All the Money You Save
Many years ago Toyota had an ad campaign with the catchy slogan, “What Will You Do with All the Money You Save?” The thinking was, I assume, the consumer had $20,000 in their checking account allotted especially for the purpose of buying a car. When they bought the Toyota and it only cost $18,000, they had $2,000 worth of FREE MONEY! Woo Hoo! I’m going to Disneyland and have dinner at one of the real restaurants!
Of course, how many people actually have the cash already set aside to purchase a car? (Or even a pack of gum these days, even that’s put on a credit card more often than not.) We usually don’t even have the down payment ready at hand. So, when a car costs less than originally expected, you don’t actually “save” money, you just don’t spend as much potential (read “imaginary”) money as you would have on the more expensive item. You can’t do anything with the money you saved, because in actuality it never really existed. Except in your mind. Which, now I think about it, is how most of my money exists.
Why do I bring this up so many years after the fact? Well, there is a new ad campaign now running from Hyundai, called Dollars & Sense, where the wide-eyed consumers, having fallen in love with the car, are admonished by either Larry Winget
I don’t really begrudge these authors getting their truck load of money for giving this fictional advice in a commercial, it is good economics. For them - lead by example, I always say. Are Hyundai cars relatively inexpensive? Yes. (I didn’t say “cheap”!) Will you spend less money on one than if you buy a comparable car from another maker? Probably. Does that mean you’ve saved money? Theoretically. What are you going to do with that money? I’m going to invest mine in an imaginary gold mine in Argentina. Hey, I don’t even have to buy the car to do that. How much more money can I save, then?
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Geoff Hoff is co-author of the best selling satirical novel Weeping Willow: Welcome to River Bend
May 6th, 2008 at 3:35 pm
[…] Geoff wrote an interesting post today on All the Money You SaveHere’s a quick excerptProbably. Does that mean you’ve saved money? Theoretically. What are you going to do with that money? I’m going to invest mine in an imaginary gold mine in Argentina. Hey, I don’t even have to buy the car to do that. … […]
May 7th, 2008 at 8:55 am
First, none of us are “presumed to be bestselling authors of books about money.” All of us actually are bestselling authors of books about money. Second, our suggestions are based on using the cash you will get back to pay down your credit card debt, open an IRA or a CD. We just want people to use the cash they get back after they buy the car in a smart way: seems like a good idea to me. Third, buying a car with zero percent financing instead of 5% financing would save you about $50 or $60 a month. We suggest you be smart with that savings and use it wisely. We aren’t telling people to invest or save money that never existed. This money would actually exist.
Good luck with your gold mine in Argentina.
May 7th, 2008 at 9:41 am
Hi, Larry,
I’m really glad you came by my blog and I am truly sorry if my satirical take on your commercials was offensive. I guess I have to assume that any people I write about, including bestselling authors, may just find my blog and proceed accordingly. Please accept my apologies. (I do know you are all bestselling authors, actually, I even put links to all your books in the blog. It was a lame attempt at humor.)
I have been told since I posted the blog that the commercials were actually dealing with a rebate, unlike the original Toyota ones (and a number of other commercials over the years that ask what you’d do with the money you save). I guess I must also, besides assuming who I write about will see it, pay more attention to the details of anything I lampoon. A rebate is, indeed, real money and, as you say, should be used to pay down debt or put in IRAs or CDs, or some other form of practical investment.
As for the savings of $50 or $60 on zero percent financing, however, this savings isn’t real money unless, as I said in the piece, you had already earmarked the original payments and now are paying less. I do know some people who do that sort of thing (a friend of mine quit smoking and put the money he would have spent each day in a box and bought himself a very nice trinket at the end of the month) but most people will still barely be able to budget the zero percent payments, much less pull out the extra (hypothetical) $50 or $60. If you are going to do that, again, you don’t need to buy a car, you can just be disciplined and invest $50 or $60 per month. We know that, given the sad state of savings in America, that is fairly unlikely for most people.
But, as I said, this was supposed to be a humorous piece. It seems I missed that mark entirely. I’m truly glad you came by and I hope you had the opportunity to look at some of my other posts, which actually are funny.