I am fascinated with they way people so easily get trapped into a middle class lifestyle.  As their income goes up so does their spending.  They just become more reliant on their wage and never build up any savings.  The typical problem seems to be that people see their material possessions as status symbols.

I was talking with a college a couple of days ago about our cars; we have very different views.  He feels that his car should be a proportion of his wage. I.E. he thinks his car will always cost around tenth of his wage.  As he progresses through his career he will buy newer and more luxury cars.   Therefore he will always be spending more and more money on his car.

Fair enough you may think; he wants a nice car and can afford it.  But wait, he expects to buy his cars on finance.  This never makes sense, even when dealers are offering 0% finance.  They only do this because they are making so much on the car in the first place.  He will be losing this as soon as he drives out the showroom.

My choice is to run an older cheaper car that I can buy without finance.  If the car is maintained well then it is best to keep it for as long as possible until the repair bills starts to outweigh the value of the car.  By keeping the car for as long as possible depreciation is kept to a minimum as this is one of the biggest, if unseen costs of car ownership.

At the end of the day I guess it s all about personal preference.  I have nothing against having a nice car or luxury items.  Its just the idea that you need them to show how well you are doing in your life.  I certainly would not buy a bigger better newer car just because my wages go up….