Financially Irresponsible or Worth It?

[TaoJones]

CPO AP1 S85s have already sold from $40K-$48K. In a few months figure that $40K buys a lot of car with warranty - and you’ll want TACC in LA traffic. Payment won’t be awful either, especially relative to gas/oil/routine ICE repairs.

No need to spend more at this point. Drive the Model S into the ground; in 3-5 years when far better cars will be available (why, they might even react to stop signs and traffic signals), then you can go nuts if you want - after maxing out retirement contributions, of course.

After all, why retire at 70 when you can be self-sufficient at 45 or sooner. Just saying.

 

[Pruitt]

I'll express a different opinion than most here...

If it's what you really want, GO FOR IT!

You never know what's coming next. If you can swing it, and you think you'd be happy even with a few years of tight finances such a purchase may bring, then bite the bullet and do it.

Certainly you should plan for the future, but you always live in the present. At your age, there is plenty of time to be "responsible" in a few years.

In the words of Robert Heinlein, "Always budget luxuries first." Why? Because luxuries are those things from which most people derive the most pleasure when it comes to material things.

If you were 40 years old, the advice might be different. But right now you have time - time to make mistakes (if this is one) and recover fully.

I lived by that philosophy for the most part. I didn't save much in my early years (for retirement or anything else), I bought things that most advised me against, and my only regret is not having bought one or two other things I really wanted because I took that advice. That was living in the present.

But I also planned for the future, and executed to those plans. In six months I'll be retiring comfortably. You can have your cake and eat it, too. Otherwise, what good is the cake anyway?

Anyway, that's how I see life. How YOU see it will dictate your choice, so consider all the advice pro and con, then make the decision. Whatever you do, best of luck to you.

 

[MoonChou]

Insurance might be a bit higher than you think. My ELR was ~$400/6 months and my model S 75D ~$1,200/6 months with the same coverage. Depending on how much you drive tires will need to be replaced every 20-25k miles on 19" rims.

 

[Troy]

@Gagan,
You should consider the Model 3. Whatever reason you have for not considering the Model 3 is probably misinformation. Feel free to mention some of those reasons so I can add the relevant data.

 

[ItsNotAboutTheMoney]

I have a simple financial maxim: never borrow for fun.

I voted irresponsible. I don't think that it's crazy, just irresponsible.
Your disposable income seems to be depending on a significant part by living with and being subsidized by family.

There are two alternative routes to the large Model S payment:
- Get a used Volt with an HOV lane sticker, giving you a large proportion of any fuel saving gains. while also saving on insurance.
- Instead of having a large car payment, have larger living expenses: look for a place to live closer to work that will give you a much shorter commute.

 

[CinRedMan]

Quite an interesting thread here with nuggets of sound financial advice.
Ultimately, it is your decision, based on your value system; what is important in your life.

Advice from married guy, 3 grown kids (one still in college), someone in their mid-50s...you have the rest of your life to "pay it off".

However, always remember debit impacts your level of "freedom". aka: you HAVE to work. You HAVE to generate certain level of income to pay your bills.

Develop "financial" goals and understand the magic of compounding interest.

My "hind-sight"...suggest you develop "decade" goals, what do you wish to achieve by 30, 40, 50, 60? Yea, probably feels like a very long time, but...trust me, it will be here before you know it because the passing of time "accelerates" as you grow older.

Example: Goal #1 for my wife and I; by the age of 55, I could take a job "in spite of a paycheck".
Said another way, I wanted 100% financial freedom. No debit, retirement goals achieved, 3 kids through college (no debit), daughter married.

Based on this one goal, my wife and I made numerous, yet critically important decisions through the years. Mind you, there is always a bit of "luck" too, but at this point, we find ourselves 3 years ahead of plan with zero debit. But, this was what worked for US; you must establish your own plan!!!

Develop a BUDGET

If I missed it, sorry. However, I would advise you to make up a simple budget, documenting fixed expenses and variable expenses. The KEY to financial success IS ALL ABOUT CONTROLLING EXPENSES!!!

As always, the first line item in your budget should be "paying yourself" each pay day.
This is discretionary spending. AKA; $200/week that you can choose to spend on anything...or not spend. It doesn't matter, the money isn't tracked, etc.

Saving for retirement...might feel like a lifetime away, but this is where the magic of compounding interest comes into play. My advice, as soon as possible, throw 10% toward retirement. The initial pain is short lived and upon your first raise, you will never miss that 10% again.

Document current monthly fixed expenses.

• What is left?
• What are all the things you can do with the remaining funds?
• Do you have an "emergency fund"; remember, those fixed expenses are there, no matter your job situation....
• Now is where you might wish to document your financial goal: Own a Tesla.
• Then, how much, of what is left, do you want to spend on the Tesla?

I believe, if you take this approach, you can establish a figure which represents what you can "afford" to spend on a car; no matter the make/model.

Good luck! And as another member posted...remember, it is only money

 

[Max*]

I didn't read the whole thread, but there's something wrong with your math.

You make 40k a year and your take home is 36k a year (3k a month). You pay only 10% in taxes? I'm not going to run through all the math, but federal taxes should be about 14%, 1.45% medicare tax, 6.2% SS tax, 6.5% state tax, etc. Sure you might some deductions to offset it, but I don't see you getting to 10% taxes.

Add to that, are you putting any money towards retirement? I'd bet with a 90% take home estimate off your salary, the answer is no. Retirement should come WAY before car payment.

Sorry, it's being irresponsible to get a 50k car using the above math.

 

[larryrobins]

Go for it. The model s is more car than the 3 and it's been consistently fun to drive.I'd buy a used one ( with free charging) from Tesla as used car dealers really don't know what to make of these cars. Cars are always a poor investment but the Tesla model s is a great emotional investment. You won't be sorry.

LR

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!!!

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!!!

 

[No2DinosaurFuel]

If you can get a dirt cheap cpo 2016 or later then go for it. The older cars are notorious in failing here and there so your repair cost after the warranty runs out can be costly.

If you are doing 80 miles a day you can count on running outof earranty fast.

Also loan interest rates are going up so if you want a low interest used car loan you better get one soon.

Look I don't know the details of your math but I recommend factor a few more things and leave margins here and there because you night want that new iPhone or Android phone. You might want that new laptop or need new clothes or you might find someone and like you said going out will cost. What about registration foe the car or when you need new tires.

Point is there will be cost here and there you don't know about now. You don't want to be short from time to time.

 

[sandpiper]

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!!!

At 21, the financial decisions you make have a disproportionate effect on your future.

At your age I needed to buy a car. I bought a 5 year old Mazda, borrowed as little as possible and paid it off in 6 months - despite earning $28K per year. The same with my first house. I bought fairly cheap, and paid it off in 5 years.

Those two debts were the last debts that I ever had, and I can tell you that I have zero regrets. Don't get sucked onto the "borrow as much as they will lend you" treadmill.

You're in a great job, have a great future ahead of you. And you have an incredible opportunity to build some equity while you're living with your parents. Live a bit while you're young, but don't waste your money on something silly like an expensive car. In 5-10 years you will earn a lot more, and will be able to afford something a lot more comfortably.

 

[arcus]

With your level of income, I would definitely advise against it. Instead, even if you have moderate savings put that money into good use. Invest. Live within your means and be patient, toys can wait.

I earn slightly more than you do, but it took me almost 8 years to come out with a plan to own Tesla without jeopardizing family savings or investments made for the future.

If anything, aim for Model 3 or another EV in similar price range. Watch the reviews for new Leaf or Ionic to see if it might be a better fit for now.

 

[bcsteeve]

No one is focusing on being "rich".

You're kidding, right? You're really going to dispute my comment when all you had to do was read what he wrote (and which I directly responded to):

Thanks for the article because yes, the ultimate goal is to become rich

"ULTIMATE GOAL" some how you think "no one is focusing on being rich".

And then you go on to comment/respond to my ps regarding generational living... in fact, your post seems to suggest that I was talking directly to you, when it should be obvious I was talking to Gagan.

Self-centered much?

 

[Gagan]

@TaoJones I will of course look at what the price comes down to by the time I actually enter the market since prices will continue to slowly slide. 2016 and sooner does sound out of range still however.

@Brunton Thanks for the encouragement and till now, I also have lived in the present rather than saving for the future. The model S is just a way bigger step that I felt I should seriously take time to actually make a decision on.

@MoonChou I went to my insurance and they gave an estimate in the mid-high 200 per month so conservatively, I think I'd be looking at 300/month. Rate will most likely change by purchase date but hopefully lower rather than higher!

@Troy The only reason I hadn't considered the model 3 before this thread was because then I would need a temporary car for about a year. I am leaning more towards it now however after all the advice.

@ItsNotAboutTheMoney Am considering a cheaper used car now but as far as relocating, I feel it would be too temporary and ultimately cost more than if I just commute.

@CinRedMan Wow, thanks a ton for everything. I know and have read countless articles that it is always good to put money towards retirement but it's just such an afterthought considering I'm 21. I know it's financially ideal but I also like the extra motivation I am forced to live under when money is tight. Right now, I feel that I'm becoming complacent and not enjoying the present. So I understand that financially, it's far from a good idea.

@Max* Sorry for the numbers not adding up but it is because I used rounded rough numbers. The numbers are on the conservative end because I do make closer to 50k and monthly just slightly above 3k. It was meant to be so that thr estimates would be on the safer end.

@larryrobins Thanks haha... and I know I will definitely be happy with the Tesla if I got it but financial factors are giving me pause.

@No2DinosaurFuel Yeah, there are many other costs that I know would come up. I do feel that I would still have extra funds to cover them already though.

@sandpiper Thanks for the advice and I really like what you said about living life without buying expensive car. Probably many other places I could spend money on.

 

[brianman]

You're looking at a savings of 10,000 over 5 years and since you get to charge for free

I really don't like that people use the word "savings" for this concept.

"I like your jacket."
"It was 50% off, so I saved $1000."
"Do you need a new jacket, especially one worth $2000?"
"No."
"So in reality you wasted $1000..."

 

[bcsteeve]

I'm 21

Gagan... something else I meant to mention. You're too young for an S. And I don't mean that as an insult, judgement, or even a reflection of your finances or whatever. In fact, I'll word it differently:

The Model S is too old for you

It is an amazing car, but consider its audience. Unless you're going to get the P model and specifically want it for embarrassing hot shots on the drag strip... its a family sedan. It looks like a family sedan. To most of your friends that aren't going to appreciate how special that car is, they're just going to see you driving an old man's car.

Now to all you old men that are about to take exception to that... remember that at 21, even someone in their mid-30's was "old". 40's was bloody ancient. If you're older than that, forget about it, you're a dinosaur in his eyes.

Ignore price and features and all that... just show pics of various cars to your friends (especially the girls) and ask them to pick the one that you should get. I'll be shocked if they pick the S without you leading them to it. Kids (yeah, I said it) your age... 2 door hatchback, a cool looking pickup, etc.

Dress age-appropriate


This actually comes from experience. In 2004 I bought a 2003 Cadillac STS. 400 HP and by far the most expensive car I ever owned. I was 28 at that point and I really thought I looked like "the man" driving in that thing. I was so proud of it, I looked up an ex-girlfriend that I stupidly wanted to impress and took her out for lunch but really I just wanted to show off the car. Now, she was always a bitch... don't get me wrong... but when she said, "what are you, 80?" it opened my eyes. She didn't care that it was expensive or that it had gobs of power or that it had all these bells and whistles... it was a 4 door grandpa car.

And she was right.

The Model S is too.

[flame away, folks... but you're just in denial]

 

[brkaus]

It's a tough call. The fuel savings is interesting, will the free charging remain at work for the long haul? I personally wouldn't plan my life around free supercharger fuel savings. The time isn't worth it and would get old fast.

Have you checked insurance rates? Grab a VIN on the CPO page and call your insurance person.

You have free room, but could that change if someone gets sick, etc? If your forced to sell the car early you will be taking all the depreciation.

Will you be able to cover repairs? Tires? Out of warranty work over the long haul?

What is your job outlook?

In general, I would lean against it. You would be tying up significant capital and will accrue significant depreciation. "Top priorities" for a 21 year old change frequently.

But, if you run the numbers and honestly consider maintenance costs, insurance costs, charging, extras (charging, tint, floor mats,...) and it works, what the heck. Just try to make it work on a 4-5 year loan with a significant down payment, not a 7-8 year loan with as little as possible down.

 

[YauKwan]

You should not get a Tesla. Never tie more than 1/2 your take home salary on a depreciating asset.

Say you keep the car for 10 years. At then end of 10 years, no one will care you have a Tesla, it will be worth roughly 0.

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!!!

 

[brianman]

In 2004 I bought a ... Cadillac .... I was 28 .... ex-girlfriend .... said, "what are you, 80?"

TLDR version ^

 

[eleison]

Go for it. Worst case, you are still young enough to recover if buying the car is a "mistake"... You will experience high car payments, but that only gives you more appreciation for those times in life where you don't have a car payment. The higher the payment, the more you will appreciate those times with no car payment.

Best case, you make it fine financially through this period of your life, and you can look back reminiscing about of all the good times you had with your car That is what happened to me. I bought an expensive BMW right after college (years, years ago when they were not as mainstream as they are now), and I have no regrets.

I don't know too much if the Tesla is an "old man" car or not... However, being on the older side of things and liking Teslas, I lean towards Bcsteve being correct. hahahahahaha.... but than, that begs the question: what is a cooler "young man" car? I have no idea.

 

[bcsteeve]

what is a cooler "young man" car? I have no idea.

I just think back to the cars I did like at that age. 100% of them were 2-door. I can't think of a single 4-door car that I would have been caught dead in. 2 seats, even better. It really came down to either "modern" (at the time) sport hatchbacks or vintage (60's) muscle cars.

On the other hand, I wouldn't have even dreamed about dropping $50k on a car. Not even $10k. $5k was high. So maybe I would have been looking at "old man cars" if I had the cash, I guess I don't know.