Another car affordability question, YOLO vs. extreme FI

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Bwlonge
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Another car affordability question, YOLO vs. extreme FI

Post by Bwlonge » Sun Aug 25, 2019 8:18 am

So, I want a Golf R. They're expensive and I'd be financing, ~$46k after tax new with 6 year warranty, or I see a used one with 20k miles for $37k. After my down payment, monthly looking at between $550 and $700.

All the advice I see says spend as little in possible on a car, but, I'm single, don't want kids, am maxing my TAAs with $100k saved by 34, am financing 2 duplexes, and plan to work part time while being FI, which gives me a reasonable FI age of 50 if I continue course as is.

If I were to go for it, I would be be saving 6k-8k in cash on the year after expenses and maxing retirement accounts. To go peasant mode (jk) and buy a $10k car outright, I would be saving $15k/yr. I'm paying a loan over the next 2 years that when done, frees up +6k/year.

What do I need 15-21k in cash/year for at this point, besides luxuries? I could pay off my mortgages faster, but I don't mind paying interest if I'm cash flow positive and it affords me time to enjoy other activities, because time seems to get more valuable as I age.

Another thing, given depreciation, if I sold it in 6 years (not the plan), I'd be projected to be actually paying 4-6k/year to own the car vs 1-2k/year to own the peasant car (plus maintenance).

Yes, I'm trying to justify my desire for this car, but I think there are serious questions about savings rates than rarely get nuanced into discussions about car affordability, so I'm wondering what y'all think.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by Kenkat » Sun Aug 25, 2019 8:25 am

On your current course, your FI age is projected to be 50.

If you buy the Golf R, what do you project your FI age to be? Are you ok with that age? If so, then buy the car, otherwise don’t.

Also, you should really buy a Tesla. Or a used Civic or Camry. Or a minivan. Or a Miata. Or whatever car I drive. Just to get all of that out of the way! :wink:

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Re: Another car affordability question, YOLO vs. extreme FI

Post by student » Sun Aug 25, 2019 8:27 am

It seems that you really want the car. My personal rule is it should be no more than 1/3 of your annual income. But I only use my car as transportation and not something to enjoy.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by bluebolt » Sun Aug 25, 2019 8:28 am

You will generally see two camps here on BH in car affordability threads:
1) If you are meeting your savings goals, buy any car you can afford if that's what you want.
2) If you're not driving an inexpensive car, you're wasting your money, no matter how much you are saving.

There's no right answer* here. It's a trade-off.

*There is, however, a wrong answer. If you buy a car that is beyond your means, it's a mistake. Almost all of us agree on that point.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by a_movable_life » Sun Aug 25, 2019 8:36 am

Is FI your goal? You may be on track to get there way before 50. You have maxed out everything.

This board can be a bit "no fun." Yes max out everything, pay off your mortgage, get to FI, max out every kid you knows 529 plans, etc. Then and only then shall you consider ditching the 1992 Beige Corolla.

You may want to assume that the used one had been driven hard.

Are you a car person?
Can you use this car in the way that it is designed to be used?
Thinking of driving days and track schools?
You have a garage for it so some other VW "Enthusiasts" don't steal it for parts.
Do you work on your own cars or is there the V-Dub/German "Guy" in town? (Or both since I won't do certain things without a lift)
VW parts are expensive.

Something to consider since you already own 4 doors and a house, and may be moving tools, etc. Have a slower car with cheaper tires and get a "Real" performance car for weekends and track days. That guy who has owned 25-30 Porsche sports cars will be along soon to comment.

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Bwlonge
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Re: Another car affordability question, YOLO vs. extreme FI

Post by Bwlonge » Sun Aug 25, 2019 8:40 am

Kenkat wrote:
Sun Aug 25, 2019 8:25 am
On your current course, your FI age is projected to be 50.

If you buy the Golf R, what do you project your FI age to be? Are you ok with that age? If so, then buy the car, otherwise don’t.

Also, you should really buy a Tesla. Or a used Civic or Camry. Or a minivan. Or a Miata. Or whatever car I drive. Just to get all of that out of the way! :wink:
That age is projected with just maxing my TAAs, so doesn't include any of that 15k-21k annual pocket cash. One edit: looking at 100k by 34*, and it also assumes social security income later on, which could be somewhat suspect, but taking that out amounts to 5 additional non-FI work years.

Here's what kills me. If I threw that 21k cash at savings, it only moves my FI age up 3-5 years depending on SS assumptions.

I'm using this, btw: https://www.bankrate.com/calculators/re ... lator.aspx

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Re: Another car affordability question, YOLO vs. extreme FI

Post by halfnine » Sun Aug 25, 2019 8:45 am

If it is an experience you can enjoy when you are old then you can can wait. If it is an experience that is more enjoyable when young then do it i now.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by student » Sun Aug 25, 2019 8:46 am

Bwlonge wrote:
Sun Aug 25, 2019 8:40 am
Kenkat wrote:
Sun Aug 25, 2019 8:25 am
On your current course, your FI age is projected to be 50.

If you buy the Golf R, what do you project your FI age to be? Are you ok with that age? If so, then buy the car, otherwise don’t.

Also, you should really buy a Tesla. Or a used Civic or Camry. Or a minivan. Or a Miata. Or whatever car I drive. Just to get all of that out of the way! :wink:
That age is projected with just maxing my TAAs, so doesn't include any of that 15k-21k annual pocket cash. One edit: looking at 100k by 34*, and it also assumes social security income later on, which could be somewhat suspect, but taking that out amounts to 5 additional non-FI work years.

Here's what kills me. If I threw that 21k cash at savings, it only moves my FI age up 3-5 years depending on SS assumptions.

I'm using this, btw: https://www.bankrate.com/calculators/re ... lator.aspx
Based on your response, I am guessing that you will get a lot of enjoyment out of it, as it seems that you want to justify the purchase and you have already studied it carefully. Then this is no difference from spending on a trip or the latest gadgets. Buy the new car because of the warranty.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by BanquetBeer » Sun Aug 25, 2019 8:53 am

$40-50k is a fair amount of money for a car. Why do you want this specific model? Do you want to drive something fun for a few years (consider buy something more used and keep for a few years then resell) or do you want a long term daily driver? (I have consistently heard bad things about VW past ~100k miles)

Do you plan on modding the car? Do you need AWD? A GTI can be had for over $10k less (better value for performance) and unless you live in a snow area, will probably give you 90% of the enjoyment for 75% of the cost

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Re: Another car affordability question, YOLO vs. extreme FI

Post by Watty » Sun Aug 25, 2019 8:57 am

Bwlonge wrote:
Sun Aug 25, 2019 8:18 am
So, I want a Golf R. They're expensive and I'd be financing,......
I only got this far into your post then just skimmed the rest of it.

If you want an expensive car then save up and pay cash for it. While it would not be my choice there is nothing wrong with that. Lots of people choose to spend their extra money on expensive cars and that is little different than people who choose to buy boats, RVs, travel, etc.

The important thing is that until you can pay cash for it you can't afford it.

Do not take out loans to buy luxuries.

If someone was posting about taking out a loan to take a delux around the world cruise for the same cost that would seem pretty unwise to most people. Using a loan to buy an expensive car is little different.

Sometimes taking out a car loan to buy a modest car is a necessity but that is a different situation.
Last edited by Watty on Sun Aug 25, 2019 9:31 am, edited 1 time in total.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by Olemiss540 » Sun Aug 25, 2019 9:00 am

100K at 34 can easily become 50k at 35.

You are not "on pace" for FI at 50 with only 100k at 34 unless you are projecting serious market returns, completely stable rents, and
neglecting potential jobloss.

Why is the choice a $10k car or a $40k car? There are plenty of extremely fun, fast, etc cars available in the middle without buying a Honda Accord. Buy a used GTI or M3 for $20k and continue on your current path for 5 years to "step up" to your dream car with cash and a $500k retirement balance.
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Re: Another car affordability question, YOLO vs. extreme FI

Post by Sandtrap » Sun Aug 25, 2019 9:05 am

Used Honda or Toyota.
Pay cash.
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Re: Another car affordability question, YOLO vs. extreme FI

Post by flyingcows » Sun Aug 25, 2019 9:15 am

If you are comfortable with the added risk, you can have the best of both worlds buy purchasing a "fully deprecated" older semi-fun car that doesn't have a big following. For example, consider the lower performance trims of the 10-12 year old E90 BMW (LCI), the engines in the 328s are naturally aspirated and have a great reputation for reliability. While it won't be a rocket, it will be fun enough, especially if you get one with a manual. You can find good examples of these cars for around $6,000, so you could pay cash using your proposed downpayment. You could factor in an extra $1-2k for upgrades interior led lights, an aftermarket headunit with android auto/carplay, new tires, etc.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by Katietsu » Sun Aug 25, 2019 9:21 am

I agree with those that say you don’t pay cash for luxuries. And unless you have built up a lot in equity on your duplexes in addition to the $100k, I am not seeing a clear path to “extreme” FI. Especially if that life includes new cars over $40k. I think your calculations may be a bit optimistic and not include any setbacks, personally or globally, that most of us will experience. Regardless of your decision on this purchase, be cognizant of the hedonistic treadmill. Greater spending both lowers savings and increase the amount needed for retirement.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by livesoft » Sun Aug 25, 2019 9:30 am

First, I've never paid that much for a car in my life. I've driven Lexuses mostly. I say go ahead and buy it. I predict you will experience extreme buyer's remorse within 6 months of buying it and will want to get rid of it. Come back and tell us about that. Thanks!
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Re: Another car affordability question, YOLO vs. extreme FI

Post by abonder » Sun Aug 25, 2019 9:40 am

First of all - I love livesoft response. Such a parental view...do the wrong thing and learn accordingly.

I’m going to join in the “get a GTI” camp. You can probably get a new GTI S manual for low 20s new with 6 year warranty. Is it the R? No, but it’s an awesome hot hatch that still delivers an near-unbeatable mix of practicality and driving fun. Also, from my limited reading, the GTI seems to have better reliability/durability. 2019 is the last year of current GTI design so they should be trying to move them in the coming months. With VW, I would not want a first-year model even if the 2020 does bring improvements.

I think boglehead JackFFR often has some good general automobile insights and maybe even some knowledge particular to GTI/R.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by wootwoot » Sun Aug 25, 2019 9:53 am

OP try to find a different used Golf R. 2017 models with ~30k miles can be found for low 30s. Then go buy a tune to make the car complete. Having a fast car like this now will bring much more enjoyment than buying it later in life. You have your ducks in a row and are building up healthy savings so yes you can afford it.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by multiham » Sun Aug 25, 2019 9:56 am

2016 Golf R owner here. Purchased the car in Feb of 2016. Not a day goes by that I do not still smile when I drive this car. I live in PA and we get snow and ice. Since the car comes with Summer Performance tires, I invested in a second set of tires (Michelin X-Ice) and smaller, way cheaper rims for this set-up. I swap the summers out for the winter set-up in November. Other than ground clearance, the Golf R is a beast in the snow given the all wheel drive. Only "problem" I've had so far is the battery died this summer.

Now for the financials:

Insurance - Definitely went up when I bought this versus my Toyota Highlander
Gas mileage - Hand calculated at between 25 and 28 (You don't buy an R for Gas mileage)
Mods -??? Only you will know if the base will satisfy you or you will want a stage 1, 2, or 3 tune. Progressively gets more expensive. Your car can start creeping up towards $50K if you go in somewhat heavy on mods.

I'm a planner. I run all the numbers on different scenarios and if I'm okay with the outcome I move forward with the purchase. This is one that 3.5 years later I'm still thrilled with.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by Bwlonge » Sun Aug 25, 2019 10:00 am

abonder wrote:
Sun Aug 25, 2019 9:40 am
First of all - I love livesoft response. Such a parental view...do the wrong thing and learn accordingly.

I’m going to join in the “get a GTI” camp. You can probably get a new GTI S manual for low 20s new with 6 year warranty. Is it the R? No, but it’s an awesome hot hatch that still delivers an near-unbeatable mix of practicality and driving fun. Also, from my limited reading, the GTI seems to have better reliability/durability. 2019 is the last year of current GTI design so they should be trying to move them in the coming months. With VW, I would not want a first-year model even if the 2020 does bring improvements.

I think boglehead JackFFR often has some good general automobile insights and maybe even some knowledge particular to GTI/R.
I'm considering this too, and in a lot of ways, it makes sense. I see a 2017 GTI S with 15k miles for $20k. 2019's for $26k. I'd go new in this case for the stock perf. package and 6 yr warranty, esp. as a compromise for taking the lower tier car. A $350 payment would take the edge off vs. the $650 payment, for sure. I'm having my Alltrack bought back and I'm $550/mo now and honestly, I don't like authorizing that transfer each month. I do wonder how much I'd hate an even higher payment, and if the sweet ride would mitigate that enough.

Most say the GTI is enough for real life. Everything I've seen, I do think the R is worth the jump in general, but maybe a few years in a GTI would give me enough time really get to know the platform and save enough to buy a fully vetted MK8 R with cash (or maybe I decide to buy another investment property, etc.).

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Re: Another car affordability question, YOLO vs. extreme FI

Post by LadyGeek » Sun Aug 25, 2019 10:05 am

This thread is now in the Personal Consumer Issues forum (car - how you spend your money and your time).
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Re: Another car affordability question, YOLO vs. extreme FI

Post by Soon2BXProgrammer » Sun Aug 25, 2019 10:07 am

bluebolt wrote:
Sun Aug 25, 2019 8:28 am
You will generally see two camps here on BH in car affordability threads:
1) If you are meeting your savings goals, buy any car you can afford if that's what you want.
2) If you're not driving an inexpensive car, you're wasting your money, no matter how much you are saving.

There's no right answer* here. It's a trade-off.

*There is, however, a wrong answer. If you buy a car that is beyond your means, it's a mistake. Almost all of us agree on that point.
Option 3: I have already saved too much money and I can't take it with me. i already give substantial money to charity, but there is some extra I want to blow, so I'm going to spend it on XYZ

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Re: Another car affordability question, YOLO vs. extreme FI

Post by Bwlonge » Sun Aug 25, 2019 10:07 am

wootwoot wrote:
Sun Aug 25, 2019 9:53 am
OP try to find a different used Golf R. 2017 models with ~30k miles can be found for low 30s. Then go buy a tune to make the car complete. Having a fast car like this now will bring much more enjoyment than buying it later in life. You have your ducks in a row and are building up healthy savings so yes you can afford it.
Legit, but I do think going 2018 is worth it for the 6yr warranty, esp. when previous owners probably beat on it. Best deal I see in my area right now is 2018, 21k miles, $35k. Vs, 2017, 16k miles, $33k. But, both are white :\

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Re: Another car affordability question, YOLO vs. extreme FI

Post by Bwlonge » Sun Aug 25, 2019 10:11 am

multiham wrote:
Sun Aug 25, 2019 9:56 am
2016 Golf R owner here. Purchased the car in Feb of 2016. Not a day goes by that I do not still smile when I drive this car. I live in PA and we get snow and ice. Since the car comes with Summer Performance tires, I invested in a second set of tires (Michelin X-Ice) and smaller, way cheaper rims for this set-up. I swap the summers out for the winter set-up in November. Other than ground clearance, the Golf R is a beast in the snow given the all wheel drive. Only "problem" I've had so far is the battery died this summer.

Now for the financials:

Insurance - Definitely went up when I bought this versus my Toyota Highlander
Gas mileage - Hand calculated at between 25 and 28 (You don't buy an R for Gas mileage)
Mods -??? Only you will know if the base will satisfy you or you will want a stage 1, 2, or 3 tune. Progressively gets more expensive. Your car can start creeping up towards $50K if you go in somewhat heavy on mods.

I'm a planner. I run all the numbers on different scenarios and if I'm okay with the outcome I move forward with the purchase. This is one that 3.5 years later I'm still thrilled with.
Did you look into GTIs at all? Another option is to be a peasant in a 2019 GTI for a few years while I save cash for a fully vetted MK8 R. I'm in the northeast too and own an Alltrack right now (that's getting bought back) and the AWD is so nice to have. It's such a close call with the added tech, performance and AWD, but the difference in payment is about $300 between them.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by Cycle » Sun Aug 25, 2019 10:27 am

remember that your desire to want this expensive vehicle is a consequence of the environment you live in. I'm assuming you don't hang out with a bunch of dirt bag fixie riding Brooklynites, my apologies if you do.

if you lived in an environment where everyone traveled by pogo-stick, you'd be trying to get the most unique and high performance pogo-stick available. If you lived in an area where everyone takes transit or bikes, you'd never mention driving as there is a social stigma associated with personal car ownership.

Cars are simply a really expensive item to have a love affair with. Is there something else you can spoil yourself with? Like an iphone x, or a sweet mountain bike, or an awesome trip somewhere every 3 months, or living in a walkable neighborhood.

the answer to all boglehead car questions is: used honda civic
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Re: Another car affordability question, YOLO vs. extreme FI

Post by Philliesfan » Sun Aug 25, 2019 10:40 am

You should hurry up and make a decision. The golf R has officially ended production.

https://www.roadandtrack.com/new-cars/f ... roduction/

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Re: Another car affordability question, YOLO vs. extreme FI

Post by emoore » Sun Aug 25, 2019 10:42 am

I'll jump on the GTI bandwagon since I've owned one for 8 years and it's still going strong with 95k miles. Love the car and it's sporty enough around town. My is completely stock so you can get some extra power with a $500 chip. It's also been pretty reliable. Had the high pressure fuel pump go out in year 1 but replaced after warranty and has been fine ever since. Also the rear drivers side window regulator broke in year 7. But that's all I've had to do to the car.

You mention that you have an Alltrack that is getting bought back. Why?

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Re: Another car affordability question, YOLO vs. extreme FI

Post by bluebolt » Sun Aug 25, 2019 10:44 am

Soon2BXProgrammer wrote:
Sun Aug 25, 2019 10:07 am
bluebolt wrote:
Sun Aug 25, 2019 8:28 am
You will generally see two camps here on BH in car affordability threads:
1) If you are meeting your savings goals, buy any car you can afford if that's what you want.
2) If you're not driving an inexpensive car, you're wasting your money, no matter how much you are saving.

There's no right answer* here. It's a trade-off.

*There is, however, a wrong answer. If you buy a car that is beyond your means, it's a mistake. Almost all of us agree on that point.
Option 3: I have already saved too much money and I can't take it with me. i already give substantial money to charity, but there is some extra I want to blow, so I'm going to spend it on XYZ
That's just option 1; i.e. met your savings goals and can afford it.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by 02nz » Sun Aug 25, 2019 10:47 am

Philliesfan wrote:
Sun Aug 25, 2019 10:40 am
You should hurry up and make a decision. The golf R has officially ended production.

https://www.roadandtrack.com/new-cars/f ... roduction/
That’s the current Golf R though. There will be a new one, though possibly with a gap in availability.

There’s another Golf variant to consider - the eGolf. No it’s not as fast but the instantaneous torque makes up somewhat for that. Like the R but unlike the GTI it’s made in Germany. Great deal after tax credit and any state incentives, but make sure the range (125 miles) works for you.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by Bwlonge » Sun Aug 25, 2019 10:48 am

emoore wrote:
Sun Aug 25, 2019 10:42 am
I'll jump on the GTI bandwagon since I've owned one for 8 years and it's still going strong with 95k miles. Love the car and it's sporty enough around town. My is completely stock so you can get some extra power with a $500 chip. It's also been pretty reliable. Had the high pressure fuel pump go out in year 1 but replaced after warranty and has been fine ever since. Also the rear drivers side window regulator broke in year 7. But that's all I've had to do to the car.

You mention that you have an Alltrack that is getting bought back. Why?
Pano roof leak! Met my state's lemon law requirements, so VW is voluntarily buying it back/replacing. They have yet to make the offer, but everything I've heard they'll do cash back or throw the money at a VW plus put add some good will credit. It's a great car and a great way to get AWD in car form, but I want more power, and the extra wagon space goes to waste 95% of the time for me.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by Traveler » Sun Aug 25, 2019 10:48 am

I can't imagine someone with only $100K at age 34 confidently being FI by 50. I didn't see if you mentioned your income but that would play a role in your ability to FI early. If you have an extra $15-20K each year, why not save for a couple years and pay cash? Then in a couple years if you don't want to part with the large sum, it answers your question on whether to buy it or not.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by abracadabra11 » Sun Aug 25, 2019 10:49 am

abonder wrote:
Sun Aug 25, 2019 9:40 am
First of all - I love livesoft response. Such a parental view...do the wrong thing and learn accordingly.

I’m going to join in the “get a GTI” camp. You can probably get a new GTI S manual for low 20s new with 6 year warranty. Is it the R? No, but it’s an awesome hot hatch that still delivers an near-unbeatable mix of practicality and driving fun. Also, from my limited reading, the GTI seems to have better reliability/durability. 2019 is the last year of current GTI design so they should be trying to move them in the coming months. With VW, I would not want a first-year model even if the 2020 does bring improvements.

I think boglehead JackFFR often has some good general automobile insights and maybe even some knowledge particular to GTI/R.
+1
Get a GTI and throw on a JB4 from Burger Motorsports.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by Bwlonge » Sun Aug 25, 2019 10:52 am

02nz wrote:
Sun Aug 25, 2019 10:47 am
Philliesfan wrote:
Sun Aug 25, 2019 10:40 am
You should hurry up and make a decision. The golf R has officially ended production.

https://www.roadandtrack.com/new-cars/f ... roduction/
That’s the current Golf R though. There will be a new one, though possibly with a gap in availability.

There’s another Golf variant to consider - the eGolf. No it’s not as fast but the instantaneous torque makes up somewhat for that. Like the R but unlike the GTI it’s made in Germany. Great deal after tax credit and any state incentives, but make sure the range (125 miles) works for you.
I did price that option out, I would be looking at maybe a 14k loan on the top trim after incentives, and fuel and maintenance would be a fraction of the other options. While I do worry about gas prices over the next 3-20 years, and 125 mile range would mean no extra planning 90% of the time, 0-60 in 8.5 seconds sounds like you may as well put me in a nursing home now.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by emoore » Sun Aug 25, 2019 10:54 am

02nz wrote:
Sun Aug 25, 2019 10:47 am
Philliesfan wrote:
Sun Aug 25, 2019 10:40 am
You should hurry up and make a decision. The golf R has officially ended production.

https://www.roadandtrack.com/new-cars/f ... roduction/
That’s the current Golf R though. There will be a new one, though possibly with a gap in availability.

There’s another Golf variant to consider - the eGolf. No it’s not as fast but the instantaneous torque makes up somewhat for that. Like the R but unlike the GTI it’s made in Germany. Great deal after tax credit and any state incentives, but make sure the range (125 miles) works for you.
Or wait for the VW ID which will have much more range than the eGolf.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by TheAccountant » Sun Aug 25, 2019 10:55 am

I was in your shoes this week. I found a car I’ve always wanted in great shape and for the right price.

I slept on it and looked at it from a numbers perspective. I already own a car that I like, and there’s nothing wrong with it.

The purchase price is just a small fraction of what you’ll be spending on it over time. You have sales tax up front, then increased insurance, maintenance, etc. over time. Warranties don’t cover tires, brakes, and other wear items as you probably already know.

So I slept on it. I woke up and decided I’d get more joy out of maintaining my current car and holding onto my money. The advice of paying cash in this case is sound - when you finance, you tend to hide the actual cost of the car.

Try this - take that car payment, and put it aside into a money market account for the next year or two. Watch that account grow - then ask yourself, what would you rather have, the money, or a scratched/dented Golf R that you owe more on than you can sell it for.

If you still want the car after a year, and are OK with deferring FI, then go ahead and get it.
Making cents out of every dollar.

emoore
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Re: Another car affordability question, YOLO vs. extreme FI

Post by emoore » Sun Aug 25, 2019 10:57 am

Bwlonge wrote:
Sun Aug 25, 2019 10:52 am
02nz wrote:
Sun Aug 25, 2019 10:47 am
Philliesfan wrote:
Sun Aug 25, 2019 10:40 am
You should hurry up and make a decision. The golf R has officially ended production.

https://www.roadandtrack.com/new-cars/f ... roduction/
That’s the current Golf R though. There will be a new one, though possibly with a gap in availability.

There’s another Golf variant to consider - the eGolf. No it’s not as fast but the instantaneous torque makes up somewhat for that. Like the R but unlike the GTI it’s made in Germany. Great deal after tax credit and any state incentives, but make sure the range (125 miles) works for you.
I did price that option out, I would be looking at maybe a 14k loan on the top trim after incentives, and fuel and maintenance would be a fraction of the other options. While I do worry about gas prices over the next 3-20 years, and 125 mile range would mean no extra planning 90% of the time, 0-60 in 8.5 seconds sounds like you may as well put me in a nursing home now.
I know it's not a hatchback but did you consider a Tesla Model 3? It will be much quicker and probably handles as well as a Golf R. It's about the same price if you don't include the full self driving option.

thankyouverymuch
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Re: Another car affordability question, YOLO vs. extreme FI

Post by thankyouverymuch » Sun Aug 25, 2019 10:58 am

If it comes down to a choice between a new GTI and a new Golf R, be sure to consider the expected resale value of the two cars at the end of your expected ownership time. Check the prices of used 3/6/9-year old GTIs vs that year's Golf R(/32) equivalent? You might find that the total cost of ownership isn't very different in the end?

MotoTrojan
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Re: Another car affordability question, YOLO vs. extreme FI

Post by MotoTrojan » Sun Aug 25, 2019 11:01 am

Bwlonge wrote:
Sun Aug 25, 2019 8:40 am
Kenkat wrote:
Sun Aug 25, 2019 8:25 am
On your current course, your FI age is projected to be 50.

If you buy the Golf R, what do you project your FI age to be? Are you ok with that age? If so, then buy the car, otherwise don’t.

Also, you should really buy a Tesla. Or a used Civic or Camry. Or a minivan. Or a Miata. Or whatever car I drive. Just to get all of that out of the way! :wink:
That age is projected with just maxing my TAAs, so doesn't include any of that 15k-21k annual pocket cash. One edit: looking at 100k by 34*, and it also assumes social security income later on, which could be somewhat suspect, but taking that out amounts to 5 additional non-FI work years.

Here's what kills me. If I threw that 21k cash at savings, it only moves my FI age up 3-5 years depending on SS assumptions.

I'm using this, btw: https://www.bankrate.com/calculators/re ... lator.aspx
What rate of return are you using?

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Bwlonge
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Re: Another car affordability question, YOLO vs. extreme FI

Post by Bwlonge » Sun Aug 25, 2019 11:19 am

MotoTrojan wrote:
Sun Aug 25, 2019 11:01 am

What rate of return are you using?
5%.

multiham
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Re: Another car affordability question, YOLO vs. extreme FI

Post by multiham » Sun Aug 25, 2019 11:25 am

Bwlonge wrote:
Sun Aug 25, 2019 10:11 am
multiham wrote:
Sun Aug 25, 2019 9:56 am
2016 Golf R owner here. Purchased the car in Feb of 2016. Not a day goes by that I do not still smile when I drive this car. I live in PA and we get snow and ice. Since the car comes with Summer Performance tires, I invested in a second set of tires (Michelin X-Ice) and smaller, way cheaper rims for this set-up. I swap the summers out for the winter set-up in November. Other than ground clearance, the Golf R is a beast in the snow given the all wheel drive. Only "problem" I've had so far is the battery died this summer.

Now for the financials:

Insurance - Definitely went up when I bought this versus my Toyota Highlander
Gas mileage - Hand calculated at between 25 and 28 (You don't buy an R for Gas mileage)
Mods -??? Only you will know if the base will satisfy you or you will want a stage 1, 2, or 3 tune. Progressively gets more expensive. Your car can start creeping up towards $50K if you go in somewhat heavy on mods.

I'm a planner. I run all the numbers on different scenarios and if I'm okay with the outcome I move forward with the purchase. This is one that 3.5 years later I'm still thrilled with.
Did you look into GTIs at all? Another option is to be a peasant in a 2019 GTI for a few years while I save cash for a fully vetted MK8 R. I'm in the northeast too and own an Alltrack right now (that's getting bought back) and the AWD is so nice to have. It's such a close call with the added tech, performance and AWD, but the difference in payment is about $300 between them.
I started with the intent of buying the GTI. I have not modded my R and was not planning on modding the GTI if that is what I got. The difference in my opinion was significant. I had a substantial down payment and only ended up financing $10,000 at 1.9% which I paid back in 15 months.

sd323232
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Re: Another car affordability question, YOLO vs. extreme FI

Post by sd323232 » Sun Aug 25, 2019 11:35 am

Bwlonge wrote:
Sun Aug 25, 2019 8:18 am
So, I want a Golf R. They're expensive and I'd be financing, ~$46k after tax new with 6 year warranty, or I see a used one with 20k miles for $37k. After my down payment, monthly looking at between $550 and $700.

All the advice I see says spend as little in possible on a car, but, I'm single, don't want kids, am maxing my TAAs with $100k saved by 34, am financing 2 duplexes, and plan to work part time while being FI, which gives me a reasonable FI age of 50 if I continue course as is.

If I were to go for it, I would be be saving 6k-8k in cash on the year after expenses and maxing retirement accounts. To go peasant mode (jk) and buy a $10k car outright, I would be saving $15k/yr. I'm paying a loan over the next 2 years that when done, frees up +6k/year.

What do I need 15-21k in cash/year for at this point, besides luxuries? I could pay off my mortgages faster, but I don't mind paying interest if I'm cash flow positive and it affords me time to enjoy other activities, because time seems to get more valuable as I age.

Another thing, given depreciation, if I sold it in 6 years (not the plan), I'd be projected to be actually paying 4-6k/year to own the car vs 1-2k/year to own the peasant car (plus maintenance).

Yes, I'm trying to justify my desire for this car, but I think there are serious questions about savings rates than rarely get nuanced into discussions about car affordability, so I'm wondering what y'all think.
If you want to achieve financial independence, you never take loan to buy anything. If you want this car, save the amount and buy it.

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Nate79
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Re: Another car affordability question, YOLO vs. extreme FI

Post by Nate79 » Sun Aug 25, 2019 11:53 am

I like the general guidelines of have no more than 50% of your annual income tied up in things with motors and wheels and pay cash. And you should have a decent net worth before buying new cars.

Yes Bogleheads is conservative but compared to the masses who are broke, in debt up to their eyeballs, living paycheck to paycheck to afford their debt, living well below your means is a way towards financial success.

Ependytis
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Re: Another car affordability question, YOLO vs. extreme FI

Post by Ependytis » Sun Aug 25, 2019 12:22 pm

The trouble with cars is they’re capital intensive and depreciate -15%/year after the first year. If they appreciated the decision would be easy- go for it.

And of course in the United States the speed limit and other cars greatly restrict how much of their performance you can use. I have toyed with the idea of going to Germany and renting a sports car to drive on the autobahn on a Saturday or Sunday.

Have you considered renting a high-performance car at a track and seeing if that gets it out of your system? As another option, I knew a guy that had a Ferrari and it was in the shop so much he would go to the local K1 racing track (Electric go cart) for fun. That’s a lot cheaper than owning a sports car.

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Re: Another car affordability question, YOLO vs. extreme FI

Post by tibbitts » Sun Aug 25, 2019 12:42 pm

Bwlonge wrote:
Sun Aug 25, 2019 8:18 am
All the advice I see says spend as little in possible on a car, but, I'm single, don't want kids, am maxing my TAAs with $100k saved by 34, am financing 2 duplexes, and plan to work part time while being FI, which gives me a reasonable FI age of 50 if I continue course as is.
I would read the solo aging thread - you might rethink the no kids plan. Then come back and ask about which minivan to buy.

MotoTrojan
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Re: Another car affordability question, YOLO vs. extreme FI

Post by MotoTrojan » Sun Aug 25, 2019 12:48 pm

Bwlonge wrote:
Sun Aug 25, 2019 11:19 am
MotoTrojan wrote:
Sun Aug 25, 2019 11:01 am

What rate of return are you using?
5%.
5% real return is no gimme for 16 years of 100% equity, let alone a more conservative AA I would think you'd have given your desire to go FI in that timeframe. I would be saving more aggressively if I only had $100K with retirement that close.

smitcat
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Re: Another car affordability question, YOLO vs. extreme FI

Post by smitcat » Sun Aug 25, 2019 2:03 pm

Watty wrote:
Sun Aug 25, 2019 8:57 am
Bwlonge wrote:
Sun Aug 25, 2019 8:18 am
So, I want a Golf R. They're expensive and I'd be financing,......
I only got this far into your post then just skimmed the rest of it.

If you want an expensive car then save up and pay cash for it. While it would not be my choice there is nothing wrong with that. Lots of people choose to spend their extra money on expensive cars and that is little different than people who choose to buy boats, RVs, travel, etc.

The important thing is that until you can pay cash for it you can't afford it.

Do not take out loans to buy luxuries.

If someone was posting about taking out a loan to take a delux around the world cruise for the same cost that would seem pretty unwise to most people. Using a loan to buy an expensive car is little different.

Sometimes taking out a car loan to buy a modest car is a necessity but that is a different situation.
"Do not take out loans to buy luxuries"
While I agree with your general thoughts it is sometime preferable to take a loan even when you can pay cash.
Making an informed and logical financial decision is the key

02nz
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Re: Another car affordability question, YOLO vs. extreme FI

Post by 02nz » Sun Aug 25, 2019 2:55 pm

emoore wrote:
Sun Aug 25, 2019 10:54 am
Or wait for the VW ID which will have much more range than the eGolf.
The OP would be waiting a long time in vain as the ID is not coming to the U.S. market. VW will bring electric crossovers from the ID family to the U.S., but those won't have the same driving dynamics of the eGolf or ID.
.
Bwlonge wrote:
Sun Aug 25, 2019 10:52 am
I did price that option out, I would be looking at maybe a 14k loan on the top trim after incentives, and fuel and maintenance would be a fraction of the other options. While I do worry about gas prices over the next 3-20 years, and 125 mile range would mean no extra planning 90% of the time, 0-60 in 8.5 seconds sounds like you may as well put me in a nursing home now.
The e-Golf (like most EVs) is a lot zippier than the 0-60 times suggest, because all of the torque is available instantaneously, without having to wait until the engine hits its rpm sweet spot or for the turbo to spool up. (How often do you go from 0-60? Probably a lot less often than you go from 0 to 30.) Driving an electric is different in some ways from an ICE car, but at least for me, once I switched there's absolutely no going back. I'd get the base SE trim with the driver assist package - depending on state incentives, this car has a net price of about $20K brand new.

BTW 100K in retirement savings at 34 is good, but it's not THAT good. To reach FI (not "extreme FI," whatever the heck that means) you'll need to step it up. Buying a performance car that will cost a lot more in maintenance, gas, insurance and depreciation is one way not to get to FI by 50.

sambb
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Re: Another car affordability question, YOLO vs. extreme FI

Post by sambb » Sun Aug 25, 2019 11:07 pm

I wouldnt buy. But if you do buy, then dont hold back. You willdiscover that you have buyers remorse, and then not make the mistake again. Alternatively, get a GTI or a civic Si or a preowned 3 series and be done with it.

Jags4186
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Re: Another car affordability question, YOLO vs. extreme FI

Post by Jags4186 » Sun Aug 25, 2019 11:13 pm

I love nice cars. I don’t own nice cars.

Here are things to consider:

If your $46k sports car gets a ding will you live with it or have to get it fixed?

How long are you willing to keep a beautiful $46k sports car? It likely won’t be that beautiful after 5 or 6 years.

What happens when you’ve decided you’ve had enough of this car? Will you get another $46k—probably $50k+ by the time the purchase comes around—car?

It’s hard to go back in lifestyle so just be sure you’re ready for the likely lifelong commitment to driving expensive cars.

randomguy
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Re: Another car affordability question, YOLO vs. extreme FI

Post by randomguy » Sun Aug 25, 2019 11:34 pm

Jags4186 wrote:
Sun Aug 25, 2019 11:13 pm
I love nice cars. I don’t own nice cars.

Here are things to consider:

If your $46k sports car gets a ding will you live with it or have to get it fixed?

How long are you willing to keep a beautiful $46k sports car? It likely won’t be that beautiful after 5 or 6 years.

What happens when you’ve decided you’ve had enough of this car? Will you get another $46k—probably $50k+ by the time the purchase comes around—car?

It’s hard to go back in lifestyle so just be sure you’re ready for the likely lifelong commitment to driving expensive cars.
Have you read the threads where people say their 20 year old lexus look just like brand new models?:) You can make the assumption that this car will get traded in every 5 years for something better but he could also enjoy driving this car for 15 years (ok with a VW I am not so sure about that:)) and decide this is the level of performance that makes them happy. Just because you buy above the minimum doesn't mean you escalate forever. I enjoy entry lux sedans. Doesn't mean I have any desire to upgrade to bigger ones or to buy some 500hp monster. I also have no desire to go back to an econobox:) Maybe the golf R is where the OP wants to be.

OP is facing the classic questions. I can afford to buy X now but will I prefer having Y amount of money in 20 years instead. Nobody can answer that. We can't tell how much enjoyment that Golf R will bring. For all the appliance car owners, spending on a fancy car makes no sense. They don't get any enjoyment. If you get 20k/year of enjoyment out of the car (good luck measuring that) then it is a great buy.

I will say that of my 34 year old friends who were never going to have kids, the number with kids is very high. And that includes a bunch of nontraditional couples that you might expect to have pretty low kid rates.:)

Personally I would buy the car. Odds are if you don't like it in 3 years, you can sell it and end up with only an addition 10-15k of loss. Personally I wouldn't get the GTI. It is a fine car but I have always found settling like this leaves me regretting my choice. If your a car guy, get the car you want. If you aren't a car get, get a corolla:) YMMV.

FireSekr
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Re: Another car affordability question, YOLO vs. extreme FI

Post by FireSekr » Mon Aug 26, 2019 1:44 am

You can get a used/CPO 2016 BMW M2 for about $45k which is more fun, faster, more reliable and better looking and you’re still considering basically a FWD with AWD added on clown car for $46k?

And I’ll echo what others are saying here...with only $100k saved at 34, your retirement goal of 50 seems extremely optimistic. To put things in perspective, I’m a car guy and I never spent more than $20k for a car until I had 4x the savings you currently have and I was 30 at the time.

Get your finances in order before you make such a large purchase.

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