Car Hobby or Personal Finance Education

In talking with several people on twitter last weekend I learned that several of us are former car fanatics. These conversations got me thinking about when I was a weekend car hobbyist/car restorer twenty years ago. I transformed my car hobby efforts into a personal finance hobby when I saw the extra expenses required to maintain and upgrade my hobby cars. 

I wanted desperately to build more wealth, not add more cars and debt to my collection. I realize now that there were several key people who helped me form my opinion on the importance of personal finances while they were obsessing and spending on their cars. The following are a few examples of these individuals and the lessons I learned from them.

(i) The Hoarder:

The first guy was a serious vintage car enthusiast who owned twelve nearly identical vintage English 60's cars. The odd thing was that none of these cars actually ran. Visiting each car began a discussion on what part could be swapped from this car to that car to get a car running properly. This gentlemen was addicted owning and tinkering with his cars on his property, yet he would never sell any any of them because he was essentially a car hoarder. 

His backyard looked like a junkyard, and his neighbors were threatening to take him to court over the state of his one acre property. He was an older gentlemen on a fixed income, and nothing in his house worked, the plumbing and electrical were in the same state as his cars.

Lesson learned: I learned from him that I didn't want to live in house like his, ever. Also, some people simply will not accept help from others, no matter how bad their circumstances..

(ii) The Over Spender:

The second guy I call the over spender. Regardless of income and ability to pay for car parts, this type of car hobbyist spends the majority of his income buying every part necessary to make his car restoration perfect. This over spender easily spends nearly all of his pay upgrading a car with a complete ground up restoration. Once complete, he will spend approximately four times what the car is worth. 

This one guy was my age with young kids. He would tell me how he would hide his newly opened credit cards from his wife to buy more parts for his restoration, and he had little or no money left over for anything else.

Lesson learned: Obsession about a car rebuild when you are without assets to cover these expenses is huge mistake that you will be paying into for many years.

(iii) The Obsessive Engineer

The third guy I call the obsessive engineer who continually tinkers with his car. This type of car hobbyist spends nearly all of his spare time working to obtain a perfection that is never met. The individual I knew would rebuild his car engine over and over, and he was never completely happy with the results. In fact, he seemed happiest when all the parts of the car were in pieces in his garage. 

This individual spent all of his time on his car, no time was ever given to his wife and kids. I remember this man telling me that his neighbors were upset with him because he had not finished painting the front of his house, it was a gray primer color in an upscale neighborhood of Spanish style beach houses. He reveled in the fact that he annoyed his neighbors by never finishing the paint job on his house.

Lessons learned: My time is a limited and valuable resource; Always make sure to use it in a way that helps me, my family and others. 

(iv) The high net worth world traveler/motorsports enthusiast:

Another individual I knew for years in the car community was co-worker. He received a generous stock offering during the dotcom days, and he used the majority of it to fund an obsession with worldwide travel in search of racing and European cannonball runs. He did several things that amazed me, such as, he bought a new BMW, traveled to Germany and drove the car on the autobahn. He then drove to France to sit through the 24 hours of Lemans before having his car shipped back to the U.S. to add his collection.

He also purchased nine motor sport vintage BMW's, which he used in races year round. The expense to buy, store, maintain and compete in racing circuits is something for people with significant assets, and plenty of time. The epiphany hit this individual hard when he told me years later that he made a huge financial mistake buying so many cars instead of buying real estate the way I had.

Lesson learned: Build significant wealth before joining a lifestyle that requires significant capital.

(v) The Dreamer:

We probably know people who spend a lot of time dreaming about buying a very expensive car, or supercar, such as an Aston Martin, Ferrari, McClaren, and so on. The dreamer will keep pictures of this car on his phone, desktop and in his mind. They join boards and participate in Saturday meetups to share knowledge they have about their dream car, such as the details of a supercar's dual clutch transmission and specific engine design.

These people spend an inordinate amount of time dreaming about something that may not be a reality because of the time they spend dreaming. What if these dreamers learned more about investing than a supercar's dual clutch transmission. Perhaps their dream could then become a reality if they moved forward in their personal finances and figured out a realistic goal to someday own a supercar.

There's always YouTube:

For those who cannot let go of the car hobby obsession, I recommend watching YouTube Car videos. There is no shortage of interesting car restoration videos documenting fascinating car restorations. Note however that many of these car builds are supported by YouTube followers and sponsors who provide free products in exchange for advertising- Perhaps they have the best of both worlds!

Summary: These individuals specifically helped me realize that I needed to build up wealth in  order to continue my car hobby. I ended up selling all of my hobby cars and focused my attention on understanding more about investing in real estate and the stock market.