At what point can I buy an expensive car?

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smitcat
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Re: At what point can I buy an expensive car?

Post by smitcat »

Jack FFR1846 wrote: Sun Jun 09, 2024 8:34 am I'll just convey information.

First, the car itself is an important consideration. Think of depreciation of the car. For a new 911 without much of any options, it's not going to depreciate steeply, but it's not going to go up in price like a low number year GT-3 would. Do your research on cars that don't depreciate a lot. This will likely head into the used area because some of the best sports cars are no longer offered.

Some examples:
Lotus Elise, Exige or Evora. Buy a good, low mileage one now and not only are you going to get a car that was made in lower numbers than any recent year 911 or Cayman, the powertrain is Toyota on all of these, so parts and maintenance is cheap and parts easy to find. Some of the non-powertrain is also from other high numbers, cheaper cars. For example, the Elise front brake calipers are Subaru STi rear calipers. The forum LotusTalk is excellent and as I've said, whatever stupidity Lotus put into their cars, LotusTalk has identified and provided low cost fixes.

Some things to watch out with Porsche. They have started to head into Ferrari territory with respect to who they sell to. Go in looking for a 911 GT-3 and the only way a dealer will sell you a new one is by paying $100k over MSRP and by you agreeing to give them first right of refusal when you want to sell. The Cayman GTS-4.0 is the lowest number Porsche made. I've seen far more GT-4's used and new for sale than GT-3s.

Can a fun car be used as a daily, too. While I did use my Elise for a month when we had a couple cars down and being repaired, there are some that might be usable. I'm thinking along the lines of a Z4/Supra, M2, Mustang GT, Camaro.

And to your question, I don't think there is a rule of thumb. I'm sitting here having driven a 41k mile 17 Rubicon unlimited and considering replacing my 14 Wrangler unlimited sport with it. It would be about a $10k upgrade and gives me lockers for offroading, all of my offroading mods on my 14 can directly transfer over and the Rubicon ups towing capacity from 2000 pounds (3.21 axles in the 14) to 3500 in the Rubicon. I just have a hard time spending money. I'm retired and we have 58 times spending saved.
"I just have a hard time spending money."
Someone will eventually spend it the way they want , if not you.
smitcat
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Re: At what point can I buy an expensive car?

Post by smitcat »

tibbitts wrote: Sun Jun 09, 2024 9:29 am Question for the OP: are you assuming your spouse will spend an equal amount on a "toy", so are you multiplying the "toy" cost by two?
In our case my spouse usually wants the car/boat/etc even more than I do.
Problem solved.
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CyclingDuo
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Re: At what point can I buy an expensive car?

Post by CyclingDuo »

ajg189 wrote: Sat Jun 08, 2024 8:40 pmI know this is not necessarily a classic thing many bogleheads would approve of, but I am a car nut. I love sports cars. I have had a few over the years but ultimately sold them for something more practical as we started a family or to put toward more important financial goals.

I am looking for some advice as to rules of thumb for when it is okay to make a big frivolous purchase on a “toy.” I really have no idea how to know what is reasonable. To me, it is a matter of trying to be sensible but also balancing that with enjoying my passion. I would appreciate the advice of the community to know how you think about this, be it a car or boat, watch/jewelry or second house, etc.
Why not go with Ramsey's rule of thumb...

"Your cars, trucks, boats, motorcycles, and other vehicles should not have a total value that exceeds half your annual income. Why? You don't want too much of your wealth tied up in things that depreciate. And cars, trucks, and things with motors depreciate big time."

Original source: https://www.msn.com/en-us/money/persona ... ey%20wrote.

I would opine that once you have a certain amount of wealth built up, you can probably begin to ignore that rule. What point, or number, is that? It's probably unique and individual for every household, but from a liquid asset base, probably seven figures would be a potential pivot point.

Odd thing is, I can drive up and down the streets in my neighborhood and see enough things with a motor sitting in individual's driveways that, if I had to guess, far exceeds 50% of their annual income. Driveways with 4 or 5 vehicles, a huge motorhome, a boat, and a garage with motorcycles, etc. In some cases, the garages are so filled with "stuff" that they cannot park any vehicles in the garage. In other cases, the household simply has that many vehicles.

OP, why not just rent a high end sports car for an occasional weekend or two every year to scratch your itch as you cruise around with a toy?

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
DownToThis
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Re: At what point can I buy an expensive car?

Post by DownToThis »

ajg189 wrote: Sat Jun 08, 2024 9:51 pm An rs6 avant would be a dream but I honestly think I prefer daily driving an EV and having a gas car for fun. I’m too spoiled by being able to charge at home (we also have a solar roof that came with the house) to want to go back to getting gas 1-2x per week.
Just wanted to add the rs6 avant is my dream car as well. Last I checked the used prices hadn't depreciated much from new
BruDude
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Re: At what point can I buy an expensive car?

Post by BruDude »

ajg189 wrote: Sun Jun 09, 2024 6:46 am
TomatoTomahto wrote: Sun Jun 09, 2024 6:17 am
jebmke wrote: Sun Jun 09, 2024 6:05 am Our rules were that any discretionary type spending like this were fair game as long as we had met output other financial goals. So, we had a savings and investment plan. As long as that was met, and anll the normal bills were paid on time, any residual was up for grabs. The mortgage was the only allowable debt.
We didn’t formalize it, but that’s what we did. We were frugal in some things, but travel, education, and occasionally cars were fair game. It all worked out.

Tbh, we focused on earning more rather than spending less. A lot of BHs seemed to have missed that memo.
This is pretty much spot on to what we do also. Set goals, ensure those are met, and then we are able to have some flexibility with the rest.

And for the car lovers on here, yes it would likely be a Porsche. I had a couple cheaper ones before kids but would like a more recent 911 or cayman gts.

I think based on what I’m reading in here, the answer is “not quite yet, but relatively soon.”

I appreciate all of the advice from everyone. This has really helped me to have some frameworks in determining the right time.
The number of people who ever bought a 911 or cayman GTS and regretted that decision is approximately 0.

If you haven’t been to the Porsche Experience Center in LA or Atlanta I would highly recommend doing that. I did the GT3 experience there which was my first time ever driving one, had to go buy one a couple weeks later. Costs $500-1200 per experience and totally worth it.

981 GTS are selling for more now then they were 5 years ago with less mileage. Most 911s have extremely good resale value. Spec is important so know everything you can about the zillion options on these cars. Look for highly optioned cars in desirable color combos (PTS colors almost always command a premium, for example). Buy CPO if you don’t want to worry about repair costs.

I’ve driven just about every modern 911 from a base 997 to a 991.1 GT3RS to a 992 GTS. IMO, the 991.1 GTS was the best all around car, the 991.1 GT3 was the most fun, and the 991.2 turbo S would be third on the list for me. They’re all very, very different in how they drive though despite being the same chassis, so definitely do some test driving before you commit to something.

If you have any questions shoot me a DM, I’m a huge Porsche guy and know the markets for them inside and out. Rennlist is also a great forum for Porsche stuff, definitely do some reading there if you haven’t already.
diabelli
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Re: At what point can I buy an expensive car?

Post by diabelli »

My personal plan is to buy a new Ferrari (250k+) when our total investment balance (401ks + taxable brokerage) equal 10x the cost of the car. The other condition is that we've succeeded in buying a home with at least 20% down and still good monthly cash flow after the mortgage payment.

I'm also wearing an F1 team shirt in anticipation of the race today. Priorities.

My wife is OK with this plan.
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TomatoTomahto
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Re: At what point can I buy an expensive car?

Post by TomatoTomahto »

diabelli wrote: Sun Jun 09, 2024 11:02 am My personal plan is to buy a new Ferrari (250k+) when our total investment balance (401ks + taxable brokerage) equal 10x the cost of the car. The other condition is that we've succeeded in buying a home with at least 20% down and still good monthly cash flow after the mortgage payment.

I'm also wearing an F1 team shirt in anticipation of the race today. Priorities.

My wife is OK with this plan.
Even though neither Ferrari made it to Q3 in Montreal? Just teasing. We will be watching, happy that F1 is once again competitive.
I get the FI part but not the RE part of FIRE.
diabelli
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Re: At what point can I buy an expensive car?

Post by diabelli »

TomatoTomahto wrote: Sun Jun 09, 2024 11:08 am
diabelli wrote: Sun Jun 09, 2024 11:02 am My personal plan is to buy a new Ferrari (250k+) when our total investment balance (401ks + taxable brokerage) equal 10x the cost of the car. The other condition is that we've succeeded in buying a home with at least 20% down and still good monthly cash flow after the mortgage payment.

I'm also wearing an F1 team shirt in anticipation of the race today. Priorities.

My wife is OK with this plan.
Even though neither Ferrari made it to Q3 in Montreal? Just teasing. We will be watching, happy that F1 is once again competitive.
So disappointing. I'm blaming it on the weather
vfinx
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Re: At what point can I buy an expensive car?

Post by vfinx »

Marq1 wrote: Sun Jun 09, 2024 6:41 am
Personally, for me a car is a foolish thing to waste money on at any income and any net worth.
Absolutely, a car is not a status symbol as many believe, when anybody can lease!

Its a tool, gets from point a to point b and for me the cheapest is best.

Haven't bought a new car since 1984, all cars are used but in mint condition, most expensive to date. $22k and my net worth is $5.5 million so I could buy whatever I want but don't!
It seems contradictory to me to preach about status symbols and drop a net worth brag in the same breath.

In any case, I believe it is a false premise that cars are just status symbols.
MostlyABogleHead
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Re: At what point can I buy an expensive car?

Post by MostlyABogleHead »

One way to think about non-essential expensive purchases is answer the question, can you pay cash for it. If you feel you cannot afford to pay full cash for it without taking a substantial hit to your finances or it makes you very uncomfortable, it’s likely you cannot afford to purchase it in the first place.

For example, let’s say you want to buy a car that costs $120k. The question is can you pay $120k cash for the car, and pay for the monthly maintenance expenses? If the answer is yes you likely can afford the car. If it makes you very uncomfortable to put in that much money, then it’s likely you cannot afford to buy the car. This type of thinking also helps you remove the effect of car loans on making the decision on affordability.You might ultimately finance the car for other reasons, but it should not play a factor in answering the question, can I afford the car or not?
tibbitts
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Re: At what point can I buy an expensive car?

Post by tibbitts »

CyclingDuo wrote: Sun Jun 09, 2024 10:04 am Driveways with 4 or 5 vehicles, a huge motorhome, a boat, and a garage with motorcycles, etc.
So, no HOA for you, apparently?
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CyclingDuo
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Re: At what point can I buy an expensive car?

Post by CyclingDuo »

tibbitts wrote: Sun Jun 09, 2024 12:32 pm
CyclingDuo wrote: Sun Jun 09, 2024 10:04 am Driveways with 4 or 5 vehicles, a huge motorhome, a boat, and a garage with motorcycles, etc.
So, no HOA for you, apparently?
Nope.

By the way, our two cars are parked in our garage.
:sharebeer

CyclingDuo

P.S. We did have two in the driveway as well during the teenage years, so some of what we see around the neighborhood is that...
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
feh
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Re: At what point can I buy an expensive car?

Post by feh »

ajg189 wrote: Sun Jun 09, 2024 6:46 am
TomatoTomahto wrote: Sun Jun 09, 2024 6:17 am
jebmke wrote: Sun Jun 09, 2024 6:05 am Our rules were that any discretionary type spending like this were fair game as long as we had met output other financial goals. So, we had a savings and investment plan. As long as that was met, and anll the normal bills were paid on time, any residual was up for grabs. The mortgage was the only allowable debt.
We didn’t formalize it, but that’s what we did. We were frugal in some things, but travel, education, and occasionally cars were fair game. It all worked out.

Tbh, we focused on earning more rather than spending less. A lot of BHs seemed to have missed that memo.
This is pretty much spot on to what we do also. Set goals, ensure those are met, and then we are able to have some flexibility with the rest.

And for the car lovers on here, yes it would likely be a Porsche. I had a couple cheaper ones before kids but would like a more recent 911 or cayman gts.

I think based on what I’m reading in here, the answer is “not quite yet, but relatively soon.”

I appreciate all of the advice from everyone. This has really helped me to have some frameworks in determining the right time.
It's possible to have a fun/sporty car without spending a ton.

If you were looking at something under $20K, I'd say ok. If you're talking about 6 figures, or close to it, I'd say no.

ETA - and I would certainly never finance a toy. Whatever is purchased must be bought with cash.
rule of law guy
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Re: At what point can I buy an expensive car?

Post by rule of law guy »

I had a conversation similar in nature a year ago with a fellow deadhead in the GA pit at Citifield, waiting for the show to begin.

Total stranger, but deadheads are not really strangers to each other. He was an orthopedic oncologist (didnt know there was such a thing) mid-30s, married with a young kid, looking forward to a lucrative career, and he was telling me about his small but expensive watch collection, and how he was thinking of making an expensive addition to his collection.

this could turn out to be a smart investment move over time but I was chiding him, saying that this time in his life was not the time to be doing this, saying "baby needs new shoes" , talking about the cost of private schooling and college etc.

we had a great time bantering and then the show began. he probably bought that new watch.
Never wrong, unless my wife tells me that I am.
flyingcows
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Re: At what point can I buy an expensive car?

Post by flyingcows »

Being a car enthusiasts doesn't mean you need to spend more money on cars than someone who views them as basic transportation. Often, the car enthusiast would feel more comfortable researching and purchasing older and more deprecated used cars than would the typical buyer. I know people that lease or buy new cars every 3 years, and these are just basic transportation. Dealing with problems that come up, and researching how to fix and address issues is part of the experience, even if your not the one actually fixing the problems, most people don't have much patience for that.

I've owned several fun cars in my lifetime, all purchased used at prices that stayed about the same level when I later sold them many years later. My total cost of ownership for those cars still included maintenance, repairs, and modification costs, but I still spent much less money than I would have had I purchased new/expensive fun cars instead as I've never really paid any deprecation costs on these vehicles, and I also preferred the older cars anyway
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gavinsiu
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Re: At what point can I buy an expensive car?

Post by gavinsiu »

My rule of thumb is that you can save up and buy it without a loan, then you can buy the car. Usually this deter me from buying one since I soon realize that there are other things I rather spend money on than an expensive car. However, your priorities may be different.
MH2
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Re: At what point can I buy an expensive car?

Post by MH2 »

ajg189 wrote: Sat Jun 08, 2024 9:51 pm An rs6 avant would be a dream but I honestly think I prefer daily driving an EV and having a gas car for fun. I’m too spoiled by being able to charge at home (we also have a solar roof that came with the house) to want to go back to getting gas 1-2x per week.
Not worth it. Audi has had a lot of issues with the more recent versions of the 4.0 TFSI. A lot of the mild hybrid systems on the 3.0 and 4.0 TFSIs are starting to fail early as well.

If you want a high performance station wagon, you're better off with an A6 Allroad or a W213 E400/E450 estate. Or, move to Europe and get an Alpina.
InvisibleAerobar
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Re: At what point can I buy an expensive car?

Post by InvisibleAerobar »

ajg189 wrote: Sat Jun 08, 2024 9:51 pm An rs6 avant would be a dream but I honestly think I prefer daily driving an EV and having a gas car for fun. I’m too spoiled by being able to charge at home (we also have a solar roof that came with the house) to want to go back to getting gas 1-2x per week.
Taycan Turismo? The lines are not as easy on the eye as those on an Avant, but it's quite comparable.

Or alternatively, wait for whenever Audi releases the e-Tron Avant (availability Stateside unknown).
smitcat
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Re: At what point can I buy an expensive car?

Post by smitcat »

gavinsiu wrote: Mon Jun 10, 2024 7:37 am My rule of thumb is that you can save up and buy it without a loan, then you can buy the car. Usually this deter me from buying one since I soon realize that there are other things I rather spend money on than an expensive car. However, your priorities may be different.
The decision on taking loans from a financial point of view is a math problem.
A person may be able to 'afford' buying a specific item or service but stlll take a loan due to the math.
yogesh
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Re: At what point can I buy an expensive car?

Post by yogesh »

SnowBog wrote: Sat Jun 08, 2024 8:54 pm
KlangFool wrote: Sat Jun 08, 2024 8:49 pm A) I save 1 year of expense every year. Then, I spend the rest.

B) Aka, I save and spend the same amount: 60K per year.
To put this into context, with a 50% savings rate KlangFool would be on track to retire in 17 years if they started with $0. Now KlangFool would probably advise that you can't plan on uninterrupted work for as long as you want... So maybe put that to 18 or 19 years as a buffer of you have an unexpected loss of income.

Image

https://www.mrmoneymustache.com/2012/01 ... etirement/

Again, it's all about your progress and priorities. If you are saving enough to hit your retirement goals, then you have options on what you do with the rest of your money.
Math seems off at higher ends.
With savings rate of 90% how do I retire in 3 years when I have saved 2.7X only where X is yearly expenses.
Emergency: FDIC | Taxable: VTI | Retirement: TD2035
wunwun1
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Re: At what point can I buy an expensive car?

Post by wunwun1 »

yogesh wrote: Mon Jun 10, 2024 9:01 am
SnowBog wrote: Sat Jun 08, 2024 8:54 pm
KlangFool wrote: Sat Jun 08, 2024 8:49 pm A) I save 1 year of expense every year. Then, I spend the rest.

B) Aka, I save and spend the same amount: 60K per year.
To put this into context, with a 50% savings rate KlangFool would be on track to retire in 17 years if they started with $0. Now KlangFool would probably advise that you can't plan on uninterrupted work for as long as you want... So maybe put that to 18 or 19 years as a buffer of you have an unexpected loss of income.

Image

https://www.mrmoneymustache.com/2012/01 ... etirement/

Again, it's all about your progress and priorities. If you are saving enough to hit your retirement goals, then you have options on what you do with the rest of your money.
Math seems off at higher ends.
With savings rate of 90% how do I retire in 3 years when I have saved 2.7X only where X is yearly expenses.
Wait.

Say After tax earnings is $100
X = $10
Savings = $90

So, for 3 years, you saved $270. That is 27X.

So yeah, the math works fine as long as everything is stated on an after tax basis.
yogesh
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Re: At what point can I buy an expensive car?

Post by yogesh »

wunwun1 wrote: Mon Jun 10, 2024 9:06 am
yogesh wrote: Mon Jun 10, 2024 9:01 am
SnowBog wrote: Sat Jun 08, 2024 8:54 pm
KlangFool wrote: Sat Jun 08, 2024 8:49 pm A) I save 1 year of expense every year. Then, I spend the rest.

B) Aka, I save and spend the same amount: 60K per year.
To put this into context, with a 50% savings rate KlangFool would be on track to retire in 17 years if they started with $0. Now KlangFool would probably advise that you can't plan on uninterrupted work for as long as you want... So maybe put that to 18 or 19 years as a buffer of you have an unexpected loss of income.

Image

https://www.mrmoneymustache.com/2012/01 ... etirement/

Again, it's all about your progress and priorities. If you are saving enough to hit your retirement goals, then you have options on what you do with the rest of your money.
Math seems off at higher ends.
With savings rate of 90% how do I retire in 3 years when I have saved 2.7X only where X is yearly expenses.
Wait.

Say After tax earnings is $100
X = $10
Savings = $90

So, for 3 years, you saved $270. That is 27X.

So yeah, the math works fine as long as everything is stated on an after tax basis.
Doing that to 50% yields 85X
Emergency: FDIC | Taxable: VTI | Retirement: TD2035
wunwun1
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Re: At what point can I buy an expensive car?

Post by wunwun1 »

yogesh wrote: Mon Jun 10, 2024 9:11 am
wunwun1 wrote: Mon Jun 10, 2024 9:06 am
yogesh wrote: Mon Jun 10, 2024 9:01 am
SnowBog wrote: Sat Jun 08, 2024 8:54 pm
KlangFool wrote: Sat Jun 08, 2024 8:49 pm A) I save 1 year of expense every year. Then, I spend the rest.

B) Aka, I save and spend the same amount: 60K per year.
To put this into context, with a 50% savings rate KlangFool would be on track to retire in 17 years if they started with $0. Now KlangFool would probably advise that you can't plan on uninterrupted work for as long as you want... So maybe put that to 18 or 19 years as a buffer of you have an unexpected loss of income.

Image

https://www.mrmoneymustache.com/2012/01 ... etirement/

Again, it's all about your progress and priorities. If you are saving enough to hit your retirement goals, then you have options on what you do with the rest of your money.
Math seems off at higher ends.
With savings rate of 90% how do I retire in 3 years when I have saved 2.7X only where X is yearly expenses.
Wait.

Say After tax earnings is $100
X = $10
Savings = $90

So, for 3 years, you saved $270. That is 27X.

So yeah, the math works fine as long as everything is stated on an after tax basis.
Doing that to 50% yields 85X
At 50% savings rate, X is no longer $10. It is $50.
z06ray
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Re: At what point can I buy an expensive car?

Post by z06ray »

I've come up with my own rule of thumb based on stuff from this site.

No more than 5% of net worth to be tied up on toys with motors. And must pay cash for them.

This ignores daily drivers but in my case our daily drivers are reasonable.
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hand
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Re: At what point can I buy an expensive car?

Post by hand »

ajg189 wrote: Sat Jun 08, 2024 8:40 pm
I am looking for some advice as to rules of thumb for when it is okay to make a big frivolous purchase on a “toy.”
There are no rules of thumb - this is discretionary consumption, you just have to do the math.

My heuristic:

Are my core responsibilities covered:
1) Retirement on track & conservative path to fully funding
2) Responsibilities to kids funded or conservative path to fully funding
3) Housing sorted
4) Reasonably protected should one income be eliminated due to job loss

What is the annualized cost of the discretionary expense?
1) Travel is easy - it's a one-time.
2) Cars are depreciation (or appreciation) + insurance + maintenance

What is the opportunity cost of this discretionary expense vs. another (both in terms of time and dollars)?

What is the impact on my family, and what is their opinion?

Make sure you're clear with yourself as to whether your intention is to make a big consumption decision (e.g., Maserati or Range Rover off the lot which will hit you with massive depreciation) or a big dollar decision that can reasonably be expected to have a floor in terms of net expense (10-15 year old soon to be collectible that is not yet loved by the market, but with little additional depreciation expected.)
gavinsiu
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Re: At what point can I buy an expensive car?

Post by gavinsiu »

smitcat wrote: Mon Jun 10, 2024 8:38 am The decision on taking loans from a financial point of view is a math problem.
A person may be able to 'afford' buying a specific item or service but stlll take a loan due to the math.
True, what you say is true. You can plan out the when the car is paid off.

However, my personal preference is to save toward a goal. Loans add to your burn rate on expenses, making you more vulnerable if you get laid off. From my point of view, there is also additional risk.
smitcat
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Re: At what point can I buy an expensive car?

Post by smitcat »

gavinsiu wrote: Mon Jun 10, 2024 10:58 am
smitcat wrote: Mon Jun 10, 2024 8:38 am The decision on taking loans from a financial point of view is a math problem.
A person may be able to 'afford' buying a specific item or service but stlll take a loan due to the math.
True, what you say is true. You can plan out the when the car is paid off.

However, my personal preference is to save toward a goal. Loans add to your burn rate on expenses, making you more vulnerable if you get laid off. From my point of view, there is also additional risk.
They are two different items altogether.
Financing is a math decision - car/boat/home/business/etc.
Affordability is another issue based on priorities and goals.

There are numerous times when taking a loan can be mathmatically a better choice.
There are numerous times when not taking a loan can be mathmatically better.
I prefer to decide on taking a loan based on the math.

'Spending' the least amount of funds will most always be safer - we have never had a goal of spending the least amount of funds.
AspirationalBH
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Re: At what point can I buy an expensive car?

Post by AspirationalBH »

InvisibleAerobar wrote: Mon Jun 10, 2024 8:36 am
ajg189 wrote: Sat Jun 08, 2024 9:51 pm An rs6 avant would be a dream but I honestly think I prefer daily driving an EV and having a gas car for fun. I’m too spoiled by being able to charge at home (we also have a solar roof that came with the house) to want to go back to getting gas 1-2x per week.
Taycan Turismo? The lines are not as easy on the eye as those on an Avant, but it's quite comparable.

Or alternatively, wait for whenever Audi releases the e-Tron Avant (availability Stateside unknown).
I'm not the OP, but I did mention the RS6 Avant. I, like the OP, plan a dual car strategy for the next few years with an EV daily driver and a fun weekend car. Since OP wants a 911 and has had previous driving experience with the 911, that's defintely the fun ICE car.

If I had more spending power, I'd look at the Audi e-tron GT for my daily so that I can have a re-badged/de-tuned Porsche and then I'd buy a manual transmission Toyota where I have multiple choices (BMW, Subaru, or Toyota). Gearheads will know what I mean by that last part. :-)
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Re: At what point can I buy an expensive car?

Post by BruDude »

AspirationalBH wrote: Mon Jun 10, 2024 1:58 pm
InvisibleAerobar wrote: Mon Jun 10, 2024 8:36 am
ajg189 wrote: Sat Jun 08, 2024 9:51 pm An rs6 avant would be a dream but I honestly think I prefer daily driving an EV and having a gas car for fun. I’m too spoiled by being able to charge at home (we also have a solar roof that came with the house) to want to go back to getting gas 1-2x per week.
Taycan Turismo? The lines are not as easy on the eye as those on an Avant, but it's quite comparable.

Or alternatively, wait for whenever Audi releases the e-Tron Avant (availability Stateside unknown).
I'm not the OP, but I did mention the RS6 Avant. I, like the OP, plan a dual car strategy for the next few years with an EV daily driver and a fun weekend car. Since OP wants a 911 and has had previous driving experience with the 911, that's defintely the fun ICE car.

If I had more spending power, I'd look at the Audi e-tron GT for my daily so that I can have a re-badged/de-tuned Porsche and then I'd buy a manual transmission Toyota where I have multiple choices (BMW, Subaru, or Toyota). Gearheads will know what I mean by that last part. :-)
You could daily drive a 911 for 10 years and lose less in depreciation than one year of owning an e-Tron GT.
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Re: At what point can I buy an expensive car?

Post by AspirationalBH »

BruDude wrote: Mon Jun 10, 2024 2:10 pm
You could daily drive a 911 for 10 years and lose less in depreciation than one year of owning an e-Tron GT.
yep, in my case I would only buy a used e-Tron GT. And from what I've read online, you have to get on a waitlist for a non-turbo manual transmission Porsche since car collectors are banking on them holding value.
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Re: At what point can I buy an expensive car?

Post by schwank »

Sounds like the Pcar folks have a path for you. :sharebeer

Now the hard part, finding the spec you want! Be ready to buy the minute you see it, desirable configs move quickly. I found 2 of mine locally, one belonged to a friend, and my Cayman was on Rennlist.
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Re: At what point can I buy an expensive car?

Post by cbs2002 »

I'm just trying to work up the mental power to buy a second car for the family! I could buy an expensive toy if I wanted to, but first I just want to get us a second functional car. I could honestly go out and pay cash for it tomorrow, but after a lifetime of buying used and then driving a single car for 10+ years it's hard to make the switch. My spouse and I have spent $51000 net on purchasing cars in the last 20 years (not including running costs). I realize some Bogleheads have probably spent much less, but that's a tiny percentage of our current portfolio.

The money I spend on the car is almost certainly going to have no impact on our spending power in retirement. But easier said than done.
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Re: At what point can I buy an expensive car?

Post by Kenkat »

AspirationalBH wrote: Mon Jun 10, 2024 1:58 pm I'd buy a manual transmission Toyota where I have multiple choices (BMW, Subaru, or Toyota). Gearheads will know what I mean by that last part. :-)
That sounds GReat.
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Re: At what point can I buy an expensive car?

Post by sambb »

having done this a few times, despite the thoughts of two separate cars, sometimes it is best to just have one car that blends the two options - two cars has its own disadvantages that may not be apparent until you try it. Second i would consider that it is diminishing returns on increase in enjoyment after the luster starts to wear. Third, beware of buyer's remorse when you are in your savings years. Lastly, resale is never as good as the advertisements you see, and if anyone ever hits you even with a minor fender bender, the car will be very difficult to sell if it is an expensicve vehicle.
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Re: At what point can I buy an expensive car?

Post by Jack FFR1846 »

diabelli wrote: Sun Jun 09, 2024 11:02 am My personal plan is to buy a new Ferrari (250k+) when our total investment balance (401ks + taxable brokerage) equal 10x the cost of the car. The other condition is that we've succeeded in buying a home with at least 20% down and still good monthly cash flow after the mortgage payment.

I'm also wearing an F1 team shirt in anticipation of the race today. Priorities.

My wife is OK with this plan.
New? That might just get a new Roma (the introductory Ferrari) with zero options.
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Re: At what point can I buy an expensive car?

Post by carminered2019 »

Jack FFR1846 wrote: Mon Jun 10, 2024 4:31 pm
diabelli wrote: Sun Jun 09, 2024 11:02 am My personal plan is to buy a new Ferrari (250k+) when our total investment balance (401ks + taxable brokerage) equal 10x the cost of the car. The other condition is that we've succeeded in buying a home with at least 20% down and still good monthly cash flow after the mortgage payment.

I'm also wearing an F1 team shirt in anticipation of the race today. Priorities.

My wife is OK with this plan.
New? That might just get a new Roma (the introductory Ferrari) with zero options.
250K, I bet he is looking at 2013-2015 458 Italia, the most reliable F-car ever made and it's the last generation for N/A.
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Re: At what point can I buy an expensive car?

Post by BruDude »

carminered2019 wrote: Mon Jun 10, 2024 4:48 pm
Jack FFR1846 wrote: Mon Jun 10, 2024 4:31 pm
diabelli wrote: Sun Jun 09, 2024 11:02 am My personal plan is to buy a new Ferrari (250k+) when our total investment balance (401ks + taxable brokerage) equal 10x the cost of the car. The other condition is that we've succeeded in buying a home with at least 20% down and still good monthly cash flow after the mortgage payment.

I'm also wearing an F1 team shirt in anticipation of the race today. Priorities.

My wife is OK with this plan.
New? That might just get a new Roma (the introductory Ferrari) with zero options.
250K, I bet he is looking at 2013-2015 458 Italia, the most reliable F-car ever made and it's the last generation for N/A.
I have one and it’s an absolutely epic machine every single time you fire it up. Way better than a new Roma which are depreciating like crazy. In 10 years a 458 will be worth 3x what a Roma is worth.
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ajg189
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Re: At what point can I buy an expensive car?

Post by ajg189 »

BruDude wrote: Mon Jun 10, 2024 6:11 pm
carminered2019 wrote: Mon Jun 10, 2024 4:48 pm
Jack FFR1846 wrote: Mon Jun 10, 2024 4:31 pm
diabelli wrote: Sun Jun 09, 2024 11:02 am My personal plan is to buy a new Ferrari (250k+) when our total investment balance (401ks + taxable brokerage) equal 10x the cost of the car. The other condition is that we've succeeded in buying a home with at least 20% down and still good monthly cash flow after the mortgage payment.

I'm also wearing an F1 team shirt in anticipation of the race today. Priorities.

My wife is OK with this plan.
New? That might just get a new Roma (the introductory Ferrari) with zero options.
250K, I bet he is looking at 2013-2015 458 Italia, the most reliable F-car ever made and it's the last generation for N/A.
I have one and it’s an absolutely epic machine every single time you fire it up. Way better than a new Roma which are depreciating like crazy. In 10 years a 458 will be worth 3x what a Roma is worth.
Sounds like I should be looking for a gently used Roma then!
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ajg189
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Re: At what point can I buy an expensive car?

Post by ajg189 »

BruDude wrote: Mon Jun 10, 2024 6:11 pm
carminered2019 wrote: Mon Jun 10, 2024 4:48 pm
Jack FFR1846 wrote: Mon Jun 10, 2024 4:31 pm
diabelli wrote: Sun Jun 09, 2024 11:02 am My personal plan is to buy a new Ferrari (250k+) when our total investment balance (401ks + taxable brokerage) equal 10x the cost of the car. The other condition is that we've succeeded in buying a home with at least 20% down and still good monthly cash flow after the mortgage payment.

I'm also wearing an F1 team shirt in anticipation of the race today. Priorities.

My wife is OK with this plan.
New? That might just get a new Roma (the introductory Ferrari) with zero options.
250K, I bet he is looking at 2013-2015 458 Italia, the most reliable F-car ever made and it's the last generation for N/A.
I have one and it’s an absolutely epic machine every single time you fire it up. Way better than a new Roma which are depreciating like crazy. In 10 years a 458 will be worth 3x what a Roma is worth.
Sounds like I should be looking for a gently used Roma then!
IfIOnlyKnew
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Re: At what point can I buy an expensive car?

Post by IfIOnlyKnew »

OP, as long as it’s a two seater and a manual, you have my permission to get and spend whatever you want. :happy
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Re: At what point can I buy an expensive car?

Post by vnatale »

KlangFool wrote: Sat Jun 08, 2024 8:49 pm OP,

May be not the answer that you are looking for.

A) I save 1 year of expense every year. Then, I spend the rest.

B) Aka, I save and spend the same amount: 60K per year.

C) In my system, I can spend money and buy anything as long as I save 1 year of expense that year. I can spend the rest.

D) I spent 8K on an electric cargo bike.

E) Do you save enough?

F) Then, you can spend the rest.

KlangFool
Are you saying that for all the years you have been doing this you have saved?

Total currently saved (on hand): [Number of years} X $60,000
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: At what point can I buy an expensive car?

Post by Metsfan91 »

ajg189 wrote: Sat Jun 08, 2024 8:40 pm Hi Everyone,

... Our incomes have increased, student loans paid off, fully max retirement accounts, fund 529s, and have some investments built up.
...
Now is the time.
"Know what you own, and know why you own it." — Peter Lynch
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Re: At what point can I buy an expensive car?

Post by KlangFool »

vnatale wrote: Mon Jun 10, 2024 8:20 pm
KlangFool wrote: Sat Jun 08, 2024 8:49 pm OP,

May be not the answer that you are looking for.

A) I save 1 year of expense every year. Then, I spend the rest.

B) Aka, I save and spend the same amount: 60K per year.

C) In my system, I can spend money and buy anything as long as I save 1 year of expense that year. I can spend the rest.

D) I spent 8K on an electric cargo bike.

E) Do you save enough?

F) Then, you can spend the rest.

KlangFool
Are you saying that for all the years you have been doing this you have saved?

Total currently saved (on hand): [Number of years} X $60,000
A) For the last 10+ years, it is around 50K to 60K per year.

B) When I earned much less, I earned, saved, and spent much less.

C) Obviously, when I was unemployed for more than 1 year a few times, I was not saving.

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Re: At what point can I buy an expensive car?

Post by BruDude »

ajg189 wrote: Mon Jun 10, 2024 7:56 pm
Sounds like I should be looking for a gently used Roma then!
The last Roma on BAT had a $337k sticker, 6k miles, and was only bid to $177k (didn’t sell). I’m guessing the reserve was in the $225k range. That’s some brutal depreciation in 3 years considering how strong the resale is on most of the rest of the V8 lineup. Good spec/mileage 458’s can still sell for close to their original sticker price despite being 9-15 years old now.
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Re: At what point can I buy an expensive car?

Post by 220volt »

I like simplicity:
If you have a stable job that you enjoy and not itching to retire, then yes to the car.
If the car will slave you to a stressful career then...you know the answer.
"If I had only followed the advice of financial analysts in 2008, I'd have a million dollars today, provided I started with a hundred million dollars" - Jon Stewart
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Re: At what point can I buy an expensive car?

Post by Jack FFR1846 »

There are no current Ferraris offered with a manual transmission. A used F430 can be had with a manual. The older front engine cars like a 550, 456 are all manual and with a normally aspirated V12 engine. They have depreciated quite a lot. The mid engine cars have gone past hitting bottom and have come up a lot over the last 10 years. These would include the F355, F360, and F430. Some years ago, I was speaking to a salesman at the big Italian car day at the Larz Anderson park outside of Boston. They had used 355 spider, 360 and 430. The sales guy went through the characteristics of each. The F355 was an engine out, 60k mile timing belt change. 360, an "engine in car" 60k timing belt change. The F430 is a timing chain.

Finding a fun, less exotic manual car leads to Porsche. If you pick a large volume year for GT-3s, you can pick up a used one easily for that $250k limit. Unfortunately, Porsche dealers have come to follow Ferrari, requiring you've bought and traded at the dealer several Porsches nobody wants. These would include Taycan, Panamera and Macan. The alternative is a $100k over MSRP price. Covid and 2 delivery ships sinking have made Porsches far more rare today. Dealers went from having several GT-3s in stock and ready for sale along with all the variations of Caymans and Boxsters to one GT-3 at $100k over MSRP and one or 2 Caymans and Boxsters.

In contrast, any Corvette, including Z06s are a dime a dozen and you can buy used at good depreciation or get a new one at under MSRP. Of course, a car with a proper manual transmission means C7 and below.
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Re: At what point can I buy an expensive car?

Post by HMSVictory »

smitcat wrote: Sun Jun 09, 2024 7:46 am
HMSVictory wrote: Sun Jun 09, 2024 7:29 am I'll take the other side of the trade on this one. I have a hobby I spend a lot of money on that makes no sense that I enjoy as well.

If you can meet the following criteria you should get the car:

- House and everything paid off (zero debt), substantial positive cash flow each month
- Paying cash for the car, if you are even thinking about payments its a hard NO
- Investments are currently at 20-25x income (I would waive this one if your income is so high that you will arrive here in 3-5 years)

These are high hurdles to meet but if you can meet them then yes, you can indulge in a Porsche or whatever nice car you are into.

Also you have to remember there are scales of "fun" cars. A $10k Mazda Miata can be a lot of fun you don't have to get a 911 Turbo S.

"I'll take the other side of the trade on this one. I have a hobby I spend a lot of money on that makes no sense that I enjoy as well."
I agree with you - except that it does make sense to spend funds on things that you enjoy and/or find valuable. That is the only purpose of money.
Indeed. Other than save, spend and give there is nothing else you can do with money and its fun to do all (3).

Where you get into trouble is when you don't have a balance between them.
Stay the course!
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Re: At what point can I buy an expensive car?

Post by BruDude »

Jack FFR1846 wrote: Tue Jun 11, 2024 8:29 am There are no current Ferraris offered with a manual transmission. A used F430 can be had with a manual. The older front engine cars like a 550, 456 are all manual and with a normally aspirated V12 engine. They have depreciated quite a lot. The mid engine cars have gone past hitting bottom and have come up a lot over the last 10 years. These would include the F355, F360, and F430. Some years ago, I was speaking to a salesman at the big Italian car day at the Larz Anderson park outside of Boston. They had used 355 spider, 360 and 430. The sales guy went through the characteristics of each. The F355 was an engine out, 60k mile timing belt change. 360, an "engine in car" 60k timing belt change. The F430 is a timing chain.

Finding a fun, less exotic manual car leads to Porsche. If you pick a large volume year for GT-3s, you can pick up a used one easily for that $250k limit. Unfortunately, Porsche dealers have come to follow Ferrari, requiring you've bought and traded at the dealer several Porsches nobody wants. These would include Taycan, Panamera and Macan. The alternative is a $100k over MSRP price. Covid and 2 delivery ships sinking have made Porsches far more rare today. Dealers went from having several GT-3s in stock and ready for sale along with all the variations of Caymans and Boxsters to one GT-3 at $100k over MSRP and one or 2 Caymans and Boxsters.

In contrast, any Corvette, including Z06s are a dime a dozen and you can buy used at good depreciation or get a new one at under MSRP. Of course, a car with a proper manual transmission means C7 and below.
A factory manual F430 is $225k+ these days with lower mileage going over $300k now. Conversions exist but those may have their own potential issues getting replacement parts. 550’s have also shot up in price and will probably continue to do so. 355 is engine out every 5 years, 360 has an access panel for timing belts so it doesn’t require full engine out. All great cars, a 355 GTS or Berlinetta with a manual is on my list for the future but they are definitely fickle and getting parts is not easy/very expensive since many of them aren’t made anymore.

All great cars and the feeling of driving one can’t be replicated by any other brand. The sound/feel/shifting/handling is quite an experience and IMO worth every penny. The “why not just get a Tesla it’s faster” crowd will never truly understand. I really like the new Z06 but at the end of the day it’s still just a Chevy and kind of ugly, while the Ferraris will forever remain timeless designs.

Not every Porsche dealer plays the games you’re describing but it does happen more often than not. The market is what it is though, used 991.2 GT3s are still selling over MSRP 6 years later. You’d have to be extremely lucky to get a GT3 at MSRP with no purchase history, it is nearly impossible except at dealers like Porsche Salt Lake City that never charge over MSRP, but will only sell to local clients and there’s still a huge waiting list. I don’t think any dealers have had GT3s ready and waiting for sale in many years, there has been huge ADM’s for at least 10 years now, I remember 991.1’s being $50k over MSRP on average. A 10 year old GT3 with a time bomb of an engine still sells for close to its original MSRP today.
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Re: At what point can I buy an expensive car?

Post by NiceUnparticularMan »

We're experiences and not things people, so we tend to spend a lot more on, say, trips than toys. And we sure have spent a lot on trips, really a lot more than many people would think reasonable, but we could do it and still save a lot and meet our other financial goals.

But that doesn't mean we NEVER buy toys, and in fact obviously sometimes you play with a toy enough to justify the expense as an efficient way of paying for an experience. Like, we bought our main residence, and in some ways we "play" with it a lot, and I think in that case it was an efficient purchase. Conversely, if you like a lot of variety, it may be more efficient to rent a type of toy instead of own. Like, we have "played" with all sorts of great "vacation homes" without every buying own, just by renting different ones all over. And some people don't buy their primary residence in part because they also want such variety in their primary residence, and that is fine too. And other people don't want a lot of variety in their vacation homes, so buy one. And so on.

OK, so spending on toys can be fine even for us if that is really about experiences too. And then as others are suggesting, the whole rent versus own equation depends on things like your cost of capital, depreciation (or sometimes appreciation, but I don't like to count on toys I play with a lot appreciating), carrying costs, transaction costs, and so on. So possibly even if you like variety, a succession of ownership experiences might beat out rental experiences. And I think it is useful sometimes to run those numbers.

So at what point does it make sense to buy a car for its toy value? When you are sure you would use it enough, don't crave too much variety to make renting a better idea, and can comfortably afford it without compromising other more important financial goals. And for some people this may never make sense, and for some people relatively early.
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