Looks Can Be Deceiving: Lessons Learned on a Shuttle Ride at the Car Dealer

This is a guest post by Philip of Weakonomics. If you like what you see here, please consider subscribing to his RSS feed.

Last week, I took my car in for some scheduled service. The dealership is near my office but far from home, so it made sense for me to take the shuttle offered by the dealership. Upon boarding the shuttle, I was greeted by the driver and three other gentlemen. The conversations wavered for a few minutes until everyone learned that I work for a local bank. At that point, the conversation shifted to the economy. And once I told them I was also a finance blogger, they let me take the lead.

The first thing that I asked was what they all did for a living. While I realize that this will sound like the beginning of a bad joke, I was seated alongside a lawyer, a doctor, and pastor — as well as the driver, who was a retired teacher. And then there was me, a banker.

The conversation moved from auto bailouts to social security before we settled into my sweet spot: personal finance. Everyone was willing to talk about their situation because they all had something to brag about. But the ultimate shocker was when we learned what kind of money each person had.

Want to guess who had the most money? I’ll give you a hint… It wouldn’t be a very interesting post if it was one of the high income earners. Still wondering? Well, our driver had more money than the rest of us. Considering his inexpensive clothes and the fact that he probably earns $10 an hour, this took us all by surprise. Even more so given that he had worked as a teacher his entire life.

Profiles in finance

No matter how many times I read it, I always lose sight of the fact that high income does not necessarily translate into high net worth. Our driver was very financially savvy and had a healthy nest egg. In fact, he said that he takes all of the money he earns driving the shuttle and parks it in 529 accounts for his grandchildren. He only works because, as he said, his wife can’t stand him being around the house for more than a few hours every day.

Next in line was the pastor. The spiritual leader of our short journey learned his personal finance lessons early in life when he was working at a small church. He was the treasurer, accountant, and head usher. Money was tight for the church, and he sometimes used his personal credit cards to help the churchgoers pay bills. Sure, he meant well, but it almost wiped him out. After balancing a church budget for a decade, he figured he should get his own house in order. He moved cross country after getting married, and he also started working at a larger church. He took the lessons from his younger days and adopted a debt-free lifestyle. Ultimately, he paid cash for the car that he bought from the dealer.

Next in line after the pastor was me, the banker. You don’t need to know too much about my finances. Just know that I’m a debt-free twenty-something who hasn’t worked long enough to amass a large net worth.

And now we’re left with the two who should have been at the top… The doctor was in better shape than the lawyer, but he was also older. It took him 14 years to pay off med-school, and now he’s in his late 40s and has only paid off about 10% of his mortgage. He leases a minivan, and carries a balance on five credit cards. He says that every doctor in the hospital lives like this. He also told us that doctors that work in small offices generally make less, but they don’t have the same pressures for social ranking, and are thus in better financial shape.

Finally, the attorney. He’s been out of law school for five years, and still owes over $100, 000 in student loans. On top of that, he’s upside-down on a mortgage and has no investments. Though he’s married, she isn’t working because she is taking care of their new baby. He’s dressed nicely, but he can’t afford new suits, and was proud of the coupon he’d found online for his oil change. This poor (literally) guy was very open about his problems, and admitted to feeling lost in a world of debt. The pastor gave him Dave Ramsey‘s name. Hopefully he’ll see the light.

Lessons learned

While I’ve read stories like this in the past, the truth never really sunk in until I shared a ride with these guys. There was a time in my life when I was jealous of doctors and lawyers. They wear nice clothes, drive fancy cars, and send their kids to private schools. However, so many of them spend money like it’s going out of style, choosing to live above their impressive means in an attempt to keep up with the Joneses. My jealousy has now died; all that is left is pity.

25 Responses to “Looks Can Be Deceiving: Lessons Learned on a Shuttle Ride at the Car Dealer”

  1. Anonymous

    I taught for many years. Teachers almost always win out in retirement because of the unions, which have negotiated nice penisions and health benefits that are almost fully paid by taxpayers. There is not a teacher that I know that does not have huge savings accounts because they pay so little out of pocket for anything, including pensions. The teachers in the Chicago area retire on pensions around $90,000 annualy and still have full health benefits paid for by taxpayers. Keep in mind that this is for teachers that have taught for 25 yrs, and retire around age 55 and taught in public schools. My pension even though I quit before age 55 is quite generous. The teachers that I know that work after retirement do not do so due to $, they do so because of boredom. My husband is an attorney, I beat him hands down in retirement because everything I got is paid for by taxpayers, he does not have that option. I also know many drs. that are in the same situation as attornies. We solved the issue in our household by living in a cheaper area with a cheaper life style. Teachers incomes do not depend on any market conditions, as taxpayers are required to increase payment if pensions fall short. Attorneys are hit by market conditions, and there is no taxpayer bailing them out. In addition, some unions for teachers have negotiated with the gov. to provide teachers not only their pensions but social security in addition. I don’t have that option, but I have many teacher friends collecting nice pensions in addition to a nice Social Security check monthly. Teachers can also teach in jeans, shorts etc so wardrobes are cheaper. An attorney cannot show up in court in anything other then a nice suite, higher cost of living expense for attornies. That is the view from both sides of the fence, just wanted to give a dose of reality. If you teach in a private school with no union representation then pensions are good but not as generous as public schools. Even when I was required to take classes to update my teaching license, the taxpayers paid for those classes also. I also had many of my travel expenses in the summer paid for by taxpayers.

  2. Anonymous

    As an atty, I can tell you that the lifestyle pressures are there. My parents are retired teachers, and they wore dept store clothes to work and drove american cars. My parents retired at 55 with pensions = 70% salary.

    Brooks Brothers at my office and BMW/Audi as the car of choice. I drive my wife’s 2002 Saturn SL1(paid for), but I’m getting quickly past the point where this is acceptable. Nobody wants a lawyer in a shabby suit and compact american car.

  3. Anonymous

    Doctors and lawyers have alot more expenses that may or may not be reimbursed/fully deductable…the wardrobe, the office, etc.
    They also have a much higher investment in their education and “hanging out a shingle” than a teacher would experience.
    There is also an expectation in our society that doctors and lawyers are “rich” and so there is some image to maintain within the community. Did their wives work outside the home? I bet the teacher’s wife did.
    That being said, it is time for the doctors and lawyers to rebel against the expectation that they must drive a Mercedes or be considered a loser.
    I have a friend who is a corporate pilot and it is a decent 6-figure salary, but he is not wealthy by any means. His wife does not work, he has two kids in college, and there is incredible pressure from his family, friends, peers to maintain a country club lifestyle. 150k per year just does not go that far these days…

  4. Anonymous

    Besides the other points mentioned, it seems likely that a retired teacher has a pension that replaces a significant fraction of salary plus, perhaps, subsidizes (or pays for access to) group health insurance. This dramatically reduces risk, and puts the pension-holder in a very different position than the others are likely to be in when they retire, unless they save much, much more than the teacher contributed (from his paycheck) to his pension.

  5. Anonymous

    This is a great post and it’s a common theme in the book The Millionaire Next Door. High income won’t equal wealth for anyone, unless they learn to save.

    I was in a Big-O store a couple of years ago putting some tires on my wife’s Jeep.

    A doctor drove up in a fairly new Mercedes and needed some tires. He tried to buy the tires using the 90-day same as cash, but he was declined. He didn’t have any money or an open credit card, so he just drove away.

    I felt really bad for the guy, because I’m sure that he works very hard and does a lot of good for others. I learned a lot from that experience.

  6. Anonymous

    I would agree/disagree on some points.

    Provided all of them have the same lifestyle and same start point of having student loans (proportional to their salary), chances are the doctor and lawyer will be able to pay off their debt at the same time or even faster than the other two.

    A person’s lifestyle would already dictate how much money they will be able to save or how much debt they will accumulate.

    The lawyer or doctor can save the same amount in 5 years as it took the teacher or pastor to save for 10 years.

    But of course, it depends on their lifestyle.

  7. Anonymous

    As a lawyer who just graduated last May with $180K of student loans from law school and undergrad, I can tell you that it seems perfectly possible to have over $100K of student loans after five years of practice. Especially if he has a spouse that doesn’t work, he has a new baby, saved up for a downpayment for a home, and is contributing to his 401K. I plan on accelerating my debt repayment program and paying my loans off in five years, but at that point I won’t have saved any money besides a small emergency fund and maxing out my 401K. I’m lucky though because I am very glad I went to law school and I like my job a lot. Not all lawyers are scary!

  8. Anonymous

    Too funnyyyy!!

    I think the lesson is don’t do something for the money… do it for the passion/desire/etc…
    Or if not make sure it’s free =)

    The question is what is the “best education”. I think “good enough” education is what most people need…

    scary lawyers and docs… brr…

  9. Anonymous

    A slightly contrarian view. I appreciate the post but, the answer is that you live modestly which when coupled with a more lucrative profession can significantly pole vault you to a higher net worth.

    I think people should follow their dreams and get the best education possible contingent upon
    1) The education can be monetized
    2) Incur as low a debt as possible and pay it off as soon as possible
    3) Don’t avail yourself of all the trappings of success. Stay in an apartment, drive a used car until you are debt free
    4) Never try to impress by spending money. This is probably the toughest to follow but it is really worth the occasional humiliation.
    5) Marry someone who shares your outlook.

  10. Anonymous

    … this ‘shuttle ride’ story is phony.

    What are the odds that (specifically)… a lawyer, a doctor, a pastor, a banker, and a teacher would all just happen to be alone on a routine shuttle ride — and somehow very willing to discuss their personal financial situations with complete strangers (??)

    Common sense tells you it didn’t happen as stated.

  11. Anonymous

    Don’t judge a book by it’s cover! I like these kinds of stories because, also working in the banking industry, this is something I learned long ago. You just never know who has what. I hope the lawyer learns how to manage his finances and soon. With a wife not working and a baby on the way, he’s in a position to cause himself a lot of harm, much more damaging than where he is now.

    Great post!

  12. Anonymous

    Very interesting post – I can’t imagine having that kind of conversation with a bunch of strangers on a shuttle car! 🙂

    James – You have 81k in debt – don’t be happy that you are better off than a couple of other people – you’ve got a big hill to climb.

  13. Anonymous

    I really wonder why the doctor can be in so much debt considering their average salaries are around $250,000. While yes there is malpractice insurance, loans, and a mortgage, that still is a lot of money.

  14. Anonymous

    Dude, you should go up on buildings and scream this out to everyone because people need a reality check.

    They also need to stop following others and getting trapped.

  15. Anonymous

    I just finished reading “The Millionaire Next Door” and you pretty much summed up the book. Unfortunately, high status jobs often require high spending to look the part (not to mention hundreds of thousands of dollars in education). If you look successful, patients and customers are more likely to believe that you are, and this helps your business. However, those with extremely high incomes have great potential to gain a huge accumulation of wealth with proper budgeting and more conservative spending habits. Basically, the moral of the story is that nearly anyone (even a teacher/taxi driver) can accumulate a large deal of wealth if they make good financial decisions and are wise with their cash.

  16. Anonymous

    And THIS is why I try to talk people out of going to law school. Thrifty as I am, I was 36 years old before I paid off my law school debt! And I hated being a lawyer. That’s 8 years of my life that I will never get back — and I paid off my educational debt faster than most of my classmates.

  17. Anonymous

    Wow you are so right, looking at this story, it does make us feel great about ourselves.

    I mean like really, if you are in school wanting to become a lawyer or doctor, just look at this story.
    Do you want to be out of school, around 30 with 100K in debt, having a baby and a mortgage on top of that?

    Or fast forward 10-15 years and take a deep breath and celebrate being debt free from student loans but now you gotta worry about the mortgage.

    Like what the hell do we get ourselves into?
    Do we not calculate the cost and benefits of taking on huge student loans and how long it would take to pay off?

  18. Anonymous

    I love it… And I’m dually impressed about the situations of everyone. Can I add I’m the jewish guy who’s on the bus just graduated (in May) out of college, but seems like I’m in better financial situation than the lawyer and maybe even the doctor??? 81k of debt from student loans, but no credit card balance, and a nest egg saved. I’ve already paid off one of my loans, and I’m hoping that I’ll have those other loans paid off quickly once I have a job. Still looking if anyone needs a physicist who’s into nanotech let me know!

  19. Anonymous

    Looks can be deceiving. I learned this lesson years ago . . .

    Many of the teachers I meet are pretty well off and have great benefits.

    This story could be in the book, “The Millionaire Next Door”.

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