CEOs, they make rough choices post-breakup just like the rest of us. But instead of getting bangs, Hilton CEO Chris Nassetta bought a used black Porsche 944 after a break up in his twenties, he told CNBC Make It.
At the time, the $20,000 car was worth more than his annual salary of $17,000, but the now 60-year-old said the cost kept racking up as the car was “riddled with problems I couldn’t afford.”
He had taken out a loan to cover the big purchases. “It nearly broke me,” he said. “I spent all my money on that stupid car.”
He ultimately sold the car 18 years later in what he said was his best financial decision ever, in an attempt to reverse his worst one. But by that time, the shiny new vehicle had likely already lost value. Cars depreciate most in value during the first year of ownership—up to 20%.
A cherry-red sports car is often at the center of the common trope of an impulse purchase that might characterize a midlife crisis or winning the lottery. But wealthy people seem to stray away from such big purchases (perhaps because of the depreciating value of said cars). A majority (61%) of people making more than $250,000 stay away from luxury cars, according to a study from Experian Automotive.
Consider Warren Buffett, who isn’t driving any Porsches. The famously frugal billionaire held on to a 2006 Cadillac DTS for some time, noting that he doesn’t drive enough to justify buying new cars. Buffett’s daughter said in a BBC documentary that he often buys damaged cars that were later fixed at discounted prices.
Fellow billionaire Mark Zuckerberg sports the same wheels that a suburban mom might, seen driving a Volkswagen hatchback and a Honda Fit. Bezos is in the Honda club too, as he drove a Honda Accord for a long time (although he does own a private jet).
As self-made millionaire and author David Bach once told CNBC Make It, buying a brand-new car is a bad decision. “Nothing you will do in your lifetime, realistically, will waste more money than buying a new car,” he said.
He’s staunchly pro-used car. Luckily for billionaires, millionaires, and average Joes alike, that’s something that's feasible enough now that the premium on used cars has cooled down.
