Investing a Lexus at 12% over 30 years or The Color of Money
Matthew 6:19-21 – Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal. For where your treasure is, there your heart will be also.”
Matthew 6:24 – No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money.
While driving around the beltway yesterday, a green Lexus LS430 passed me in the far left hand lane. This isn’t unusual as people in general drive pretty fast and Lexus’ are pretty common these days. As a car-o-holic, I did notice it though as I do most cars I see on the interstate, and it wasn’t even the strange yet familiar color of green the car was painted that caught my attention. It was the license plate: COLROFMNY that got my attention.
At first I thought to myself That explains the strange green color, pretty creative. Then my next thought was Wow, I wonder what his priority is?
Now, is it fair to judge someones priorities over the color of their car and the tag on it? Of course not, but it does bring up a really good question: How do people perceive you?
I’ve heard far too many times that perception is reality, and if that is indeed true, than this person was obsessed with money. I mean why else would you buy, and what would seem, intentionally buy a Lexus that is painted the exact green color used to print US Money? Then to top it off, advertise that exact fact by putting the COLROFMNY on your license plate?
This made me begin to think how I am perceived by others and what kinds of things I do (or have done) that might have made people perceive me in a certain way. How do I show people what I treasure? Do I send the message to others about who I really am?
I do recall my wife and I having a discussion about this same topic sometime back. A local contemporary Christian radio station gives out free bumper and window stickers for people to place on their cars. My wife and I have both seen instances in the past where people, with these bumper stickers either:
- Drive like complete idiots
- Do something while driving that would really make people think twice about their advertised Christianity.
The two instances in particular were a person aggressively tailgating me and another person showing me the number one using the middle digit of their hand.
I drive a 2001 Nissan Sentra that is very reliable, but isn’t the prettiest car on the outside. It has numerous dings, scratches, faded paint areas, etc. But it runs great, and with 115,000 miles on it hasn’t failed me yet. I purchased it used with about 96,000 miles on it a year ago. So if anything, I guess my car would cause people to
- Think I am poor
- Cause people to think I am a cheap skate.
I am fine with people thinking either.
So how does this relate to finances you ask? After dwelling on the perception I had of this person, I then began to wonder how much a Lexus 430 costs and what would happen if I saved that money instead.
Doing a quick look-up on Edmunds.com at the true market value, a new 2006 Lexus 430 (they dropped the 430 in 2007 for the 460) costs $51,725. Let’s assume we put 10% down and finance at 6.35% for 60 months.
10% Down: $5,172.50
Amt Financed: $46,552.50
Payment: $1,102.55 *Gasp*, this is more than my house payment!!
Let’s assume we open a mutual fund that averages 10% per year. We open it with the 10% deposit we were going to put on the Lexus in the amount of $5,172.50 and then contribute $1,102.55 each month for 30 years. At the end of 30 years you would have:
If you did indeed by the Lexus, it will depreciate $27,102 by the time you pay it off, leaving you with a car worth at most, $24,623. By the way, for a car this is really good as a Lexus really holds it’s value.
Just something to consider the next time you want to buy a new Lexus, or a new car in general. When you buy that new Lexus, while you may have the COLROFMNY on your license plate, you are really throwing $235.50* out of the window of your Lexus every day that you drive it.
Just a few things to consider and another example of how to Gather Wealth, Little by Little.
* (2,603,327.17 – 24,623)/(365 days * 30)