Low Earner... Creative ways to own a Tesla Model 3?

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MortgageOnBlack
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Low Earner... Creative ways to own a Tesla Model 3?

Post by MortgageOnBlack »

Two weekends ago, I finally drove a Tesla Model 3 (Turo rental)... I get the hype now! I'm completely sold on Tesla's mission and I want in! It's been 2 weeks and I can't stop obsessing about the car (maybe this will fade with time)

Problem is I'm a low earner (75k), 36 years old, retirement ~115k (vanguard index funds 80/20), 40k emergency fund, no debt other than 190k mortgage (15 years remaining, split with soon to be wife).

My parents and fiancee are in the justification phase for me pulling the trigger since I drive the oldest honda on the block. Perhaps, I am a bit too. All i know is that pulling the trigger on this would completely wipe my emergency fund (probably too high anyway right? :wink: j/k or maybe I'm not )

What creative ways can I make this a reality? Should I just accept my social class and keep driving my 91 honda? Maybe buy one and Turo it Out? Perhaps this is the start of my mid-life crisis.

Any ideas? I appreciate any insight. It's amazing to me that I would have never considered anything over $5k for a car, but yet I'm drooling over a $40k car now. Tesla definitely pulled some moves from Apple's playbook on this one.
Hamberders
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by Hamberders »

If you don’t drive too many miles annually, lease one.
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Watty
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by Watty »

MortgageOnBlack wrote: Tue Aug 25, 2020 12:33 am ....with soon to be wife

....yet I'm drooling over a $40k car now.
You are not looking at a $40K expense, you are looking at an $80K expense since it would only be fair for your wife to spend that much on something she wants too.

Even for Bogleheads driving a 91 Honda that is 29 years old is more than a bit extreme so you could likely easily justify getting a much newer car just for the better safety features. Does your car even have airbags on both the driver and passenger side? Even buying a modest new car could make sense if you plan to keep it for 10+ years.
Hastur
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by Hastur »

Little offtop.. 70% americans earn 50k and less, so how's your 75k make you a "low earner" ?
cacophony
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by cacophony »

What did you like about the Model 3? Perhaps there are other much cheaper cars that could be equally appealing. Or not. It depends what you liked.
jjface
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by jjface »

Hastur wrote: Tue Aug 25, 2020 1:29 am Little offtop.. 70% americans earn 50k and less, so how's your 75k make you a "low earner" ?
Exactly 75k is not a low earner.

Try saving really hard for 6 months and maybe you won't even want it by then.
Pegasus_RPG
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by Pegasus_RPG »

Check the used ones too, as they're starting to appear. Wait until the first ones start coming off lease, about 3 years after initial release. That's when the better deals will start appearing, assuming they don't get snatched up right away: https://www.tesla.com/inventory/used/m3
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Brianmcg321
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by Brianmcg321 »

Start a sinking fund.

Put $500 a month into VTSAX. Wait five years. Buy car.
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rocketful28
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by rocketful28 »

I bought one a year ago Sept 2019 Model 3 AWD and it’s amazing. At the time the stock was around $200. I wish I’d bought $50k of Tesla stock at that time, then I’d have 4 Model 3s today ;)

Open a PenFed credit union account to get lowest loan rate, trade in your current car to Tesla with a free CarMax Trade-in estimate (it was $1,500 higher than what Tesla initially offered me and they accept CarMax estimates no questions asked). Small ways to save some money.
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22twain
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by 22twain »

Hastur wrote: Tue Aug 25, 2020 1:29 am Little offtop.. 70% americans earn 50k and less, so how's your 75k make you a "low earner" ?
This is Lake Wobogle where everybody is (way) above average. :wink:
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anon_investor
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by anon_investor »

jjface wrote: Tue Aug 25, 2020 1:57 am Try saving really hard for 6 months and maybe you won't even want it by then.
+1.
lightheir
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by lightheir »

I don't own a Model3 or Tesla yet, but I have it fully funded and ready to go.

I literally bought $10k of TSLA stock over a year ago, and it appreciated enough to pay for the car itself. Not saying this is replicable now that the stock is sky-high, but that's about as solid and low-cost a way to do it before as you could get and was eminently within your income range.

Things are harder once you're following the herd before things break.
RJC
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by RJC »

I'm eyeing a Model Y right now. Once they resolve some of the quality build issues, I'll be ready to buy.

There's no other car in the market right now that has all the features and characteristics of the Model 3/Y at that price point.
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White Coat Investor
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by White Coat Investor »

MortgageOnBlack wrote: Tue Aug 25, 2020 12:33 am Two weekends ago, I finally drove a Tesla Model 3 (Turo rental)... I get the hype now! I'm completely sold on Tesla's mission and I want in! It's been 2 weeks and I can't stop obsessing about the car (maybe this will fade with time)

Problem is I'm a low earner (75k), 36 years old, retirement ~115k (vanguard index funds 80/20), 40k emergency fund, no debt other than 190k mortgage (15 years remaining, split with soon to be wife).

My parents and fiancee are in the justification phase for me pulling the trigger since I drive the oldest honda on the block. Perhaps, I am a bit too. All i know is that pulling the trigger on this would completely wipe my emergency fund (probably too high anyway right? :wink: j/k or maybe I'm not )

What creative ways can I make this a reality? Should I just accept my social class and keep driving my 91 honda? Maybe buy one and Turo it Out? Perhaps this is the start of my mid-life crisis.

Any ideas? I appreciate any insight. It's amazing to me that I would have never considered anything over $5k for a car, but yet I'm drooling over a $40k car now. Tesla definitely pulled some moves from Apple's playbook on this one.
$75K is a low earner? That's more than the average household income in the US.

I certainly wouldn't own a Tesla of any kind if I only made $75K a year, had a mortgage, and had less than $200K. But it's your life and only you get to decide what is most important to you.

If renting didn't do it for you, why not look for a good used one? Here's one in my area for $30K: https://cars.ksl.com/listing/6638511?ad_cid=21
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bikesandbeers
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by bikesandbeers »

People in your income range do buy cars that expensive, and car loans are cheap right mow. although that doesn't mean its a good idea

There is someone in my neighboorhood with an S, X, and now 3 all on Turo. Renting it out one weekend a month could really help offset the cost.
Some used ones are starting to show up, although they haven't been cheap realitive to the mileage.
Also note tour insurance is limely to go way up with a Tesla.


If in were you, Id get a 2016 or 2017 Chevy Volt and save money for a few more years. I think the voltnwould give you some high tech feeling compared to a 29 year old car, and i think there will be cheaper used model 3 in a few years, or the new model 3 will be much better
260chrisb
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by 260chrisb »

Hamberders wrote: Tue Aug 25, 2020 1:15 am If you don’t drive too many miles annually, lease one.
I would never do this but it's not about me. Leasing has been proven to be the most expensive way to "own" a car. A 75K income isn't "low" but a 40K car makes no sense at that income level. Frankly getting creative with purchases (especially car purchases) is what gets people in trouble and leads to buyers remorse, endless debt, and worse. Maybe buy a newer Honda for a few years, save some money, and then buy a used Tesla and stop listening to people who help you justify making a purchase you can't afford. They are not the ones who will have to pay for it.
Valuethinker
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by Valuethinker »

lightheir wrote: Tue Aug 25, 2020 7:03 am I don't own a Model3 or Tesla yet, but I have it fully funded and ready to go.

I literally bought $10k of TSLA stock over a year ago, and it appreciated enough to pay for the car itself. Not saying this is replicable now that the stock is sky-high, but that's about as solid and low-cost a way to do it before as you could get and was eminently within your income range.

Things are harder once you're following the herd before things break.
This is terrible advice. Buy the stock because you want to own a consumer product costing 10s of thousands of dollars?

We all bought 3Com because we like the Palm. We bought Nokia & BlackBerry because we used the products. And this was only for a few hundred dollars product.

I don't own BMW stock because I like BMW cars.

If OP wants a $40k car then they should save for it.
Last edited by Valuethinker on Tue Aug 25, 2020 8:28 am, edited 1 time in total.
Valuethinker
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by Valuethinker »

MortgageOnBlack wrote: Tue Aug 25, 2020 12:33 am Two weekends ago, I finally drove a Tesla Model 3 (Turo rental)... I get the hype now! I'm completely sold on Tesla's mission and I want in! It's been 2 weeks and I can't stop obsessing about the car (maybe this will fade with time)

Problem is I'm a low earner (75k), 36 years old, retirement ~115k (vanguard index funds 80/20), 40k emergency fund, no debt other than 190k mortgage (15 years remaining, split with soon to be wife).

My parents and fiancee are in the justification phase for me pulling the trigger since I drive the oldest honda on the block. Perhaps, I am a bit too. All i know is that pulling the trigger on this would completely wipe my emergency fund (probably too high anyway right? :wink: j/k or maybe I'm not )

What creative ways can I make this a reality? Should I just accept my social class and keep driving my 91 honda? Maybe buy one and Turo it Out? Perhaps this is the start of my mid-life crisis.

Any ideas? I appreciate any insight. It's amazing to me that I would have never considered anything over $5k for a car, but yet I'm drooling over a $40k car now. Tesla definitely pulled some moves from Apple's playbook on this one.
The technology of EVs is changing very fast. Lots of new models.

I would buy a 5 to 8 year old used car and wait 3 years. You will have far more options, then.

Meanwhile set up a savings account for a new car and deposit 500 dollars a month into it.
Valuethinker
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by Valuethinker »

Ps 40k is not too high an emergency fund when US has highest unemployment since postwar years and an epidemic is raging.

Nobody is entirely safe from corporate restructuring, downsizing or if in public sector budgetary problems of state and local government, higher education etc.

Look back at 2008 09 threads. People were without work for a year or more. Had to take jobs at half their previous salary. Or move across the country.
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by JoMoney »

Give it time, they will come down in price, there will be better ones coming to market, and the current ones will become outdated and cheaper.
The people who I know who have Tesla's bring up very expensive insurance.
Cars are depreciating assets, and they depreciate very quickly. Especially in the first 3 years. If you're at all interested in garnering 'wealth' you don't want a bunch of your net worth (or going into debt) in something that's pushing you the wrong direction. People have different priorities, and maybe getting that shiny car NOW is more important for you, but future you will be thankful if you just wait awhile.
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by crefwatch »

An emergency fund is not the same thing as a lump-sum savings plan for a planned purchase. You've known the age of your old car for many years. Apparently you did not formulate a plan to accumulate the money to buy a suitable replacement. In these uncertain times, you should not assume that you cannot lose your job or will not get sick.

A car is transportation. I might add that old-money New Englanders did not have to get a new car every three years. You have applied a "class" label to yourself, but you should pick a better term, like "lifestyle". As in, The Kardashians. This sounds harsh, but your OP makes a lot of naive statements. I'm not accusing you of being like them, I'm suggesting that you feel too much influence from ... ... Influencers.
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by niceguy7376 »

MortgageOnBlack wrote: Tue Aug 25, 2020 12:33 am Problem is I'm a low earner (75k), 36 years old, retirement ~115k (vanguard index funds 80/20), 40k emergency fund, no debt other than 190k mortgage (15 years remaining, split with soon to be wife).
All comments of how this is lot more than usa avg income aside, OP, I am in similar boat as you.
With your soon to be wife, how does your family income look like? As some one else said, once you get married, not only your combined income increases but also now there are two buyers whose mindset may be different.

I had put in 1k on first day of reservations in 2016 and went through mental agony of unable to buy that car till like end of 2019.
With COVID and less commute, I am slow withdrawing from it and feel comfortable driving my 2005 corolla for some more years
regularguy455
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by regularguy455 »

It sounds like you’ve made up your mind. The fact is a luxury car is an expensive and unnecessary drag on your financial future. The math I would do is see what the impact of buying this vs. a cheaper car vs. keeping the beater.

Buying this now will move the needle out on when you’re FI. If you’re OK with that, go for it.
simplextableau
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by simplextableau »

What's funny is I think a '91 Civic is way cooler than a Model 3, and I'd rather drive the Civic -- those things are classics. Do a motor swap, upgrade some stuff. There's always someone on the other side.
knowledge
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by knowledge »

There's no way I would recommend someone in your financial position to spend half their annual gross income on a car. Either increase your income, or save up for it. The good news is that the next version of the model will have upgrades that make the first gen look weak. So in 5 years time, you may be able to afford the better version of the model 3.

That said, I would worry about driving a '91 civic amongst the monsters on the road today. Even a 2020 Honda CRV weighs more than 1,000 lbs more than your car. That doesn't necessitate upgrading to a 2020 Tesla Model 3, but maybe a 2012 Honda Accord.
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by tibbitts »

lightheir wrote: Tue Aug 25, 2020 7:03 am I don't own a Model3 or Tesla yet, but I have it fully funded and ready to go.

I literally bought $10k of TSLA stock over a year ago, and it appreciated enough to pay for the car itself. Not saying this is replicable now that the stock is sky-high, but that's about as solid and low-cost a way to do it before as you could get and was eminently within your income range.

Things are harder once you're following the herd before things break.
You can't seriously argue that buying Tesla stock was a "solid" way to afford the car. In your case it apparently turned out that way, but that's like claiming that buying a lottery ticket is a solid way to finance a purchase.
DH0
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by DH0 »

Go drive a few other EVs/PHEVs besides the Model 3. People who can qualify for the 'low income' EV tax credit in CA are leasing base Chevy Bolts for 3 years for free when you take into account the tax credits/incentives. Check out the thread on here about the Honda Clarity PHEV...people are driving them for a year and selling them for a profit when you take into account the $7500 federal tax credit. The Model 3 is a great car but you can get ~85% of the benefit over a 91 Civic for ≤ 20% of the cost. In fact if you play your cards right the cost may be negative vs your civic.
econprof
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by econprof »

Sorry to be the voice of frugality, but: don't buy the car, dude.

$40k is a lot of money. At 7% return your money doubles every 10 years; in 20 years this $40k is like $160k, and in 40 years it's like $640k.

You don't earn enough to buy a Tesla. And that's okay. I don't earn enough to buy a Lamborghini. Richer people get nicer things.

For comparison, at a household income of $375k, we just spent $10k on a 2013 Mazda CX5 and we love it. 2 month ago we were driving a 2002 Honda Civic.

You have created a false dichotomy between continuing to drive your beater, vs buying a new luxury car. There are plenty of $10k cars that will be much better than your current ride, make you happy and comfortable, but not cost 1/2 your annual salary.
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by squirm »

you know the novelty wears off.... saying creative ways to buy something is really just saying you probably can't really easily afford it. personally if i were you, first i would calm down and don't act like a kid in a candy store and get hyped up over a car...it's just a car. my rule is, if i can't *easily* pay cash for it, i ain't buying it. but some people get all weird buying a car and go into debt...whatever.
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by TomatoTomahto »

I love my Model X and have a deposit on a CyberTruck. I love Tesla. DON’T BUY ONE. Your finances are not suitable. There are other options: Bolt, etc.

Good luck.
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Independent George
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by Independent George »

Only on Bogleheads could anyone say 75k is a 'low earner' with a straight face.

Anyway, to get back to the original point, the boring (but correct) answer is that you should not buy the Tesla. Or, rather, you should not buy the Tesla right now.

I don't see anything wrong with splurging when you have the funds to do so comfortably, but, bluntly, that is not you today. Buying the Tesla today isn't just wiping out your emergency fund, it's also wiping out years of compounding returns as you save and replenish those funds.

That's the practical answer. Here's a more emotionally satisfying argument against: EV's are still an emerging technology today. It's not just about the engineering, but also the myriad issues with mass production; in many ways, current customers are beta testers. How much better will a Tesla (or a competing EV from BMW or Toyota) be in, say, five years? That's not to say you need to keep driving your '91 Honda - spending $10k out of your $40k emergency fund would be a huge upgrade that doesn't set you back too far - while still leaving the option open to buying a much better vehicle down the road. There will also be more infrastructure to support EVs - not just charging, but also maintenance & repair.

I'm bullish on EVs (though not necessarily Tesla) in the long-term for reasons that have nothing to do with pollution or gas prices. In many ways, EVs are much, much simpler devices than the thousands of precision-fit parts that go into a standard drivetrain; I can easily imagine standard engines eventually going the way of hard drives and CRT televisions. That won't be for many years yet, though; in the meantime, you'd be spending an awful lot of money to pay the early adopter fee.
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by lightheir »

tibbitts wrote: Tue Aug 25, 2020 9:07 am
lightheir wrote: Tue Aug 25, 2020 7:03 am I don't own a Model3 or Tesla yet, but I have it fully funded and ready to go.

I literally bought $10k of TSLA stock over a year ago, and it appreciated enough to pay for the car itself. Not saying this is replicable now that the stock is sky-high, but that's about as solid and low-cost a way to do it before as you could get and was eminently within your income range.

Things are harder once you're following the herd before things break.
You can't seriously argue that buying Tesla stock was a "solid" way to afford the car. In your case it apparently turned out that way, but that's like claiming that buying a lottery ticket is a solid way to finance a purchase.
Nope, never said it was "solid."

Creative, though, yes. And quite a few people besides me have done exactly this - I was inspired to do it myself after reading about all the lucky folks who did this earlier than me. Didn't expect it to happen, but it did.

It wasn't just dumb luck either, though. I had a fair amount of experience test riding, talking with several diehard owners who were quite intelligent about investing, etc., and they all made convincing points that it was a no-brainer investment in terms of risk vs reward. They were obviously correct. I'd make that bet again 10/10 times even if there was a real risk of utter failure, as TSLA does have special technology infrastructure that no other car company can compete with.

I actually think it's a reasonable bet to do this again RIGHT NOW, but I do think the appreciation will take longer since everyone's now in on the gravy train.
BogleFan510
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by BogleFan510 »

The simple answer is that you want something you can't afford, if you want to stay on track with your wealth accumulation plans. So pick 1 from below:

A. Wealth accumulation plan success. Likely able to retire early.
B. A fancy new car whenever you want it. Traditional retirement age.

Its that simple. My wife and I have a fully funded retirement. We are in our 50s. Did earn pretty well, but not crazy income. We bought one new Honda CRV and several used cars over almost a 30 year period together. We probably have several million in assets that would have been a 20k car 30 years ago, a 30k car 15 years ago, a 40k car, 10 years ago, etc. Currently drive a Prius we bought used about 8 years ago (from a young Google hot shot with 40k miles on it for $13k) that still runs beautifully, 40 mpg, with 150k miles, no major maintenence needed. We did have the option of driving those newer cars and retiring later, but we chose option A. I recommend option A.

That said, it is really important to be on the same page with your partner, and many sane people prefer plan B. Follow your own dream, but make sure it is the priority you really want.

Edit: as stated in the post below, excessive frugality does have opportuntity costs. Some spending is often helpful and a 'reward' for your hard work and success saving. I did splurge on a used classic car in my 30s (one that tripled in value, so a Bogleheadish slurge). Be happy first, wealthy second.
Last edited by BogleFan510 on Tue Aug 25, 2020 10:19 am, edited 5 times in total.
lightheir
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by lightheir »

econprof wrote: Tue Aug 25, 2020 9:24 am Sorry to be the voice of frugality, but: don't buy the car, dude.

$40k is a lot of money. At 7% return your money doubles every 10 years; in 20 years this $40k is like $160k, and in 40 years it's like $640k.

I don't disagree with the frugality portion and the advice - I earn a lot more than the OP and I still happily drive my 10 year old Prius hybrid and will do so until it dies.

I will say for myself though, having lived through that 20 year 7% (more in my case, got lucky!) return, that it sounds great on paper but it's definitely not all it's cracked up to be. I'd say it's wayyyyyy overhyped in terms of advantages vs opportunity cost. The cold, hard reality that OP and other young folks should remember is that for most folks, $40k at age 20 is manyfold more impactful and useful than $160k at age 40.

Seriously, at age 20-25, $40k would have been an utterly lifestyle-changing upgrade for me. Better food, better social life, better transportation, etc. - every dollar makes an enormous difference at that age.

Now at age 45, I couldn't get that sort of material upgrade in lifestyle even with 10x that amount of money, as lifestyle creep has already taken hold and things cost so much more in general.

Nothing wrong with frugality and compounding savings, but it's just as important not to neglect the real spending power of that money in your younger years - you won't get those years back, and when you're in the low end of housing/food/transportation, it's literally the highest bang for your buck you will get in your entire life in terms of spending it. Don't think of it as anti-boglehead, think of it as the wiser version of Bogleheads where money isn't the only answer.
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by livesoft »

I wonder if the OP would be as enamored with the Tesla if they had been driving a modern car from almost every other car manufacturer with all the helpful self-aware automatic features.

I'll add that neither I nor anyone in my immediate family has paid $40K for a car in their life. To make that even more clear: All our vehicles have cost less than $40K including taxes and the rest of the fees.
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fedpharmer
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by fedpharmer »

tryingtogetahead wrote: Tue Aug 25, 2020 10:14 am Don’t do it. https://www.financialsamurai.com/the-11 ... st-follow/
I haven't seen this article before, but I recently bought a Honda Fit on our $150-200k gross income (actually one of the car examples he gives for that income range). It's a 2015 though and I got it for $10k. :D

OP, I would not get the Model 3 in your situation. It is a dream car for me right now too, but even with double your income it seemed like a stretch. I'm not sure why you think the only options are to keep your 1991 Honda or a new $40k car.
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by tryingtogetahead »

fedpharmer wrote: Tue Aug 25, 2020 10:30 am
tryingtogetahead wrote: Tue Aug 25, 2020 10:14 am Don’t do it. https://www.financialsamurai.com/the-11 ... st-follow/
I haven't seen this article before, but I recently bought a Honda Fit on our $150-200k gross income (actually one of the car examples he gives for that income range). It's a 2015 though and I got it for $10k. :D

OP, I would not get the Model 3 in your situation. It is a dream car for me right now too, but even with double your income it seemed like a stretch. I'm not sure why you think the only options are to keep your 1991 Honda or a new $40k car.
Amen
lightheir
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by lightheir »

Valuethinker wrote: Tue Aug 25, 2020 8:21 am
lightheir wrote: Tue Aug 25, 2020 7:03 am I don't own a Model3 or Tesla yet, but I have it fully funded and ready to go.

I literally bought $10k of TSLA stock over a year ago, and it appreciated enough to pay for the car itself. Not saying this is replicable now that the stock is sky-high, but that's about as solid and low-cost a way to do it before as you could get and was eminently within your income range.

Things are harder once you're following the herd before things break.
This is terrible advice. Buy the stock because you want to own a consumer product costing 10s of thousands of dollars?

We all bought 3Com because we like the Palm. We bought Nokia & BlackBerry because we used the products. And this was only for a few hundred dollars product.

I don't own BMW stock because I like BMW cars.

If OP wants a $40k car then they should save for it.
Nope, not terrible advice for TSLA (specifically).

Buy the stock because it's a good, game-changing company with a proven, game-changing product with literally close to zero competition to speak of and which dominates its entire sector (EV, EV infrastructure, AI driving, etc) , and is not even remotely close to saturating its market.

I would not recommend 'buy the stock to save for the product' for pretty much any other product, but my hunch was and still is that TSLA is as good bet as any because of the above. The retrospectocope always wins, but it supports me on this one as well.

Also note that I am absolutely NOT the typical day-trader. In fact, in the past 25 years I have only bought ONE single stock, and that was TSLA. Everything else I've bought has been Bogleheads 3-fund simplicity style, which forms the great bulk of my portfolio. So, I'm not straying far from the BH advice of 'buy the index and hold' - I'm just of the opinion that if you do feel like you see a good long-term opportunity (at a reasonable price, which is always a catch!), you also should seriously consider it as a long-term purchase, but it should be a small portion of your diverseified portfolio.

Just because you're a BH doesn't mean you can't be flexible if your reasoning and instincts say its a reasonable bet.

I am literally cordoning of $20k of my recent TSLA winning in hopes of future appreciation to buy my next TSLA after a Model3, not even joking. TSLA has a massive market to takeover and they are just getting started.
tibbitts
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by tibbitts »

lightheir wrote: Tue Aug 25, 2020 10:39 am Just because you're a BH doesn't mean you can't be flexible if your reasoning and instincts say its a reasonable bet.
Actually, being a Boglehead does mean that you have to ignore your instincts.
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by tibbitts »

lightheir wrote: Tue Aug 25, 2020 10:02 am
tibbitts wrote: Tue Aug 25, 2020 9:07 am
lightheir wrote: Tue Aug 25, 2020 7:03 am I literally bought $10k of TSLA stock over a year ago, and it appreciated enough to pay for the car itself. Not saying this is replicable now that the stock is sky-high, but that's about as solid and low-cost a way to do it before as you could get and was eminently within your income range.
You can't seriously argue that buying Tesla stock was a "solid" way to afford the car. In your case it apparently turned out that way, but that's like claiming that buying a lottery ticket is a solid way to finance a purchase.
Nope, never said it was "solid."
???
lightheir
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by lightheir »

Solid reasonable risk LOL.
lightheir
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by lightheir »

Solid reasonable risk LOL.
iamlucky13
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by iamlucky13 »

Don't wipe out your emergency fund to buy a car unless it's an emergency. Reliable transportation to work can be an emergency. A luxury car is never an emergency. I'd personally stay above 6 months expenses at least.

Set a savings goal that doesn't compromise your other savings goals, and a plan for how to accommodate that extra savings in your budget, then be patient.

I'm not on principal opposed to financing a car if you can start with a significant down payment and the recurring payments are in the same ballpark as what your savings rate would have been. However, financing locks you into the monthly payment, where as saving on a monthly basis for a cash purchase keeps your finances more flexible until you pull the trigger.

As you get closer to your savings goal, re-evaluate how much value the car is likely to provide. When you reach your savings goal, shop around. If you jump straight from 1991 Civic or whichever model you have, with it's rip-roaring 79 hp/ton, nearly 30 year old seats, and perhaps even still a cassette deck assuming the original owner paid for that upgrade, to a brand new car without any other point of comparison, you're likely going to be quite impressed almost regardless of what you buy. Even the current year Hondas have quite a few more appointments, more room, and better power and handling than your current vehicle. Does a $39,000+ Tesla provide value commensurate with its cost to you, or will $20-25,000 on a Civic provide the most important benefits when you replace your 1991?

I think you will likely see your level of interest in specific features vary over time as you save for the purchase. I know mine have. The BMW 3-series I assumed at one point in the past I would buy as my savings grew ultimately fell almost completely out of interest.
White Coat Investor wrote: Tue Aug 25, 2020 8:12 am $75K is a low earner? That's more than the average household income in the US.
In some metro areas, it is below poverty level, and I'd call it low income for buying a brand new luxury car.

The median household does not most typically buy new cars (source). The median new car buyer has over $80,000 household income, and my own opinion is a significant percentage of those spend a higher proportion of their income on their vehicle than they should.

That said, I would not call $75,000 so low that this is necessarily a bad idea if MortgageOnBlack is careful about his other expenses. Already owning a home means saving for a down payment is not a potential competing interest. It also should not be allowed to compete with a sufficient retirement savings rate. This purchase should be competing with nice vacations, home upgrades, etc.

That said, this is above what I would personally spend for this type of purchase, and even if this was a high priority for my discretionary spending, I would not do it until I can pay cash or meet the financing criteria I mentioned above without dipping into my emergency fund.
RichmondDad
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by RichmondDad »

A few years ago I called an Uber which happened to be a Tesla (I don’t know what model/year). The driver said he was In the National Guard, wanted a Tesla and decided to be
Uber driver on nights and weekends until he had the car paid off...
iamlucky13
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by iamlucky13 »

Independent George wrote: Tue Aug 25, 2020 9:49 am Only on Bogleheads could anyone say 75k is a 'low earner' with a straight face.
Or in quite of a few of the largest cities in the US.

Or more relevantly, I would look at this statement in the context of the specific demographic population "new luxury car buyers." I would very comfortably call that low income in that context.
stoptothink
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by stoptothink »

RichmondDad wrote: Tue Aug 25, 2020 11:51 am A few years ago I called an Uber which happened to be a Tesla (I don’t know what model/year). The driver said he was In the National Guard, wanted a Tesla and decided to be
Uber driver on nights and weekends until he had the car paid off...
My neighbor has a Model 3 performance, he works in the call-center at my employer and his wife does nails out of their home. I'd bet my life the car costs new significantly more than their annual income, but their cars (and house) our on mommy and daddy's budget.
chenzi
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by chenzi »

Tesla cars are good but there is also lot of Elon Musk's hype and "mission". Ofcourse the economy (and Tesla's stock price) is driven by consumer spending and I encourage you to spend for the economy ;) (just kidding)
{ On the other hand, my spouse and I have been making 7 digit income for the last couple of years and we happily drive our Hondas and plan to use them for next 10+ years!}

I rent Audis (Silvercar) or Teslas via Turo on the rare occasion when I want to drive one of them.
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MortgageOnBlack
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by MortgageOnBlack »

I appreciate all of the advice. I know in my heart this car is outside of my budget and chances are very high that I will have buyer's remorse after 6 months when I look at my account. Soon, I will compromise and "upgrade" to a used $7500-$10000 Toyota/Honda. Perhaps, periodic Turo rentals can help scratch the itch for now.
squirm
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Re: Low Earner... Creative ways to own a Tesla Model 3?

Post by squirm »

MortgageOnBlack wrote: Tue Aug 25, 2020 12:12 pm I appreciate all of the advice. I know in my heart this car is outside of my budget and chances are very high that I will have buyer's remorse after 6 months when I look at my account. Soon, I will compromise and "upgrade" to a used $7500-$10000 Toyota/Honda. Perhaps, periodic Turo rentals can help scratch the itch for now.
Good decision...
Can't go wrong with Toyota or Honda either.
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