Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
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BJJ nerd wrote: ↑
Fri Mar 16, 2018 9:53 pm
I don' think I would feel comfortable spending that kind of money until maybe the 3-4m mark.
I'm well aware that there is a huge number of factors that would be at play. Just wanted to get the discussion started and get your thoughts and opinions.
Agree. This 2006 article quotes the average Ferrari owner having an annual income of at least $1 million.
https://www.sfgate.com/cars/article/RED ... 532601.php
In the early 2000's the typical Porsche buyer had an income of $300k+.
With sufficient savings though, you could just buy it. A school classmate spent their trust fund on a car when they turned 18.
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Exotics have come a long way in terms of maintenance — Ferrari offers 7 years free maintenance now (along with a 3 year warranty). They basically wanted people to stop saving a few bucks at independent shops and wanted to maintain relationships for future car purchases.
Ferraris, McLarens, and Lamborghinis can be purchased with very few games — Ferraris used to be a mess but outside of the special editions you can just walk into most dealers and get a 488 now. They upped production significantly since going public.
Porsche still has ridiculous ADMs (Adjusted Dealer Markup) for the GT3/RS and GT2, but who knows if that’ll still be the case a few years from now. These markets change fast.
Since this is a Boglehead forum I’d suggest only buy the car when you can afford to buy it outright. Leasing this kind of car (because you can’t afford it) seems really unnecessary — the only good reason to lease is if you get an early allocation and plan to flip (so you save on taxes), but that’s super uncool so just don’t do that.
You have to decide how much of your net worth you want to tie up with this, but I agree with the advice to consider this a zero to your NW after purchase, and thus only buy if you’re okay with that. Depreciation will hit hard, and don’t assume cars that held up well in the past will do so in the future. Only buy these cars if you don’t mind parking it at the grocery store, and won’t overly sweat some door dings or valet-ing it.
It’s just a car.
Insurance won’t be bad — just scale up comprehensive, and heavily discount since it’ll be a third car with low mileage. I think my 488 is like $2200 a year or so.
I spend pretty much every weekend going for a long drive on back roads, and love every minute. I don’t go much above the speed limit, but everything about the Engineering and craftsmanship sings to me, even at safe speeds in the twisties. I drive early, come home, and spend time with my kiddo — it doesn’t feel like a misplaced priority, but rather a luxury that I’m blessed and lucky enough to afford. I use a regular car if I’m going to work or will run into coworkers somewhere, never post to social media, and so on. Buying this car is for you and the friends you want to let drive and experience it, not for anyone’s perception of you.
If I had bought this earlier I would have stressed about damage, cost, embarrassment at being seen driving it, etc. Wait until the time is right. When you can afford it and are in the right mental state, it’ll be worth every penny.
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Save and invest 30% of after tax income. Blow the rest on anything you fancy. YOLO!
Danger only comes in when you are attracted to purchasing an exotic (car, painting, wine, etc.) and justifying it as an "investment". Only the "investor"can judge that sensibly. But if it is considered as a mere toy or a utility, then as long you still save and invest 30% of after tax income, go ahead and spend the 70% on a home theater under a railway bridge. You'll still retire comfortably
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SeaToTheBay wrote: ↑
Mon Mar 19, 2018 4:18 pm
10YearPlan wrote: ↑
Mon Mar 19, 2018 3:30 pm
Not a car person myself, but I like the Livesoft Rule for Extravagant Purchases heuristic. It makes good sense to me as a way to measure the true impact to one's financial situation.
That said, I think it is important, in my opinion, to take into consideration the optics of such extravagant purchases, whether they're in the form of cars, watches, jewelry, or anything other people in your orbit would notice.
One optic to consider is that of your house. I always chuckle inwardly when I see a super expensive sports car outside of a house that could use some tlc. It's judgy of me, I know, but I cannot help it. Or when one spouse has a spendy car and the other has a hoopty. Another optic to consider is the people you work with/for and what they will say if you were to roll up in the car at work. Or how it looks compared to the rest of your life/style. None of these are reasons NOT to purchase, mind you, but just some food for thought. People can/will have thoughts about it, so might as well get comfortable with that in advance.
While I generally don't care that much about what random people may think (I would like my car just as much if it had a Hyundai badge instead of a BMW one), this is one thing that makes me hesitate in buying my dream car. People will look at a $20k used Porsche Boxster and think/say, "Oooh he drives a Porsche! Must be rich/paid too much/reckless with money." Meanwhile a co-worker will show up in a new loaded F-150 pickup that cost $60k and will depreciate more than the Porsche's value in 2-3 years, and no one will bat an eye. It's frustrating.
I feel like if I do buy a used Ferrari in a few years, I will have to keep it a secret from all but my very closest friends/family (certainly no co-workers or Facebook posts). People don't stop to consider people's passions in life (many car enthusiasts don't spend much on anything else) or that certain expensive cars can actually be decently responsible financial decisions (the case of say a Porsche 911 GT3 retaining virtually all of its value or even appreciating).
I only bring it up because it's human nature to make judgments about these things, good and bad. It's one of the reasons I don't buy super expensive handbags...because the rest of my wardrobe would not "match" and people, myself included, might judge that. I also might find it to be a slippery slope--when you have a really, really nice handbag, shouldn't the shoes be really, really nice,too? Can I afford both? What about my other accessories, like jewelry. This exercise has kept some of my spending in check, actually, so I find it kind of helpful, even if it is a buzzkill.
All that said, if I could EASILY afford the car, was in fact a car person, and had other financial ducks in a row, then yeah, buy the car.