Lower Income model S owners

[Retrospected]

I feel like I’m far to young (25) to own my 13 P85. I’m certainly on the lower income, but I don’t have many expenses either. Finishing school, and should have the car paid off In 4. The cost of my ICE (2009 G37X) wasn’t much cheaper per month when insurance and gas was factored in though, so it’s not a big financial hit. The only downside is I’m saving a couple hundred less each month.

 

[gdec]

Couldn't imagine buying an S on ~$50k/yr. Seems like you would have to sacrifice a lot unless your living expenses are effectively zero (as in paid by someone else).

I would guess I am in the lower end of income for Model S owners. It was a stretch for me. I saved hard the first 10 years of my career and felt it was time to buy something I really wanted.

If I was making below the $50k mark I would avoid the car based purely on potential repair costs. It would only take one major repair to demolish yourself financially.

 

[RogerHScott]

void the car based purely on potential repair costs. It would only take one major repair to demolish yourself financially.

In my country, we have this odd thing called "insurance". Perhaps your country should investigate it

 

[gdec]

Let's say the MCU fails outside of warranty, insurance will cover it in your country? Or an accident where you are at fault?

 

[Pipcecil]

I am definitely on the left side of that bell curve, but average 100k combined a year. A CPO 2013 we purchased last year definitely was a stretch for our finances. But accounting for the 4 year CPO warranty (yea I wanted the better warranty) and the price I would have had to spend on a competing long range EV (the Bolt) the CPO wasn't much more (and lets face it, the Tesla is cooler). And I usually find we are the younger end of the scale as well (mid 30's)

Everyone has different finances: kids, medical bills, savings, retirements, etc. For anyone that can make it work - its awesome and I always recommend buying one

 

[RogerHScott]

[insurance will pay for] an accident where you are at fault?

Absolutely! They recently coughed up $60k in repairs. Without such insurance I'd be terrified to take my car out of the garage, even though I could afford to pay for repairs myself.

 

[ReddyLeaf]

You have an interesting understanding of how millions of people in this country live. It is quite possible to be fully employed and have zero disposable income. Many, many fully employed people live on less than $40k/year. Tesla ownership among this population is shockingly low

Hmmm, count one. I've been living on less than that for years, if not decades. I don't live in NY, SF or other high cost area, so the dollars go much farther. However, I'm pretty frugal, though I wouldn't consider myself so compared to my grandparents. Oh, I paid cash.

 

[vraev]

I am definitely on the lower end myself at 45k for now. However, I justified my 2017 model s purchase with the fact that I was going to get a BMW that would cost at least 600to 700 a month...then considering I drive 150km a day, I would be spending over 450 on gas. A sizeable downpayment based on my last few years of savings helped me get the monthly payments on my finance to hit the thousand mark. I don't regret it at all. I love the car..but I am more than aware that I need to improve my finances in order to save myself for the next stage in life (31 now... And need to save for home, wedding etc).

 

[Another Geek]

What would classify as low income?

 

[FlatSix911]

Really depends on where you live ...
$84,000 a year now qualifies as low income in high-cost Orange County – Orange County Register

 

[K-MTG]

Really depends on where you live ...
$84,000 a year now qualifies as low income in high-cost Orange County – Orange County Register

View attachment 277323

That's just painful..

 

[sauce]

It also depends on what you budget for transportation costs.

For example, I budget in excess of $25k/yr just for my car because I'm a travelling businessman.

However, my revenue makes it that I must budget more in proportion for the car but I need to sacrifice somewhere else, hence, my house is relatively modest and my mortgage is manageable.

At the end of the day, I have to agree that 1) you must balance your budget at the end of the month and 2) your net ratio should remain positive or at least owning a car shouldn't be what brings you into net-negative territory even if it is a business investment for you, as it remains a depreciating asset.

 

[FlyingCookie]

I make about $70K/year base pay, and I run my budget as if I make that (even though I make more most months). I fit a used $50K Model S financed over 3 years into that, and still had money to spare. I could probably still swing it if I made $50K, but I'd likely finance a bit longer in order to keep the payment a bit lower.

My work has me driving about 2000 miles/week, so a Model S just made sense. This car pays for itself in gas savings by the 2nd week of most months.

I also bought a used Cadillac for $10K back when I worked for Dominos and had no issues paying the payment on it. The flip side is I spent almost no time eating out on my own dime, I didn't go to bars/movies when my friends did, and my only real living expenses were rent and food. (Which was usually a $50 trip to Walmart once a week) I've never been interested in partying and spending money on entertainment, so I've had plenty of disposable income not being disposed of.

Now that I travel for work, I make much more money than Dominos paid and my living expenses are LOWER because I'm out of town most weeks and the company is buying food. I pay rent for an apartment I'm not actually living in, so the power bill is basically nothing, and I pay my car note. Those are my only real expenses. Cable and internet are provided by the apartment complex. So for me, a $50K car is easy. I probably could have bought new, but wasn't willing to take the huge depreciation hit due to the mileage I'll put on the car.

 

[eyespii]

I make about $70K/year base pay, and I run my budget as if I make that (even though I make more most months). I fit a used $50K Model S financed over 3 years into that, and still had money to spare. I could probably still swing it if I made $50K, but I'd likely finance a bit longer in order to keep the payment a bit lower.

My work has me driving about 2000 miles/week, so a Model S just made sense. This car pays for itself in gas savings by the 2nd week of most months.

I also bought a used Cadillac for $10K back when I worked for Dominos and had no issues paying the payment on it. The flip side is I spent almost no time eating out on my own dime, I didn't go to bars/movies when my friends did, and my only real living expenses were rent and food. (Which was usually a $50 trip to Walmart once a week) I've never been interested in partying and spending money on entertainment, so I've had plenty of disposable income not being disposed of.

Now that I travel for work, I make much more money than Dominos paid and my living expenses are LOWER because I'm out of town most weeks and the company is buying food. I pay rent for an apartment I'm not actually living in, so the power bill is basically nothing, and I pay my car note. Those are my only real expenses. Cable and internet are provided by the apartment complex. So for me, a $50K car is easy. I probably could have bought new, but wasn't willing to take the huge depreciation hit due to the mileage I'll put on the car.

Holy crap - 2000 miles / week?? How many hours do you spend in your car per day?Spend your money where you spend your time i guess!

 

[Qbenjamin]

I've lived by a general rule that your debt to income ratio should never exceed 49%. I have annoyed myself in the past by making "cheap" purchases, but I can't stay too mad when I don't completely splurge.

 

[jbcarioca]

It's very easy to not feel wealthy despite being in the rarified levels. Some people who are there and live on investment income constantly worry about changes in tax policies or health or just bad investment choices. Despite high wealth and high disposable income there is plenty to cause anxiety. Despite the odd joke above, being Norwegian is far less anxiety-producing than being in the US or quite a few other countries.

Just think, if you're in the .001 % in the US any move to actually fix the tax code in a rational way will cost you lots of money. In the meantime those Americans in that class can, and sometimes do, pay almost no federal tax. Sensible people worry about that. If you're in the category you need to reconcile what you know to be good public policy with your own financial benefit.

 

[FlyingCookie]

Holy crap - 2000 miles / week?? How many hours do you spend in your car per day?Spend your money where you spend your time i guess!

Most days it's about 1 or 2 hours for daily driving. On the front and end of the week I can easily spend 12-16 hours in the car.... Being paid for every mile

 

[DanKC]

This thread was enlightening! There are so many variables. The variable of a gigantic loan never crossed my mind when considering the different situations. Guess I always assumed there were a few people that didn't pay cash, but maybe it's more than I think. For anyone on the far left of that curve, borrowing would likely be a necessity. A mortgage-sized car payment would make me very, very nervous. That's my biggest consideration in this purchase...do I want to put that much cash into a car.

 

[jbcarioca]

This thread was enlightening! There are so many variables. The variable of a gigantic loan never crossed my mind when considering the different situations. Guess I always assumed there were a few people that didn't pay cash, but maybe it's more than I think. For anyone on the far left of that curve, borrowing would likely be a necessity. A mortgage-sized car payment would make me very, very nervous. That's my biggest consideration in this purchase...do I want to put that much cash into a car.

FWIW, roughly 35% of vehicles in the price range of S and X are sold for cash. We don’t know exactly the percentage for Tesla but we do know that the average FICO score for Tesla lessees is 767 so however weather they are the have plenty of cheap financing available. That was disclosed in the lease securitization earlier this week.

 

[Zeromus-X]

Holy crap - 2000 miles / week?? How many hours do you spend in your car per day?Spend your money where you spend your time i guess!

That was my philosophy when I bought the car. I have a 200 mile per day commute, three days a week. If you average that to be about 2500 miles per month at California gas prices ($3/gal), with my previous car getting about 26 mi/gal, that meant a savings of $300/month in gas alone. Makes it much easier to justify the payment.