Financially Irresponsible or Worth It?

[Tiger]

@Gagan Rembember, expensive cars (except collectibles) are not life investments because they lose value fast (or have leases expensive to maintan).

If you plan to ever in your life to have savings or income from investments ("become rich"), you don't want to be spending your newly earned money on a car at such an early stage. You should rather invest that money and if you need a car to commute to work, get a financially optimal one, there are a lots of cheap electric cars which allow you to get a green pass on your commute.

Spending more than absolutely necessary on a car is insane unless you have insane means and can afford it. Especially if you do not yout have your own family yet (and don't know it's costs!), get a cheap car (but a safe one! because you are young you are in the risk profile!). And even a cheap car, buy it used so you do not have to pay extra just for it being new.

 

[Gagan]

It's actually not a bad idea despite what people will tell you. Since you drive 80 miles each way, multiple that by 260/261 working days @ 3 dollars a gallon with an efficiency rating of 30mpg.

If 30 mpg, it will take 666.67 gallons or 2,523.61 litres of gas with fuel cost of $2,000.00.
If 40 mpg, it will take 500.00 gallons or 1,892.71 litres of gas with fuel cost of $1,500.00.
If 50 mpg, it will take 400.00 gallons or 1,514.16 litres of gas with fuel cost of $1,200.00.
If 60 mpg, it will take 333.33 gallons or 1,261.80 litres of gas with fuel cost of $1,000.00.

You're looking at a savings of 10,000 over 5 years and since you get to charge for free, you basically pay 0 out of pocket for fuel cost. This is not factoring insurance cost, etc etc. If you purchase a CPO at 50-55k, you're essentially paying 40-45k for a Tesla. Is it a bit much? Yes but since your take home is 3000 with a personal expense of 1000. That leaves you roughly with 2000 dollars of disposable income. You can easily afford this without going broke.

Finally someone on my side!!!!

But yah, the car I currently drive (Kia Optima) gets about 25-30 MPG so I have to refill it once a week which costs me about 150-200 dollars a month.

I will definitely be getting an electric or at the very least a hybrid car but by the looks of it, I'm not ready for the Model S yet.

Thanks though for the support!!!

 

[stan23]

If I were you, and i'm being serious. I'd look into a lightly used Prius.

 

[Gagan]

@Gagan Rembember, expensive cars (except collectibles) are not life investments because they lose value fast (or have leases expensive to maintan).

If you plan to ever in your life to have savings or income from investments ("become rich"), you don't want to be spending your newly earned money on a car at such an early stage. You should rather invest that money and if you need a car to commute to work, get a financially optimal one, there are a lots of cheap electric cars which allow you to get a green pass on your commute.

Spending more than absolutely necessary on a car is insane unless you have insane means and can afford it. Especially if you do not yout have your own family yet (and don't know it's costs!), get a cheap car (but a safe one! because you are young you are in the risk profile!). And even a cheap car, buy it used so you do not have to pay extra just for it being new.

Thanks for the article because yes, the ultimate goal is to become rich... And yeah, I'll probably look into a cheaper electric car now and keep dreaming about Tesla Model S for the next few years. I guess the bright side is though that once I do feel I am stable enough for a Model S, I can go straight for the highest end and fully loaded instead of getting cheapest one I can now.

 

[Gagan]

If I were you, and i'm being serious. I'd look into a lightly used Prius.

Noooooooooooooo, not the Prius!!! But yeah, I'd consider the Leaf over the Prius but I think Ioniq is definitely the next one I have eye on after Tesla.

 

[Esme Es Mejor]

Get a used Model S. I'd argue for classic pre-AP1 model (sub $45k), but an AP1 shouldn't be that bad (~$50k). Depreciation should cost you -$5k/year, which isn't the most financially responsible decision you can make, but it isn't that bad, either. I drove a Honda Civic for 11 years, and it cost me $3-4K per year once you factor in gas.

You're good. Drive it. Love it.

 

[Canuck]

The thing is that I guess I kind of spoiled myself since I bought a new Mazda6 for 35k when I was making only about 15k a year and that has worked out.

You have a different view of "worked out" than me. Let's say you bought a decent used car for $5k instead of that Mazada for $35k, and then you put the $30k in Apple, Google, Tesla, NetFlix, Sirius, etc. Or a down payment on a condo that you rent out. Run the numbers and see how that would have worked out for you. Then with the profits you can buy a Tesla. You've got lots of time but only so much earning power and you're wasting it in my view if you buy a Tesla. I guess if your parents keep treating you like a dependent kid, and you accept that, then you don't really have to grow up.

 

[Lloyd]

You should not exceed 10 % of your gross income including total payment and insurance.

How much should you spend on a car? | Interest.com

 

[idleuser]

You should not exceed 10 % of your gross income including total payment and insurance.

How much should you spend on a car? | Interest.com

Good advice except interest rates are so low right now, it makes no sense to down payment 20%.

 

[Gagan]

You have a different view of "worked out" than me. Let's say you bought a decent used car for $5k instead of that Mazada for $35k, and then you put the $30k in Apple, Google, Tesla, NetFlix, Sirius, etc. Or a down payment on a condo that you rent out. Run the numbers and see how that would have worked out for you. Then with the profits you can buy a Tesla. You've got lots of time but only so much earning power and you're wasting it in my view if you buy a Tesla. I guess if your parents keep treating you like a dependent kid, and you accept that, then you don't really have to grow up.

That makes a lot of good sense about how I could've invested instead and do still have lots of room to grow up. I do disagree about me being dependant since I have been and continue to be independent with all my expenses and decisions. So I wouldn't say I'm dependant but more so independent with narrow long term vision.

I do feel like I've gotten great advice though so thanks everyone!

 

[stan23]

I know your culture may not dictate moving out, but have you considered that at all? Man, at 21 having my own place was a pretty amazing experience. Either way, sounds like you have a good head on your shoulders, so my only advice is cars will come and go, so don't fret if you don't get the drive the coolest thing right now.

 

[bcsteeve]

Just a note on your "get rich" plan...

Man, its only money. I guess that's easier to say when you have it, but the only reason I have it is by being frugal. I remember when I was 21 (almost half a lifetime ago), there was no Plan B... "Get rich" was about it. Then I got out of university and stepped into a job paying about $40k... a lot for my age at the time, but really that's not "rich". But the thing was... no matter what I did, my bank account just kept going up. To me, I was spending like crazy - but being a financially responsible person by nature, really I was still being my same frugal self, just not to the Mr. Noodles-every-night degree.

That's when I realized that $40k per year is really enough. Money just stopped being a motivator for me at that point. Kind of like playing a video game when you stop caring about the score and you just play cause its fun.

And it seems the less I care about money, the easier it is to find it.

Money isn't the end game, friend. Not having enough sucks, but "rich"? Don't focus on that. Life's way too short to worry about something so exceedingly meaningless.

ps. I've had a lot of Indian friends growing up (then I move 2 hours away and I can't find anything but white people... go figure), and I know a lot of people don't "get it" with the extended family living thing. I always envied my friends living under the same roof with 3 generations. My friends didn't really appreciate it at the time, I don't think, but to me, your people are on to something with that.

pps. I picked "irresponsible" but only because of the limited choices. "Ambitious" didn't really fit either. I think buying an S in your position is a poor choice financially. But on the other hand, you only live once, right? You have an enormous advantage with the housing situation.

 

[Gagan]

@bcsteeve Thanks for the input and I do agree that getting rich shouldn't be the focus but it's more of a motivation factor to help give back to parents who worked long hard hours to get me to this point. Instead of "get rich", the goal really is to be successful and money is a easy scale to base it on.

And yeah, the family thing is still quite misunderstood but it works and I'm sure I'd rather want to be taken care of by my children/grandchildren rather than live in a retirement home...

 

[Evoforce]

Living frugally is good advice. I have done so all my life. I have been on the financial roller coaster in life based on the economy. There are no guarantees that powers beyond your control won't strip you of your wealth. You work hard for what you want and try to do it in a smart way.

This car probably will not be a money making investment, but it could be a good psychological investment. If you are willing to work extra to cover your indulgence and reward yourself, also make sure that you do that prudently too. Maybe the first Tesla that you buy won't have all of the bells and whistles and you buy the least expensive one that you can find.

Rise to the occasion, and be prepared to push yourself a little harder to have this Tesla if it is extremely important to you. Just make sure that this new child of yours doesn't drag you under and you have a viable plan to pay for it. There are a lot of daddies and mommies out there who didn't plan beyond their desire and can't get beyond broke. They may even have to give up their child (car) or have it taken from them. You get the drift...

 

[Canuck]

Money isn't the end game, friend. Not having enough sucks, but "rich"? Don't focus on that. Life's way too short to worry about something so exceedingly meaningless.

No one is focusing on being "rich". I remember one of my kid's friends said to her: "You're rich" and my daughter replied: "we're not rich, we're comfortable." That pleased me since I've had to work hard on instilling the value of a dollar on my kids. I grew up without much food in the cupboards, so when someone talks about buying an expensive vehicle beyond their means I think of eating -- not being rich -- and there's nothing "exceedingly meaningless" in that. I consider someone being rich if they own their own jet or yacht. If you don't own those, you are not rich but comfortable and being comfortable is important to me.

do disagree about me being dependant since I have been and continue to be independent with all my expenses and decisions.

I'm only going by what you said:

I typically spend about 500 dollars a month on food since I eat at home quite often.

I live with family so little to no cost on rent

It seems to me that food and rent are pretty basic expenses someone of your age should be paying before vehicle payments.

ps. I've had a lot of Indian friends growing up (then I move 2 hours away and I can't find anything but white people... go figure), and I know a lot of people don't "get it" with the extended family living thing.

I'm Italian and I know a lot of Indians living in Surrey. I totally "get" the "extended family family thing." In Indian and Italian cultures, and in most others from the "old country", the parent supporting the children, especially grown ones, comes with an expectation that they are to be paid back later in life.

b. Indian: In the Indian household, the understanding is, “I take care of you now, and you will take care of me later.” The parents will rarely expect any monetary contributions from the children as they believe it’s their own “duty” to take care of their children. Therefore, in the Indian household, the parents will pay the mortgage and expenses needed to support their children, with the expectation that once the parents get older, they will live with their kids and be supported by them in health and finances — regardless of the living situation.

This is expected in Italian culture too, as in most cultures when grown children live off their parents.

So if we're going to bring culture into the discussion, and say how great it is to live with extended family, let's at least please be honest about it. You can pick your friends, but you can't pick any of your family except your spouse, and it's not all hunky doory living off your parents as a grown child, especially when the culture expects you to pay it back around the time in my view a person needs all of their funds to support their own kids and live their own life. In my view, it all goes down, and nothing goes up, unless the parent is in need of food or medical attention.

I live in Canada and I like the new country culture better than the old, at least in this one aspect. I sure hope my kids leave the nest before I have to kick them out and watch them fly away, like all parent birds in nature know, but many human parents fail to see. I left the nest at 17 and never looked back.

 

[Maximilien]

I am a few years older than you, but until I made more than 6 figures per year, I didn't think about Tesla even though I wanted.

I know I should not have spent so much money on cars but I already have a house, so I splurged for Teslas which I enjoy everyday. Because I am a single also it is possible. If I have a gf or make a family, I would have contemplated my Tesla purchase.

CPO model s sounds good since it is getting cheaper or you can start with Volt, which I enjoyed a lot.

Whatever you choose, good luck to you.

 

[S4WRXTTCS]

Absolutely no.

We're not THAT far away from the Model 3 becoming available
You can already get a Bolt for a significant amount less than the S.

When you're young you should live. You'll have plenty of time later in life to splurge on vehicles.

The greatest gift someone can have is youth and their health.

Don't waste it.

 

[Tiger]

Thanks for the article because yes, the ultimate goal is to become rich... And yeah, I'll probably look into a cheaper electric car now and keep dreaming about Tesla Model S for the next few years. I guess the bright side is though that once I do feel I am stable enough for a Model S, I can go straight for the highest end and fully loaded instead of getting cheapest one I can now.

@Gagan Buy a used EV, but don't spend more than what you would pay for the best brand new value-for-money ICE car.

 

[Gagan]

@Canuck I was using the 500 a month as a reference of how little expenses I consume and live off of. By eating at home, I mean that I buy groceries and cook for myself since it saves money rather than eating out too frequently.

I know I don't pay rent which is a basic expense but I also know that once my parents do retire in about ten years, that payment will be off of them and I will be completely responsible for it from then on. As you said, they support now but I will also pick up the rent/mortgage payment as soon as they stop making income. That's not to mention that I do contribute and give money whenever money does become tight.

As for the "extended family family thing", I understand the merits of both systems. It comes down to personal preference and for me, I feel that I do owe family enough that I am responsible to care for them later. That isn't to say that I'm dependent on them though since I pay for all my expenses (food, bills, past car payments, etc.) Just not rent... yet.

 

[Gagan]

@Maximilien

@Gagan Buy a used EV, but don't spend more than what you would pay for the best brand new value-for-money ICE car.

Yeah, I'm continuing to do research as to what the best affordable solution would be. I still have several months before I actually buy anything though. All I know for certain is that it will be electric or hybrid because priority is to save on gas and time (HOV sticker).