Monday, June 29, 2015

Don't Succumb to Peer Pressure or Keeping up with the Jones(Tans).

http://business.asiaone.com/news/money-way-better-serve-my-life

Q: What's the most extravagant thing you have bought?
A Chanel bag for myself as a Mother's Day present "from my one-year-old daughter" (laughs). It was really because of peer pressure. For instance, at my office there was a lady whose bag collection could have probably bought a small HDB flat.
They would talk about what kind of bag and how many of those you should have after working in the industry for six to seven years, for instance. But I found the Chanel bag not practical and it's too small.
I learnt a life lesson - the consequences of buying something because of peer pressure. In my case it was a bag, but for my peers, it could have been an Audi, Ferrari or a house.
- See more at: http://business.asiaone.com/news/money-way-better-serve-my-life#sthash.W8B3Mr6M.dpuf

Well said. Too many people succumbed to peer pressure or having to have face. If you can afford a Ferrari and is within your means, please go ahead and do so, POWER TO YOU! :) But for the rest who have to stretch to buy that Ferrari, please think twice. It's only a car that brings you places literally. Bring you place metaphorically can only be done if you really have the substance to carry thru' , if not, that first step will always be at the doorstep and that's it.

I can afford a Ferrari, but I choose to drive a Hyundai. What about you?

4 comments:

Jesse Muller said...

I've never changed because I've earned some extra money.
it are the little things that makes us happy, a nice walk in nature, sitting down with a few friends thinking about the future or past.
enjoying a nice movie.

Anonymous said...

Those who splurge believe in YOLO.

Lim Der Shing said...

Affordable is defined differently by people when it comes to luxury consumables. Some possible scenarios in order of conservativeness.

1) can pay the monthly installment for it, so if owning a fast car costs $20,000 per mth and salary is 30k, technically can afford.

2) net worth is more than cost so technically can afford. So if have more than 1m cash, again can buy super car.

3) cash position enough to pay 1m for car. So again technically can afford,

To me all the above can afford a fast car but not with a good safety margin even if for case 3 cash is two or three fold. To me the real affordable for a 1m car is :

4) net capital able to generate at least 500k per year safely using 4% returns. Meaning min 12m in net investments excluding home with ability to pay down payment and not affect the investable capital.
Or
5) pay 1m in cash for the car but overall, all consumables comprise less than 5% of net worth.

With (5) being even safer than (4).

Lim Der Shing said...

Affordable is defined differently by people when it comes to luxury consumables. Some possible scenarios in order of conservativeness.

1) can pay the monthly installment for it, so if owning a fast car costs $20,000 per mth and salary is 30k, technically can afford.

2) net worth is more than cost so technically can afford. So if have more than 1m cash, again can buy super car.

3) cash position enough to pay 1m for car. So again technically can afford,

To me all the above can afford a fast car but not with a good safety margin even if for case 3 cash is two or three fold. To me the real affordable for a 1m car is :

4) net capital able to generate at least 500k per year safely using 4% returns. Meaning min 12m in net investments excluding home with ability to pay down payment and not affect the investable capital.
Or
5) pay 1m in cash for the car but overall, all consumables comprise less than 5% of net worth.

With (5) being even safer than (4). And yes, I fully agree little things make us happy. And experiences shared with loved ones are the best. With learning come in next and new positive experiences third.