Convince me I can make a dumb (car-related) purchase

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
buckeyefan303
Posts: 19
Joined: Sun Feb 05, 2012 7:53 am

Convince me I can make a dumb (car-related) purchase

Post by buckeyefan303 » Mon Aug 11, 2014 6:36 am

I'm looking for some conservative Boglehead advice to talk me down from a desired car purchase. I want to buy a car in the $40-50k range (new Audi S3, used S5, used Porsche Cayman). Relevant details are noted below:

Age: 29 / married
Combined Income: $195k + non-guarenteed bonus (typically $25k)
Jobs: Both are in healthcare, but different very stable companies.
Retirement Account Balances: $200k
Cash on Hand: $165k
Current Savings: max Roth IRAs (x2), Max my 401k, save $4000 monthly to Capital One 360
Current Debt: None

Future Considerations: My wife just took a new job with 401k, we will reduce cash savings and max this out (60% of income for remainder of 2014 / max in 2015). I just enrolled in our ESPP which will consume 15% of my income, but I will sell the day after the purchase occurs. We will likely be buying a house in the next 3-5 years. We currently live in "medium" cost of living major city, but the home purchase will likely be in another "medium" cost of living city. Kids are not being considered at this time.

I commute 40 miles daily and would be purchasing this car because I enjoy quality autos and it will help ease the pain of the commute. I'm not looking for a status symbol, but unfortunately the cars meeting my criteria are often associated to this perception.

Let me have it!

jcpct
Posts: 25
Joined: Mon Feb 03, 2014 12:41 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by jcpct » Mon Aug 11, 2014 7:01 am

With your income you can certainly afford the car. You also seem to appreciate a higher end car. Get an '09 or newer Cayman, S model if you can swing it, but even the base model is a great car. Go for it and enjoy it.

amitb00
Posts: 435
Joined: Sun Jan 01, 2012 9:04 am

Re: Convince me I can make a dumb (car-related) purchase

Post by amitb00 » Mon Aug 11, 2014 7:10 am

Anyone who plans to spend 40+ on a car, should take a look at Tesla. After accounting for tax rebates, fuel & maintenance saving, difference is far less and you become green, drive a really modern car. Best wishes in your purchase.

pacodelostigres
Posts: 125
Joined: Mon Jul 28, 2014 8:14 am

Re: Convince me I can make a dumb (car-related) purchase

Post by pacodelostigres » Mon Aug 11, 2014 7:12 am

I'd also say that you can afford it. However you might want to look at leasing as a less expensive option that lets you change your mind in a couple of years if your circumstances change or if you decide you want something different.

I'm in a similar situation to yours and recently decided to get rid of our compact cars and leased a small SUV for my wife and a high HP sedan for me. Yeah, we picked up lease payments and increased gas / insurance / registration fees of about 700 / month instead of depreciation and maintenance costs of a little more than half of that, but I couldn't care less and haven't regretted it at all.

That isn't conservative advice, but if you're maxing out your retirement accounts and putting money in a taxable account every month, don't have debt, don't have kids, etc, you're certainly free to spend a few hundred dollars a month on something that will make you happy. We lump this in with things like having someone mow the lawn and having cleaners come once a month. A higher budget for these types of things only add about six months total to the retirement date, and will make life more enjoyable for the next 10 years or so. Totally worth it as long as it isn't in conflict with your plan and goals.

User avatar
midareff
Posts: 5853
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Convince me I can make a dumb (car-related) purchase

Post by midareff » Mon Aug 11, 2014 7:21 am

Used either C63 series or E63 series AMG Benz. Comfortable, safe and wicked fast. Since they are dropping the 6.3 for a turbo 4.0 it might hold value better than you might think.

You might be able to negotiate a lease with first call option to buy that makes acquiring new quite attractive.

awval999
Posts: 1080
Joined: Fri Apr 08, 2011 10:17 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by awval999 » Mon Aug 11, 2014 7:41 am

I don't think the OP can consider leasing because of the large daily commute which will destroy his yearly mileage allowance.

Yes, you obviously can afford it OP. Good job getting rid of (or never having) those pesky student loans.

sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: Convince me I can make a dumb (car-related) purchase

Post by sscritic » Mon Aug 11, 2014 7:48 am

I am curious: why did you think there was a question? The math seems pretty simple.

You said you wanted to be talked down, so here goes: don't buy a new car, get a motorcycle. Feel better now? :)

P.S. The last time I bought a new car, I didn't ask anyone's permission, certainly not this crowd. Hey, I have only met one of them as far as I know. Who are they, anyway?

P.P.S. Do you have a pre-nup? Did you listen to this crowd on pre-nups?
Last edited by sscritic on Mon Aug 11, 2014 7:52 am, edited 1 time in total.

pacodelostigres
Posts: 125
Joined: Mon Jul 28, 2014 8:14 am

Re: Convince me I can make a dumb (car-related) purchase

Post by pacodelostigres » Mon Aug 11, 2014 7:51 am

awval999 wrote:I don't think the OP can consider leasing because of the large daily commute which will destroy his yearly mileage allowance.

Yes, you obviously can afford it OP. Good job getting rid of (or never having) those pesky student loans.
A 40 mile daily commute * 22 work days per month = 880 miles. That fits into any lease if the 2nd car is owned, or into a 15k mile lease fairly comfortably for not much more expense.

If he meant 40 miles one way, I'd say it's time to consider moving since they don't own a house yet.

dbltrbl
Posts: 887
Joined: Thu Mar 01, 2007 11:52 am

Re: Convince me I can make a dumb (car-related) purchase

Post by dbltrbl » Mon Aug 11, 2014 8:03 am

+1 For Tesla. drive one and see how feel about it.

User avatar
midareff
Posts: 5853
Joined: Mon Nov 29, 2010 10:43 am
Location: Biscayne Bay, South Florida

Re: Convince me I can make a dumb (car-related) purchase

Post by midareff » Mon Aug 11, 2014 8:04 am

awval999 wrote:I don't think the OP can consider leasing because of the large daily commute which will destroy his yearly mileage allowance.

.

Naw, redo the math. They are pretty special vehicles.... hence the first call on the lease.

Jack FFR1846
Posts: 8075
Joined: Tue Dec 31, 2013 7:05 am

Re: Convince me I can make a dumb (car-related) purchase

Post by Jack FFR1846 » Mon Aug 11, 2014 8:18 am

I have owned a loaded A4 and then an S4. My honest advice is to be sure that your dealer is on your way to work with loaner cars and early drop off times and late pick up times. The A4 visited the dealer about once a month. The S4 spent exactly 50% of its life at the dealer.

I eventually replaced the S4 with a subaru legacy gt. Although no as rock solid feeling as the Audi, the only dealer visits were to buy the car and to buy 30k, 60k and 90k maint parts.
Bogle: Smart Beta is stupid

Leesbro63
Posts: 5532
Joined: Mon Nov 08, 2010 4:36 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by Leesbro63 » Mon Aug 11, 2014 8:20 am

Jack FFR1846 wrote:I have owned a loaded A4 and then an S4. My honest advice is to be sure that your dealer is on your way to work with loaner cars and early drop off times and late pick up times. The A4 visited the dealer about once a month. The S4 spent exactly 50% of its life at the dealer.

I eventually replaced the S4 with a subaru legacy gt. Although no as rock solid feeling as the Audi, the only dealer visits were to buy the car and to buy 30k, 60k and 90k maint parts.
+1. Had 3 Audi's. Spent more time at the dealer than with us. Do yourself a favor and get an Asian make car.

User avatar
Watty
Posts: 14581
Joined: Wed Oct 10, 2007 3:55 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by Watty » Mon Aug 11, 2014 8:48 am

If you commute in heavy traffic then sitting in it in a high performance car is a waste. In bumper to bumper traffic I have been known to pull up my Honda next to a car like a Porsche and rev the engine like I was wanting to race them.
I want to buy a car in the $40-50k range....
Be sure to look at the overall budget since your wife will likely end up buying a more expensive car too or spending an equelevent amount on some other splurge.

If you get accustomed to expensive cars you will likely be buying replacements every five to seven years if you are lucky since the cars you are looking at will likely not hold up well as commuter cars.

Sure you can afford it but you need to look at what the "opportunity cost" is of spending the money on the car verses something else. Compared to buying a very reliable and nice $30K car that will last you ten years the trade offs might be something like;
1) Having to work an extra ten years or more.
2) Being able to buy a more expensive house 15 minutes closer to your jobs. That would be an extra half hour a day that you would be buying.

Buckeye
Posts: 460
Joined: Mon Feb 26, 2007 3:08 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by Buckeye » Mon Aug 11, 2014 9:06 am

Used? You can afford a new S5 or Cayman.

Go for it!

User avatar
dbCooperAir
Posts: 1107
Joined: Tue Jan 07, 2014 10:13 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by dbCooperAir » Mon Aug 11, 2014 9:11 am

Do you suffer from buyers remorse?
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-

User avatar
semperlux
Posts: 394
Joined: Tue Jan 22, 2008 6:46 pm
Location: Ca

Re: Convince me I can make a dumb (car-related) purchase

Post by semperlux » Mon Aug 11, 2014 9:32 am

Looks like your finances are in order and no significant debt. I vote go for it and get something you like. Hopefully you're a buy and hold kind of car guy though, or it'll become expensive to get a new car every few years. With that said, either go big or go home .... get a new one! Nothing beats the new car smell and being the first owner.

And on that note, another +1 to look at a Tesla =)

Keep It Simple
Posts: 298
Joined: Sat Nov 17, 2007 5:07 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by Keep It Simple » Mon Aug 11, 2014 9:48 am

Get that Cayman then please post back here on how awesome it is!

K.I.S.

EnjoyIt
Posts: 1594
Joined: Sun Dec 29, 2013 8:06 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by EnjoyIt » Mon Aug 11, 2014 9:51 am

Any car you take care of will last you. Yes, German cars have more expensive maintainance, but there is no reason it can't last for 10 years. In my circle of people I know, there is a 7, an 8, and an 11 year old Audi that are all daily commuters and still run fine. Cars are built much better these days.

Anyways, if you are on schedule with your retirent plans and have cash left over, then feel free to enjoy it. Just remember a luxury car is just that, a luxury and a complete waste if money.

Until the Tesla has been around for several years, I would not own one. In cars, past performance does corolate well to future results.

humbucker87
Posts: 24
Joined: Fri Feb 20, 2009 3:54 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by humbucker87 » Mon Aug 11, 2014 10:01 am

I agree with another poster. For a daily commuter car I would get something like a C63 AMG or E90 M3. There is nothing fun about driving a car known for it's handling 40 miles on the highway. Now if you said fun track car or weekend canyon carver that's a different story.

There are several C63's at Carmax in my area with low 30k mileage for around $41k. Then buy the MaxCare warranty (around $4k for 5 year 100k coverage) so that when something absurdly expensive breaks (because it will) you'll be out $50 to get it fixed at a Mercedes dealer.

User avatar
HomerJ
Posts: 11924
Joined: Fri Jun 06, 2008 12:50 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by HomerJ » Mon Aug 11, 2014 10:14 am

Watty wrote:If you get accustomed to expensive cars...
Pay attention to this... Lifestyle creep can be very dangerous...

You can certainly afford this car... I hope that commute is uncrowded highway miles. I'm not sure how driving a fast $50k car in heavy traffic at a slow pace is more enjoyable than driving a $20k car, but if you think that will make you happy, you should buy it...

Just be careful to not buy everything you want. My wife and I got rich in 15 years ($200k net worth to $1.7 million) because we stopped increasing our lifestyle once we had "enough"...

It pays off double when you can stop lifestyle creep... Not only do you save more, but your "number" for financial independence is lower.

Say you make $200k a year, live a $140k lifestyle... Saving $60k a year, and you need $3.5 million to be FI (financially independent) because you want to maintain that $140k lifestyle in retirement.

Spend $120k a year, and now you're saving more ($80k), AND you now need less($3 million) to be FI.

This can translate into being financially independent at 53 instead of 60.... BUT you think, "I get $20k a year more to play with in the first scenario, and that is worth more to me than time in my 50s".

It may indeed be worth more. You are a very lucky person to be able to choose between the two. You can definitely afford to spend a bit more, if you want to.

sls239
Posts: 928
Joined: Thu Oct 23, 2008 4:04 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by sls239 » Mon Aug 11, 2014 11:01 am

Since you specifically asked, here goes.

Sometimes people get so caught up in how good something is - and patting themselves on the back for recognizing "quality" that they forget that they don't need it to be that good.

My advice is to ask to take the car on a test drive of your actual commute, or maybe half of it, and to go ahead and test drive less expensive cars on that same commute. Ask yourself if the difference in experience is actually worth the difference in price.

Stan57
Posts: 2
Joined: Mon Aug 11, 2014 10:32 am

Re: Convince me I can make a dumb (car-related) purchase

Post by Stan57 » Mon Aug 11, 2014 11:02 am

Lots of sound advice being posted here.

My Wife and I have purchased three vehicles from CarMax and have been pleased with each transaction. I picked up a 2003 Lincoln Towncar which came off a two-year lease with 17K miles for $22K in 2005. New ones were going for $46K at the time. They appraised my Silverado trade-in and when I sat down with the salesman in front of the computer to view the results of the appraisal, he asked me "What do you think we will give you for it?" I said that based on what I had researched, I thought they would give me about $9K. He laughed and pulled up the report on the screen and told me they would give me $11K! I was impressed. At most car dealers, the response probably would have been "We can't go that high, but we might be able to give you $8K."

This is appropriate, as my goal is to possibly purchase a Rolls Royce in a couple of years. I will get a used one. Let someone else take the initial depreciation hit.

User avatar
cfs
Posts: 4154
Joined: Fri Feb 23, 2007 1:22 am
Location: ~ Mi Propio Camino ~

Re: Convince me I can make a dumb (car-related) purchase

Post by cfs » Mon Aug 11, 2014 11:08 am

The need to convince.

Actually, there is only one thing we need to "convince" our fellow Bogleheads.

We need to convince them to stop posting "convince me" notes on this forum.

Thanks for reading.
~ Member of the Active Retired Force since 2014 ~

User avatar
HomerJ
Posts: 11924
Joined: Fri Jun 06, 2008 12:50 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by HomerJ » Mon Aug 11, 2014 1:48 pm

cfs wrote:The need to convince.

Actually, there is only one thing we need to "convince" our fellow Bogleheads.

We need to convince them to stop posting "convince me" notes on this forum.

Thanks for reading.
What do you guys have against "convince me" threads? This forum is about asking for advice about financial matters... These kind of threads are EXACTLY what this forum is for.

User avatar
mbk734
Posts: 460
Joined: Tue Jan 21, 2014 2:14 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by mbk734 » Mon Aug 11, 2014 2:09 pm

If you want a reliable (long lasting and low maintenance like a good wife) luxury car, I would look at Lexus. Depending on where you live, their convertibles are very nice looking (sunny) or the sedans have AWD (snowy).

If you are going German, I agree with a previous poster to lease! Sports cars look old fast and depreciate even faster. Otherwise factor in an extended warranty, so maintenance is not your problem. I would also shop around and at least compare a Beemer (Ultimate Driving Machine) or Benz (luxury). But all in all, this is a want not a need, so get what you want! You earned it! Just remember if you invest that money now, you can drive an even nicer car when you have a midlife crisis :D
Last edited by mbk734 on Mon Aug 11, 2014 2:43 pm, edited 2 times in total.
You can't stop the waves, but you can learn to surf

User avatar
Leif
Posts: 2499
Joined: Wed Sep 19, 2007 4:15 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by Leif » Mon Aug 11, 2014 2:30 pm

Seems doable.

From Fidelity
For example, by age 35, Fidelity suggests that you should have saved 1X your current salary, then 3X by 45, and 5X by 55.
How much do you need to retire?

jlawrence01
Posts: 1426
Joined: Mon Feb 25, 2013 1:34 am
Location: Southern AZ

Re: Convince me I can make a dumb (car-related) purchase

Post by jlawrence01 » Mon Aug 11, 2014 2:36 pm

One comment.

Before you buy any car, make sure that there is a LOCAL dealer or repair shop that is qualified to repair the vehicle that you wish to buy. It is NO fun o purchase a vehicle just to find that you need a LONG tow or need to wait weeks for a part to be shipped to you.

User avatar
gunn_show
Posts: 1473
Joined: Wed Jun 06, 2007 3:02 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by gunn_show » Mon Aug 11, 2014 4:09 pm

Keep It Simple wrote:Get that Cayman then please post back here on how awesome it is!

K.I.S.
+1.
Bought me a poor man's Cayman at your age, Honda s2000, and still waiting to buy the real thing, so go for it and let us know the joy.
M3/M4 would be second choice, like others mention, have not heard good results from Audi owners, as much as I also think they are badass cars.
Will also comment, as others said, with that much mileage estimated, I'd really consider either leasing the Porsche/BWM/MB/Audi options, or buying a Lexus/Infiniti/Acura
You certainly have the income, no debt, savings, so from that perspective it is not a dumb idea. Make money, spend money. Some of us are car guys, some of those on this board wouldn't buy a ham sandwich at lunch if it didn't fit their investment strategy, so do what you want and have fun. Can't take it with you, and why drive that many miles in a tin can.
"The best life hack of all is to just put the work in and never give up." Bas Rutten

DFWinvestor
Posts: 202
Joined: Mon Mar 19, 2012 2:05 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by DFWinvestor » Mon Aug 11, 2014 4:29 pm

amitb00 wrote:Anyone who plans to spend 40+ on a car, should take a look at Tesla. After accounting for tax rebates, fuel & maintenance saving, difference is far less and you become green, drive a really modern car. Best wishes in your purchase.

+1

I just bought a Tesla, have test driven twice before the purchase but won't get it delivered until November. The savings on gas is significant for someone commuting 800 miles/week. Most of the cars you mention in the OP I would imagine are gas guzzlers.

Just to be generous let's assume 25 MPG for those vehicles. 3200 miles/month/25 mpg=128 gallons of gas every month. If you have cheap gas in your area and they don't' require premium, let's assume $3.50/gallon, you are going to spend $450 every month on gasoline.

Charging a Tesla at home would cost a fraction of what you would spend on gas. At 0.11/kWh, 265 miles on with 85 kw battery, somewhere around $112/month to charge your car for that commute if my math is right.

So you could spend an extra $340/month on a Tesla and break even, without accounting for any other maintenance costs which would absolutely be more expensive in a high end ICE vehicle.

killjoy2012
Posts: 1057
Joined: Wed Sep 26, 2012 5:30 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by killjoy2012 » Mon Aug 11, 2014 6:07 pm

1) This forum is probably the single worst place to come to for gaining 'permission' to go spend big $ on a car.
2) You can clearly afford it, assuming you want to.
3) If you're going to do it, I would make sure you buy what you really want. Buying one expensive 'fun' car is bad. Buying 2-3 over the course of just a few years because you bought the wrong one initially, or feel a constant need to upgrade, is even worse.
4) Assuming you still live in TN, I would LOL at buying a Tesla since there's only 1 store/dealer/supercharger/church in the entire state. And if it turns out you don't like that dealer, or they close shop, then it's a very long ride/tow to either St. Louis or Atlanta.
5) I wouldn't spend $70k+ on an EV period.

sambb
Posts: 2193
Joined: Sun Mar 10, 2013 3:31 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by sambb » Mon Aug 11, 2014 9:07 pm

DFWinvestor wrote:
amitb00 wrote:Anyone who plans to spend 40+ on a car, should take a look at Tesla. After accounting for tax rebates, fuel & maintenance saving, difference is far less and you become green, drive a really modern car. Best wishes in your purchase.

+1

I just bought a Tesla, have test driven twice before the purchase but won't get it delivered until November. The savings on gas is significant for someone commuting 800 miles/week. Most of the cars you mention in the OP I would imagine are gas guzzlers.

Just to be generous let's assume 25 MPG for those vehicles. 3200 miles/month/25 mpg=128 gallons of gas every month. If you have cheap gas in your area and they don't' require premium, let's assume $3.50/gallon, you are going to spend $450 every month on gasoline.

Charging a Tesla at home would cost a fraction of what you would spend on gas. At 0.11/kWh, 265 miles on with 85 kw battery, somewhere around $112/month to charge your car for that commute if my math is right.

So you could spend an extra $340/month on a Tesla and break even, without accounting for any other maintenance costs which would absolutely be more expensive in a high end ICE vehicle.
Would disagree strongly on buying a tesla, based on my family member.
A family member has one of these.
A very very very minor fender bender can easily cost 5k-10k to fix. I mean tiny fender bender. Read their forums on this. Happened to my family member. They aren't the only ones.
The range in the winter in cold areas is very bad. The winter in the midwest resulted in a very poor range on the car. Intermittent charging issue, and left him "unable to start" recently for no reason- how inconvenient.
The resale is totally unknown, but given how many 15k "engine" replacements or whatever it is, and the cost out of warranty (read edmunds' review for information), i don't suspect it will be good resale out of warranty. My family member will sell the car in 2 years before the resale crashes on the car. The battery won't be the issue - it will be the rest of the car. But, I will acknowledge that owners do love the car and thank goodness they do, because my family member can't wait to sell before the resale issues hit.

I think you have a nice plan for a nice used sporty car, and would be so much more fun than a big lumbering sedan. Invest the difference. You can invest the difference compared to a tesla. Best wishes.

Cars are subjective decisions so YMMV.

berntson
Posts: 1366
Joined: Mon Oct 29, 2012 12:10 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by berntson » Mon Aug 11, 2014 9:36 pm

buckeyefan303 wrote: I commute 40 miles daily and would be purchasing this car because I enjoy quality autos and it will help ease the pain of the commute. I'm not looking for a status symbol, but unfortunately the cars meeting my criteria are often associated to this perception.
It sounds like what you need is a quality car for commuting. Why do you need to spend $40,000-$50,000 to get that? There are all sorts of high-quality vehicles with top-notch engineering that sell for much less. Maybe by "quality" you really mean "luxury"?

angelescrest
Posts: 947
Joined: Tue May 27, 2008 10:48 am
Location: The Third Coast

Re: Convince me I can make a dumb (car-related) purchase

Post by angelescrest » Mon Aug 11, 2014 9:52 pm

EnjoyIt wrote:In my circle of people I know, there is a 7, an 8, and an 11 year old Audi that are all daily commuters and still run fine.
Amazing, I wish all cars lasted that long.

User avatar
HomerJ
Posts: 11924
Joined: Fri Jun 06, 2008 12:50 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by HomerJ » Tue Aug 12, 2014 9:24 am

killjoy2012 wrote:1) This forum is probably the single worst place to come to for gaining 'permission' to go spend big $ on a car.
Or the single best place to be talked out of wasting $50,000 (Let's not kid ourselves, that's a ton of money)

tphp99
Posts: 332
Joined: Sun Jan 03, 2010 8:47 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by tphp99 » Tue Aug 12, 2014 9:38 am

Buckeye wrote:Used? You can afford a new S5 or Cayman.

Go for it!
That's kind of what I was thinking - but along the line of a new car will get you better service if you get a lemon. Make sure the dealer has a solid loaner car program. My MB dealer used to try to impose a 100 mi limit on the loaner, what good would that do you if they keep your car for a week.

My advice: get a reliable new car, buy the fun car for the weekends.

WhyNotUs
Posts: 1358
Joined: Sun Apr 14, 2013 11:38 am

Re: Convince me I can make a dumb (car-related) purchase

Post by WhyNotUs » Tue Aug 12, 2014 9:51 am

A mid-80's Porsche 911 Cabriolet can be had for high 20's and are sweet cars for those sunny days in life.
Unfortunately, cars have a pretty short pleasure cycle by design if you buy into the mindset. Always a new model with a new feature that makes your model less attractive.
You have the cash, personally, I would buy a low end Lexus (if I did not want any maintenance issues and wanted 30 mpg) or older Porsche Cabrio (if I was willing to spend a little money to keep it up in return for dropping the top and hearing it purr on a ragtop day).

If you are a Buckeye, as in living in OH, then there may be weather considerations that rule out a rear wheel drive vehicle. FWIW, one of the handful of things that I have learned in life is that the pleasure of time off with my loved ones and far flung adventures are the best uses of my funds after paying bills, saving, and giving, YMMV. Go Bucks.
I own the next hot stock- VTSAX

tphp99
Posts: 332
Joined: Sun Jan 03, 2010 8:47 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by tphp99 » Tue Aug 12, 2014 10:13 am

Oh, you're on a "save as much as possible and then retire" website. But if you were on a car enthusiast site: they might tell you to skip the A3, S5 and Cayman and go straight to a Audi R8 or Porsche 911 GT3 - you can probably afford those.

And yes, once you start spending $ on luxury cars - it get tough to go back to a Camry.

amitb00
Posts: 435
Joined: Sun Jan 01, 2012 9:04 am

Re: Convince me I can make a dumb (car-related) purchase

Post by amitb00 » Tue Aug 12, 2014 10:28 am

@sambb: Individual experiences varies and I hope your relative sells the car very soon and gets something he loves. There is no point in spending so much and being unhappy about it.
I am also a very frequent visitor to Tesla forums. Most owners love the car. Yes, there are few who don't but level of satisfaction is very very high with the car. Yes, it is an expensive car and repairs may be expensive. I hope folks have insurance to cover for that cost. My own insurance is not high at all. In South Florida, it is $350 for 6 months for this car. Of course it depends on your driving habits and kind of coverage you take.
When one is spending money on a car, he should look into his own driving habits and if car is suitable for him.
I will still say that if some one is spending 40+ on a car, he should take a free test drive for Tesla and then evaluate for himself. Tesla has already eaten big into the sales of MB S & E class, BMW 7xx & 5xx series and other cars which sell in range of 50-120. If you are looking into that range, do yourself a favor and see this car from future. Yes, the car updates itself.
Last edited by amitb00 on Tue Aug 12, 2014 2:10 pm, edited 1 time in total.

buckeyefan303
Posts: 19
Joined: Sun Feb 05, 2012 7:53 am

Re: Convince me I can make a dumb (car-related) purchase

Post by buckeyefan303 » Tue Aug 12, 2014 1:08 pm

I'm surprised by the number of favorable responses! I'll reply to a few things.

- The wife will not be asking for a new car anytime soon. She just got a 2014 Wrangler she is more than happy with.
- While my commute is 44 miles, there is not any traffic and it's all highway miles. I'm not located in Ohio anymore as my name my suggest so weather isn't a problem.
- This isn't my first "nice" car. My current Audi A4 3.2 Quattro was purchased with 20,000 miles at a time when I probably shouldn't have been purchasing this kind of car. I've driven it for the last 7 years with no real problems.
- Lots of leasing comments. I find this interesting since I was just going to pay cash. I would love to hear some lease vs. loan vs. cash purchase arguments.
- The C63 comments really having me researching that vehicle. Great performance + luxury. I just didn't want to be a "Benz" or "Beemer" driver (no offense).
- Tesla's are still expensive even with incentives.

technovelist
Posts: 2917
Joined: Wed Dec 30, 2009 9:02 pm
Contact:

Re: Convince me I can make a dumb (car-related) purchase

Post by technovelist » Tue Aug 12, 2014 1:22 pm

Of course you can make a dumb purchase.
The question is whether you should. :mrgreen:
In theory, theory and practice are identical. In practice, they often differ.

User avatar
Leif
Posts: 2499
Joined: Wed Sep 19, 2007 4:15 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by Leif » Tue Aug 12, 2014 1:45 pm

buckeyefan303 wrote: - Lots of leasing comments. I find this interesting since I was just going to pay cash. I would love to hear some lease vs. loan vs. cash purchase arguments.
I would not suggest leasing unless your car's use is business related and can be deducted from your taxes.

amitb00
Posts: 435
Joined: Sun Jan 01, 2012 9:04 am

Re: Convince me I can make a dumb (car-related) purchase

Post by amitb00 » Tue Aug 12, 2014 2:23 pm

buckeyefan303 wrote: - Tesla's are still expensive even with incentives.
If you are in US, Uncle Sam gives you 7.5K tax rebate. In some states like CA, you get additional 2.5K state tax rebate.
Depending on your driving, fuel savings will vary. Even if we assume $200 per month saving in gas, you are looking at 2.4K in a year (change it to whatever is your personal saving depending on your driving habits.
Maintenance cost is zero for Tesla as there is no scheduled maintenance. Now BMW includes maintenance in its cost so it is not additional. Mercedes charges around $800 a year for scheduled maintenance. Depending on which luxury car you are buying, you may want to add that cost. For argument sake, let us say $600 per year. This means b/w fuel & maintenance you are saving (or not spending) 3K a year.
If you keep the car for 8 years, you saved 24K. Add 7.5 K on top of it and total saving is $31.5 K. If you keep car longer, saving will be more.
You can get Tesla from 70K to 130K (depending on the battery and options). If you plan to keep it for 8 years, very simplistically it becomes 40K to 100K. So if you are planning to spend more than 40 on a car, it makes sense to consider Tesla.
Now true Bogleheads will talk about time value of money and that if you spend 40K now on a car and invest 30K, 30K will grow over time. Those are all valid points and you should properly account for it. My point was just to say that you need to discount Tesla cost to account for tax rebates and other savings.

User avatar
mbk734
Posts: 460
Joined: Tue Jan 21, 2014 2:14 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by mbk734 » Tue Aug 12, 2014 2:28 pm

From edmunds.com

Advantages of Car Leasing
Lower monthly payments
Lower down payment
You can drive a better car for less money each month.
Lower repair costs (With a three-year lease, the factory warranty covers most repairs.)
You can more easily drive a new car every two or three years.
No trade-in hassles at the end of the lease
You pay sales tax only on the portion of the car you finance.

Disadvantages of Car Leasing
You don't own the car at the end of the lease.
Your mileage is limited to a set amount, typically 12,000-15,000 miles a year (excess miles are paid for at the lease termination).
Lease contracts are confusing.
Leasing is more expensive in the long run (as opposed to buying and driving until the wheels fall off).
Wear-and-tear charges can add up (paid at lease termination).
It's costly to terminate a lease early if your driving needs change.

Advantages of Car Buying
Pride of ownership — you can modify your car as you please.
Car buying is more economical in the long run unless you buy and trade-in regularly.
No penalty for driving excess mileage
Increased flexibility — you can easily sell the car whenever you want.

Disadvantages of Car Buying
Higher down payment is generally required.
Higher monthly payments
You're responsible for maintenance costs once the warranty expires.
Trade-in or selling hassles when you're ready to get rid of your car
More of your ready cash is tied up in a car, which depreciates, rather than an investment that appreciates.


If you are buying, many dealers offer 0% financing or close to it rather than paying in cash in full. With inflation, you are then paying back cheaper dollars and you can invest the difference in a CD. Often you don't get any better deal paying cash vs financing, and dealers will even give you a better price if you finance, which you then can pay off immediately if you so choose. Truecar, Costco, and Kelley Blue Book are good resources to give you an idea of what a good price is.
You can't stop the waves, but you can learn to surf

killjoy2012
Posts: 1057
Joined: Wed Sep 26, 2012 5:30 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by killjoy2012 » Tue Aug 12, 2014 8:39 pm

I think you need to truly look at your own car buying habits before making the buy vs. lease decision. If you're someone who can be happy by buying a car and driving it into the ground, then so be it. However, if you generally find yourself always driving newer vehicles (<3 years olds), then you're probably way better off leasing.

And if I would also strongly consider leasing if you're looking at a model/brand that is well known for expensive repairs when out of warranty. (I won't name names.)

berntson
Posts: 1366
Joined: Mon Oct 29, 2012 12:10 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by berntson » Tue Aug 12, 2014 8:54 pm

Here's another way to look at it. Every year that you drive a Audi S5 instead of a Toyota Camry will require you and your wife to work an extra month.

Judging from Edmonds, driving a used 2012 Audi S5 costs about $7,000 a year more than driving an ordinary used car (2012 Toyota Camry). Say that given your current savings, you can retire at age 60 (it's hard to tell since its unclear how much of your $4,000 monthly savings is long-term savings for retirement and how much is savings for future purchases like a house). Presumably, if you make the decision now to spend an extra $7,000 a year on your car, you will continue making that decision in the future (hard to back to ordinary once you've left).

Putting an extra $7,000 a year to retirement would generate enough money to retire three years early (assuming either a 4% or 5% real return and slightly lower cost of living, given that you continue driving less expensive cars in retirement). So is driving a luxury car worth working for three extra years? For some, this is a great trade. Myself, I would get to financial independence three years earlier. But everyone's preferences are different.

spectec
Posts: 1239
Joined: Mon Jul 14, 2014 8:00 am

Re: Convince me I can make a dumb (car-related) purchase

Post by spectec » Wed Aug 13, 2014 8:18 am

After years of observing people's car-buying habits, I often refer to the '"Buy vs Lease Addiction" (rather than Decision).
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

feh
Posts: 1275
Joined: Sat Dec 15, 2012 11:39 am

Re: Convince me I can make a dumb (car-related) purchase

Post by feh » Wed Aug 13, 2014 9:54 am

Can you afford it? Yes. Do I think you should spend so much on a vehicle? No.

TRC
Posts: 1896
Joined: Sat Dec 20, 2008 5:38 pm

Re: Convince me I can make a dumb (car-related) purchase

Post by TRC » Wed Aug 13, 2014 10:08 am

buckeyefan303 wrote: We currently live in "medium" cost of living major city, but the home purchase will likely be in another "medium" cost of living city. Kids are not being considered at this time.
Are you planning to purchase a house and and your planning to have kids?

House = $$$
Kids = $$$$$$$$$$$$$$$$$$$$$

leonard
Posts: 5993
Joined: Wed Feb 21, 2007 11:56 am

Re: Convince me I can make a dumb (car-related) purchase

Post by leonard » Thu Aug 14, 2014 11:14 am

Car is a tool. It's like buying a $500 hammer. It simply doesn't drive a nail any better.
Leonard | | Market Timing: Do you seriously think you can predict the future? What else do the voices tell you? | | If employees weren't taking jobs with bad 401k's, bad 401k's wouldn't exist.

MN Finance
Posts: 1828
Joined: Sat Dec 22, 2012 10:46 am

Re: Convince me I can make a dumb (car-related) purchase

Post by MN Finance » Thu Aug 14, 2014 2:39 pm

When we were about your age we had an S3 and a 328i. As we proceeded to have 4 kids over the following 10 years the small sedans turned into larger sedans and wagons, then SUVs and minivans. I don't think you need to buy a car to accommodate future needs, but realize that if you spend 50k expecting to drive it for 10 years, you certainly might not.

I don't particularly like posts asking for permission like this. When I think of someone spending 50k on a car, it's most certainly not someone only making 200k a year. I make 250k and am glad I was nervous about the 35k in cash I paid for a new minivan. You may think 200k is a lot of money, but if you buy a house and eventually do have kids and one of you reduces hours, you won't find yourself very flush at all (especially if your new standard is 50k for a car). Like most things in life, you won't realize this is dumb until you've lived it, but that doesn't change the fact that it is.

Post Reply