TMC is an independent, primarily volunteer organization that relies on ad revenue to cover its operating costs. Please consider whitelisting TMC on your ad blocker or making a Paypal contribution here: paypal.me/SupportTMC

A Bad Idea, Whose Time May have Come

Discussion in 'Model S' started by rpiolends, Mar 3, 2016.

  1. rpiolends

    rpiolends Member

    Joined:
    Apr 20, 2015
    Messages:
    22
    Location:
    Palm Beach, FL
    Hello good people of the Tesla Motor's Club.

    I have a story to tell you. Now I know, the internet is not known to be very tolerant of long stories. I will provide a TL;DR at the end, but I just jumping to it will remove the emotional justification I have for my idea. So, if you feel that emotion can be an important part of decision making, I hope you will take the time to dive deeply into my story. If you believe that the best decisions are based on the facts alone, the bottom of this post is for you.

    They say that those who fail to learn history are doomed to repeat it. The very tone of the sentence implies that we can only learn from the failures and that the prudent course is evasion. What if history, like truth is in the eye of the beholder.

    When I was a young man, fresh out of college, It was my dream to own the most technically advanced automobile of the time. That car was then, the Toyota Prius. Back in the day, when the cars came from japan, and the waitlist was 6-9 months long. I was poor college graduate, I could not afford a brand new car, but I had a dream. So, I threw myself into learning about it. I joined the newly created Prius chat website, I followed bloggers, downloaded manuals. At gas stations I would speak to those happy few who got their new shiny. At car shows, I would sit in the models. I would answer questions that people asked, even before the showman could say, “Let me look that up.” One dealer had be throw on a sweater from his dealership and do a TV interview. I felt like the Prius king. Alas, the emperor had no clothes, and I had no Prius.

    Forward a few months, I had gotten my first “real” job. The beginnings of a career, that will last a life time. It was a damn good job, the starting salary was more than I could fathom at my young age. Today, it is a small amount, but back then I was rich. $55k. Being young and brash. I took my future earnings and then and there set out to fulfil my dream. I ordered a Prius and began to wait.

    The car arrived with 8 miles on the odometer, and along with it the bill for $31,853. Financing arranged, I set out on the wheels of my dream. The Prius was my loyal car. Even when my commute stretched itself to 150 miles a day it saw me through. 8 years and 132k miles later I said goodbye.
    My commute shorted to a measly 10 miles, my family had grown, and the Prius was just sitting more often than not. But I remember the days, and felt empowered by a dream fulfilled.
    Now to today. I may have an opportunity to receive a substantial raise in pay (+$30,000), but it will mean returning to the 150 mile commute. On a commute such as this, I know even a Prius will wear over time. More oil changes, brakes, filters, and fuel. I today am just as enamored with the Model S as I was with the Prius.

    I joined a website of enthusiasts, I read articles, and watch youtube videos. I contacted my local tesla store and arranged an extended test drive. I have convinced myself that the tesla will be the most cost efficient commuting car to handle this possibly new commute.

    At the same time, I’m not as young as I used to be. Spending 60% of your annual income when you are young is a lot different then when you are (supposed to be) a responsible family man.
    TL;DR begins here

    I have convinced myself, the question is, am I blinded by my dream. I need a jury of my peers. If I take this opportunity, should I spend 60% of my one year’s salary to buy a model S 70 because I believe it is the car most qualified to handle my 150 mile commute. Or should I stick with a Prius, while no longer as flashy and edgy as it used to be represents a safe and prudent choice going forward.

    I look forward to your questions and comments
    Thank you
     
  2. HookBill

    HookBill Member

    Joined:
    Dec 28, 2015
    Messages:
    396
    Location:
    The OC, CA
    Having been down that road before, my best advice would be not to do anything financially stupid early in life. Only you can make that decision for you and your family. I remained financially conservative through life and was able to retire early and living comfortably in my latter years.
     
  3. Rockster

    Rockster Active Member

    Joined:
    Oct 22, 2013
    Messages:
    1,005
    Location:
    McKinney, TX
    The fact that you're asking a Tesla enthusiast community to offer an opinion tells me that deep down you know what you need to do. :wink:
     
  4. Drucifer

    Drucifer Active Member

    Joined:
    Nov 30, 2014
    Messages:
    1,015
    Location:
    Charlotte, NC
    My rules of thumb is a car should be no more than 50% of annual salary and a mortgage should be no more than 3 years. If you have more to put down for a house, you can go bigger as long as the mortgage stays in bounds.

    That said, with Model S you can exceed it slightly due to gas and maintenance savings, but that might get you a bump of about $10k or so.

    Stay in your comfort zone. For me that would be a reasonably well optioned 70 or lightly optioned 85D or loaded CPO. I am an "options whore" so I did the CPO. YMMV
     
  5. brianman

    brianman Burrito Founder

    Joined:
    Nov 10, 2011
    Messages:
    15,487
    Well said.

    - - - Updated - - -

    If you can wait until 2018 (maybe 2019) to take delivery, the answer will change to Model 3. Something to consider.
     
  6. Max*

    Max* Autopilot != Autonomous

    Joined:
    Apr 8, 2015
    Messages:
    4,866
    Location:
    NoVa
    #6 Max*, Mar 3, 2016
    Last edited: Mar 3, 2016
    There are a lot of financially savvy people on this board, and the running opinion that I keep hearing is "don't do anything risky financially" yadda yadda yadda. Now, for most people, that's very sound advice.

    I've done some things which I knew were very high risk (not the Model S), which most of these people would think I was crazy. Thankfully most (not all) have paid off in the long run.


    Now, before I can answer your question: "60% of your annual income", I don't understand.
    Does that mean the total value of the car is 60% of the total amount you make in a year? If so, I say do it. That means you're banking about $150k, that's a good salary for someone single with no kids (regardless of which metro area you live in)
    Does that mean that the monthly loan payment will be 60% of your gross take-home pay? If so, are you @#$%ing crazy? No way in hell should you do it.
     
  7. rpiolends

    rpiolends Member

    Joined:
    Apr 20, 2015
    Messages:
    22
    Location:
    Palm Beach, FL
    Max,

    The opportunity in question would give me a salary at $125K per year. 60% of that would be $75k or the approximate cost of a Model S 70. To answer the other half of your equation. Financing on 75K would be about $1,100 per month, where gross monthly salary of 125k would be about $10k per month, or just over 10%.
     
  8. Max*

    Max* Autopilot != Autonomous

    Joined:
    Apr 8, 2015
    Messages:
    4,866
    Location:
    NoVa
    I don't know the rest of your financial life (and don't tell me), but IMO 10% is VERY safe. I think the typical financial planning advice is 20% on debt (car, student loans, etc.)


    The other thing to think about, you can take a longer loan. Yes, people will yell at me for this, I know.

    But wait, there's more! Take a longer loan, at a slightly higher APR, but try to pay it off quicker. In the end, you may still pay it off in about the same amount of time as you would with a shorter loan, BUT if something were to happen (you needed the money that month, etc.), you could revert back to paying just the minimum car payments.

    You will pay more in the long run, but it gives you a security blanket.
     
  9. rpiolends

    rpiolends Member

    Joined:
    Apr 20, 2015
    Messages:
    22
    Location:
    Palm Beach, FL
    My Wife does not work outside the home. So 125k will represent out total income. We have 3 kids, 7,4,and 7 months.
     
  10. Max*

    Max* Autopilot != Autonomous

    Joined:
    Apr 8, 2015
    Messages:
    4,866
    Location:
    NoVa
    You just changed my "hell yeah, do it!" into a "hmmm"... that's a tougher decision then.

    I got 2 little ones, and I know how expensive some things get...
     
  11. ItsNotAboutTheMoney

    ItsNotAboutTheMoney Active Member

    Joined:
    Jul 12, 2012
    Messages:
    4,500
    Location:
    Maine
    I have a very simple rule: never borrow for fun.

    So, no. Well, you did ask.

    Instead, set the extra money aside, improve your fiscal position, and then in a few years maybe you'll be able to buy without worrying about the risk.
     
  12. Drucifer

    Drucifer Active Member

    Joined:
    Nov 30, 2014
    Messages:
    1,015
    Location:
    Charlotte, NC
    Oh. $125k with a family of 5 would put me with a $1000 deposit on Model 3 on 3/31/16 and running the crap out of the Prius for the next 2 years while I wait.
     
  13. freeewilly

    freeewilly Member

    Joined:
    Jul 22, 2015
    Messages:
    387
    Location:
    Brea, CA
    I love Model S the same way you love Prius. I did something I never done before, purchased a CPO instead of new, no regret so far.
     
  14. ReddyLeaf

    ReddyLeaf Member

    Joined:
    Mar 19, 2014
    Messages:
    274
    Location:
    Pasco, WA
    Everyone's personal and financial situation is different, so I won't presume to tell you what to do. For myself, I wouldn't trade anything for a 150 mi commute, even a $30K salary increase and a Tesla, that's just too much of my life. In financial terms, $30K will net you maybe $20-$25K after taxes, with about 3 hr/day commute (maybe two extra hr), accounting for vehicle costs/depreciation is always tough, but maybe $10-15K/yr for an ICE and $20-25K/yr for a Tesla. Figuring all that in, it's a money losing proposition. Add the extra stress of commuting traffic, and I would go crazy. Perhaps someone who loves rush hour traffic or listens to podcasts might enjoy it, but not me. Instead, I have a 8 mi RT commute so that I can bicycle about 6 mo/yr.

    The 70D cost me more much than 100% of my salary, but I paid cash, so rules of thumb don't always apply. I always look long-term. I tell people that I paid $10K for it, I just started saving for it 20 years ago (which is true). I do not borrow to buy anything that I would consider a monthly expense, a consumable, or a depreciating asset in this case. This is my third car, the 2011 Leaf is my 2nd, my 1st is from the 90's. I still have all three and together they have less than 220,000 mi. Financially, it makes no sense for me to own even the Leaf, let alone the Tesla. However, not all decisions are based on financials.
     
  15. McRat

    McRat Active Member

    Joined:
    Jan 20, 2016
    Messages:
    1,256
    Location:
    Norco, CA
    I used to commute 150 miles a day.

    I now live 2.5 miles from work.

    I could never go back to spending my life commuting. In my case, traffic would keep me on the road up to 5 hours per day unless I was riding my motorcycles and splitting lanes, which could cut it down to 3 hours a day.

    But to each their own. Just remember your time is fixed.
     
  16. SmartElectric

    SmartElectric Active Member

    Joined:
    Jul 9, 2014
    Messages:
    1,078
    Location:
    Toronto,Canada
    +1.
    I went from 3 hours of total commuting per day in heavy traffic to less than 40 minutes on back streets with little traffic.
    It was life changing, in a good way.
    I missed most of my oldest's early years, but made up for it by enjoying most of my youngest's early years.
     
  17. ElectricTundra

    Joined:
    Feb 5, 2015
    Messages:
    532
    Location:
    Tundra
    My first thought when reading your OP was nothing about buying a Tesla but the insanity of a 150 mile commute. When I saw the ages of your kids it was confirmed. There is no amount of money that is worth that much extra time away from your family not to mention the potential for your arriving home in an irritable mood from the idiotic drivers you've had to deal with.
     
  18. EcoHeliGuy

    EcoHeliGuy Member

    Joined:
    Dec 2, 2012
    Messages:
    545
    Location:
    Canada
    Here is my advice and it's a little more broad. Not enough people get good sound financial advice for free in life.

    1) work to live, don't live to work. No matter if it's your dream job or not. The latter is fine as long as your not a family or people person.

    2) if a loan payment is $700 a month, and $660 of that is just to cover interest. Paying $740 a month is two payments. To many people get discouraged thinking they need to put $1400 down to make a difference.

    This one is my personal favorite:

    3) Cash flow is king, to many people don't realize how much effect cash flow has. A Starbucks coffee a day could be 15-30 mins of your work day in earnings. Do you smoke? Again it adds up. All of a sudden your working 7hrs a day just to cover bad spending habits.

    I had a student loan years ago that was a monthly payment of $388 per month for 12 years. I decided I couldn't afford to lose that cash flow for 12 years. Looked up the interest portion ($366) and start paying $400 a month. 2 years later got a nice raise at work and started paying $500 a month. Took no where near 12 yrs and then I had $500 extra cash flow a month to put towards something else. Or I could have paid $388 up to now and beyond.
     
  19. EcoHeliGuy

    EcoHeliGuy Member

    Joined:
    Dec 2, 2012
    Messages:
    545
    Location:
    Canada
    My point with cash flow really is:

    If buying the Model S frees up cash flow down the road, then it's a good idea. If you going to trade the car 3-5 years out. I would consider the prius
     
  20. lolachampcar

    lolachampcar Active Member

    Joined:
    Nov 26, 2012
    Messages:
    4,446
    Location:
    WPB Florida
    This decision can only be made by the person that suffers the consequences of the decision (good or bad).
     

Share This Page