Canadian here, so fair warning that the numbers might be a bit higher. My story is a mixture of hard work, some luck / good fortune, and good financial awareness.
My wife and I both look over our finances closely on a monthly basis, but at the same time we do like to enjoy ourselves, with our most expensive items being outside dining ($450/month), skiing ($2K/year), and a yearly vacation ($3K/year). We're currently in our mid-20s and moved out of my parents' place 3.5 years ago, finishing school 1 year later while paying for it all. From then till now, our combined household income grew from $75K to $115K currently and because of our focus on saving, we were still able to save roughly $2K per month, give or take depending on things. Can't stress enough the importance of getting relevant work experience asap while in post-secondary.
Over the last several years we bought our first car, a used Mini for $13K, then traded up for a used BMW 320i for $29K. As for our living situation, we went from renting to buying a to-be-developed townhouse in the subrubs in August of 2015, which we moved into last year, with our mortgage and strata being roughly equal to our rent, $1200 a month. Add in all the new furniture and upgrades we bought for the place and paying for our wedding last year, and it's fair to say it was an expensive year, sparing no expense. Although we now had some debt on our line of credit, we still had good positive cashflow while still early in our careers. That was the hard work.
Our luck / good fortune came with some unfortunate news though, but like they say, when one door closes, another door opens. My parents worked their way to upper middle class by this point and had three income properties. 3.5 years ago they divorced (for the better) and were splitting up assets, which is what forced us to move out in the first place. They decided to leave me with one of the apartments as you can't divide three apartments between two people. It was valued at $180K and had a $130K mortgage on it so after all costs, it added about $150 a month of income with a 30-year mortgage. The plan was to keep it and just gain the bonus income and equity, slowly but surely.
We want to be thinking of our retirement so earlier this year we found a retirement plan where we contribute $400 a month for 20 years, while it grows. Worse comes to worst at 65, we will still have access to $2K a month until the day we die, and that's not including the government pension plan.
Now comes some good financial awareness, or perhaps just taking advantage of the situation. We found that the apartment real estate market jumped this summer and so came an opportunity. While the value of the apartment stayed relatively, it could now sell for around $300K. We decided to put it on the market and found a buyer, with the sale going through on September 1st, giving us an estimated profit of $159K. This is where, after years of talking about Tesla, my mind started to whirl.
After a lot of discussions, playing with numbers, and comparing various scenarios, we came up with a plan. We're going to pay off the $20K line of credit that we have leftover from last year, max out our Registered Retirement Savings Plan spare contribution limit of $62K (which is tax deductible), and put $57K into several financial investments. For the capital gains tax on our apartment sale, the government taxes you on 50% of your profit, which for us would come to $80K. Less, the RRSP tax deductible contribution, it would add $18K to our taxable income, which is very manageable.
If you're still following along, you'll see we saved $20K to serve as a down-payment. In conjunction with an estimated resale value of $23K for our BMW, and we have a sizable amount towards a Tesla. In Canada, with the exchange rate, your're looking at 6-figure car. Our philosophy at this point is if we're going to be spending this much money on a Tesla, we may as well get exactly what we want and be happy with it, rather than trying a save a few grand. We're planning on keeping this car until it dies so concerns about resale value and the like don't factor in for us. After all of our research, because of my hockey games, our ski trips, and the family we look to build, we decided on fully-optioned X 100D.
With the new price reductions, it comes to $161,350. Add on the 12% GST/PST and 3% luxury tax (really...?), less the previously mentioned down-payment, and we're looking at a loan of around $143K. With their offer of 8 years @ 1.99%, it comes to $1,600 a month, which combined with our car insurance, mortgage and strata is still less than 50% of our monthly disposable income. Once I also account for the fact that we historically spend $300 a month on gas, it doesn't look so bad.
After everything, our mortgage, strata, car payments, insurance, retirement contribution, and credit card bills, we aim to have a net of $500 a month. That isn't a lot of wiggle room but here are some key points I remember: 1) this is without adjusting our credit card bill and current lifestyle, which have plenty of opportunities for reduction, 2) we're still paying for our retirement by considering it a cost, 3) our careers are in great positions to grow, 4) our financial assets are growing for the long-term, and 5) if worse comes to worst, we have the financial assets to pay off the car loan. In the meantime, however, no point in not making the most of it while we can.
Sorry for the long story, meant for it to be shorter, but I wanted to show how even for young people, Tesla can be affordable -- you just need to manage your monthly finances. I'm fully aware of the role the apartment played in this, but I consider it to have just sped things up. More than anything, it gave us the safety net of financial assets in case things go wrong.
Without it though, I think we would've been in a position to afford a Tesla within a few years. What truly allowed us to afford it, I think, is our positive monthly cashflow. Without that, we wouldn't have garnered the assets beforehand nor would we have been approved for our loan. It's a delicate balance between enjoying life currently and saving for your future, and I think we have found it. Thanks for reading and can't wait for the delivery!
