Sometimes I look at financially successful people and wonder whether they have any tricks I could employ to boost my net worth. I ran across a wonderful bit of guidance the other day on our Living Below Your Means board, which showed how Ford Motor
It all started when 2Hokies shared "the secret of my success":
"I recently sat down and prepared a personal balance sheet. The resulting net worth on my freshly minted spreadsheet was higher than I expected and much higher than I would have predicted had you asked me to forecast my future net worth 10 years ago. My 'aha' moment came as I realized that the majority of my current net worth can be traced back to a single decision, made over and over. While admittedly oversimplified, this single decision can be called the 'secret' to my success. In 1995, I bought a used 1992 Miata with 9,000 miles. Every year since, I've thought about upgrading my car to something newer, cooler, even sexier. I look, I drool, yet each time I decide to keep driving my reliable Miata."
He went on to explain, with some examples:
"In 1999, I made my last payment on the car. In 2000, thanks to the additional [free cash flow], I bought a lot on the water. If I still had a car payment, I could not have afforded the lot. In 2001, we moved. Instead of selling our house, we chose to rent it out. I could just afford to keep the house and pay for a new one. If I still had a car payment, I could not have afforded to keep the old house as a rental. In 2002, repeat. Now I own two rental properties and am still driving with the top down. In 2004, I picked up our third rental property. This time I didn't have to move. I could afford to buy the property as an investment. In each case, the difference between investing and not investing was about the same as my car payment. Still driving with the top down.
"Now, we are finally in a position to achieve a longtime goal -- we broke ground on our waterfront lot. Very exciting -- thanks to a frugal [dear wife], other [living below your means] principles, and that same 1992 Miata, now with 119,000 miles. it will be with great satisfaction that I park my '92 Miata in the garage of our beautiful lake house when it is finished next summer."
Fellow denizens of the board offered congratulations and continued the conversation. One noted that he, too, had saved a lot of money with his Miata. Another pointed out that 2Hokies' not having traded in his wife also saved him a bundle. HomerBufflekill added: "But seriously, driving cars as long as possible is the No. 1 money saver for the average person. Most any reasonably maintained car will go at least 200,000 miles. Some will go much more." Makasha thanked 2Hokies and explained that though she's been drooling over a new Toyota
It's funny -- a typical Motley Fool article might point out the dangers of investing in Ford due to its pension problems and might sing the praises of Toyota, with its growing market share. Yet here's a Fool suggesting that Ford could make you rich and Toyota could make you poor! But that's because we're talking about the cars, not the stocks.
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Longtime Fool contributor Selena Maranjian owns no companies mentioned in this article.