Financially Irresponsible or Worth It?

[Max*]

Yes, it all comes down to how we each define "living". I don't define living as to how I feel in the moment when accelerating in my car. I define "living" as what happens while we're busy making other plans. At 31, I was busy making plans, working hard, we had our first child, and I was concerned about buying RESP (registered educational savings plan) since the government here gives us $1k for every $5k per year invested, plus anything earned in the plan is tax free provided you can show your kid is going to post-secondary school (or you lose the gov't contributions and are taxed on profits). So I did a self-directed RESP and invested in stocks (not a fast car). Then we had two more kids and I did the same while also using any free money for my own investments -- mostly in rental properties -- and buying an expensive car never even crossed my mind. I wanted my money to grow -- not throw it down the sink.

Now, twenty years later (I'm 51), my two oldest are at University and the shares in Canadian bank stocks, and later in APPL, SIRI, GOOGL and even TSLA are more than paying for their education -- so I don't have to now -- since I did that when they were young. If I bought an expensive car in those days, I sure wouldn't be LIVING like I am now. I don't need to work, I go to my cabin a lot, took the family on a European vacation last summer, I go away with my wife a lot (we head to New Zealand next month) and all because I saved and invested. That's my idea of living. But again, to each their own.

I'm so glad I read this book when it came out in 1989 and I was in my mid 20's.

I can sense a bit of judgement about 30-something year olds buying expensive cars.

 

[VTengineer]

Yes, I can charge at work.



Ahhhh, but it's a Leaf!

What are your thoughts on a Ionic?

Are you familiar with onlyusedtesla.com ? no strings no tricks, no fees just a market place for buyers and sellers of used teslas. all configurations are available.

I found my 2016 60D (now configured as a 75D) there. luck of the draw but no way I could have found this generation car for the price I paid with a CPO. I'm very pleased with my purchase.

 

[Max*]

Yes, it all comes down to how we each define "living". I don't define living as to how I feel in the moment when accelerating in my car. I define "living" as what happens while we're busy making other plans. At 31, I was busy making plans, working hard, we had our first child, and I was concerned about buying RESP (registered educational savings plan) since the government here gives us $1k for every $5k per year invested, plus anything earned in the plan is tax free provided you can show your kid is going to post-secondary school (or you lose the gov't contributions and are taxed on profits). So I did a self-directed RESP and invested in stocks (not a fast car). Then we had two more kids and I did the same while also using any free money for my own investments -- mostly in rental properties -- and buying an expensive car never even crossed my mind. I wanted my money to grow -- not throw it down the sink.

Now, twenty years later (I'm 51), my two oldest are at University and the shares in Canadian bank stocks, and later in APPL, SIRI, GOOGL and even TSLA are more than paying for their education -- so I don't have to now -- since I did that when they were young. If I bought an expensive car in those days, I sure wouldn't be LIVING like I am now. I don't need to work, I go to my cabin a lot, took the family on a European vacation last summer, I go away with my wife a lot (we head to New Zealand next month) and all because I saved and invested. That's my idea of living. But again, to each their own.

I'm so glad I read this book when it came out in 1989 and I was in my mid 20's.

I'll give a more serious answer with a different perspective.

Everyone has priorities. For some people it's to have a big house. For others it's to have 6 children and send them all to college tuition free. For others it might be to drive a Tesla. Yet for someone else it would be to accumulate so much money as possible. For yet others it's to travel. And for others it's to leave a large inheritance to their kids. Some people want to retire early. Some people enjoy the work they do and want to continue working (for themselves or for someone else).

Priorities adjust throughout your lifetime, and there's nothing wrong with that.

So telling someone that they need to follow in your priorities to be FI by 51 is not good advice. It's what worked for you, because those were your goals and your priorities. I bet a lot of people on this forum make a good living doing what they do. I'm sure most of them can afford nearly anything they want. But I also bet that a lot of them can't afford everything they want.


I have my priorities too. My wife's condition on us getting a Tesla was that it can not impact any of our "fun" goals. Children activities (at one point I paid more for their preschool than I did for my mortgage), ski trips/beach trips, travel (we're been to ~10 different countries, and probably another 8-9 Caribbean islands), etc.

All of the necessities obviously come first (mortgage, retirement savings, keeping the rental property, etc.), that wasn't even a question when we made our decision.

 

[BBB4000]

If you are Indian, how have your parents not ostracized you for just contemplating this?

 

[bcsteeve]

Are you familiar with onlyusedtesla.com ?

I was curious, so I checked it out. That is the most annoying sure I've come across in awhile. At least on my mobile, filtering listings is ridiculous. That would be so frustrating to find what I'm looking for. And, of course, USA only makes it useless for most of the population. Good idea... needs work.

 

[Gagan]

If you are making $40k a year in LA as a software developer. YOU ARE WAY UNDERPAID! Get a new job!

I know... Everyone has advised me though to stick with it for 2-3 years at least so it doesn't come off bad on my resume to future employers. I also like my position for now and am continuing to learn quite a bit which is invaluable.

Good job everyone. With all this talk about wives.. Moving screen doors.. Mid life crisis.. family of 5.. Retirement plans, etc. I think we might have scared off the 21 year old OP

Now, maybe he'll buy a car that is more suited for his age... hahahhahaa... Ohhhh... "now get off my lawn!!! darn kids..."

Hahaha... yeah... I didn't realize TMC has a 30+ (OLD) age limit. I can't wait to be 30!

All of the above. It's financially irresponsible, ambitious, and worth it. Worth it because I am a kool aid drinker who believes Tesla is saving the world and all of our futures are dependent on their continued success (not just for the cars, but moreso for the battery gigafactories, grid storage products, and solar power advancements). I really believe that, but I'm sure many out there probably think I'm crazy.

I would advise waiting a year though. Make sure the job is stable, and try to save a year worth of payments so you will know what living that way will be like, and also so you have a decent downpayment ready the next year. Model 3 might be a great choice, as you'll be waiting a year for that anyway.

Yeah, I've decided to wait and just get a temporary car for now. I'll reconsider once Model 3 gets closer whether that's a good decision (Prolly not after hearing all this but let's see).

I'm most struck by the open mindedness the OP possesses. Because of that I truly think he'll do fine either way. When I was his age, I would have been too self centered to ask for advice. For him, not only is he open to advice but he's really trying hard integrate what everyone's input. Yes it's somewhat an impossible task but you can sure see his effort. Kudos to you, OP.

One thing I missed is if the OP decides to get a model s, how much of a downpayment he's putting down. To me, that makes a huge difference in terms of risk. If there's a substantial downpayment, the risk involved should be substantially lower. Good luck.

Thanks! It's always worth asking others who have more knowledge and I already knew it'd be frowned on but wanted to see the various reasons.

financially speaking your reasoning is flawed....but with that said once i got my first real job I bought a new sports car at your age.....
had fun with the new car for a couple of years then I realized i would never own a home, get married have kids, pay for college, etc.....if I continued to own a car with payments and insurance the size of a mortgage payment.....

go for it ....but i would lease it that way if things change you can get out of it in a couple years

I have always hated leases and especially for a Tesla, leasing a brand new one would be waaaaay irresponsible. The fun of a Tesla though...

Are you familiar with onlyusedtesla.com ? no strings no tricks, no fees just a market place for buyers and sellers of used teslas. all configurations are available.

I found my 2016 60D (now configured as a 75D) there. luck of the draw but no way I could have found this generation car for the price I paid with a CPO. I'm very pleased with my purchase.

Thanks for the link as I had been only stalking ev-cpo.com. Hopefully I find a 2016+ Tesla Model S for around... 20,000...

I'll give a more serious answer with a different perspective.

Everyone has priorities. For some people it's to have a big house. For others it's to have 6 children and send them all to college tuition free. For others it might be to drive a Tesla. Yet for someone else it would be to accumulate so much money as possible. For yet others it's to travel. And for others it's to leave a large inheritance to their kids. Some people want to retire early. Some people enjoy the work they do and want to continue working (for themselves or for someone else).

Priorities adjust throughout your lifetime, and there's nothing wrong with that.

So telling someone that they need to follow in your priorities to be FI by 51 is not good advice. It's what worked for you, because those were your goals and your priorities. I bet a lot of people on this forum make a good living doing what they do. I'm sure most of them can afford nearly anything they want. But I also bet that a lot of them can't afford everything they want.


I have my priorities too. My wife's condition on us getting a Tesla was that it can not impact any of our "fun" goals. Children activities (at one point I paid more for their preschool than I did for my mortgage), ski trips/beach trips, travel (we're been to ~10 different countries, and probably another 8-9 Caribbean islands), etc.

All of the necessities obviously come first (mortgage, retirement savings, keeping the rental property, etc.), that wasn't even a question when we made our decision.

.............Maybe I need a wife to help straighten my priorities...?

If you are Indian, how have your parents not ostracized you for just contemplating this?

Luckily, my parents give me freedom to make my own decisions so if I wanted, I could go buy a P100D!

 

[bcsteeve]

Hahaha... yeah... I didn't realize TMC has a 30+ (OLD) age limit. I can't wait to be 30!

Oh man, don't wish for that! Don't rush growing up. I have no particular regrets in life. I love my wife and my kid more than anything and I think I've had a very interesting and fortunate life thus far. But be clear... I would give virtually anything to go back and do it again. And I'm only 41! My knees hurt... all the time. I don't "get" Facebook. I can't go on rollercoasters anymore (tooooo diiiizizzzzzyyyy). I don't care what others lie about, getting older SUCKS.

Lol... but you'll be fine.

But, seriously... I don't know why my "Tesla is an old man's car" and "30 is old" comments got so much traction. I was kidding on both accounts. I mean, I was sort of being real with the 4-door-sedan bit... but there's plenty of hella cool in this car.

.............Maybe I need a wife to help straighten my priorities...?

OK, there's no talking to this kid. He's just straight up crazy.

 

[idleuser]

............Maybe I need a wife to help straighten my priorities...?

Oh you’ll be straighten out alright.

 

[Gagan]

Oh man, don't wish for that! Don't rush growing up. I have no particular regrets in life. I love my wife and my kid more than anything and I think I've had a very interesting and fortunate life thus far. But be clear... I would give virtually anything to go back and do it again. And I'm only 41! My knees hurt... all the time. I don't "get" Facebook. I can't go on rollercoasters anymore (tooooo diiiizizzzzzyyyy). I don't care what others lie about, getting older SUCKS.

Lol... but you'll be fine.

But, seriously... I don't know why my "Tesla is an old man's car" and "30 is old" comments got so much traction. I was kidding on both accounts. I mean, I was sort of being real with the 4-door-sedan bit... but there's plenty of hella cool in this car.


OK, there's no talking to this kid. He's just straight up crazy.

Old people don't get sarcasm either ... hahaha

But yah, there's no way this car should be classified as an old person's car... just the center display makes it a young guy's car!

 

[bcsteeve]

Old people don't get sarcasm either ... hahaha

I got it. I ignored it and did what old people do... spew unwanted advice to the young.

 

[Dublin 'Eer]

I didn't read through the entire thread, so if this option had been mentioned, I apologize. If you really want a Model S (and I would strongly suggest a CPO in your situation), determine the monthly cost difference between it and another option you'd consider and find a 2nd job that would cover that cost. Buying such an expensive car is not ideal in your case, but if it means enough to you that you're willing to work hard to pay the differential cost, I say go for it. As a software developer in what sounds like an urban area (HOV lanes) there should be opportunities for you to take on additional work.

 

[David L]

When you're in your 20s, earning $50k a year may seem like a lot, but you're probably overlooking some expenses that you should start saving for now. I'm in my mid-30s, so some of this is in my somewhat recent memory (or so I like to think ). For example, you may want to get married and start a family 10 years from now. If you want to buy a 2-3 bedroom house or apartment in LA, you're looking at $400k+, which means you'll need an $80k+ down payment. While you'll have no problem saving up that much without car payments, I imagine paying for a pricey car would make such a goal difficult to achieve.

I like to give myself context when considering pricey purchases by comparing them to my disposable income. List your annual income in Excel, then subtract off all of your taxes and at least several percent for 401k. Then subtract off all of your basic expenses, such as food, insurance, clothes, cell phone, gas, rent (if you move out), etc., in order to get your annual disposable income. For a car, compare your disposable income to the expected depreciation over your years of ownership. Let's say a $100k Model S is worth $25k after 6 years (just making up numbers), resulting in $75k of depreciation. Let's say you have $25k of disposable income, which means a Model S would cost you 3 years of hard work for 6 years of enjoyment. If you think that's totally worth it, then go for it! I'd personally hold off until the depreciation is less than 1 year of my disposable income.

 

[Gagan]

I didn't read through the entire thread, so if this option had been mentioned, I apologize. If you really want a Model S (and I would strongly suggest a CPO in your situation), determine the monthly cost difference between it and another option you'd consider and find a 2nd job that would cover that cost. Buying such an expensive car is not ideal in your case, but if it means enough to you that you're willing to work hard to pay the differential cost, I say go for it. As a software developer in what sounds like an urban area (HOV lanes) there should be opportunities for you to take on additional work.

When you're in your 20s, earning $50k a year may seem like a lot, but you're probably overlooking some expenses that you should start saving for now. I'm in my mid-30s, so some of this is in my somewhat recent memory (or so I like to think ). For example, you may want to get married and start a family 10 years from now. If you want to buy a 2-3 bedroom house or apartment in LA, you're looking at $400k+, which means you'll need an $80k+ down payment. While you'll have no problem saving up that much without car payments, I imagine paying for a pricey car would make such a goal difficult to achieve.

I like to give myself context when considering pricey purchases by comparing them to my disposable income. List your annual income in Excel, then subtract off all of your taxes and at least several percent for 401k. Then subtract off all of your basic expenses, such as food, insurance, clothes, cell phone, gas, rent (if you move out), etc., in order to get your annual disposable income. For a car, compare your disposable income to the expected depreciation over your years of ownership. Let's say a $100k Model S is worth $25k after 6 years (just making up numbers), resulting in $75k of depreciation. Let's say you have $25k of disposable income, which means a Model S would cost you 3 years of hard work for 6 years of enjoyment. If you think that's totally worth it, then go for it! I'd personally hold off until the depreciation is less than 1 year of my disposable income.

Thanks for the advice and numbers... I have ultimately decided it's too soon to spend my income on an expensive car.

As many have said, one indicator as to when I should consider it is when I have enough money to buy it outright saved up. Not necessarily buy it outright but that would indicate that I can afford it and have backup in case something does go wrong. Time to start to save up and invest so that hopefully I'll be a Tesla owner in 5-10 years!

Thanks to everyone!!!

 

[Zero CO2]

Thanks for the advice and numbers... I have ultimately decided it's too soon to spend my income on an expensive car.

As many have said, one indicator as to when I should consider it is when I have enough money to buy it outright saved up. Not necessarily buy it outright but that would indicate that I can afford it and have backup in case something does go wrong. Time to start to save up and invest so that hopefully I'll be a Tesla owner in 5-10 years!

Thanks to everyone!!!

good decision

 

[JCLwek]

When I was the OP's age I had 2 paid off cars. Accidents, leases, being suckered into the flashy new car culture, and 7 years later now I pay $900/mo for 2 vehicles. I wish I could go back in time when I didn't have to make car payments. I have the income to support it, but car payments are the worst! Live and learn.

 

[OooohNooo]

Do you have an emergency fund of any kind? Your budgeting goes in the shitter if you have a sudden $5000 bill or lose your job. $500/mo in free spending certainly won't go as far as you think it will. Your family may not appreciate you living with them rent-free if you get such an expensive car. Here is how my salary trend went, and the cars I owned around that time (last 6 years). I think of myself on the much more fiscally irresponsible side of things. Insurance for me has hovered around $100/mo - $130/mo, even as the cars got more expensive. I also pay $220/mo for two parking spots -- one in downtown austin, and one at my apartment. I am 28 years old with only 1 accident on record, no traffic infractions ever:

2011 Chevy Malibu preowned -> $220/mo financed. Made $60k/yr I crashed this car
2013 Chevy Cruze new -> $300/mo financed. Made $65k/yr. I got bored of this car
2013 BMW Z4 preowned sDrive35i -> $650/mo financed. Made $90k/yr. This car broke a bunch
2014 Audi A7 preowned -> $700/mo financed. Made $95k/yr. This car broke a bunch.
2014 BMW Z4 sDrive35is -> $730/mo financed. Made $120k/yr incl. bonus. This car sucked gas and I started driving further distances to work (new job)
2017 Tesla Model S 90D -> $1060/mo lease. Make $145/yr incl. bonus+stock options. This car is awesome.

 

[SO16]

Hello All... been lurking on the forums and Tesla website for few months now as I inch closer and closer to convincing myself to buy a Model S. So I thought that I could get real advice from real people and whether you think it would be financially irresponsible for me to buy a Tesla. I'll give you my numbers and thought process so please help by giving input of whether or not I actually should purchase it.

I'm 21(if age matters) and I make about 40,000 a year as a junior software developer. I plan on buying a new car early this coming year so probably February or March. By then, I predict my salary to also become 5-10k higher but I won't factor that in since it's speculation.

So basically, my reasoning is as follows.

- I make about 3,000 a month.

- I live with family so little to no cost on rent but come from immigrant family who recently tied up their money on new house mortgage so this car will be all on me.

- I typically spend about 500 dollars a month on food since I eat at home quite often. Factoring in other expenses here and there and I easily stay under a total of 1,000 dollars a month on personal expenses.

- I am still not sure of CPO or New but I'm leaning towards CPO since it'd be more affordable and because of the fact that the 7,500 rebate will most likely not apply to me at all.

- I currently commute to work which totals to nearly 80 miles a day and typically 3 hours of drive time. With a tesla though, I'd be able to get a clean air vehicle sticker which would save about 30 minutes each way.

- Insurance would be about 200/300 a month?

So based on this, what do you guys think? Things I should worry about? Hidden Costs? Need more info?

I have fairly good credit since I have cosigned on a new car before.

Thanks in advance to all repliers even if you do believe I am not being logical. And please be honest even if it may not be what I wanna hear! Thanks!!!

Sorry but NO! Be patient. You are young. Invest that money or into a retirement account. Buy a used model 3 in a few years for maybe 20k.

 

[turtlesz]

Everyone has different priorities but I personally don't think anyone should ever buy a car worth more then their entire yearly salary esp when factoring higher insurance and maintenance costs. Take a hard look at your taxes as something isn't adding up with the numbers your mentioning. Also max out your Roth IRA which I believe is $5500 a year while your income is low, and put some money into your retirement accounts and invest a portion. Then play around with the rest with what you want. I think life experiences and travelling the world would be something to consider as you have more flexible time when young and depreciating assets like cars can always be purchased used at fraction of the cost if tight on budget.

 

[buttershrimp]

Let me give you some insight into my sophisticated financial formula and thought process...

I call it, the Buttershrimp/Immanuel Kant Method of Financial Imperatives..... it goes something like this....

"You wussy.... will you please just grow a pair and buy the car? Or maybe just keep making delicious and cute click baity threads for me to read in between my twice daily orgasms, better known as a daily commute."

If you find the content of this post lewd or offensive, please be aware that Immanuel Kant lived in a different time and was a clearly a real potty-mouth when it came to financial philosophy...

 

[BinaryField]

Do you have an emergency fund of any kind? Your budgeting goes in the shitter if you have a sudden $5000 bill or lose your job. $500/mo in free spending certainly won't go as far as you think it will. Your family may not appreciate you living with them rent-free if you get such an expensive car. Here is how my salary trend went, and the cars I owned around that time (last 6 years). I think of myself on the much more fiscally irresponsible side of things. Insurance for me has hovered around $100/mo - $130/mo, even as the cars got more expensive. I also pay $220/mo for two parking spots -- one in downtown austin, and one at my apartment. I am 28 years old with only 1 accident on record, no traffic infractions ever:

2011 Chevy Malibu preowned -> $220/mo financed. Made $60k/yr I crashed this car
2013 Chevy Cruze new -> $300/mo financed. Made $65k/yr. I got bored of this car
2013 BMW Z4 preowned sDrive35i -> $650/mo financed. Made $90k/yr. This car broke a bunch
2014 Audi A7 preowned -> $700/mo financed. Made $95k/yr. This car broke a bunch.
2014 BMW Z4 sDrive35is -> $730/mo financed. Made $120k/yr incl. bonus. This car sucked gas and I started driving further distances to work (new job)
2017 Tesla Model S 90D -> $1060/mo lease. Make $145/yr incl. bonus+stock options. This car is awesome.

If you don't mind me asking, are you talking earnings before or after taxes? My gross income is just under 100K annually with very small expenses and I cannot see myself being able to purchase luxury vehicles and swap them so frequently.