I’m sure that most of you have seen the show on MTV, “Pimp My Ride”. It’s a great show. Some of the stuff they do to those cars is sick. Some of my personal favorites were the waterfall/river running through the middle of the interior of the car, and another car where they turned the entire trunk into a sweet karaoke machine. Tricking out a car has become wildly popular over the past decade. Honda Civics with 22″ rims, and Eldorados with LCD monitors and playstations installed. Young people love to pour money into their cars, but is it worth it?
The answer is simple: NO! It’s never wise to pour a ton of money into something that will always go down in value, no matter what. The sad truth is that cars depreciate no matter how much junk you throw into them. It may help them to maintain their value for a little while or sell a little higher than the book value, but it’s not going to stop the car from constantly going down in value. The only time that a car will appreciate in value is a rare collector’s item like the Mustang Shelby GT in the movie ‘Gone in 60 Seconds’. So many young people take their paychecks, pay their bills, and put the left over money into their cars. This is fine if you have that kind of money to throw around for a hobby, but don’t think that you’re going to get rich off of putting a 20″ LCD in your car or a custom paint job. Even if you upgrade the mechanics of the car, it will help hold the value more, but you’re not going to get rich off of reselling the car.
I’m not trying to sound like a stick-in-the-mud about this, but I want to encourage you to invest more money into things that go UP in value. It’s great if fixing up cars is your hobby, but don’t let that hobby dominate your finances. If you want a hobby that is also a good investment, but a house and start fixing that up. Fixing up houses and reselling them WILL get you rich.