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My math was pretty simple. My son's day care payments were coming to an end since he is starting Kindergarten in the fall, which automatically gave me $450 a month right off the bat towards a car payment. I took 20k out of savings towards the 31k down payment (I sold my 328 for 11k) and was able to have a manageable $672 monthly car payment. If you factor in fuel savings, I wasn't far off. I purposely waited until one of my other bills disappeared before even considering a new car. Now when my daughters day care payments end in three more years, that will be time to upgrade Model S to the latest and greatest!

The goal was to still put away money in my savings a month, retirement and kids college funds and I am still doing that. My quality of life hasn't changed one bit financially since I took ownership and I think that is the sign that I could afford to car. Sure, I could have saved money with a cheaper car but I think something an he said of enjoying your hard earned money once in awhile...

$450/mo could go toward college funding, paying down mortgages, etc. But if we all lived like I do (no vacations, rarely going to fancy restaurants, telecommuting) - the economy would fail :) I still have three car payments, Mortgage, HELOC, college tution for one. Problem is - I could pay it all of in cash if I took investment money off the table. I don't mind the 0% and 4% car loans much and mortgage is 3.5% with deductability so it's not all bad.

Best financial advice I can give to anyone. 15 year mortgage. Never go with 30 year mortgage. And take a Financial Peace University class and check into better ways to cut expenses smartly. Cell phone, cable and other "subscription" services are a huge part of many people's monthly budget. Don't get me started on things like Blue Apron and other money grabs that people get involved with.
 
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$450/mo could go toward college funding, paying down mortgages, etc. But if we all lived like I do (no vacations, rarely going to fancy restaurants, telecommuting) - the economy would fail :) I still have three car payments, Mortgage, HELOC, college tution for one. Problem is - I could pay it all of in cash if I took investment money off the table. I don't mind the 0% and 4% car loans much and mortgage is 3.5% with deductability so it's not all bad.

Best financial advice I can give to anyone. 15 year mortgage. Never go with 30 year mortgage. And take a Financial Peace University class and check into better ways to cut expenses smartly. Cell phone, cable and other "subscription" services are a huge part of many people's monthly budget. Don't get me started on things like Blue Apron and other money grabs that people get involved with.

Can you elaborate on the 15 vs 30 yr mortgage and why you should never go with a 30?
 
Can you elaborate on the 15 vs 30 yr mortgage and why you should never go with a 30?

Well, step one is to get it paid off on time. Some of us with 30 years "refinanced" when rates came down to save monthly costs. That starts a new amortization table again. paying more interest up front than if you are in the middle of a 30 paydown process. Then, 15 years offer lower interest rates, meaning that the payoff is faster still. If I had started with 15 year mortgage in 1996 - I'd be paid off by now. I had a 30 and refinanced and HELOC'd in the "heyday" times of the mid 00's digging a deeper debt hole (and yet, using low-percentage mortages). I should have refinanced with a 10-year instead of the 15 year that I took out in 2011 to get going. The higher the interest rates go, the more reason to avoid a 30-year mortgage. Also, stretching to buy "more house" with a 30 year means you will buy a bigger house, pay bigger local taxes, get higher energy bills, have more house to repair and more. With more house, you have more bedrooms and possibly more reason for "the wife" to ask for more kids to raise. One child is another quarter to half million or so of lifetime expenses for a breadwinner.

With a 15 year, you are paying principal down faster, you can add more principal to payments if you can afford it and be "mortgage free" sooner. Anyone buying a house really should do this if they don't have a lot going into 401k. You have no guarantees on investments but sitting in a paid-off home feels so good. My parents had their house paid off before I was born. Never had a mortgage payment in my lifetime. Yet I have had mortgage payments for the last 25 years trying to keep a family together.

Heh - here's FOOL saying to get both of them for different reasons. Banks do want you to take a 30-year, of course. You're more likely to move within the first 10 years when you are primarily paying interest on the amortization table.
4 Reasons to Get a 15-Year Mortgage -- The Motley Fool
3 No-Brainer Reasons to Get a 30-Year Mortgage -- The Motley Fool

Since Tesla is not really a "green company" (as some may say) trying to get people to live smaller, with smaller expenses and less resource burn is hard to do. But living smaller, having fewer kids and keeping a smaller house can lead to more satisfaction in life than trying to make a family work with two jobs, lots of expenses, more costs and more demand on emotions and time. The interest in "Tiny Houses" from the next generation or apartment living indicates that trying to live the McMansion lifestyle may not last in some parts of the country.
 
I always wanted to buy an S since it came out but thought to myself I shouldn't afford it. I'm a saver and I'm keen on streamlining expenses as much as I can. For example, being vegan not only makes me a lot healthier long term, but it saves so much money on groceries also. The expensive things in your grocery list are all animal products (meat, dairy, etc). So it's not unusual to last as long as a week on less than $100 of fresh organic produce for the two of us.

Anyways, I sold my 328 convertible for 18k and put in some of my savings to get my monthly payment just below $600. I figured that I can easily budget for that much and plus I'm saving about $2000 a year on gas. Here's what I envisioned long term:

For 7 years of ownership that I expect, this is my rundown:

Cost of car when new: $78,450
Cost of car minus federal and CA tax credit: $68,450
Deduct 7 years of gas at $200 a month: $51,650
Deduct 7 years of high maintenance fees ($1000 a year): $44,650
At the end of 7 years, I should be able to get maybe $30k for the car. Therefore essentially the cost of the car was $14,650 for 7 years of awesome driving experience. That is $2100 a year or $175 a month. Easily worth it to be in the coolest, AND one of the safest cars on the road.
 
Well, step one is to get it paid off on time. Some of us with 30 years "refinanced" when rates came down to save monthly costs. That starts a new amortization table again. paying more interest up front than if you are in the middle of a 30 paydown process. Then, 15 years offer lower interest rates, meaning that the payoff is faster still. If I had started with 15 year mortgage in 1996 - I'd be paid off by now. I had a 30 and refinanced and HELOC'd in the "heyday" times of the mid 00's digging a deeper debt hole (and yet, using low-percentage mortages). I should have refinanced with a 10-year instead of the 15 year that I took out in 2011 to get going. The higher the interest rates go, the more reason to avoid a 30-year mortgage. Also, stretching to buy "more house" with a 30 year means you will buy a bigger house, pay bigger local taxes, get higher energy bills, have more house to repair and more. With more house, you have more bedrooms and possibly more reason for "the wife" to ask for more kids to raise. One child is another quarter to half million or so of lifetime expenses for a breadwinner.

With a 15 year, you are paying principal down faster, you can add more principal to payments if you can afford it and be "mortgage free" sooner. Anyone buying a house really should do this if they don't have a lot going into 401k. You have no guarantees on investments but sitting in a paid-off home feels so good. My parents had their house paid off before I was born. Never had a mortgage payment in my lifetime. Yet I have had mortgage payments for the last 25 years trying to keep a family together.

Heh - here's FOOL saying to get both of them for different reasons. Banks do want you to take a 30-year, of course. You're more likely to move within the first 10 years when you are primarily paying interest on the amortization table.
4 Reasons to Get a 15-Year Mortgage -- The Motley Fool
3 No-Brainer Reasons to Get a 30-Year Mortgage -- The Motley Fool

Since Tesla is not really a "green company" (as some may say) trying to get people to live smaller, with smaller expenses and less resource burn is hard to do. But living smaller, having fewer kids and keeping a smaller house can lead to more satisfaction in life than trying to make a family work with two jobs, lots of expenses, more costs and more demand on emotions and time. The interest in "Tiny Houses" from the next generation or apartment living indicates that trying to live the McMansion lifestyle may not last in some parts of the country.

Great breakdown, thank you. I'm all for living within your means and the less 'crap' you have the better off you are... But why is not wiser to take a lower payment 30-yr and contribute extra payments to it when you can, yet if you lose your job or have financial hardship, you revert to the lower rate for the rest of the mortgage..?
 
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Best financial advice I can give to anyone. 15 year mortgage. Never go with 30 year mortgage.
If you are at all competent at investing, this is terrible advice. Instead you should take the 30 year mortgage and invest the difference. Getting a higher return on an investment compared with a 30 year mortgage rate is very easy. In addition this gives you more liquidity should you have an emergency.
 
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If you are at all competent at investing, this is terrible advice. Instead you should take the 30 year mortgage and invest the difference. Getting a higher return on an investment compared with a 30 year mortgage rate is very easy. In addition this gives you more liquidity should you have an emergency.
The advice is mainly for the "lower 80%" of the consumer community who actually aren't good at investing. I do understand the advice of "get a long mortage, dump all money into the market" - but who can guarantee me 30 years of 5% returns? I want to definitely invest in them - as long as that guarantee has no "small print". Also, the amortization table of a 30-year mortgage is lopsided. Get a tiny primary mortgage and a simple interest HELOC at as low a percent as possible. It's one reason HELOCs are higher percents as are construction loans - the ability for a bank to make the full body of interest off of someone is lower. If we could get more of the lower-end of consumers to adopt 15 year mortgages, they wouldn't have to have DI (Dual Income) families just to afford the house they stretched to get the 30-year mortgage for.

A smart investor doesn't have to do the above - but numerically, half the people are below average intelligence.
 
Great breakdown, thank you. I'm all for living within your means and the less 'crap' you have the better off you are... But why is not wiser to take a lower payment 30-yr and contribute extra payments to it when you can, yet if you lose your job or have financial hardship, you revert to the lower rate for the rest of the mortgage..?

Because you are tempted through many avenues to spend that extra savings that the 30-year offers. If you monthly payment is $500 less because you went with 30-year, then you feel good about taking out larger car loans, going on more vacations, doing lots more spending "now" - mainly on highly depreciating things (vacations, cars, vacation-homes, buying an in-ground pool for the Griswalds).

Living differently was explained to me this past weekend by a friend. It was telling of our society.

He has a house (since we are talking mortgages) surrounded by trees. He had a large tree to remove. That tree was looked at by Company A. Guy wanted $3300 to take the tree down. Down, without tree removal. Too much for he and his wife. Company B came in to look at it. $2200 to cut it down and stack it. No removal. Guy then calls over the Amish guy who is working trees in his neighborhood that week. Amish guy looks at it, computes somethings with pencil and paper. Says 30 bucks. $30 to take the tree down but he wanted the wood. Mills it and makes furniture out of the wood.

We are a society where our personal choices favor convenience. Would we pay the $3300 to get the first company to do it without all the work of a second opinion? Would we hunt a 2nd company and pay $2200 or would we "Live differently" and share the work and results with the hard working Amish guy who not only saves us money - but does something good with the tree that simply was in danger of possibly blowing down onto our homes.

Live differently - it isn't all about leveraging money through risk. It is about sharing risk with others smartly. If someone were to get laid off in a tough unforseen economy - a paid off house is FAR easier to live in than one that needs constant income to pay off. Taking a loan on 401k investments for "emergencies" happens far too often. I was young once, when I grew up I wanted a sports car, like a Lambo. Today? Grew out of it and find that EVs are a good thing to look at for those folks like you who want a car for 10-years. I might have recommended a CPO or even say a used Chevy Volt for $10k to then allow use of that money for living life more - a few more vacations, investments, whatever.
 
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Because you are tempted through many avenues to spend that extra savings that the 30-year offers. If you monthly payment is $500 less because you went with 30-year, then you feel good about taking out larger car loans, going on more vacations, doing lots more spending "now" - mainly on highly depreciating things (vacations, cars, vacation-homes, buying an in-ground pool for the Griswalds).

Living differently was explained to me this past weekend by a friend. It was telling of our society.

He has a house (since we are talking mortgages) surrounded by trees. He had a large tree to remove. That tree was looked at by Company A. Guy wanted $3300 to take the tree down. Down, without tree removal. Too much for he and his wife. Company B came in to look at it. $2200 to cut it down and stack it. No removal. Guy then calls over the Amish guy who is working trees in his neighborhood that week. Amish guy looks at it, computes somethings with pencil and paper. Says 30 bucks. $30 to take the tree down but he wanted the wood. Mills it and makes furniture out of the wood.

We are a society where our personal choices favor convenience. Would we pay the $3300 to get the first company to do it without all the work of a second opinion? Would we hunt a 2nd company and pay $2200 or would we "Live differently" and share the work and results with the hard working Amish guy who not only saves us money - but does something good with the tree that simply was in danger of possibly blowing down onto our homes.

Live differently - it isn't all about leveraging money through risk. It is about sharing risk with others smartly. If someone were to get laid off in a tough unforseen economy - a paid off house is FAR easier to live in than one that needs constant income to pay off. Taking a loan on 401k investments for "emergencies" happens far too often. I was young once, when I grew up I wanted a sports car, like a Lambo. Today? Grew out of it and find that EVs are a good thing to look at for those folks like you who want a car for 10-years. I might have recommended a CPO or even say a used Chevy Volt for $10k to then allow use of that money for living life more - a few more vacations, investments, whatever.

Love your points and I'd definitely work with the Amish guy as it's a win-win for everyone (except for the tree). But altogether, I think I still prefer a lower monthly fix rate and the OPTION of paying in advance, rather than being forced to pay higher monthly payments resulting in lower interest paid over the time of the loan...
 
Love your points and I'd definitely work with the Amish guy as it's a win-win for everyone (except for the tree). But altogether, I think I still prefer a lower monthly fix rate and the OPTION of paying in advance, rather than being forced to pay higher monthly payments resulting in lower interest paid over the time of the loan...

No problem, it is the American Way :) But i do recommend either taking something like Dave Ramsey's Financial Peace University or Legacy class. Yes, it does bring in some religious angles into money theories - but it has helped many. I look back at my life and my family financial situation and I would gladly pay someone to forcibly remove that OPTION away from me in my 30s and 40s. If I wasn't paying my over $2100 monthly mortgage now, I could go to Broadway every weekend and see a show and fly to Miami Beach for a few hours of sun once a month. It's not what you can do today with the money - it's what you think you will do tomorrow and how rational the markets, world and other uncontrollables offer. We got Trump, we got Putin, we got risk.

I took 25 pounds of garden-grown produce to my local food bank today. If I was able to stop working and retire, I could volunteer my time there more or give more time elsewhere.
 
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I think this thread boils down to priorities.

Some people want a nice car, some people want a nice house, some people want both, some people want to travel, some people want to eat out every day, some people etc. etc. etc.

Sure, there are people who can afford all of the above, but then you wouldn't be looking at a thread called "Affording a Tesla".


Now to answer the OP, my wife and I had one simple rule - the car can not strain our finances. Period. We have priorities too, we chose a smaller house with more land. We chose to put our kids in higher end daycare/preschool (when both my kids were attending preschool, I paid more for preschool than our mortgage, so some people might think I'm insane), we like to travel, we like to eat out occasionally, I like gadgets, etc. We also had some long-term renovations we wanted do on the house.

We financed the Tesla, so what the means to us is that each month we have less money to save up for our long-term renovations, but we can live with that. It didn't affect our priorities though - kids, travel, food, etc.


Canuck stated upthread that it's stupid (I'm paraphrasing, I think...) to finance a depreciating asset without having the investment property/etc. to back it up. I don't agree with that, I think it's about priorities. If your priority is to have a high end car, but you're not living paycheck to paycheck, sure there are smarter ways to invest your money, but at the same time you only live once.

O yeah, and we do have a cash flow negative rental property that I go from hating and wanting to get rid of, to debating about selling and cashing out in order to buy 2 other rentals instead...
 
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According to the survey the average annual income for Model S purchasers was $267K, Model X purchasers was significantly higher at $503K, and Model S reservation holders at $160K. Good to know. At least I had a benchmark.

I'm curious to know if you have the data for median annual income? Average seems pretty useless because it is going to get skewed heavily for those few who have extraordinary incomes (like professional athletes).
 
I think this thread boils down to priorities.

Now to answer the OP, my wife and I had one simple rule - the car can not strain our finances. Period.

Canuck stated upthread that it's stupid (I'm paraphrasing, I think...) to finance a depreciating asset without having the investment property/etc. to back it up. If your priority is to have a high end car, but you're not living paycheck to paycheck, sure there are smarter ways to invest your money, but at the same time you only live once.

I agree with a lot of what Max said and I find the items I quoted similar to my situation. I had never paid >$40k for a car. My last car was used and <$20k. I just didn't see the point of spending a bunch of money on a depreciating asset. I am not a "car" guy. I just don't really care about cars, I don't know how to fix cars, I am not impressed by other people's cars, etc. However, I really wanted an electric car and honestly a Tesla was about the only thing that really fit the requirements (not looking bizarre was a big one for the wife). Buying it would not strain our finances at all. Period. That was really what mattered in the end and why I ended up buying one. However, I also went with a 60 instead of P90DL so it is not like I completely ignored finances when thinking it through.

I also financed almost all of it. I don't understand the thought that financing a depreciating asset is bad. If you have no worry at all about your ability to make the payments, then 1.49% is basically free money to me. I would take a 1.49% loan under any possible excuse I could. If it makes you feel better, you can always pretend you got a 1.49% personal loan and bought the car with cash. I think the thought process that this is "bad" only applies to if you can't afford the thing you are buying to begin with.
 
Hello All,

I just took receipt of my 2017 silver metallic Model S 100D. This is my first Tesla, and my first electric car. I appreciate all of your posts, as information I gathered here was instrumental in my design of the car, as well as taking the plunge and going electric. I love this car!

One of the things I wanted to get a dialogue going on from you all is affording a Tesla. As we all know, there are more expensive cars we can purchase than Teslas, but these certainly aren't cheap cars. I wanted to hear some of your all thoughts for any financial budgeting adjustments, portfolio liquidations, additional income created, etc to purchase your Tesla. Below is my story. Hope it is helpful to some of you on the fence. I know I'm only two weeks into Tesla ownership, but I don't regret it for a moment.

So me being a financial planner by profession, I'm always interested in the finances of things. I'd never bought a new car before, typically opting for low mileage pre owned cars from brands that were highly rated for reliability, which for me ended up being mostly Lexus vehicles. Those were fine, until I test drove a new Tesla Model S at a colleague's suggestion. Ugh. My IS250 just wasn't that exciting any more. I thus began researching the Tesla car designs and the corresponding monthly payments (couldn't justifiably pay cash without sacrificing other goals, plus 1.49% is a low interest rate hurdle to hopefully overcome on my investments). I discovered I could swing the monthly payments, but just because I could didn't mean I should. I needed more info.

Shortly thereafter, while in chats with the Tesla sales guy in Boston, who was very helpful, he told me that the average first time Tesla buyer had previously never spent more than $40K on a car. Not sure if that's an official number, and certainly doesn't apply to everyone, but that was encouraging, because I fell into that boat. I also went online to study Tesla financial demographics, and I stumbled into a great survey on Teslarati.

According to the survey the average annual income for Model S purchasers was $267K, Model X purchasers was significantly higher at $503K, and Model S reservation holders at $160K. Good to know. At least I had a benchmark.

Finally, I wanted to see if I could adjust monthly cash flow to purchase a Tesla with minimal interruption to other financial goals (still max out 401k, pump money into kid's college savings plans, keep adequate slush fund, acquire investment real estate, etc). In short, I didn't want to drive a sweet car at the expense of where my kids would potentially go to college. Thus, I went through my budget, discovered I was spending an unconscionable amount of money on groceries and dining, as well as too high of a cable bill. My wife and I candidly now go to Whole Foods way less (almost never), are more conscientious about how often and where we dine out, and I beat up my cable company. This has freed up a good $800-$900/mo. Not enough for a Model S 100D monthly payment, but pretty close if I put a little down, which I did via trade in and deposit. Bottom line is that I'm now only $300-$400/mo more out of pocket than I was before I adjusted cash flow ($1,200/mo total car payment). And now I own a Model S. Pretty sweet!

The federal tax credit of $7,500 will help at tax time, and I just got approved today from the state of MA to get a rebate check for $1K. Not too shabby.

It also helped to get a referral code from a buddy of mine who has a Model S, as this saved $1,000, as well as get me free supercharging for as long as I own the vehicle. Score!

That's it for now. Let me know if any of you have any exciting stories to share or thoughts about making the car happen. Happy driving!
My financial analysis was pretty easy ... i was paying over ~$2500-4500 per month over the previous 6 years(before i bought my Tesla ) and found myself thinking i could be buying a new car each year of the 6 years I paid for college for my kids (with Scholarships by the way)... and somehow affording it by cutting back on all kinds of things we did not really need ... so in my case free cash flow became abundant once my oldest son graduated .....one word of caution if you have not looked at college tuition/room and board figures( i mean really look at the total cost) and you plan on funding your kid(s) college education I would do this math first.... i ran my previous cars into the ground before and while paying for college....:eek:

obviously your kids can get their own loans ....and you can get a model S or X ;)
 
I agree with a lot of what Max said and I find the items I quoted similar to my situation. I had never paid >$40k for a car. My last car was used and <$20k. I just didn't see the point of spending a bunch of money on a depreciating asset. I am not a "car" guy. I just don't really care about cars, I don't know how to fix cars, I am not impressed by other people's cars, etc. However, I really wanted an electric car and honestly a Tesla was about the only thing that really fit the requirements (not looking bizarre was a big one for the wife). Buying it would not strain our finances at all. Period. That was really what mattered in the end and why I ended up buying one. However, I also went with a 60 instead of P90DL so it is not like I completely ignored finances when thinking it through.

I also financed almost all of it. I don't understand the thought that financing a depreciating asset is bad. If you have no worry at all about your ability to make the payments, then 1.49% is basically free money to me. I would take a 1.49% loan under any possible excuse I could. If it makes you feel better, you can always pretend you got a 1.49% personal loan and bought the car with cash. I think the thought process that this is "bad" only applies to if you can't afford the thing you are buying to begin with.
this is spot on... i did the same analysis and concluded the 60 or 75 w/o the AP/FSD initially was a way to get into a Telsa at a price point that was still high for transportation at 1.49% the interest is a minor component of the TCO.....
 
All that being said, I should've included one cost that wouldn't apply to an ICE - the cost of adding a separate meter for the off-peak charging. But having an electrician father-in-law, and the materials being very cheap, that's pretty negligible in my particular case at least.
When I looked into off peak (I'm on Xcel, in Bloomington) they also had an extra monthly charge for the additional meter ($10). Usage during peak is something like 2x the standard rate:
https://www.xcelenergy.com/staticfiles/xe/Regulatory/Regulatory PDFs/rates/MN/MNResRateCard.pdf

For our mileage situation my spreadsheets steered me toward keeping our standard rate service when we purchased our Leaf. We'll see how that pans out when we get the second EV.

All this to say: it's important to crunch the numbers for each individual situation to see if one of the "programs" actually make sense.
 
Life is finite and the utility of money at and after death is 0. Gota spend money on things/experiences that one enjoys. Tesla is one such thing. Finance is important, but enjoying life when one can is more so.

A Tesla car is worth splurging on.

Have you forgotten estate hand-off at passing including giving to some who need it more than us? Whether kids, family, charities, etc.? Do you guys do any giving today? I should give more than I do and may need to start thinking about it more.