Should I Purchase a $240,000 Car to Impress Potential Clients?

We do have a spicy question first up from James. He says, ‘I’m a new college grad starting a sales role, 55k base plus commissions. I need to impress to succeed, so I’m buying an Aston Martin DB11 for 240k, which will be well within 8% of my income with all my projected commissions, especially if I stretch the loan out to 8 years. Should I take a personal loan out to cover the 20% down payment or a cash advance off of my credit card?

Who’s this? Is this real? Who is this? Is this one of the chaos seekers over here on the side? This is a real question. I took it as a real question. First of all, James does not know 20/3/8. No, ’cause do you know about to leave the only way that James could have the car that he’s talking about is if he has joined the Formula 1 circuit and Aston Martin is now giving him a free car, right? I mean, like, I don’t get mad when I see LCLA and others driving Ferraris and stuff because I know that that’s just part of the whole thing when they get the fancy watches. But James, who’s starting a role as a sales rep making 55,000 plus bonus, buying a $240,000 car, is a complete failure. And I think, I don’t know if his tongue is in his cheek or what, but it does remind me back when, um, I don’t know, college. I had four, you know, guys in college that were selling Cutco knives and making big chunks of money. And then I, I, I can remember also that, um, I was pitched a job to go sell encyclopedias. Oh yeah, I got that same pitch. Oh my gosh, a fortune selling encyclopedias back in the day. I bet that industry hasn’t held off too well, but it’s, um, here’s the thing. And sales can be one, if you have the skill set of being a salesperson, that’s why I brought up the whole Cutco. I had a fraternity brother, he’s turned out to be a very successful executive too. But, you know, people who can sell good, they can make a lot of money. And I’ve even told you guys about my buddy. Um, still I see my wife shares his social media post and they’re hilarious. Who, who was actually struggled academically. One, a really close friend in my neighborhood who was held back two years.

So he was, like, driving in middle school. But, and, you know, so you worry, is this guy going to be successful? And then I remember I graduated from college with my accounting degree and was making $228,000 a year. And this same friend, who I, I really think he had a learning disability based upon how fun he was, how just everybody was a friend to him. He was making six figures right out of the gate in his early 20s, um, selling tractor supplies and other things. But so, James, you could potentially make a lot of money. But, you don’t, I know that because we had an insurance guy who was a client of ours who said that his insurance broker, when he was in his 20s, told him to go buy the fanciest car he could like a fancy cat, like Lincoln or Cadillac. You’ve heard him tell you the story too. And it’s, and they wanted all their sales reps to do that because it made them hungry. Because they had to go afford that super expensive car payment.

So, your employer, while you’re telling you, you got to be snappy and doing this, might have an ulterior motive to get you so underwater financially that you have to produce. Because guess what, if you wash out like a lot of salespeople do, because a lot of people that want to be good at sales, but they find out they don’t have it, they don’t have the skill set, they don’t have the stick-with-it, and it’s because it is a unique thing, and they wash out. You see it in our industry all the time. That I’m worried if you buy something like, assuming this is a legitimate question, you wash out, your employer could care less, ’cause they move on to the next training class. Go watch Boiler Room or whatever, you know, that talks about this type of stuff. But that’s a disaster. I’m not going to speak to the fact that you ran afoul of 20/3/8, because 8% of income does not apply to luxury cars. I’m not going to speak to that. I’m not going to speak to the fact that you talked about an 8-year loan, because that certainly violates the three and 20/3/8. What I would like to do, James, is I would like to point you to a classic, Vince. Brian, you’re going to appreciate this. I’d like for you to go watch the movie National Lampoon’s Christmas Vacation. Because what has happened is you have fallen prey to something that so many people do. And I’m not even going to make this a car answer. I’m going to make this, like, a life money answer. We so often get excited about the projections of things to come, the income that I might make, the bonus that I might receive, the promotion that might happen, that we begin spending that money before it ever hits our checking account.

Well, unfortunately, sometimes in life, things don’t go the way that we thought they would go. And so, while you’re thinking, ‘Oh, 55,000, I’m going to have these commissions, make all this money,’ you ain’t done it yet, bro. You have not made that money yet. And far too often, we see people go buy the home in the community because they think that new job is going to be great. Or they go ahead and put the pool in the backyard because they think that the end-of-the-year bonus check is coming. And then something changes. What the jelly of the month? Get the jelly of the month is what they get instead of the bonus. And what you recognize is you have completely derailed your entire financial plan. Because, James, when I hear this, you’re making $55,000. That’s a lot of money. I know starting out, people might scoff at that. 55,000 is a great income, especially when you have commissions coming in as well. You are in the catbird seat to do something incredible as a young person if you can go out there and sell, and you can go out there and earn commissions. But, man, it is going to be so much more powerful for you to actually be wealthy five years from now than look wealthy five days from now and it all be a mirage. It all be a facade. So, I would encourage you, don’t start spending that money until it shows up. And by the way, when it shows up, don’t spend it. Start saving it and let that money start working for you. Don’t be Clark Griswold. And then last thing, a $240,000 car, ’cause you have to pay it back. I mean, to own a car, we talk about that even normal cars can be a million-dollar mistakes for young enough investors, yep, a $240,000 car is like a decamillionaire-type mistake. I mean, that is huge. It’s 5 to 10 million away from your future self potentially. So, you know, there’s a time and place. That’s why it always cracks me up when I say, ‘What’s the average age for Corvette purchases?’ It’s not 23 or 24 years old where you look the coolest version of yourself, Bri. It’s like 61 years old. So, save the Aston Martins for the 60-year-olds who, um, who got a lot more in the bank. And as a percentage of the net worth, it’s actually not a lot, whereas for you, it’s more than your net worth. And that’s a failure, yep.