Maybe instead of assuming everyone that commented is wrong and you’re right, you should reevaluate why you think everyone is wrong in life
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For those that own a Model S Ludicrous without breaking the bank, what is you total comp or job?
- Thread starter Drizzle
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Think about it another way. All discretionary spending in relation to what is “appropriate” or affordable is relative to your situation and values. Do you have 1 year’s comp saved in rainy day fund? What percentage of annual income do you save? How many years to retirement? Have you invested in/saved for home? Other obligations and debts? What is risk tolerance? Overall financial priorities over next x years?
When all else is covered, what level of happiness do you get from spending more on a car? Is there a better opportunity for $$ you would save by getting a Corolla, entry level Tesla or whatever?
Sorry to preach. But I think discretionary spending is smartly governed by balancing big picture priorities. I never would have purchased the Tesla I did, without being comfortable that I was not compromising something else that was more important.
When all else is covered, what level of happiness do you get from spending more on a car? Is there a better opportunity for $$ you would save by getting a Corolla, entry level Tesla or whatever?
Sorry to preach. But I think discretionary spending is smartly governed by balancing big picture priorities. I never would have purchased the Tesla I did, without being comfortable that I was not compromising something else that was more important.
I appreciate this response, but what I'm really after is more of human, guiding element. I have no one to mimic or aspire to in my life when it comes to salary and finances. I can answer some of those questions you raised, but at the end of the day I don't know what to do with an extra $3k a month besides invest or buy a rental property. I don't even know what the possibilities are besides these two things.
When you say "doable", is that with a 5 to 7yr loan?
I would try to resist the urge to buy a car until I had enough saved up to pay for it in cash.
I can't believe that someone that is senior enough in life to earn $183k has difficulty working out why people wont post sensitive details in a public forum, nor can I believe that someone with the skills to obtain such an income cannot work out a budget.
Maybe you should apply the wife (SO) approval factor method. If she/he threatens divorce then you know you cannot afford the car. Or maybe it will clarify your desire or not for the car. Buying a luxury car is mostly an emotional choice, assuming you can afford it.
Maybe you should apply the wife (SO) approval factor method. If she/he threatens divorce then you know you cannot afford the car. Or maybe it will clarify your desire or not for the car. Buying a luxury car is mostly an emotional choice, assuming you can afford it.
Then start with a good book on personal financial management so you can establish your own guidelines and targets. Most include fundamentals like the 50/30/20 rule of thumb... invest at least 20% of gross annual income, with 50% on necessities and remaining 30% on discretionary. Another tenant is maintain at least 6 months in an accessible rainy day fund outside of long term investments. I think 1 year is safer. If you are meeting goals and have $3K per month in disposable income, I always feel better with a compromise. Invest half and have fun with the rest. No guilt.
skitown
Member
The smartest thing I ever did in my first job out of college was to listen to an older coworker who advised me to take advantage of my company’s saving and stock purchase plans vs buying a bunch of toys with my new income. I took his advice and made saving a life habit. It’s served me very well. Consequently I don’t buy cars unless I can afford to pay in cash. That’s been my path. YMMV.
Not necessarily. While mine isn’t a performance/ludicrous, my down payment on the car was half its total cost, and I paid the rest loan off before ever making a first payment, so monthly income wasn’t a factor(if anything, my monthly cost dropped dramatically vs. the used Toyota Highlander it replaced).
IchDochNicht
Member
I have a somewhat (not exactly) similar occupation as you do. However, I don't have a Model S with ludicrous mode. In fact, I didn't think I could ever afford a new Model S, despite the tax break - at least not as long as I would keep my classic Porsche (which was my childhood dream that I've owned for 20 years, so I'll be very reluctant to ever sell it).
But I know what I want, and I'm willing to wait and make some compromises. For example, I don't feel that I'm above buying pre-owned. Letting someone else take the depreciation and shopping wisely has saved me much money over the course of my life. And I'm not about unselective choices - I don't need "Fully loaded", or "The full enchilada". Ludicrous mode? For what? Even the slowest Model S is soo much faster than my other car.
I bought my Model S pre-owned, as a 60D. I still cringed about spending so much money on a car, but it was exactly what I would have ordered, plus some options I would have been too cheap to buy. However, being a 60D, there were not many people interested in it. Why? They don't know that you can buy a software upgrade from 60D to 75D for only $2000, while the used car price for a 60D is about $7000 less than for a 75D. So, here I saved $5k right off the bat.
While I had the cash to pay for the car outright, I opted to finance about 2/3 of it, to preserve cash. The reason was that I planned to buy a 2nd property in the future, and I wanted to make sure I wasn't constraining myself too much with the car.
I did buy a property in the meantime - a completely run-down condo at the beach in San Diego. I spent the cash to have it gutted and completely rebuilt and furnished, per my own design. It now serves as a combination of my own vacation home and vacation rental (managed by an agency) when I'm not using it. You can see it here: Sleek Pacific Beach 2BR/2BA w/ Garage Parking, Near Beach & Entertainment - an EV charger will be installed sometime this year.
Is my situation anything like yours? I have no idea, so this may not help at all...
Still, I'd like you to take away the following lessons:
a. You can make some compromises that save you a lot of money (buy used, and perhaps not top of line)
b. Preserve cash, so you can deal with uncertainties or better opportunities despite the car
c. I know nothing about finances, so don't feel bad if you are not sure what's right. You are not alone.
But I know what I want, and I'm willing to wait and make some compromises. For example, I don't feel that I'm above buying pre-owned. Letting someone else take the depreciation and shopping wisely has saved me much money over the course of my life. And I'm not about unselective choices - I don't need "Fully loaded", or "The full enchilada". Ludicrous mode? For what? Even the slowest Model S is soo much faster than my other car.
I bought my Model S pre-owned, as a 60D. I still cringed about spending so much money on a car, but it was exactly what I would have ordered, plus some options I would have been too cheap to buy. However, being a 60D, there were not many people interested in it. Why? They don't know that you can buy a software upgrade from 60D to 75D for only $2000, while the used car price for a 60D is about $7000 less than for a 75D. So, here I saved $5k right off the bat.
While I had the cash to pay for the car outright, I opted to finance about 2/3 of it, to preserve cash. The reason was that I planned to buy a 2nd property in the future, and I wanted to make sure I wasn't constraining myself too much with the car.
I did buy a property in the meantime - a completely run-down condo at the beach in San Diego. I spent the cash to have it gutted and completely rebuilt and furnished, per my own design. It now serves as a combination of my own vacation home and vacation rental (managed by an agency) when I'm not using it. You can see it here: Sleek Pacific Beach 2BR/2BA w/ Garage Parking, Near Beach & Entertainment - an EV charger will be installed sometime this year.
Is my situation anything like yours? I have no idea, so this may not help at all...
Still, I'd like you to take away the following lessons:
a. You can make some compromises that save you a lot of money (buy used, and perhaps not top of line)
b. Preserve cash, so you can deal with uncertainties or better opportunities despite the car
c. I know nothing about finances, so don't feel bad if you are not sure what's right. You are not alone.
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Tic-tac-toe
Member
It use to be considered bad manners to ask... my 11 yr old likes to point out that most model S/X drivers are “really old, even older than you Mommy”. Hahaha! May not be true on the west coast where Tesla is the Toyota of Silicon Valley but here on the East coast, It’s true. I think it is the promise of FSD that makes them so popular. Or did before they learned Elon’s timeline has little to do with reality.
The only hard and fast rule (for us) is that depreciating assets like cars should be paid for in cash. Yes like throwing $$$ out the window but worth it
. My SP100D puts a smile on my face every single day. Planning on buying the roadster too. You can’t take it with you...
If you have no one to help you with your finances, let me help guide you a little. And yes, I’m one of the over 40 people you sort of offhandedly blew off earlier. Basically you’re totally asking the wrong questions.
An S with autopilot, a color other than black, and ludicrous will cost $139,000. Assume it is financed at 3.75% for 72 months, At the end you’ll have a 6 year old car for which you’ve paid $155,439. It’ll be worth about 1/3 of that. You’ll be out about $100,000.
Now assume that instead of buying the car, you invest that $2159 per month and you are minimally wise with your investments making 7.2% per year. At the end of 6 years you’ll have $193,715. Now suppose you never put another cent in but leave that money invested at 7.2% for 30 years, assuming retirement in 36 years. That money will have increased to roughly $1.67 million.
So your choice right now is that you can retire with the distant memory of driving the car for 6 years, or you can have an extra $1.67 million. We all get old. You included.
If you learn about investing, it isn’t unreasonable that you can make 20% or better on that same $193,715 over 30 years. For that, you’ll need to spend some time learning about stocks, how to evaluate them, how to value them, how to choose them, and when to sell them. You could learn it in a month or two. Then the value will be over $74 million. There’s more to it but in general that’s the way it works. The time value of money is enormous.
That $74 million in 36 years won’t be worth anything like what $74 million is worth today. Taxes will take a good portion of it. If you trust others with your investments, they’ll get most of it.
Or you can buy a new car.
docbrown
Member
+1 on only buying a car when you can afford to pay for it in cash (whether or not you actually use your cash to buy the car outright is another discussion).
What I can tell you is that there are numerous folks on TMC I know personally especially in the Del Mar area - surgeons, senior scientists, folks in venture capital, private equity and just plane ol' entrepreneurs who have had one or more successful exits (largely through our active angel/VC group). Many make well over $600K although the range can vary a bit on business and bonus as you say. Almost everyone has one or more nice homes, most have decent to nice cars (perhaps $30-$100K) and only one has a P100DL and a Ferrari because he deems that important and that's his business.
There is no magic number beyond a certain level of financial comfort and security - and that varies for each person. In our case, my better half reminds me we'd much rather do things like take a trip to Antarctica or fly the A380 in business class en route to the Maldives. I know many folks who make far, far less but have better/faster/more expensive cars - and that's just fine for me since I don't want debt of any kind and value financial freedom and peace of mind.
There is no magic number beyond a certain level of financial comfort and security - and that varies for each person. In our case, my better half reminds me we'd much rather do things like take a trip to Antarctica or fly the A380 in business class en route to the Maldives. I know many folks who make far, far less but have better/faster/more expensive cars - and that's just fine for me since I don't want debt of any kind and value financial freedom and peace of mind.
Since we are helping each other here, I'll try to enlighten you. I've spent the past 6 years balancing working as hard as I can and my sanity to know feel what it takes to make this kind of money (and likely more coming soon). I haven't had as much time to research anything besides maxing 401ks, IRAs, and preparing for an investment property or taxable investment account. No one in my family or friend circles make even half of this at this point, so I'm a bit lost in the woods for lack of a better term.
Yes, I understand budgeting and I have a financial advisor. What I'm lacking are major goals besides a house. What I'm looking for is someone to tell me "Comon man, that is stupid unless you really love cars. Just buy a vacation home and get ready for early retirement.
Hope this helps.
Do you feel like you missed out on anything at all? Say, being able to drive a fast car when you were still young and agile (if you aren't now)?
Thanks for this. Buying used would be a great option as well.
Thanks. This makes me feel like a model 3 performance is enough at my current cash flow rate.
That really puts things into perspective. I knew I liked cars but I didn't realize it that much. The question will be, is it worth it over retiring earlier, etc.
IchDochNicht
Member
You never know when you NEED to retire... that's the thing. There is a temptation to try and keep-up with the Jones' - particularly in Southern California. A friend of mine once described it as "You ARE your car".
Definitely. SoCal is a rat race. SF is even worse. I have some bearings left in me from my Midwest upbringing, and this thread is me struggling with these things.
StealthP3D
Well-Known Member
I have to comment on this since it shows a distinct lack of understanding.
The most important quality necessary to handle a fast car is good judgement (which gets better with age). That is followed by driving skills and good reaction/vision. A healthy person can drive high performance cars into their 80's. Paul Newman took Pole Position at his last professional race at the age of 82 in a notoriously difficult to drive Corvette. He died the next year of lung cancer.
You don't need to be young and agile to handle a fast car, but it might make you feel more young and agile!
skitown
Member
No, because financial discipline allowed me to escape a life in corporate America that I didn't enjoy and move to a resort town when I was in my mid 30s. I bought myself freedom first. Then Teslas. But hey, life is about priorities. You should do what will truly make you happy in the short and long run. While I'd surmise that my Tesla's are among the best things I've ever owned, in the end, they are just things. (albeit awesome things!) Things only give me so much pleasure. Time to do what I want gives me far more pleasure. Financial discipline has effectively bought me time to do what I want. That was my priority.
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