Can I/Should I Buy LR AWD

[Uncle Paul]

OP already missed the financial boat by not purchasing a $40,000 dream Tesla plus qualifying for the $7,500 Federal Tax Credit (net cost $32,500). That ship has now sailed, and the price of admission has gone up.

His values have been inhereted by his wealthy Dad's policy of purchasing $15,000 used cars and driving them for 10 years. Dad probably does this because he has endured hard times before, and is reluctant to spend any of his wealth.

OP is currently a Millionaire. If he keeps to his plan, he will most probably die a Multi-Millionaire.

I see this thinking a lot. Many people with lots of money are hesitant to spend any of it. They want to keep as much as they can. They do without and feel great about it.

Have a neighbor that is a Multi-Millionaire. His stock portfolio has grown as he has aged. He will never spend any of it because he does not want to pay the Taxes. Government will take all this when he dies anyways.

Others are the other way. They not only spend everything they make, but also everything they can borrow. They want all the shiney stuff and a YOLO attitude. They get lots of stuff and feel happy, but also have lots of anxiety about ever getting out of deep debt.

OP has the finances to easily get the Tesla he wants. WIll cause no financial stress and great enjoyment of driving the car of his dreams. Buying a new Model 3 is a stretch for many, but not for him.

Maybe now is the time for him to go for it. Tomorrow is never guaranteed and life is more than drinking cheap wine and driving junky cars.

My GF drives an i3, and it is more of a toy than a real car. It has been in the shop a lot and that "range extender" scooter motor is just stupid. It drains all the enjoyment of the drive when it is engaged. It makes a good city car and parks easily, but is terrible for long trips. Those goofy suicide doors make carrying passengers uncomfortable for everyone. OP has already made the decision to by a used i3, but it has given him little joy.

His dad may think he is crazy, spending "all that money" on a car, but OP is not his dad. These are good days for OP and his family. Imagine they will have years of enjoyment from their new Tesla. Will not cause financial distress.

 

[kmstivers]

Can you link me to that?

You're questioning your own ability to afford the car but are then talking about spending an additional (non-financed) $2K after purchase on acceleration boost. ‍ To each his own.

Also, there are good discussions about which models will hold up best for resale and many think it'll be the Standard Range/+ models.

 

[ElectricIAC]

We can say what we want but in the end it’s the OP who’s stroking the check. That being said, you’ve worked hard: Now live a little.

 

[MaxAdolphus]

At your stage in life my thought would be: If you have to finance it, don't buy it. By your own analysis and admission you don't need it to live your life. Same goes for boats, fancy vacations, and all those other luxury non-essential. You're doing great in your life, don't get carried away.

Just comments from an old curmudgeon who just bought a 2020 M3 LR AWD. For cash.

It would be partially financed. I don’t have the full cash value completely liquid (retirement funds) and my credit union has 2.99% at 72 months. Looking at financing $25-30k of it. My credit score is about 810, so no worries there.

 

[ElectricIAC]

It would be partially financed. I don’t have the full cash value completely liquid (retirement funds) and my credit union has 2.99% at 72 months. Looking at financing $25-30k of it. My credit score is about 810, so no worries there.

Money’s cheap. Unless your savings account is earning better than 2.99% I’d personally just finance the whole thing.

 

[rdcisneros3]

I don’t normally interject my thoughts/opinions in others’ financial decisions, but since the point of this post is you asking...wouldn’t most (i.e. all) financial advisors/experts advise against withdrawing retirement funds to purchase a car that is not a necessity?

 

[MaxAdolphus]

OP already missed the financial boat by not purchasing a $40,000 dream Tesla plus qualifying for the $7,500 Federal Tax Credit (net cost $32,500). That ship has now sailed, and the price of admission has gone up.

The issue with me is, I never wanted the $40k RWD Model 3. I want AWD. The AWD models today ($49k) are the same as they were when the full tax credit was available ($57-7.5). I don’t think I’ve missed the boat at all on the Tesla I want.

 

[rdcisneros3]

Money’s cheap. Unless your savings account is earning better than 2.99% I’d personally just finance the whole thing.

I don’t think any of us can suggest that without knowing his monthly debt/living expense-to-income ratio. The monthly payment difference between a 25-30K purchase and a 55K purchase is quite significant.

 

[MaxAdolphus]

Money’s cheap. Unless your savings account is earning better than 2.99% I’d personally just finance the whole thing.

100%, but I have a self imposed mental block of spending more than $500/mo on a car payment.

 

[MaxAdolphus]

I don’t normally interject my thoughts/opinions in others’ financial decisions, but since the point of this post is you asking...wouldn’t most (i.e. all) financial advisors/experts advise against withdrawing retirement funds to purchase a car that is not a necessity?

I would never withdraw from my retirement accounts for a car. Never. The only time I’ve ever even suggested it to someone was when they were going to buy a tax credit eligible EV and their income didn’t give them $7500 in tax to take advantage of the full tax credit. In that case I told them to draw in their pre-tax 401k, pay the 10% penalty to get you to the $7,500 tax credit, then take the money you just pulled and put it into a post tax IRA. That 10% penalty is as about as cheap as you’d ever draw from a pre-tax account.

 

[rdcisneros3]

I would never withdraw from my retirement accounts for a car. Never.

That’s good. I must have misunderstood your earlier post taking about the liquidity of your retirement funds.

 

[ElectricIAC]

100%, but I have a self imposed mental block of spending more than $500/mo on a car payment.

Understood: just putting it out there my man. I, like you also had a mental block against a payment above ~$600 but for me the gas savings alone made it worth it ($200+/mo in my case)

 

[ewoodrick]

100%, but I have a self imposed mental block of spending more than $500/mo on a car payment.

You need to break yourself of that thinking. Not the $500, but the fact that a monthly payment is how much something costs. $50,000 is $50,000. You can finance things for 1 year, 5, 6, 7, etc. but it still costs the same and impacts your overall budget the same way.

Sure going above $500 a month is a lot. But then again, it was unheard of not that many years ago that going over $500 a month was a lot for a HOUSE!!

 

[MaxAdolphus]

That’s good. I must have misunderstood your earlier post taking about the liquidity of your retirement funds.

No problem. I was implying I don’t have the liquidity because it’s tied up in retirement accounts (which I’m not touching).

 

[ElectricIAC]

You need to break yourself of that thinking. Not the $500, but the fact that a monthly payment is how much something costs. $50,000 is $50,000. You can finance things for 1 year, 5, 6, 7, etc. but it still costs the same and impacts your overall budget the same way.

Sure going above $500 a month is a lot. But then again, it was unheard of not that many years ago that going over $500 a month was a lot for a HOUSE!!

Hell, my property taxes on our home our higher than that.

 

[arghx7]

Just buy the damn AWD. Buying a Tesla is never a purely rational decision.

 

[OCR1]

OP already missed the financial boat by not purchasing a $40,000 dream Tesla plus qualifying for the $7,500 Federal Tax Credit (net cost $32,500). That ship has now sailed, and the price of admission has gone up.

I’m not sure what you are referring to here. When the Midrange came out in October 2018 it was $45,000, and later increased to $46,000. It did not drop down to $40,000 until March 2019 when the tax credit was cut in half. So at best you could have bought the MR for $45,000 less $7,500 tax credit, or $37,500. And that price does not include Autopilot.

The best overall deal was the LR RWD for $43,000 in March 2019 (without autopilot), or $44,900 with autopilot. Both of these were still eligible for the $3,750 tax credit.

 

[jonquiljo]

His values have been inhereted by his wealthy Dad's policy of purchasing $15,000 used cars and driving them for 10 years. Dad probably does this because he has endured hard times before, and is reluctant to spend any of his wealth.

No, quite the opposite. He may have a lot in retirement funds at age 42, but he will need every cent of that. He will need more to raise his kids and send them to school. He inherited common sense and brains from his father - who clearly knows sh1t can happen at any time.

I see this thinking a lot. Many people with lots of money are hesitant to spend any of it. They want to keep as much as they can. They do without and feel great about it.

No .... people with lots of money tend to understand the fleeting nature of any amount of wealth. It comes and it goes - easily at times. When someone has a lot of money they do not want to risk spending their last days living on a few cents a day - common among people who overspend.

Have a neighbor that is a Multi-Millionaire. His stock portfolio has grown as he has aged. He will never spend any of it because he does not want to pay the Taxes. Government will take all this when he dies anyways.

No again ... The federal government takes very little when someone dies - even at high net worth. Up to $11M per couple is exempt from taxation when they die. Above $11M, tax is 40% for the next million and beyond. This tax can be avoided if the "couple" gradually sells assets before they die, generating only a 20% capital gains tax. Whoever inherits assets upon the death of someone - the value is taken as the current market value as of the date of death. The estate is taxed, then distributed with no tax burden to the recipients.

A good grantor trust and plan can further help tax issues. But definitely the government does not get all or even most of it. There are a few states that tax estates, but they get much less.

OP has the finances to easily get the Tesla he wants. WIll cause no financial stress and great enjoyment of driving the car of his dreams. Buying a new Model 3 is a stretch for many, but not for him.

Please don't oversimplify. OP can easily afford a Tesla because he is living in a relatively low-cost of living situation. If he lived in the San Francisco Bay area (or NYC, or LA), his salary might be higher - but his taxes and house costs would be easily 3-7 times higher.

Maybe now is the time for him to go for it. Tomorrow is never guaranteed and life is more than drinking cheap wine and driving junky cars.

Tomorrow is never guaranteed, yes. But it is more guaranteed if you have extra of cash (or equity to use as cash) to boost your medical care so that the system does not kill you. This is something I am acutely aware of.

That said, I think the OP can afford a Tesla. But he should realize as should everyone else that spending $50K or $60K on a car is completely optional. Whatever someone buys - they should not feel the "bite" of the costs of owning the car (payment, insurance, etc.). It should be a nagging expense that is not painful at all. That's the only way you can truly own and enjoy the car. Car stress is miserable, and I went though that myself a long time ago. Never again.

So ... if it doesn't hurt - go for it!

 

[timk225]

100%, but I have a self imposed mental block of spending more than $500/mo on a car payment.

Here's something to think about. My previous car was a 2011 Challenger R/T, on which I paid $500 a month.

And then another $200-$250 per month on gas!

My 3 RWD LR payment + electricity = same as or less than the Challenger payment plus gasoline!

Short version - put a 3 AWD + acceleration package on order today. Right now. You won't regret it.

Long version:
1. Buy a duplex rental property and get both sides rented. Around here I can get one for ~$50K in a low income area.
2. Use the rental income (minus insurance and taxes) to make the 3 payments.
3. When the car is paid off, either keep the duplex and enjoy the extra income, or sell it and get your purchase price back.

Other People's Money!

 

[ElectricIAC]

Here's something to think about. My previous car was a 2011 Challenger R/T, on which I paid $500 a month.

And then another $200-$250 per month on gas!

My 3 RWD LR payment + electricity = same as or less than the Challenger payment plus gasoline!

Short version - put a 3 AWD + acceleration package on order today. Right now. You won't regret it.

Long version:
1. Buy a duplex rental property and get both sides rented. Around here I can get one for ~$50K in a low income area.
2. Use the rental income (minus insurance and taxes) to make the 3 payments.
3. When the car is paid off, either keep the duplex and enjoy the extra income, or sell it and get your purchase price back.

Other People's Money!

Disagree only on buying second best for consolation price.