“Wealth consists not in having great possessions, but in having few wants.” – Epictetus

MercedesLast week, Jeanne Sahadi at CNNMoney.com put together her list of 7 Net-Worth Killers. She writes, “Saving and spending aren’t the only factors affecting your net worth. How you manage (or don’t manage) your assets and liabilities can make a big difference, too.

Number Three on Sahadi’s list is: Driving Too Much Car

She writes, “Certified financial planner Mari Adam has seen couples with car payments totaling $1,400 a month. Would it kill them, she wonders, to drive cars that combined would cost them closer to $800 or $900? Another planner, Chris Cooper, has suggested as a rule of thumb that you don’t spend more than 8 percent of your monthly gross income on a car payment, less if you have credit card debt.”

“Money Magazine has estimated that driving less expensive cars could yield an additional $180,000 over 30 years, assuming you invest your savings. Remember, in addition to your monthly payments, you’ll be paying for insurance, fuel, maintenance and repairs.”

The car and money topic has always been a hot debate in our house. Of course, some people live without or share as John noted in his Car Sharing post the other day… but for the majority of suburban Americans, a car is considered a necessity or at a minimum a deserved convenience. It’s interesting to me that cars have such an impact on achieving wealth.

Thomas J. Stanley and William D. Danko emphasized car choice in their book, “The Millionaire Next Door” and as Gregory Karp wrote in the Chicago Tribune to commemorate its 10th anniversary of publication late last year. He writes, “They don’t drive away wealth. The No. 1 make of car owned by millionaires in 1996 was Ford. Today, it’s Toyota, according to Stanley’s new study. Luxury brands do not top the list, and many millionaires, 37 percent in 1996, bought used cars. Stanley’s research shows high-priced cars seem to be wealth-repellant.”

“What’s interesting about spending is that everybody thinks all the millionaires in America have BMWs. Even among the highest income levels, about 60 or 70 percent have never owned a BMW,” he said. “I think BMW is a great car. I’m a car guy. But I won’t buy one because there is a relationship between wealth and how much people spend for cars. There’s no doubt about it. It’s a significant relationship.”

I drive a seven year old Volvo. I would rather be driving a Mercedes and sometimes I feel like I’m the only person in coastal California driving an older car. I look around and often feel “car shame” and an intense amount of “peer pressure” to be driving a nicer and newer car. I constantly have to remind myself that it’s paid for, fairly dependable (although we always take Jeanine’s leased Saab on any road trips) and I don’t need to be driving a $60,000 car with a $800 car payment.

But I still look around and wonder how so many people can afford to drive new cars. I guess what I don’t see is how much debt they might be carrying on their credit cards or how they’ve maxed out their home equity or maybe it just boils down to them making a heck of a lot more money than my annual income.

The reasons don’t really matter, because I need to focus on what’s going to lead to long term wealth and for me, buying a new Mercedes will only create the illusion of wealth. I don’t want the illusion. I want to BE wealthy and I have the drive to make it happen. Note to self: my “ride” shouldn’t matter at this point. I’ll try to remember that the next time I feel car shame at the valet stand!