I am just like everyone else: I like nice things. I prefer to buy high quality items that will last a long time and provide me with a lot of use and value. But, I also realize that I can’t have everything that I want.
They say patience is a virtue, and I agree. Waiting to purchase things that I coveted has been a financial blessing in my life. Delayed gratification has kept me out of debt and allowed me to amass a respectable net worth – while still enjoying my life in the process. Let me give one example out of many. I will use cars, but you can substitute electronics, clothes, frequent nights on the town, etc.
I enlisted in the USAF at age 19. Most people I came in with were roughly my age. For most, including myself, this was their first “real” job with a full-time paycheck. I witnessed a lot of friends go out and buy new cars, stereo systems, rims, TVs, video game systems, DVDs, CDs, etc. Many people blew through their paycheck within the week and had to wait a week or more to afford a $6 haircut. I couldn’t, and didn’t, live like that.
Fast forward to my first duty station – RAF Lakenheath, England. I bought a $700 Rover Metro. It was a tiny car with a 1.1 liter engine and was about the size of a Mini. I affectionately named it “the Little Red Demon.” It got 40 mpg, and was incredibly fun to drive. When I left, I sold it for $600.
My next vehicle was an upgrade. I moved to the US and bought a 4 year old pickup. It was a basic model Toyota Tacoma, no frills, but dependable and economical. I paid half down and paid my 3 year loan off in 15 months. On paper, I could have afforded a new car, but I didn’t want to be saddled with large payments. Instead, I used the money to fully fund my Roth IRA, invest in the Thrift Savings Plan, and have a good time traveling and living life.
After 3 years of owning my truck, it was time to upgrade. It had a standard transmission and I was about to have 2 knee surgeries. I lived alone and a vehicle was necessary where I lived. I had the option of dealing with a stiff clutch and a vehicle I didn’t want, or trading it in and buying something I wanted. Time to go shopping! And shop I did! 
I fell in love with a late model BMW 325. If you have never driven one of these cars, they are incredibly fun and responsive. I was inches away from buying it. The BMW 325 is sleek, fun to drive, comes loaded with premium sound and leather everything… Wow! But they are also very expensive to purchase and maintain. In the end I bought a new car, which was the right choice for me (it was after Hurricane Katrina and there were a lot of damaged vehicles on the market, so used cars were not always the best choice).
How is buying a new car exercising delayed gratification? Well, it cost several thousand dollars less than the BMW. I wanted the BMW, but I didn’t need it.
You see, I was in a financial position where I could afford a new car without breaking my bank. My trade-in was about 1/3 the cost of my new car, and my down payment was about 1/3. That left a small monthly payment, which I got at a low rate and paid off in less than 2 years. Not having a car note is a wonderful thing!
Delayed gratification is essential to good financial health. Had I bought a new car as a young Airman, I would have been saddled with crushing debt, probably for the entire length of the loan. It would have also used up the majority of my paycheck every month – leaving me with little else to use for enjoyment and living.
Instead, I bought a junker and enjoyed myself. I traveled throughout England and Europe. I invested in my retirement accounts. I went out with friends and lived. And I have no regrets.
I would still love to have that BMW. Not just as a status symbol – that car is sweet! Smooth, powerful, sexy. But, right now, there are other things that are more important to me – investing for retirement, traveling to see family and friends, and enjoying my life. You see, the freedom of not having a car payment allows me the freedom to allocate those funds however I want. And that is liberating.
One day I may just have that BMW. And I guarantee you this… it will be well worth the delayed gratification.
{ 13 comments… read them below or add one }
Great post!
Hubby and I both drive Bimmers – mine 16 years old and his 17 years old. We plan to drive them into the ground after buying them used for a few thousand dollars cash each in the past few years.
But I get what you’re saying
Good article. I SO want a BMW too, but like you am holding off. I have a 2001 Nissan Sentra that I payed $4000 cash for. It’s fun to drive, gets good gas mileage and runs well. Someday, I’ll get the BMW, but for now it’s just not the right time or choice.
I almost published an article on a similar topic, glad I waited
Now I can link to yours!
Many people blew through their paycheck within the week and had to wait a week or more to afford a $6 haircut. I couldn’t, and didn’t, live like that.
That sounds like me, except without the cars, stereo systems, rims, TVs, DVDs, etc. I regularly wake up on payday with less than $5 in the bank – but I haven’t bounced a single check.
Maybe you couldn’t live like that, but millions of Americans do, every day. Many of us delay gratification daily yet do not enjoy financial health.
Minimum Wage, I understand what you are saying, and I am not judging those who do not earn much money. The Airmen in my example were not living within their means. They were broke because they were spending too much on momentary wants, not needs. They were not broke because they didn’t earn enough money.
My article is about setting a strong financial foundation and living within your means. If it takes putting off a big purchase or eliminating frivolous expenses, then so be it. In that respect, delaying gratification is essential to financial health. It is much easier for someone to get ahead financially if they do not overspend and fall behind.
I want your little British car. It sounds cute, efficient, and well-priced. But we also don’t need a 2nd car, so it would be wasted money.
As a teen, I sometimes delayed gratification for bigger things. I have lots of great memories from my trip to Europe, for instance.
We used to have a Metro when I was a kid. And of course I have known lots of people with similar cars. If you were 20ish when you were in England then you were almost certainly fitting in with the natives.
I have been a total fumbler with cars.
Spoilt rotten by being given company cars, I started with new cars and not much thought.
We now have a Toyota Camry now in its 3rd year, and a Toyota Innova bought just before reading PF blogs.
Well, hopefully these two cars are going to be with us for the next 20 years!
Excellent advice! I wish a had excercised some delayed restraint when A bought a new Chevy truck back in 2003. Cost $40k, all the bells and whistles, could have waited a year and got the same truck for 15k less. You live, you learn. Will finally pay it off this December.
I like a nice mix of instant and delayed gratification. If it’s under $5 and I haven’t done it in a while, I’ll go for it.
I nearly bought a 4 year old 3 series BMW too.
however, for a little less I bought a 2 year old acura TSX with half as many miles. I think its one of the few cars that drives comparably to the 325.
Great post Patrick and very powerful. I’m linking to it is my post that’s coming out in the morning. I wish I had developed your maturity when I was 19. It took me quite a while longer. Better late than never, though!:)
Thanks for the kind words, Ron. I’m not 100% sure it was wisdom, or fear of being broke! But it worked out well for me in the end. Links are always appreciated.
For years I was into Chevy Blazers. Leased a new one every 3 years or so. But what I REALLY wanted was a Z3, and then a Z4. Didn’t need it. Just wanted it.
And now? In a Chevy Impala.
Why don’t they make a Z4 with a tag-along trailor, or at least a trunk?
Good post! Thanks. G.