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Financially stretching - what were your life trade-offs?

Discussion in 'Model S: Ordering, Production, Delivery' started by docrice, Jun 21, 2014.

  1. docrice

    docrice Member

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    Hi, this is my first post on this forum. I've seen some threads which somewhat touched on this topic here (particularly the one from December) as well as on teslamotors.com (although I haven't read through every single thread) but I wanted to do a pulse check again, especially with new owners where the initial hype might have worn off as well as those who might have had a change of heart in the last six months. Apologies if this topic has already been covered ad-nauseam.

    I'm curious as to how far current owners were willing to stretch themselves financially in order to be able to justify their purchase, not including those fortunate enough to be able to easily plunk down the cash up-front without a second thought. Cars tend to be an emotional purchase for many and I assume in this case we're talking about a relatively significant financial commitment for most.

    There are obviously many ways to look at this issue with a wide variety of subjective factors to consider and I presume most owners are sane enough to not put themselves into extremely vulnerable financial situations in order to get a fancy "nextgen" vehicle, but as a generalization, I'm wondering what kind and how much risk owners were willing to expose themselves to (delay mortgage payoffs, delay retirement savings, etc.) in order to afford one?

    I'm on the fence on purchasing (again) but after writing down the numbers, it seems I'm actually able to afford one assuming I put half down with a 72-month loan while potentially paying it off early, and still maintain my present course of paying off my mortgage ten years early as well. I had assumed a while ago that I'd have to delay mortgage payoff by quite a bit, but that doesn't seem to be the case, assuming future economic conditions aren't too adverse for me.

    However, this does mean the money I'm putting into a car is not being used for padding retirement or other investments. I'm a little conservative on these things so making a leap of faith requires me to do some comparison on just how sane (or not) my line of thinking is relative to others who may be in a somewhat approximate situation as myself, otherwise there's a nagging voice in my head yelling at me for being unnecessarily frivolous and indulgent. On the other hand, I'm over forty and not getting any younger.

    I plan on keeping the car as long as I can or however long the battery lasts or technology to replace it will be available. This will be my third car. My current vehicle for which I paid about $20k new is almost fourteen years old and still runs fine, but at 230k+ on the odometer it's not going to last forever. I can't cost-justify a Model S based simply on fuel savings (the new insurance will offset that) and perceived less mechanical maintenance (also offset by tire costs). And body-related damage repairs will be very expensive from what I can tell. When it comes down to it, this will be a very pricey avatar for my sense of futurism and willingness to gamble on positive disruption in a stagnant industry. A nice avatar, for sure, but I'm trying to walk the line to ensure I'm not making an overly impulsive decision. On the other hand, it's easy to over-rationalize.

    Living a few exits away from the Fremont factory SuperCharger adds a bit of comfort too.
     
  2. DEinspanjer

    DEinspanjer Member

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    Your message is a little hard to get a track on. The first few paragraphs had me itching to tell you not to risk hardship just to get a car. It is just a car and not worth the risk of losing a home or providing security.

    If the lifestyle changes you are considering is just keeping a mortgage a while longer or not investing quite as much in retirement funding, then my answer definitely changes to do it right away.

    If you can afford it, do it now while you can fully enjoy it. The car will bring years of fun and pleasure. You have to enjoy the path to old age rather than focusing solely on funding old age, because you have a higher chance of being alive the next ten years than the next thirty.

    If you were putting your ability to enjoy the next ten years at risk, or guaranteeing insolvency in twenty or thirty then that would be a bad choice, but don't waste chances to enjoy the present just to make the future a little more comfortable... if you get there.

    You will love getting into the car every day. You will look for excuses to take a quick trip with all the windows rolled down. You will think about making plans for a long road trip to someplace you miss or have never seen and a significant part of the fun will be getting there. Are any of those the case with your current car?
     
  3. MikeC

    MikeC Active Member

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    I gave up any potential international vacations for a few years, figuring that knocks off 5-10k of the purchase price. I'll just be doing road trips instead :) Wouldn't want to leave my car for weeks at a time anyway!
     
  4. meloccom

    meloccom Moderator Aus/NZ

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    If you are financially conservative like me, calculate the additional costs of owning your Model S, ie payments minus gas savings, and start putting that into a mortgage offset account. I started to do this in 2007 so it's never too early to start.
    Do a family budget and examine where your money is going. For me I saved some money by signing up to Time of Use electricity and moved large consumption to off peak, like clothes dryer and dishwasher. We also started to eat in a lot more.
    I also kept my last car for 15 years and would still have it but for a texting teenager in a Jeep crashing into it last year. I had to buy a stop gap car and the main focus was minimum depreciation which is why I currently drive a GM Holden utility which has a big following second hand amongst 20-30 something's.
    Finally we have only been overseas once since 2008 which was in 2012 to test drive the Model S.
    Once you have saved up a substantial deposit for the Model S it gives you the confidence to continue.
    Nothing however, removes the lingering doubt that this is a lot to spend on a depreciating asset.
     
  5. Footer

    Footer Member

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    Nobody here has really justified the Model S financially. Most of the 50,000 buyers seem to be on reasonably sound footing, although I'm betting that more people are stretching themselves to buy a Tesla than any other $80,000 car ever made. Some have compared it to a $30,000 ICE and come close to a financial justification if they drive it a lot.

    While actual maintenance should be less, maintenance costs are not. You have to get service through Tesla and that costs $475 every year if you buy the plan, which you need to do to protect your investment. I don't spend that kind of money on an ICE until the mileage gets up there.

    Everybody here buys it because it's a fun car, a really nice toy. Most want to support and further develop the technology.

    Personally, I feel you need your financial plans in order if you want to be an early adopter. The Model X is coming out next year and should cost less. The Model S cost should come down as the battery prices improve but since Tesla is not making much money at this point I don't think they can afford to reduce the price for a while.

    You're still young. Lots of driving ahead of you. I would wait a couple years, maybe find a $4000 used car in good condition to get you by till then. Financially you will never justify a Model S compared to that. However, keep an eye on the number of cars sold. Once it gets up to 200,000 you lose the $7,500 tax credit.
     
  6. Pilot_51

    Pilot_51 Member

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    For me, I've never had any debts until my Model S purchase and my investments aren't being impacted, with possible exception of TSLA stock that I might sell to finish paying off the loan. The stretch was saving up for 20 months before placing the order and carpooling on my brother's schedule for about 18 of those months. You could also call being extremely frugal (rarely buying anything not needed) to be stretching, but that might just be how I am and not so much to do with saving up for the car (even I don't know yet). I have a 60 month loan at 3.97% and was able to pay about half down, though I plan to pay it off nearly as fast as I saved up, which I've projected to be sometime in 2015 whether I sell the stock or not. Being young without major financial obligations such as a house or dependent family really helped.
     
  7. Bardlebee

    Bardlebee Member

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    So I was in your shoes not 3-4 months ago and I will link my thread if you haven't read through it yet. I really feel it helped me cover all my bases, at least from an outsider point of view:

    Need The Opinion Of Others For My Purchase

    I think I was in your exact circumstances and I chose to get the car. I can't tell you whether I regret the purchase or not because its only been 3 weeks since I took delivery. I can tell you however that I feel like I will never regret it. The payments aren't a stretch for me, had I not invested in TSLA the payments would bother me though because like you I am debt adverse and I would like to work on being debt free. A 1k car payment had I not had the TSLA stock would mean I couldn't divvy that money into paying off my last debt (my house) or putting it into retirement. So you can see it wasn't an easy choice for me.

    After going through every post in that thread and test driving, I sided with those that said this was an emotional purchase. It is when you get right down to it. I felt that life wasn't just about pinching pennies and working hard to be debt free and not have any fun until it was too late. I decided to get the car because while it was an expensive purchase I felt and still believe it was worth it to purchase for life enjoyment. I will still pay my mortgage and the Tesla off early and still be debt free in short order, just not as short as I wanted to be. You have to ask yourself how important it is for you to be debt free or I guess in your case paying off all your mortgage sooner then later. Is that more important than enjoying a really really freaking amazing car? Will you miss the 5-10 years of no payments over driving this sweet ride? Are you willing to wait another 3-4 years for the less expensive model?

    Here are some questions as well that came from that thread that I didn't anticipate thinking about. What if a tornado tears down your house and destroys your new Tesla? Financially will you be able to recover? What if a flood happens? What about a fire that burns down all your belongings? 10 years is a LONG time. Anything can happen.

    My payments today is 600 dollars and I was like you I payed off about half the car and got a very low 1.6 percent interest. So I am in a great spot right now and I don't think I will ever regret purchasing this vehicle. I look for reasons to drive it. I used to read about people saying that on this forum and I kind of rolled my eyes like, "How could that be, I am a home body... I don't want to go anywhere". I am telling you. I LOOK FOR REASONS TO DRIVE THIS CAR. :)

    Don't regret a thing!
     
  8. docrice

    docrice Member

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    Thanks for the link to that particular thread as it's directly relevant. I skipped over that one while combing through the forum. Seems we have a number of parallels, including vocation.

    My risk-averse tendencies may have benefited me twenty years ago when I was seriously financially struggling, but it's not a habit which equally applies well in my current situation which is obviously very different. I work in Silicon Valley and make a Silicon Valley salary, so clutching onto the pot like I'm still working minimum-wage is a disadvantage, but old habits die hard when you've been through some desperate years.

    I think I've had two vacations in the last twenty years. I've had to redefine what a vacation really means. But a in-country road trip with a new car would certainly be cheaper to some degree. Plus going through the TSA checkpoints are really annoying.

    Nailed it right there. But after reading through the replies in this (and other) thread so far, I realize a bit more now that it's not healthy to only invest in financial stability at all costs and sacrifice current well-being. Finding that balance sometimes is hard when there's a lot of general repeated advice to prioritize your retirement savings.

    I didn't really think of it this way. I'm probably too caught up in ensuring further stability that I tend to lose track of the bigger picture.


    I appreciate the advice so far. I'm still leaning towards purchasing, but I need to run through some additional number-crunching and understanding my real risk tolerance to make sure I'm not making an unbalanced decision. I don't indulge in spending like this, so even considering it automatically triggers my brain to react due to significant deviation from baseline. My current car still runs and looks fine, so I'm not at a forced decision point.
     
  9. Bardlebee

    Bardlebee Member

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    Have you tried test driving the vehicle? I got the S85 and I am happy I got it. The acceleration is ridiculous and its a great car, though to be frank I am coming from a 2014 V6 Mustang and that was my first and last car I owned that I bought myself. This is my first luxury car experience. Either way its a great car and while making the decision I found it very useful to test drive the P85 and S85 or even S60 to make an informed decision on this. I also decided to get the S85 over the S60 due to the super charging coming free and extended warrant as well as the other add-ons. Seemed like a great fit.

    I agree with those above, if you have the means and you have the stability to be able to recover from disaster you should get the car and not hesitate. Just tonight I found an excuse to drive it! :)
     
  10. Alysashley79

    Alysashley79 Member

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    My purchase was a stretch...I've laid this out before...you mentioned in your pits your car you have now you paid $20k for 14 years ago. Minus tires and insurance(because those are things you will have on the MS as well) how much have you say paid for gas in those 230k miles? Repairs? Etc...here is or was my break down from my previous car... You may be a little bit shocked at what you see...

    2006 honda pilot (purchased new) cost $30,000
    miles on ODO when sold in feb 2014 185k total gas paid (15 mpg) $48,100
    repairs done on car while owned not including tires $14,786
    Total for my honda pilot during ownership $92,000

    so you see I thought is purchase this quiet modest honda but in reality this car cost almost or more than the average MS!! I should say had I been paying for electricity for those same 185k miles it would have been approximately $4800. Almost a $40,000 savings!!!!

    ive owned my car for 9 months now. We traded the ridiculously high gas payments for a car payment but gave up things like cable tv, (we just stream them via the web) set a strict grocery budget for the family of $500 per month and we have managed to follow it for the most part for the last year. (And...my husband had to sell his beloved truck )
     
  11. docrice

    docrice Member

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    I test drove a P85 last year as that's all they seem to have for test drives at the time (I assume it's a way to give solid first impressions to newcomers to Tesla). Since I had already seen dozens of test drives on YouTube, nothing surprised me. Floored it, got what I expected. Had more road noise than I wanted, but that's probably due to the 21" wheel setup. I walked away thinking, "It's just a car, you don't really need this crap." Well, it may be just a car, but it's apparently compelling enough that I still keep thinking about it and here I am again salivating at the prospect. And I'm not really into cars at all. If something is still nagging me after nine months, I should admit I'm emotionally biased towards it.


    Since 12/00 (when I picked up my current vehicle from the dealership), I've spent $25,935.07 on gas. I'd ballpark the repairs around 10 - 15k (I'd have to go through multiple databases to get the exact number for fluid changes and parts, timing belts, minor repairs, smog checks, plug changes, and so on). I did some of the small work myself, so I could add up my own hourly-rate for those things but it's probably negligible in the grand scheme. So about $60k over 14 years.

    If there was no Model S in existence, I'd probably be looking at buying a 40k European sedan if my car was on the fritz. But since the EV world has changed, if I'm spending 40k for a traditional ICE vehicle, at that threshold I'd easily consider looking at the S85. It all comes down to the up-front sticker shock, I guess, and the number of unknowns such as repair costs after the warranty expires.

    Assuming my current car works fine for another five years, I could just wait for the long-awaited low-cost model. That'd be the most practical as I'd also save a lot in the process, but I wonder how close that model would be compared what's available today. That's part of the dice roll, because today's model is very motivating. I'm just hesitant to allow myself the, "...because I deserve it!" excuse because that's too easy.

    If I were to move forward on buying this year, I suspect I'd start cutting back on eating out often, etc. due to the psychological factor.
     
  12. Bardlebee

    Bardlebee Member

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    I am not a car guy at all myself. But I love the car and my choice still in getting it. I definitely had the same experience where I followed them ever since the Roadster for multiple reasons, but mainly its because EV's just make sense. Helps towards a goal of renewable energy, its an inspiring company doing great things... I could go on and on of the things I enjoy about the car that have nothing to do with the car. Been a Tesla freak for years. Not a car freak.

    I say if price is driving you crazy, call up the test drive people and ask specifically for an S85 ride or/and an S60 ride with 19" wheels. Its been over a year. You should reconfirm your convictions by riding again and see if it wasn't just the p85 pull/torque that lit you up.

    FYI, I have an S85 and the torque is STILL out of this world! Very glad I didn't splurge for the P85!
     
  13. jerry33

    jerry33 S85 - VIN:P05130 - 3/2/13

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    This has been my experience as well. Now the Model S will cost me more than the Prius it replaced in lifetime costs, but it won't cost more than an old fashioned car unless you drive very little. And is so much more convenient and fun to drive.
     
  14. dave

    dave Member

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    You're talking to a bunch of Tesla owners and fans, so understand that most of our opinions are that the car is worth it...

    Here is a dose of reality. At the end of the day the Tesla is a car that gets you from point A to point B. While the car is awesome, you will love it, are supporting a great cause and company, etc, etc, it is still just a mode of transportation and will not bring you true HAPPINESS. It is a material possession. One that depreciates. If you have to put yourself out financially or make extensive sacrifices I think it is not worth it. Financial stress and anxiety have the very real potential to bring UNHAPPINESS. This has to be taken into account.

    Now, this is just my personal opinion, but I think if you can not purchase the whole vehicle without financing it, then you shouldn't buy it. Putting yourself in debt, committing to years of payments for a depreciating asset that may end up causing you stress and anxiety is not worth it. Again, just my opinion. I know most people finance - it's just against my nature.

    Personally, I emptied my savings to buy the car outright. Love the car. Still on the fence if it was "worth it" financially, however, I have no debt, and it is not causing me any stress or hardship. I'm still maxing my 401K contributions, and haven't done anything drastic. My advice would be if you are in a situation to do something similar, go for it!! Personally I would never finance a purchase of this size, knowing that in 15 years it will be worth almost nothing. If you can pay for it outright however and think its worth it, go for it. Life is short! Enjoy it. Just don't create anxiety for yourself by going into debt for a depreciating material possession.

    IMHO of course. :)
     
  15. ecarfan

    ecarfan Well-Known Member

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    @dave, very well reasoned post...but you didn't really put all your savings into your Model S did you? You say you are still maxing out your 401K contributions so that's good.

    @docrice, consider an S 60 with the Tech Package as the only option (and Supercharger capability if you plan to take it on long trips). Just that configuration is an awesome car. And it will last a very long time...
     
  16. bonaire

    bonaire Active Member

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    #16 bonaire, Jun 22, 2014
    Last edited: Jun 22, 2014
    If you are conservative, you also have patience. In less than three years, you can get a nearly as capable Gen III for half the price of a MS. Invest wisely between now and then to leverage your income and existing investments. The car might even be "free" if you are as lucky as some long term TSLA holders. If you can keep emotions in check, life becomes far more affordable. In terms of wanting to drive electrically, why not consider doing a knowledge-growing test drive in all EVs and keep in mind that every EV moves you electrically, not just Teslas. The future of cars is electric and many do not require you to stretch financially. They are a compromise in range and size. But are not bad cars. I have never owned top of the line products in my life and feel that it was a maturing process that allows me to handle negative things as easily as positive ones.

    You can also buy used MS on the open market and also older loaner cars for discounts at Tesla.

    Owning one is not cheap. You need to factor in slight to moderate insurance increase, adding possibly a HPWC at home and maybe CHadeMO adapter, the delivery and doc fee, sales tax and more. An 8 year ownership of an 80K tesla will not burn gas but will burn electricity. Roughly 3.3 miles per kWh is a good computation when charging at home. In CA, you must get a time of use meter to charge the car at night. Otherwise, high tiered electric rates can kill your compare against gas. Free at the superchargers and if you live near one, great. Heavier, more powerful car will require possibly earlier tire replacement. Availability of repair shops is limited to Tesla owned service centers. Fuel savings from your Honda Pilot is easily halved if you went to a Honda CR-V and use eco mode. If you want to go somewhere in between, there is the Ford Fusion Energi and Chevy Volt. Electric yes and gas sippers on the highway when driving long distances. I have driven most of the EVs. All have quick torque off the line. Try a Chevy Spark EV. They are available in CA. Tons of fun but a tiny car. Chevy Volts are fun and quick off the line and have a sport mode and low gear which make one pedal driving fun too.

    the bigger question is - do you want to drive electrically or do you want to drive a Tesla. That is where you have to look to see if you are drawn to Tesla for some irrational reason that you cannot break through. You may not like the Leaf, but you could try a Volt. Do you need red-light racing launch performance or do you live a mature life? Do you always drive along routes which have superchargers or go off the beaten path and might need gas when criss crossing the countryside.
     
  17. ZBB

    ZBB Emperor

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    I would look back on your actual car expenses over the last ~5 years or so. Include car payments, service/repair cost, insurance, fuel, tires etc. When I realized that buying the Tesla would reduce my average monthly cash out for a car by ~$125 for all those things, I was able to justify it, even though the Tesla's up front cost was ~$25k higher than my most expensive previous car.

    I also looked at the total expected cost over 5 years for both the Tesla and some alternate cars I was considering -- purchase, estimated depreciation, operating cost, maintenance, tax and registration, any rebates, etc. Even though those cars cost ~$25k less up front, they were comparable in total cost to own (using my own realistic assumptions, not "Tesla Math"). And that's with an assumption that the Tesla would depreciate faster than the other cars (where I used Edmunds trade in history for older models to get a depreciation % at year 5).

    I ordered the Tesla almost 15 months ago now and have been driving it for over a year. Turns out my estimates were a bit on the conservative side. Mostly because I put ~3k more miles on the Tesla than expected in the first year -- we're driving my wife's ICE less, so our fuel savings are even higher than estimated.
     
  18. dave

    dave Member

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    Yup. I spent all of my disposable savings on my Model S. Did not touch my retirement or emergency fund, but spent everything else I had. I have zero debt however. Mortgage is paid off, making my 401k contributions, and slowly building my savings up for my next purchase. I believe in paying myself first and saving for what I want. I'd never go into debt for a car.
     
  19. Jeff N

    Jeff N Active Member

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    #19 Jeff N, Jun 22, 2014
    Last edited: Jun 22, 2014
    +1 for the Volt suggestion. They can be bought new for effectively about $22k before taxes and registration. $35k MSRP minus $7.5k fed credit, $1.5 CA rebate, $5k discount from a volume dealer like Keyes Chevy in the Los Angeles area. Drive that for 3-5 years and then get a 3rd gen Tesla.

    I've spent about $50 on maintenance for a single oil and filter change during the last 3.5 years and 86,000 miles of owning my own Volt, in accordance with the suggested maintenance schedule.. I also replaced the tires at 57,000 miles.

    I'll have to pay a few hundred bucks late this year for my 2nd oil change around 100,000 miles since the schedule calls for replacing the coolant, spark plugs (actually, they are probably fine), engine air filter, and probably transmission fluid. Then I'll be good for another 50,000 miles....oil change, tires...another 30-50,000 miles... buy a 3rd gen Tesla. Meanwhile I enjoy driving 80-100 miles electric with a recharge at work during the day.

    Save and invest the $50k difference between now and then.
     
  20. bonaire

    bonaire Active Member

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    Jeff,there is always leasing too. Many early EV buyers leased so they can get into something new in three years when the technology changes. Why would someone stretch to get an MS now when they can buy a Gen III in three years or choose from five or six other competitive models at that time as well. The MS used models with 40-50 K miles on them coming off lease will also be half price to today's new pricing. I met someone a few months back who is driving a Volt who intends to buy a used Model S in 2016.
     

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