Sell Sports Car and Invest or Keep for Fun Factor

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khangaroo
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Sell Sports Car and Invest or Keep for Fun Factor

Post by khangaroo » Wed Jan 10, 2018 12:00 pm

Hi Bogleheads! I've been a lurker for several months and come from Dave Ramsey's debt-free principles. I feel like he's the undergrad in personal finance and now I'm getting a graduate degree with Bogleheads - I'm really loving it!

So my question is a personal consumer/behavior/investment one that deals with a lot on the emotional side.

Financial background: I'm 28, debt-free and with a great, stable job and no mortgage. I'm maxing all retirement accounts and most of my extra money goes into paying for a part-time MBA.

I have a red 2005 Honda S2000 (convertible coupe) with 54,000 miles that I could probably easily sell for ~$20k - it's rare to find one that is 100% stock with low miles and a clean title. It's been my dream car since I was a little kid but I only put ~1,500 miles or so a year on it - I bought it at 48,000 miles back in 2013.

My dilemma is that I can sell this car and invest that $20k into an index fund and have whatever the substantial amount would be +30 years from now with VTSMX. The other side of the coin is that I have so much fun driving the car although I rarely ever drive it (usually only during the summer months).

How do you all decide between what makes the most financial sense vs. what feels good at the moment? What things should I consider/look at? I guess this is one of those classic personal finance questions. Thanks for all your help, advice, and wisdom!

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jabberwockOG
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by jabberwockOG » Wed Jan 10, 2018 12:04 pm

Personally I would keep the S2000 for a toy and partially as an investment. They are no longer made, a little bit of a cult car, and rare so my guess is a garaged well cared for example isn't going to lose much value and may actually continue to gain. We love older 2 seat convertibles so if it was mine I'd definitely keep it.

mortfree
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by mortfree » Wed Jan 10, 2018 12:08 pm

drive it more.... or sell it.

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mhc
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by mhc » Wed Jan 10, 2018 12:13 pm

My decision process would be to set goals. If I can meet the goals and keep the car, then keep the car. If I can't meet the goals, then sell the car to help meet the goals.

I do this every year with vacation spending. I have a retirement goal. As long as I am on track to meet the goal, I have no problem spending the excess on fun activities like vacations and club sports for my children.

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Doom&Gloom
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by Doom&Gloom » Wed Jan 10, 2018 12:15 pm

You will get very different responses from this forum than you would from a car forum.

I'm not much of a car guy anymore, but here is my 2c (unless you really, really need the money)--YMMV: I have never regretted keeping a "fun" car too long, but I have regretted selling several too early.

Thesaints
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by Thesaints » Wed Jan 10, 2018 12:22 pm

Why do you want money ? To support your lifestyle, I guess.
Is the honda part of your lifestyle ? If it is why sell it ?

chicagoan23
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by chicagoan23 » Wed Jan 10, 2018 12:30 pm

khangaroo wrote:
Wed Jan 10, 2018 12:00 pm
How do you all decide between what makes the most financial sense vs. what feels good at the moment? What things should I consider/look at? I guess this is one of those classic personal finance questions. Thanks for all your help, advice, and wisdom!
I look to my personal hierarchy of savings before spending anything beyond the basics of food, clothing and shelter. For someone with a high income and thus a high tax rate, that generally is something like this:

1. Contribute to an employer 401(k) up to the employer match; and then
2. Max out an HSA and then don't withdraw anything from it; and then
3. Go back to the 401(k) and contribute up to the annual max of $18,500; and then
4. Fund any other IRAs that are possible (spousal IRA, Roth for yourself, or backdoor Roth); and then
5. Pay off non-deductible and/or secured consumer debt that has an interest rate above 4%; and then
6. Pay the minimum on other low rate/deductible debt (mortgage) and put everything else in taxable.

Once you have Items 1-5 checked off and those monies are invested in a well-diversified asset allocation, you're already most of the way to financial independence.

That's the position you find yourself in now. So, I'd say that you can feel much freer in what you spend on your day-to-day life. At this point, your spending excess money on things you enjoy does make financial sense. It's better to enjoy life than try to accumulate more money that you will never need. Ask yourself if you'd rather spend years enjoying your dream car, or stop working a little bit earlier. I'd definitely take the car.

WhiteMaxima
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by WhiteMaxima » Wed Jan 10, 2018 12:32 pm

Sell it for $20000, get a used Miata MX-5 for $10000 and invest rest of $10000 in VT. Same fun and some money to grow.

JuniorBH
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by JuniorBH » Wed Jan 10, 2018 12:37 pm

Doom&Gloom wrote:
Wed Jan 10, 2018 12:15 pm
I have never regretted keeping a "fun" car too long, but I have regretted selling several too early.
This. Goes for almost every fun car I've had.

Also, the S2000 will continue to hold value and you're not running up the mileage on it. I'd think of it like a low-risk portion of your portfolio; it's not liquid, but it has a low risk profile.

RRAAYY3
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by RRAAYY3 » Wed Jan 10, 2018 12:38 pm

Sell, invest, buy cooler toy in 15-20 years

crystalbank
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by crystalbank » Wed Jan 10, 2018 12:46 pm

S2000s hold their value very well. I would just keep it unless you're bored of it.

azanon
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by azanon » Wed Jan 10, 2018 12:52 pm

mortfree wrote:
Wed Jan 10, 2018 12:08 pm
drive it more.... or sell it.
I agree with this. I feel a little wasteful with the GTI I own because i put only 5K a year on it. But at the OP's kind of mileage, I'm definitely looking for a "no-car" solution.

obgraham
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by obgraham » Wed Jan 10, 2018 12:59 pm

Absolutely: Keep the car!

I still regret selling my 1973 911Targa in 1987!

In coming years you may find a lot more time to drive it, and then you'll be out looking for another Toy car. That'll wind up costing you a whole lot more. KEEP IT!

Jack FFR1846
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by Jack FFR1846 » Wed Jan 10, 2018 1:04 pm

About 2 years ago, my older son "aced" out of his middle of the road engineering school. I had told him that if he got the grades and was accepted at a better engineering school, I'd support him. He did and I did. I have no debts, mortgage long since paid off and well over a million dollars in investments. Because the college cost was quite a jump (double), I thought it imprudent to keep my 07 Lotus Elise. I sold it for $2,000 more than I originally paid for it 4 years earlier and have not regretted it once. It's a car that's still appreciating even more than S2k's are and is about the most fun car that's road legal.

Once my first son graduates, I plan to buy something that's more fun to drive than my present day Wrangler Unlimited. I don't really know what yet. Maybe an STi as it's practical all the time, maybe an Evora, maybe a GT-R, maybe a GTi. I will say that if I hit $3M in investments, I'll just go buy one of these as that's my magic number.
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thangngo
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by thangngo » Wed Jan 10, 2018 1:06 pm

Nope. I have my fun car, it's my main and only car. I put 15-20k miles on it every year. I would not give up something I enjoy doing. I would rather make more money and trim the fat/cut wasteful expenses elsewhere.

bloom2708
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by bloom2708 » Wed Jan 10, 2018 1:18 pm

I vote "keep" on this one.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

EnjoyIt
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by EnjoyIt » Wed Jan 10, 2018 1:21 pm

If your financial goals are being met then there is no problem spending money on fun things. Only question I have for you is:

Does this car offer you $20K of happiness over long term. If it does then keeping it is a no brainier for you.

BTW, do you want to sell me your S2000?

alfaspider
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by alfaspider » Wed Jan 10, 2018 1:54 pm

I vote keep if you like it. Think of the S2000 as part of your bond portfolio- it won't go down in value much if the stock market tanks :mrgreen:

Atgard
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by Atgard » Wed Jan 10, 2018 2:15 pm

We can't give a great answer without knowing your overall financial picture. For example, if you are well on track to meeting your retirement goals, earn $200K and spend $50K per year, max out retirement plans, etc., then keep it and enjoy it, look for excuses to drive it more! (I personally think fun cars are meant to be driven, not looked at in a garage, but that's my personal opinion and I live in Florida with no snow!)

On the other hand, if you are in credit card debt, not saving for retirement, etc., then do the responsible thing and sell it and stick the money into your retirement funds.

I'm not saying you should give us a full financial breakdown here, but you can probably decide if the car is hurting your ability to pay for expenses and save (it does not sound like it is). In general, if you are saving enough and meeting your retirement goals and not having to skimp too much in other areas, then the point of excess money is to spend it on things you enjoy, and it sounds like this is one for you. So enjoy it.

P.S.: It can be helpful to help people learn to save by showing them their daily latte over the course of a year and compounded at 9% until they're 75... but it can also be paralyzing if you think of every fun expense that same way once you're "on track" and saving enough. So there has to be a balance.

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Alexa9
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by Alexa9 » Wed Jan 10, 2018 2:20 pm

Keep it if you drive it and enjoy it! Great car, reliable, not overly expensive, will hold it's value or could even go up. If you don't drive it much, I'd probably sell it.

Prov227
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by Prov227 » Thu Jan 11, 2018 2:25 am

Are you in a climate to drive year round or do you store winters? I am in the latter camp, and it played a part in my decision in a similar situation. Mine was a gorgeous, low mileage, 3000GT VR4 that was my baby for 10 years until I sold it recently (age ~35), but over the years I drove it less and less. Then realized how much I'd grown to dislike all the little hassles -- performing oil changes, dealing with other random maintenance or fixes, taking care of annual registration, extra cost of insurance, contacting insurance twice a year to change coverage to storage and then back to full coverage, pulling the battery each winter and re-installing and charging each spring, etc.

I sold the car 2 years ago and threw the proceeds at the house mortgage. Which is now paid off. Miss the car sometimes, but absolutely no regrets.

Part of my thought process was that there are a lot of great sports cars out there, certainly others that really interest me, and that eventually I'd get back in that game with an opportunity to try another platform.
"...and the borrower is slave to the lender." -Proverbs 22:7

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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by Alex Frakt » Thu Jan 11, 2018 2:40 am

khangaroo wrote:
Wed Jan 10, 2018 12:00 pm
Financial background: I'm 28, debt-free and with a great, stable job and no mortgage. I'm maxing all retirement accounts and most of my extra money goes into paying for a part-time MBA.

I have a red 2005 Honda S2000 (convertible coupe) with 54,000 miles that I could probably easily sell for ~$20k - it's rare to find one that is 100% stock with low miles and a clean title. It's been my dream car since I was a little kid but I only put ~1,500 miles or so a year on it - I bought it at 48,000 miles back in 2013.
Keep it. First, you are already doing the right things financially. Second, at current market valuations, the expected return on a clean S2000 is not that far from the expected return on a broad market portfolio. :happy

veggivet
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by veggivet » Thu Jan 11, 2018 5:48 am

Keep it and take it to the track!

msk
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by msk » Thu Jan 11, 2018 6:01 am

This invariably works:
Save and invest 30% of after tax income. Blow the rest on any toy you want. YOLO.

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bottlecap
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by bottlecap » Thu Jan 11, 2018 6:31 am

If you’re maxing everything and plan to continue to do so, I’d keep it. And probably drive it more.

JT

bubbadog
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Re: Sell Sports Car and Invest or Keep for Fun Factor

Post by bubbadog » Thu Jan 11, 2018 8:39 am

I sold my S2K last year (2006, 46,000 miles). I wasn't driving it enough to justify the carrying costs and loss of a garage space. It was not a good daily driver for me and sat 99% of the time. They are wonderful cars and are appreciating in value. Tough call, maybe wait 6 months or so before you do anything.

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