Am I being smart with this car purchase?

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hightower
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Am I being smart with this car purchase?

Post by hightower » Sun Dec 25, 2016 7:23 am

For the record, I ordered this car before I started reading this site;)

34, married, no kids, dual income combined made 320k this year, but will probably be making more like 230-250k from now on (getting a new job).  I have 104k in student loan debt at 2.6% fixed (488/month for like 20+ years) and a 296k mortgage at 4% (around 2000/month with taxes and insurance).  No other debt.  We almost maxed out all of our retirement accounts this year (fell short on her 401K only because I paid off a lot of student loans).  Next year we are definitely budgeting to max out his/her 401ks and backdoor ROTHs.

We live in the city and for the last 5+ years we've been able to get away with just one car since i lived close enough to the hospital to ride a bike, walk, or take a bus.  Our current car is a 2008 Honda Element.  Paid it off a long time ago and still driving it.  We plan on continuing to drive it for another 3-4 years (unless something really expensive breaks on it).

Anyway, since I'm getting a new job outside of the city this year we need a second car.  I got really excited about this a couple of months ago and ordered a new BMW i3 (an all electric vehicle).  The price is $47,195, but I get a $7,500 tax credit on my 2017 taxes, so real cost to me is $39,695.  I plan on financing it with a 3 year loan at 0.74% through a credit union.  We started running an AirBNB room a few months ago at our home and the income from that should be able to cover the cost of the car payment most months.

Now that I've ordered it and started thinking about having another monthly payment for the next 3 years, I'm starting to question if it was an okay move.  I mean, obviously the best thing would be to pay cash, but I don't have that kind of cash sitting around and I wanted a car that would last the long haul for me (at least 10-12 years ideally).  My main justification for it was that the airbnb income would cover it, but obviously I could be investing that extra income instead.  But, we do really need a second car and I do really like the idea of a good, well made car that should last me a long time and at the same time is environmentally friendly and cheaper to "fuel."  What do you guys think:)?  Is it really that big of a deal if I pay it off in 3 years at 0.74% and drive it for at least a decade?

orca91
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Re: Am I being smart with this car purchase?

Post by orca91 » Sun Dec 25, 2016 7:29 am

You will get answers on both sides of the fence. Most Bogleheads will probably say, no, it's too expensive.

I say, go for it if it's a car that will make you happy.

Of course, I'm a car guy and spend far too much on vehicles by BH standards, so... :happy

bubbadog
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Re: Am I being smart with this car purchase?

Post by bubbadog » Sun Dec 25, 2016 8:05 am

Not a big deal. Enjoy your new ride.

Gropes & Ray
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Re: Am I being smart with this car purchase?

Post by Gropes & Ray » Sun Dec 25, 2016 8:10 am

Smart? I vote no. But it's also not a financial disaster either. Enjoy the car and buy another Honda in 10 years.

livesoft
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Re: Am I being smart with this car purchase?

Post by livesoft » Sun Dec 25, 2016 8:10 am

Now get rid of the Honda Element.
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hightower
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Re: Am I being smart with this car purchase?

Post by hightower » Sun Dec 25, 2016 8:14 am

As far as it making me "happy" I wouldn't go so far to say that. But, the fact that it doesn't use gasoline definitely makes me feel somewhat happy about it. I don't like the fact that I now have to drive 20 miles each way every day, but doing so without burning gasoline makes me feel better about it. That's kind of how my wife and I were okay with it. I would have considered a Chevy Volt or a Tesla 3, but neither of those cars will be available for quite some time and they aren't much cheaper.
If it weren't for the electric thing, I would have never even considered another brand new car. I would have certainly bought used. When the element dies, we'll probably buy a used hybrid of some sort for longer road trips.

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Watty
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Re: Am I being smart with this car purchase?

Post by Watty » Sun Dec 25, 2016 8:29 am

You have over $100K in debt, were not able to max out your retirement accounts, and can't pay cash for the car. Taking out a loan to buy a car that costs over $40K and has a reputation for high maintenance costs and rapid depreciation is not smart especially since you will likely need to replace your other car in the not too distance future.

You can get lots of very good new cars for around $20K or a bit over.

There is not anything inherently wrong with buying expensive toys once you are out of debt(except possibly a mortgage) and can pay cash but you are not there yet.

If an electric car uses electricity that is generated by coal or nuclear power then it is far from a zero environmental impact vehicle.

Even if it is uses wind or hydroelectric power electricity it is using clean power that could have been used by someone else that is using coal electric power.

Buying something like a used Prius would be a better choice.

orca91
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Re: Am I being smart with this car purchase?

Post by orca91 » Sun Dec 25, 2016 9:05 am

hightower wrote:As far as it making me "happy" I wouldn't go so far to say that. But, the fact that it doesn't use gasoline definitely makes me feel somewhat happy about it. I don't like the fact that I now have to drive 20 miles each way every day, but doing so without burning gasoline makes me feel better about it. That's kind of how my wife and I were okay with it. I would have considered a Chevy Volt or a Tesla 3, but neither of those cars will be available for quite some time and they aren't much cheaper.
If it weren't for the electric thing, I would have never even considered another brand new car. I would have certainly bought used. When the element dies, we'll probably buy a used hybrid of some sort for longer road trips.
Well, nevermind then. I thought you liked the car and wanted it bad. If it's just a car and anything will do, then it's not a smart purchase.

What do you mean the Volt won't be available for some time? The Chevy site says they are, I've seen some around, and they're nearly $15k cheaper... whatever you need to tell yourself to justify the BMW you don't care about though...

I'll take back my car guy statement also, since it's probably quite offensive to you with multiple gas guzzling powerful V-8s involved in my stable. :happy

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blaugranamd
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Re: Am I being smart with this car purchase?

Post by blaugranamd » Sun Dec 25, 2016 9:26 am

Watty wrote:You have over $100K in debt, were not able to max out your retirement accounts, and can't pay cash for the car. Taking out a loan to buy a car that costs over $40K and has a reputation for high maintenance costs and rapid depreciation is not smart especially since you will likely need to replace your other car in the not too distance future.

You can get lots of very good new cars for around $20K or a bit over...There is not anything inherently wrong with buying expensive toys once you are out of debt (except possibly a mortgage)...used Prius would be a better choice.
I've got to agree with this sentiment. You did not/were not able to maximize tax-advantaged accounts with your income of $320k and no kids last year :shock: , you indicated this year you will be bringing in $230-250k (that's $70-90k less this year) and are contemplating adding $40k of debt to the $100k of debt you already hold? IMO, if you're not maxing your tax-advantaged accounts, you should really think hard about taking out large, unnecessary debt. Get a more reasonably priced car, take a hard look at your lifestyle spending to maximize your tax-advantaged accounts, get the Tesla Model 3 in 2-3 years when you're debt free.

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sunny_socal
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Re: Am I being smart with this car purchase?

Post by sunny_socal » Sun Dec 25, 2016 9:45 am

An electric vehicle? All cars depreciate, but EVs drop like nothing else. Just poke your head into carmax, you can get a Nissan Leaf with hardly any miles on it for $7-8k. That BMW is quite possibly that last vehicle on earth I would buy.

If you're chasing fuel efficiency, a hybrid is a much better deal. Excellent performance, good MPG and excellent resale value.

grettman
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Re: Am I being smart with this car purchase?

Post by grettman » Sun Dec 25, 2016 9:48 am

Watty wrote:You have over $100K in debt, were not able to max out your retirement accounts, and can't pay cash for the car.
That says it right there. You can't afford the car but as someone else said, it isn't a disaster. Just learn from it.

Longdog
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Re: Am I being smart with this car purchase?

Post by Longdog » Sun Dec 25, 2016 10:01 am

Watty wrote: If an electric car uses electricity that is generated by coal or nuclear power then it is far from a zero environmental impact vehicle.

Even if it is uses wind or hydroelectric power electricity it is using clean power that could have been used by someone else that is using coal electric power.
Watty, while I do agree with pretty much your entire post, I couldn't help but think about this excerpt a bit. I think your assessment, while correct, is incomplete. Disregarding whether its a wise financial move, this purchase is contributing to the shift in demand for energy from gasoline (always fossil fuel) to electric, which may or may not be generated by environmentally friendly means. Over time, as more and more of these vehicles are purchased, this would increase the need for new electricity generating capacity, and I doubt that new plants will be created that rely on coal or nuclear. If the OP wishes to place solar panels on his roof and use that to charge his vehicle, would your environmental concern go away?
Steve

grettman
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Re: Am I being smart with this car purchase?

Post by grettman » Sun Dec 25, 2016 10:08 am

Longdog wrote:
Watty wrote: If an electric car uses electricity that is generated by coal or nuclear power then it is far from a zero environmental impact vehicle.

Even if it is uses wind or hydroelectric power electricity it is using clean power that could have been used by someone else that is using coal electric power.
Watty, while I do agree with pretty much your entire post, I couldn't help but think about this excerpt a bit. I think your assessment, while correct, is incomplete. Disregarding whether its a wise financial move, this purchase is contributing to the shift in demand for energy from gasoline (always fossil fuel) to electric, which may or may not be generated by environmentally friendly means. Over time, as more and more of these vehicles are purchased, this would increase the need for new electricity generating capacity, and I doubt that new plants will be created that rely on coal or nuclear. If the OP wishes to place solar panels on his roof and use that to charge his vehicle, would your environmental concern go away?
What about the energy costs associated with building and disposing of an electric vehicle? I once read (but not sure it was true) it costs more energy to build these cars that standard cars (primarily I believe because of where the parts are distributed from) .....

Longdog
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Re: Am I being smart with this car purchase?

Post by Longdog » Sun Dec 25, 2016 10:26 am

grettman wrote:
Longdog wrote:
Watty wrote: If an electric car uses electricity that is generated by coal or nuclear power then it is far from a zero environmental impact vehicle.

Even if it is uses wind or hydroelectric power electricity it is using clean power that could have been used by someone else that is using coal electric power.
Watty, while I do agree with pretty much your entire post, I couldn't help but think about this excerpt a bit. I think your assessment, while correct, is incomplete. Disregarding whether its a wise financial move, this purchase is contributing to the shift in demand for energy from gasoline (always fossil fuel) to electric, which may or may not be generated by environmentally friendly means. Over time, as more and more of these vehicles are purchased, this would increase the need for new electricity generating capacity, and I doubt that new plants will be created that rely on coal or nuclear. If the OP wishes to place solar panels on his roof and use that to charge his vehicle, would your environmental concern go away?
What about the energy costs associated with building and disposing of an electric vehicle? I once read (but not sure it was true) it costs more energy to build these cars that standard cars (primarily I believe because of where the parts are distributed from) .....
If you have a source for that claim, please let me know. Even if true, for a true comparison with an ICE (internal combustion engine) vehicle you'd have to look at the incremental costs (EV versus ICE), and also consider that the energy cost to produce a vehicle is very small compared to the ongoing energy usage of the vehicle over its lifetime. Also, the material in the batteries is recycled/reused when the batteries reach end of life, just like in hybrid vehicles. [Arguably, this side discussion is derailing the original question about whether the vehicle purchase was "smart", but one of the reasons the OP gave for the purchase was the environmental benefit of this EV versus a gasoline powered vehicle, so this discussion would seem to be relevant to that part of the rationale.]
Steve

EXH
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Re: Am I being smart with this car purchase?

Post by EXH » Sun Dec 25, 2016 10:29 am

I'd buy a used leaf since all you need is a commuter car. You could pay cash for that and use the extra 30k towards the student loans.

timmy
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Re: Am I being smart with this car purchase?

Post by timmy » Sun Dec 25, 2016 10:38 am

I think you need to develop a philosophy to make decisions against. That's most important. Otherwise, you'll bounce around too much.

Two folks that I think have reasonable (comprehensive) views/ philosophies (will make you wealthy if you follow consistently): Ric Edelman and Dave Ramsey.

I've migrated from Ric to Dave over the years.

http://www.edelmanfinancial.com/promoti ... wAodmAEBnQ

http://www.daveramsey.com/specials/welc ... sey-brand2

My opinion ... You can't afford this car.

timmy
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Re: Am I being smart with this car purchase?

Post by timmy » Sun Dec 25, 2016 10:43 am

EXH wrote:I'd buy a used leaf since all you need is a commuter car. You could pay cash for that and use the extra 30k towards the student loans.
+1

You don't need to spend $50K to go electric. Used leafs are (around) $10K. My next car is a used leaf.

Good luck.

Jack FFR1846
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Re: Am I being smart with this car purchase?

Post by Jack FFR1846 » Sun Dec 25, 2016 10:53 am

I'm going to guess that you just really think the i3 is really cool and with your huge income, why not? That's fine. If you have to drive in HOV lanes to save 3 hours of commuting time, that's fine too. If your area is full of smog and you'd rather have someone else's air polluted with coal to generate your clean electricity, that's ok too. But for me, the i3 is a way overpriced coal burning, depreciation monster that's way to small compared to "real" cars. For well under $10k, you could buy a used Mazda 3 or manual Ford Focus which would use very little cheap gas and last longer than that German Wunderwagen. I would tend to put reliability of an i3 up there with VW Jettas, which is pretty bad. German downfalls tend to be electrical, so buying an electric German car sounds pretty iffy to me.
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Loik098
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Re: Am I being smart with this car purchase?

Post by Loik098 » Sun Dec 25, 2016 10:54 am

hightower wrote:
34, married, no kids, dual income combined made 320k this year, but will probably be making more like 230-250k from now on (getting a new job).  I have 104k in student loan debt at 2.6% fixed (488/month for like 20+ years) and a 296k mortgage at 4% (around 2000/month with taxes and insurance).  No other debt.  We almost maxed out all of our retirement accounts this year (fell short on her 401K only because I paid off a lot of student loans).  Next year we are definitely budgeting to max out his/her 401ks and backdoor ROTHs.
For comparison, my wife and I made about the same as you this year (combined, about $330k). We have a larger mortgage than you do ($340k). We have a child, with two more on the way. And here's the kicker: we have about $350k in student (medical) loans combined remaining.....more than triple yours.

We paid extra on those student loans this year (as we have been doing every year), as well as on our mortgage. We maxed out both his and her retirement accounts this year. We contributed to a 529. Finally, we paid cash for a new minivan this year. Now, I'm not saying these things to say we are perfect (far from it, because we still spend on things like eating out and purchases for the house).....but we think we lead a comfortable life.

Questions for you: Do you have a financial plan for the next 5-10 years written out? Emergency fund set up? Do you know how much you spend on each category each month and what you're doing to lower your non-fixed expenses, if you so desire? Are your fixed expenses as low as they can possibly be?

If you don't know these things and how your new car fits into your long-term financial plan, it might explain why you are feeling guilty.

CorradoJr
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Re: Am I being smart with this car purchase?

Post by CorradoJr » Sun Dec 25, 2016 11:05 am

For the record, the i3 is not necessarily an "all electric" vehicle. Range extender models (which it sounds like you are in the process of purchasing based on price) have a 2 cylinder 650cc gasoline engine.

N10sive
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Re: Am I being smart with this car purchase?

Post by N10sive » Sun Dec 25, 2016 11:20 am

In regards to the BMW i3 as a wise purchase I would have gone with a hybrid prius. The depreciation value is very high for new EV because of the incentives. Or have gotten a used EV for over 50% off.

Another thing to look at is the cost of installing a charger and then the overall cost of the electricity. Depending on when you work and charge your vehicles you could have major swings in the actual cost of your mpg. I had a relative just purchase a used volt (which he paid more than market for because of no research before) but was excited about using the electric motor to drive his 40 mile commute. This quickly changed as his electricity bill skyrocketed because he charges during peak hours since he works at night. Now he just uses the gas motor unless he is off to charge at night. Just something to think about.

Although I think its not a terrible idea with your income, you should make a budget sheet and see where your actual spending is going. With your only debt a student loan and mortgage, it seems your payments to debt every year is around 70k which is a fraction of your combined earnings. It seems you could cut back a little on spending and easily afford the car payment however its something to look at as you say your combined income will decrease. Adding a car payment and then the costs associated (insurance, charging, etc).

N10sive
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Re: Am I being smart with this car purchase?

Post by N10sive » Sun Dec 25, 2016 11:26 am

For example just checked carmax a 2015 bmw i3 with 9k miles is 28k.

tim1999
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Re: Am I being smart with this car purchase?

Post by tim1999 » Sun Dec 25, 2016 11:38 am

Until the debt is paid down, in your situation if you want an electric car, I'd say buy a used Leaf for cheap. You live in the city...do you have a garage in which you will charge the electric car?

mrb09
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Re: Am I being smart with this car purchase?

Post by mrb09 » Sun Dec 25, 2016 12:01 pm

Not much to add, but I went through a thought process recently for an electric/plugin purchase:

Just stating the obvious, for all-electrics like a leaf you need a reliable charging situation. Folks I know that have electrics (Teslas, Fiats, Golfs) all have charging stations in their garages. They only use public stations as an exception.

For plugins like a Volt or I3, you can have more exceptions, but you really want to be able to plugin every night in your garage. A Volt will run on gas like a normal car, but when it does it doesn't get as good a milage as a Prius or even a Malibu Hybrid. You still need to treat going past electric range as an exception (albeit an easier one to deal with than a public charging station)

For me, I decided an electric wouldn't work at all, and the plugins just weren't economical enough for my driving patterns. I ended up buying a used Prius to tide me over for five years or so, and then I'll look at an all-electric with hopefully more range/faster public charges.

KyleAAA
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Re: Am I being smart with this car purchase?

Post by KyleAAA » Sun Dec 25, 2016 12:26 pm

You can easily afford the car on your income but "last 10-12 years" and "BMW" are rarely used in the same sentence, at least not this century. It will last that long but you probably aren't going to like how much money you'll have to pour into it to do so.

abonder
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Re: Am I being smart with this car purchase?

Post by abonder » Sun Dec 25, 2016 1:34 pm

Agree with the posters who advise against this car if it's not something you're passionate about. So many options exist for reliable cars, new and used, ICE and electric, that the i3 strikes me as an odd choice. Look at used Leafs. It's almost scary how cheap they are. I almost want to buy one as a novelty. There no way that this decision would really throw your path to financial success off too much, but I personally think that a more modest vehicle and more aggressive debt reduction would bring more long-term happiness and fulfillment. But it's your money!

stevekozak2
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Re: Am I being smart with this car purchase?

Post by stevekozak2 » Sun Dec 25, 2016 1:37 pm

Watty wrote:You have over $100K in debt, were not able to max out your retirement accounts, and can't pay cash for the car. Taking out a loan to buy a car that costs over $40K and has a reputation for high maintenance costs and rapid depreciation is not smart especially since you will likely need to replace your other car in the not too distance future.

You can get lots of very good new cars for around $20K or a bit over.

There is not anything inherently wrong with buying expensive toys once you are out of debt(except possibly a mortgage) and can pay cash but you are not there yet.

If an electric car uses electricity that is generated by coal or nuclear power then it is far from a zero environmental impact vehicle.

Even if it is uses wind or hydroelectric power electricity it is using clean power that could have been used by someone else that is using coal electric power.

Buying something like a used Prius would be a better choice.
This! If you can't pay cash for it, you can't afford it. With the money OP makes, though, it baffles me why he is in debt.

Alexander2020
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Re: Am I being smart with this car purchase?

Post by Alexander2020 » Sun Dec 25, 2016 2:49 pm

Do NOT buy a new i3. If you want one, lease it or buy used.

They are great cars, I had a BEV one for 24 months. I saw the very first one delivered in CA and really liked the design. Go drive one and take it on the 24 HR test drive. There are battery only and REX versions. Make sure you have charging options.

Some things to consider - if you live where it gets cold range will drop by 40% when it's below 20 degrees. Secondly the back doors are a PITA, big opening and all but don't park close to anyone.

PM me if you have specific questions. I would have got another one if the range was higher and they had a 4WD option.

apokryphon
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Re: Am I being smart with this car purchase?

Post by apokryphon » Sun Dec 25, 2016 3:02 pm

If you're looking for an EV, you can find terrific deals on used Volts. I bought a 2013 for 10.5k; the battery was in mint condition.

Afty
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Re: Am I being smart with this car purchase?

Post by Afty » Sun Dec 25, 2016 3:50 pm

I would not buy an i3 right now. The Chevy Bolt is about to come out, and IMO it's going to make every other non-Tesla EV obsolete. It has 2-3x the range of any non-Tesla EV, but costs only $30k after the federal tax rebate. Motor Trend just picked it for their Car of the Year.

If I were you and interested in owning an EV, I would buy something cheap to hold me over until the Bolt becomes widely available. Maybe a used Leaf.

afan
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Re: Am I being smart with this car purchase?

Post by afan » Sun Dec 25, 2016 4:01 pm

I would suggest a used hybrid.

Plug in hybrid if you like, but a hybrid. If you need to get somewhere, and you do not have ready access to a charging station for a long time then a hybrid still gets you there. All electric means you simply wait until you can get to a charger and then wait, seemingly forever, for it to charge.

I think it is true that the environmental impact of driving on electricity, while not zero, is a lot smaller than driving on gas. But you do have to weight that against the demand that the car actually does drive- as opposed to sitting at a charging station going nowhere.

Financially used cars always make far more sense than new. Someone has to pay that huge depreciation for the first few year. No reason it should be you, particularly since you are kind of stretched right now.

Financially, less "prestigious" cars always make far more sense. The prestige is part of the price.

Get a more humble nameplate and pocket the cost. They will get you there just as well. BMW apparently is not too bad on reliability, but it cannot compete with Toyota on that measure. Throw in the difference in cost for maintenance, and Toyota blows them away.

Keep in mind that the low interest rate on the loan is a mirage. They simply charge more money for the car, then give you a low rate on the loan. Same (or worse) financial impact.

So...
Buy a used hybrid. 3-5 years old in good condition. Get it from a company whose name does not impress anyone at the doctor's parking lot. Toyota, for example. Drive it for a very long time. You will be far ahead of where the overpriced, expensive to maintain and impractical BMW would get you.

If you do this, then your airbnb should cover much more than the payment, you will pay it off earlier and then direct that cash flow to investments.
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Good Listener
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Re: Am I being smart with this car purchase?

Post by Good Listener » Sun Dec 25, 2016 5:26 pm

sunny_socal wrote:An electric vehicle? All cars depreciate, but EVs drop like nothing else. Just poke your head into carmax, you can get a Nissan Leaf with hardly any miles on it for $7-8k. That BMW is quite possibly that last vehicle on earth I would buy.

If you're chasing fuel efficiency, a hybrid is a much better deal. Excellent performance, good MPG and excellent resale value.
This is interesting. Why is it in your opinion that electric cars would drop so much?

I would also like to pose a question.... My reading indicates the possibility that although these vehicles do not use carbon directly, that most of the source of the electricity is power plants that burn carbon based fuels. And that there might be no net saving of carbon? OK

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Geneyus
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Re: Am I being smart with this car purchase?

Post by Geneyus » Sun Dec 25, 2016 6:04 pm

Something else to think about... I noticed you said you were married without kids. Do you plan on having kids? If so, you might want to consider a fuel-efficient SUV for half the cost. There are a lot of options, especially if you buy a used one with low mileage. I think it would drive me nuts if I tried to get a kid in and out of a BMW i3. My brother wanted a newer FJ Cruiser and reconsidered after looking at putting a car seat in it.

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epictetus
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Re: Am I being smart with this car purchase?

Post by epictetus » Sun Dec 25, 2016 6:41 pm

unless you really love it i would encourage you to pass on it.

even if you really love it i would probably encourage you to pass on it.

this purchase is moving in the wrong direction with purchases, debt, etc.

if you can move in the right direction at this point in your life with purchases, debt, etc. it will create a lot more freedom for you down the road
Focus on what you can control

Mav
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Re: Am I being smart with this car purchase?

Post by Mav » Sun Dec 25, 2016 9:27 pm

hightower, or others, would you share your experience about doing Airbnb or similar services?

bubbadog
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Re: Am I being smart with this car purchase?

Post by bubbadog » Sun Dec 25, 2016 10:14 pm

I think we need to cut the OP a little slack.

He makes between 230-250K per year.

He fully funds his/her 401Ks and IRAs.

He wants to buy a new car for a net price of 32.5K

While his choice of a BMW is not what I would choose, to each their own.

He is doing better than probably 95% of the US population.

Kencufc
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Re: Am I being smart with this car purchase?

Post by Kencufc » Sun Dec 25, 2016 10:59 pm

bubbadog wrote:I think we need to cut the OP a little slack.

He makes between 230-250K per year.

He fully funds his/her 401Ks and IRAs.

He wants to buy a new car for a net price of 32.5K

While his choice of a BMW is not what I would choose, to each their own.

He is doing better than probably 95% of the US population.
I agree. Is this the best financial decision...unquestionably no.

Is it a fun expense..yes.

Can he afford it...yes.

We bought a 2011 335xi, awesome to drive. Needed a new muffler at 19k miles. Worst financial decision we have made to date. It was also about 3 years before I figured out personal finance.

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ClevrChico
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Re: Am I being smart with this car purchase?

Post by ClevrChico » Sun Dec 25, 2016 11:52 pm

Is it a big deal? No. :-)

Can you afford it? Probably!

Is buying a $40k commuter car when you have $400k of debt, smart? Probably not.

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Fieldsy1024
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Re: Am I being smart with this car purchase?

Post by Fieldsy1024 » Mon Dec 26, 2016 12:35 am

If it doesn't hurt your savings, go for it!

N10sive
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Re: Am I being smart with this car purchase?

Post by N10sive » Mon Dec 26, 2016 2:36 am

Good Listener wrote:
sunny_socal wrote:An electric vehicle? All cars depreciate, but EVs drop like nothing else. Just poke your head into carmax, you can get a Nissan Leaf with hardly any miles on it for $7-8k. That BMW is quite possibly that last vehicle on earth I would buy.

If you're chasing fuel efficiency, a hybrid is a much better deal. Excellent performance, good MPG and excellent resale value.
This is interesting. Why is it in your opinion that electric cars would drop so much?

I would also like to pose a question.... My reading indicates the possibility that although these vehicles do not use carbon directly, that most of the source of the electricity is power plants that burn carbon based fuels. And that there might be no net saving of carbon? OK
EV's drop in price because of the incentives that are provided come tax time. For example this I3 as the op says has a 7500 rebate. So purchase price of the vehicle is 47k the 7500 brings it down to 39k. from that further depreciation from just buying the vehicle.

I gave an example of a 1 year old I3 going for 28k. You can expect the 39k is what you bought the vehicle at. Add in unknown maintenance costs and it will drop even further. Batteries for an electric vehicle range from 4-6k. This unknown is what I believe drives the EV resale down along with the incentives.

The only real way to get from using coal power to charge an EV is if you have enough solar to charge it. EV's are still a little better in reducing carbon pollution as your not contributing to the trucks that haul the gas to the gas station and everyday output from a normal combustion engine.

anoop
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Re: Am I being smart with this car purchase?

Post by anoop » Mon Dec 26, 2016 2:55 am

I'm a big fan of BMW, but I would not recommend the i3. It doesn't feel as well put together (lots of rattles even in a brand new car) and unless they have fixed something recently, there are many reports of issues with range/performance in cold weather. In one case someone reported they were not able to get beyond 55 mph on an uphill stretch in cold weather.

I second the recommendation to vote for the Bolt.

HopeToGolf
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Re: Am I being smart with this car purchase?

Post by HopeToGolf » Mon Dec 26, 2016 5:22 am

Since the car is already ordered I'm guessing you are stuck with it. Given that you expect to keep it for a decade I don't think it is a terrible purchase.

That said, look at your expenses and figure out why you didn't max your retirement savings. With your income, 401Ks (or the equivalent) and Roths should be maxed.

My only concern here is the fact that you have a huge salary and are Airbnb a room, didn't max your retirement and plan to take 20 years to pay your loans. Your story sounds like you are done sacrificing and want to spend most of what you make.

Pay yourself first (save) and see what's left.

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Re: Am I being smart with this car purchase?

Post by hightower » Mon Dec 26, 2016 8:44 am

Great discussion! Its good to hear everyone's take on this.

For the record, I meant to say Chevy Bolt in the original post (all electric). Those are out in small numbers on the west coast, but it will probably be awhile before they're in the midwest.

The i3 I ordered is the all electric version (non-range extender). I did that because its a lot lighter and gets better electric range without it. Also, the only reason I didn't buy used is because the 2017 version comes with a bigger battery capacity and thus much further range. I am aware of the battery efficiency drop in the winter. Pre-conditioning can help a lot (warming up the car with it plugged in), but even with the potential drop, the range is still more than I need for commuting. The thing about it "not making it up the hill at 55 mph" that is a problem with the range extender versions when they are running on the generator.. the motor can't charge the battery fast enough to keep up with the high speed demands of going uphill in some situations (like when you're trying to go 70 mph up a mountain pass or something). Not really an issue for me since I wouldn't use this car for that kind of trip.

The main reason I didn't max out her 401k this year is because I wasn't a boglehead yet and because I paid down a ton of student debt this year. We did max out my 401k and both backdoor roth ira's though.

This discussion did make me realize that I am kind of a big fan of the i3 specifically and all electric vehicles in general (non-hybrids). The only other cars I would consider (the yet to be released tesla model 3 and the bolt) are not really available yet and I don't like the look of them as much. Yes the range on those beat the i3 no doubt. What I like about the BMW is that it's designed to be an electric vehicle from the ground up. The way it is built is very different from any other car they make. It has an all aluminum and carbon fiber construction. I personally think its going to be capable of lasting much longer than traditional cars.
Someone mentioned the environmental impact of these and the cost of building one in terms of energy use. That's another thing I like about BMW here. They have a dedicated factory for this car that was designed to be very environmentally friendly (I believe its a net carbon neutral facility actually). Germany is a big supporter of wind and solar as a country as well. Also, we buy 100% of our electric from wind/solar sources now and we do plan on adding solar to our roof soon. I don't have a garage, but we a parking pad in the back with a spot to add a charging station (which I'll be adding myself, so won't cost too much...and yes I've done electrical work many times in the past).

Listening to everyone's responses made me realize I do really want to show my support for this new technology. I think BMW is doing something special with its electric division. Will it be the most successful in the EV world? I don't know. Will this car be more or less reliable than any of its other cars? I don't know and i don't think anyone can say just yet since they've only been making the i3 since 2014. But, I think the potential for it being less costly than a traditional are in terms of upkeep are high. Electric vehicles are much simpler with fewer moving parts. No oil changes to worry about. The brakes should last a lot longer since most stopping can be done using the regenerative braking ability (just take the foot off the pedal and it slows to a stop while regenerating the battery).

I agree with the sentiment that is probably not the smartest move financially, but ultimately probably won't be a terrible decision either. I can tell you that since I started reading this forum about a month ago, its already completely changed my way of thinking about money and personal finances. I've already planned out our budget for this year. My wife and I are formulating a formal IPS. We're going to be maxing out all tax advantaged accounts first and carefully budgeting everything else. This is a big change from years past. The main reason I'm still in debt after 5 years of making attending salary is because we bought our current house right after residency and poured money into renovating it (old house needed a full restoration). Though I would never do this again and I definitely wish I had been a boglehead back then and started saving and paying off debt at that time. But, at least I learned my lesson now. And we're fortunate that the house is in a popular part of the city where prices on homes are climbing (ours is probably worth between 500-600k), so we have a healthy amount of equity right now.
Thanks for all the feedback. Next time I need to make a big purchase, I'll be asking you guys for help BEFORE I put a deposit on something though:)

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Re: Am I being smart with this car purchase?

Post by NYCguy » Mon Dec 26, 2016 8:45 am

ClevrChico wrote:Is it a big deal? No. :-)

Can you afford it? Probably!

Is buying a $40k commuter car when you have $400k of debt, smart? Probably not.
Agreed. OP's decision is not financially smart. I LOVE cars but they are are one of the worst impediments to financial independence.

I drove a bone until I repaid my student loans and had a NW of $200k and was making $300 k a year. Then I bought certified preowned luxury vehicle for $30k. I then drove CPO luxury vehicles until my NW was $10 million.

Today I enjoy $300k of brand new luxury cars sitting in my driveway. Horrible financial decisions but loads of fun.

My observation is if you don't defer these types of gratifications in life it is difficult to achieve financial independence. Financially independent isn't a goal for everyone but is OP's decision financially smart? No.
If your out-go is greater than your income, your upkeep will be your DOWNFALL.

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Re: Am I being smart with this car purchase?

Post by Valuethinker » Mon Dec 26, 2016 9:03 am

Watty wrote:
If an electric car uses electricity that is generated by coal or nuclear power then it is far from a zero environmental impact vehicle.

Even if it is uses wind or hydroelectric power electricity it is using clean power that could have been used by someone else that is using coal electric power.

Buying something like a used Prius would be a better choice.
As you can imagine that's something that people like the National Renewable Energy Lab have gone through in great detail. Somewhere there is a website where you can type in your postal code and find out the pollution production from charging your electric car.

If you live in California, the Pacific NW, or the Mid Atlantic and New England, your coal fired component is likely less than 40% (down to nearly 0 in the Pacific NW). And falling.

If you live in the South or much of the Midwest (but not Chicago) then it's not a super pretty picture. Because of the low efficiencies of ICE (c. 28% in conversion) and the cost of extracting/ refining/ distributing oil you are probably still ahead saving gasoline by using electricity, even if from coal fired sources. And of course on all other pollutants you are way ahead (mostly).

Part of the issue is time of day. Since the marginal plant on the load curve tends to be gas fired (Combined Cycle Gas Turbine/ CCGT) it tends to be relatively clean (c. 50-55% efficiency conversion less standard 8% Transmission & Distribution loss). And CCGTs are far less polluting than coal fired stations. So charge at peak times, average pollutants/ kwhr goes *down* in many places.

Over to non peak periods. Baseload power (nukes + coal in some jurisdictions, hydro in Pacific NW) is always there, so if wind and solar if it blows. So it's not true to say that a wind or solar kwhr is simply "displaced" with an equivalent coal station generated kwhr consumed by someone else. Demand at any given moment is what it is, and if nukes + solar + wind fulfills that demand, the marginal kwhr from coal may just not get generated.

In addition, by creating demand for that kwhr of "clean" power, you have incentivized investment in that, as against investment in new coal fired stations (which, by and large, is just not happening now, and that may not change even with the change in government-- because a coal fired station is second only to a nuclear plant in capital cost, and operating lives are 30 years+. Currently CCGTs are a lot cheaper and faster to build and run).

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Re: Am I being smart with this car purchase?

Post by Valuethinker » Mon Dec 26, 2016 9:06 am

hightower wrote:For the record, I ordered this car before I started reading this site;)

34, married, no kids, dual income combined made 320k this year, but will probably be making more like 230-250k from now on (getting a new job).  I have 104k in student loan debt at 2.6% fixed (488/month for like 20+ years) and a 296k mortgage at 4% (around 2000/month with taxes and insurance).  No other debt.  We almost maxed out all of our retirement accounts this year (fell short on her 401K only because I paid off a lot of student loans).  Next year we are definitely budgeting to max out his/her 401ks and backdoor ROTHs.

We live in the city and for the last 5+ years we've been able to get away with just one car since i lived close enough to the hospital to ride a bike, walk, or take a bus.  Our current car is a 2008 Honda Element.  Paid it off a long time ago and still driving it.  We plan on continuing to drive it for another 3-4 years (unless something really expensive breaks on it).

Anyway, since I'm getting a new job outside of the city this year we need a second car.  I got really excited about this a couple of months ago and ordered a new BMW i3 (an all electric vehicle).  The price is $47,195, but I get a $7,500 tax credit on my 2017 taxes, so real cost to me is $39,695.  I plan on financing it with a 3 year loan at 0.74% through a credit union.  We started running an AirBNB room a few months ago at our home and the income from that should be able to cover the cost of the car payment most months.

Now that I've ordered it and started thinking about having another monthly payment for the next 3 years, I'm starting to question if it was an okay move.  I mean, obviously the best thing would be to pay cash, but I don't have that kind of cash sitting around and I wanted a car that would last the long haul for me (at least 10-12 years ideally).  My main justification for it was that the airbnb income would cover it, but obviously I could be investing that extra income instead.  But, we do really need a second car and I do really like the idea of a good, well made car that should last me a long time and at the same time is environmentally friendly and cheaper to "fuel."  What do you guys think:)?  Is it really that big of a deal if I pay it off in 3 years at 0.74% and drive it for at least a decade?
Did you buy the range extender i3? Because the basic range isn't great (compared to a Tesla). I don't t hink BMW has yet cracked the PHEV/ EV challenge.

I am not sure this car meets your needs. And EVs and PHEV technology is moving so fast that wait is worth it.

In the absence of an ability to "flip" your car right away (which I would consider) then you are probably stuck with it. So this is sunk cost-- just enjoy driving it.

I do have some concerns about how you are managing your personal finances that you went down this particular alley. There were cheaper alternatives, I think.

But you are well paid, and we all make financial mistakes. If you can reconstruct how you got to this position in your mind, it might help you in future large consumption decisions.

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Re: Am I being smart with this car purchase?

Post by sunny_socal » Mon Dec 26, 2016 11:15 am

So you're buying the BMW EV for reasons that are not financial:
- You like the idea of EVs
- You like the carbon fiber construction of the BMW EV ("Will last longer than traditional cars")
- You enjoy supporting alternative energy

It seems like finances have little to do with the decision. In that case go for it! :beer

I've already been through the "EV Bug" phase of my life and believe me, it bit me hard. I was ready to build my own EV in my garage. I bought a Prius, felt great about it.

In the years since, some scales have fallen from my eyes:
- The solar industry still isn't fully viable. The power source itself itself only makes sense in a few geographical locations and it is only available part of the day. It must be supplemented by traditional power sources in order to work (coal, nuclear, gas.) The very fact that it requires government subsidies to exist tells me it is not ready for prime time.
- The wind industry is even worse. The turbines require a great deal of maintenance and wind farms occupy huge land areas (I live in CA, I know.) The kill birds. The decision to use wind is more political than anything else, it is not financially viable.
- Solar heating (ie power generation) is the worst of the lot. The power plants are a complete money pit (see the plant in the Mojave.) Any bird that enters the solar field becomes a meteor.
- Power conversion from other sources into electricity and from there into charge held in an EV is necessarily the least efficient path! Any time energy is converted from one form into another there is loss, this is just a fact of life.

The only vehicles I would buy are a regular hybrid since they capture power loss during braking and capture energy when driving in hilly areas. I would also consider a PHEV because I have a solar panel set and produce more power than I need (and the utility doesn't pay me back for it in equal measure.) I would never get an EV until there is a nuclear power station in every city to support the massive infrastructure required. Until that day, fossil fuels rule. (And the whole 'peak oil' was another great lie, we have enough fuel for many, many generations.)

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Re: Am I being smart with this car purchase?

Post by Valuethinker » Mon Dec 26, 2016 11:56 am

sunny_socal wrote:So you're buying the BMW EV for reasons that are not financial:
- You like the idea of EVs
- You like the carbon fiber construction of the BMW EV ("Will last longer than traditional cars")
- You enjoy supporting alternative energy

It seems like finances have little to do with the decision. In that case go for it! :beer

I've already been through the "EV Bug" phase of my life and believe me, it bit me hard. I was ready to build my own EV in my garage. I bought a Prius, felt great about it.

In the years since, some scales have fallen from my eyes:
- The solar industry still isn't fully viable. The power source itself itself only makes sense in a few geographical locations and it is only available part of the day. It must be supplemented by traditional power sources in order to work (coal, nuclear, gas.) The very fact that it requires government subsidies to exist tells me it is not ready for prime time.
That's not what the data shows. Depends on location (very much). If you price in the pollution externality of course solar looks *much* better.

Note that installed costs per peak kw in Germany are half what they are in the US. Since the silicon and the inverters have the same price, that's to do with a stable regulatory system common across a country.

https://www.lazard.com/perspective/leve ... alysis-90/

http://grist.org/climate-energy/renewab ... -6-charts/

note latter has old data (2 years old).
- The wind industry is even worse. The turbines require a great deal of maintenance and wind farms occupy huge land areas (I live in CA, I know.) The kill birds. The decision to use wind is more political than anything else, it is not financially viable.
Maintenance compared to what? On offshore wind, we just don't know (not enough operational experience, dependent on location). Onshore, not hardly not compared to the manning levels of a coal fired station. CCGTs are fine until they go for their 10 year retrofit, then they are down for months (years?). Nuclear? Come on-- the maintenance side of nuclear is *the* question (not to mention the refuelling)-- you can go down for *years*.

Note we are still on a learning curve re wind turbine maintenance. The new designs are a lot better than say the 5 and 10 year old ones (remote monitoring, plus far more data about what goes wrong and when). Think of the lower maintenance requirements of jet engines now v. 30 years ago.

Large land areas? Yes. But in the context of the US of A it's not unreasonable. Think about highways or golf courses-- how much land *they* take up. Or simply urban parking (read Randy Shoup's work).

Not financially viable? Strange that, given how fast the industry is growing, worldwide. It's expensive capital cost but low Operations & Maintenance. Wind is now cheaper than other electricity sources in any number of countries.

In the US that socialist and environmentalist hell that is the state of Texas is, of course, the leader in wind installations. Texas.
- Solar heating (ie power generation) is the worst of the lot. The power plants are a complete money pit (see the plant in the Mojave.) Any bird that enters the solar field becomes a meteor.
Solar heating is for buildings. You mean solar thermal? Very early stage on the technology. Concentrated Solar Power (CSP) has one incredible merit-- you can pump power after nightfall. It really depends on the pricing curve over the day (or longer). If the peak price at 4.30pm on a winter's eve (or c. 5 pm on a summer's eve) is very very much higher than the price at 11am, then the economics work.

This is early stage on CSP. CSP is where PV solar was maybe 20 years ago. First Of A Kind (FOAK) for a new technology is way on the top of the cost curve and the falls on the NOAKs will be impressive (as they are with every new technology in energy *except* nuclear where even the French had a rising cost curve with the later reactors).
- Power conversion from other sources into electricity and from there into charge held in an EV is necessarily the least efficient path! Any time energy is converted from one form into another there is loss, this is just a fact of life.
Yup. A coal fired station runs 35% efficiency, then has transmission losses of 8%... ohhh, sorry, you meant solar and wind? A nuclear station (other than the Advanced Gas Reactor, which was a British technology which has terminated, which did around 40%) is around 30%.

BUT an Internal Combustion Engine has 28% efficiency from gasoline. But you also had to pump that oil (or mine it in the Canadian case), transport it to a refinery, refine it, distribute the product. So ICE's are running say 20% efficiency. An electric motor in an EV is running 90% (however there is lost charge in a battery over time).
The only vehicles I would buy are a regular hybrid since they capture power loss during braking and capture energy when driving in hilly areas. I would also consider a PHEV because I have a solar panel set and produce more power than I need (and the utility doesn't pay me back for it in equal measure.) I would never get an EV until there is a nuclear power station in every city to support the massive infrastructure required. Until that day, fossil fuels rule. (And the whole 'xxxxx' was another great lie, we have enough fuel for many, many generations.)
OK where I put the xxxx we are not allowed to use on this Forum (it attracts the most lunatic anti-semitic types of drive by posters, apparently).

A PHEV of course also uses regenerative braking. So does an EV I presume.

The problems with nuclear stations are the old ones. They cost too much (EPR by Areva-- both Flamanville and Oulo are c. 9 years late and 2-4x over budget), there's no agreed way of long term waste disposal (and no certainty it will stay long term) so the waste keeps piling up in "temporary" storage, they have a finite probability of a catastrophic disaster costing 10s or hundreds of billions of dollars (Windscale, Chernobyl, Fukishima Daichi, but also that one in Siberia that was kept secret; Three Mile Island, Browns Ferry and Besse Davis all had the potential for that kind of disaster). It's a technology that relies on the existing techno structure staying *forever*. If you look at the photos of the old NASA launch sites (and as a kid, I could no more imagine NASA looking like that than I could Washington DC looking like that) as they are now, your confidence in the "forever" of technological bureaucracies has to be shaken-- or see the collapse of the USSR and the nuclear and environmental messes left behind.

What kills nuclear though is unfavourable economics. To get Hinckley C (EDF/ Areva) the British government has guaranteed, inflation linked, a price for electricity double the current wholesale price for the first 35 years of operation. Plus loan guarantees.

Solar power can provide most energy demand in the daytime (depends on climate and latitude). Wind can fill much of the hole. The Holy Grail is electricity storage (we already have "solved" that problem in the sense the US could already do it using Pumped Storage Hydro in the Rockies and a national network of HV DC lines; however the institutional issues around that mean it won't happen that way, local storage from things like super batteries will catch up). Oh and Concentrated Solar Power ;-).

hightower
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Re: Am I being smart with this car purchase?

Post by hightower » Mon Dec 26, 2016 3:10 pm

Valuethinker wrote:
Did you buy the range extender i3? Because the basic range isn't great (compared to a Tesla). I don't t hink BMW has yet cracked the PHEV/ EV challenge.

I am not sure this car meets your needs. And EVs and PHEV technology is moving so fast that wait is worth it.

In the absence of an ability to "flip" your car right away (which I would consider) then you are probably stuck with it. So this is sunk cost-- just enjoy driving it.

I do have some concerns about how you are managing your personal finances that you went down this particular alley. There were cheaper alternatives, I think.

But you are well paid, and we all make financial mistakes. If you can reconstruct how you got to this position in your mind, it might help you in future large consumption decisions.
I'm not one prone to "range anxiety." I ordered the 2017 battery only version, non-range extender. The non-rex versions get better range on the battery due to the lighter weight. The 2017 models got an upgraded battery (30% more power). It gets an EPA estimated 114 mi/charge. That's with the car in "comfort mode" and at higher speeds overall which is not as battery efficient as eco mode. I think I'll be able to do much better than that in eco-mode. I drive like a grandpa anyway. My new job is 19.7 miles from my house. So, I'm looking at no more than 40 miles of range needed per day. That will leave probably 80+ miles of range for once I get home (in non-freezing temps). We're not going to use this car to go on road trips, that's what our Honda is for. Also, BMW gives 2 weeks of free car rentals per year for i3 owners for as long as you own the car...so we can use a free rental car to go on long road trips if we want (which we fully plan on doing). I don't know if I would ever consider this, but BMW does plan on offering battery upgrades to existing i3's in the future. I think I read somewhere that its estimated to cost around 5k. SO, if 5+ years for now I really like the car and still plan on driving it for the foreseeable future, they will likely have a battery capable of twice the range or more of this current one. If this country adopts a more EV friendly highway system with fast chargers strategically placed, that would be an upgrade I might consider.

However, I agree it does not compete with the Chevy Bolt's estimate of 238 or the Tesla's 215. I am not willing to wait 2 years for a Tesla (their wait list for the model 3 is well into 2018 now and most people believe they will be way behind on production once they start). I considered the Bolt, but I have a feeling it would be a solid year to get my hands on one of those and I need a second car now unfortunately. None of the other EVs on the market have enough range in my opinion (for instance the leaf is only like 80 miles, which means in cold weather you'd be around 50 miles/day) But, those weren't the main reasons for the i3. I like the looks and features of it better than the other 2 as well. I absolutely hate the looks of the leaf.
Yes the Bolt is cheaper (starting price of 37k vs 42k for the BMW), but not by a whole lot. If it had actually been available at the time, I would have more strongly considered it.

The message I've gotten from this site and the WCI over the last few weeks is loud and clear though and I fully understand now why you all have the philosophy of "if you can't afford to pay cash, you can't afford it." That will certainly influence my future decisions. I'm sure the next few years of car payments will further strengthen that notion.

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Taylor Larimore
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Something to consider

Post by Taylor Larimore » Mon Dec 26, 2016 5:22 pm

hightower wrote:For the record, I ordered this car before I started reading this site;)

34, married, no kids, dual income combined made 320k this year, but will probably be making more like 230-250k from now on (getting a new job).  I have 104k in student loan debt at 2.6% fixed (488/month for like 20+ years) and a 296k mortgage at 4% (around 2000/month with taxes and insurance).  No other debt.  We almost maxed out all of our retirement accounts this year (fell short on her 401K only because I paid off a lot of student loans).  Next year we are definitely budgeting to max out his/her 401ks and backdoor ROTHs.

We live in the city and for the last 5+ years we've been able to get away with just one car since i lived close enough to the hospital to ride a bike, walk, or take a bus.  Our current car is a 2008 Honda Element.  Paid it off a long time ago and still driving it.  We plan on continuing to drive it for another 3-4 years (unless something really expensive breaks on it).

Anyway, since I'm getting a new job outside of the city this year we need a second car.  I got really excited about this a couple of months ago and ordered a new BMW i3 (an all electric vehicle).  The price is $47,195, but I get a $7,500 tax credit on my 2017 taxes, so real cost to me is $39,695.  I plan on financing it with a 3 year loan at 0.74% through a credit union.  We started running an AirBNB room a few months ago at our home and the income from that should be able to cover the cost of the car payment most months.

Now that I've ordered it and started thinking about having another monthly payment for the next 3 years, I'm starting to question if it was an okay move.  I mean, obviously the best thing would be to pay cash, but I don't have that kind of cash sitting around and I wanted a car that would last the long haul for me (at least 10-12 years ideally).  My main justification for it was that the airbnb income would cover it, but obviously I could be investing that extra income instead.  But, we do really need a second car and I do really like the idea of a good, well made car that should last me a long time and at the same time is environmentally friendly and cheaper to "fuel."  What do you guys think:)?  Is it really that big of a deal if I pay it off in 3 years at 0.74% and drive it for at least a decade?
hightower:

You are not going to like my analysis but we learn from each other:

According to Edmunds True Cost to Own, a new BMWi3 (after the tax credit) has a 5-year True Cost to Own of $40,347. A new 2017 Toyota Corolla Sedan (my last car) has a 5-year True Cost to Own of $23,079. The 5-year savings ($40,347 -$23,079 -) is $3,454/year.

If you work for 31 more years until age 65, and invest your savings of $3,454/year in a Roth IRA earning 8%, you would have accumulated $497,646 (tax-free) to spend in retirement (my wife and I enjoyed 2 world cruises with a part of our savings.

Thank you for giving Bogleheads something to consider.

Happy Holidays!
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

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