target.
Although nobody thus far has given me any grief for owning a Tata Motors SUV, I sometimes feel like an oddball when I drive to my Saturday softball meetup games. Everybody is pretty down-to-earth, with the nicest car in the lot being a Tesla Model 3, a ~$50,000 car fully loaded.
I also feel kinda bad when teachers see me picking up my son from preschool. Preschool teachers only make between $40,000 – $70,000, depending on experience. Further, there are several parents who bike their kids to school.
I’ve tinted my windows black so it’s difficult to see me while I’m driving (illegal in California). But that’s not enough to stay stealth because I’ve inevitably got to get out of my car.
When I drove a Honda Fit for three years, I always felt great everywhere I went. Although I experienced a lot more car bullying on the road, it felt great blending in with my surroundings. Most of the time, my Honda Fit was also the cheapest car in the parking lot.
Too bad I had to give it up because there was no way I was going to drive a baby in a car with such small crumple zones and thin doors.
You Will Grow Into Your Show Car
Even if you only own a Show Car, know that things will get better because of three things.
The first thing is that your car will depreciate in value every day. If you hold on to it for at least 10 years, it will eventually not be worth much at all. My plan is to own Beast Master for at least 10 years and then consider buying an electric vehicle. In another seven years, Beast Master will be 12 years old and be worth less than $20,000.
The second thing is that you will probably make more money every year. Part of the reason why following the 1/10th rule for car buying is so important is that you won’t feel as guilty buying any type of car. As the car’s value becomes a smaller and smaller percentage of your annual income and net worth, you will stop feeling as embarrassed about owning a Show Car.
The final thing is that you will get older. Nobody really cares if a 55-year-old drives a $110,000 Porsche 911S. If you’re in your 30s or younger, however, sometimes people will give you grief for driving a Show Car out of envy. Don’t drive a Show Car alone at night in Johannesburg or Manila. Chances are high you will get mugged at a stop light.
If you must own more than one car, make sure one of them is a Dough Car to help you blend in. On your road to financial independence, you never want to stand out too clearly. Protruding pegs tend to get knocked down.
Car Saving Suggestions
Lower Your Auto Insurance Costs: Check out AllState online for some of the best plans with the lowest rates around due to their lower overhead costs. It’s worth spending a moment filling out a quote to see if you can save some money for free.
Car insurance is one of the largest ongoing expenses for car owners. AllState has good driver discounts, and multi-product discounts as well. There is no obligation to sign up once you get a quote either.
For further suggestions on saving money and growing wealth, check out my Top Financial Products page.
In addition, if you enjoyed this article and want to get more personal finance insights and tips, please sign up for the free Financial Samurai newsletter. You’ll get access to exclusive content only available to subscribers.
Readers, does anyone else have a Dough Car to hide you from society’s rage and judgement? If you are to only own one car, what would it be?
Note: for those wondering how the 1/10th rule for car buying applies to owning a Show Car and a Dough Car, the best practice is to have the total price of all cars be 10% or less than your annual gross salary.