Your M3 price vs. your disposable income

[Foxhound199]

Trust me -- I could not care less how you pay for your car choice

That was my only point of contention.

 

[tekdemon]

Glad to see that there are a bunch of other cheapos like myself who are being relatively frugal with the 3.

 

[tekdemon]

For those of you who said 5 months or less, how are you making that much money? And can I join?

Well, I actually voted 6-10 but I was ignoring growth in the value of my investments that haven't been realized, if I counted both investment and employment income this last year has been such a good year I'd have to put 1.
But mostly I work as a physician and live pretty frugally and put my money into some very high risk investments/businesses some of which really paid off. Since I live pretty cheaply otherwise the total disposable income becomes relatively high even before I count my investment/business income.

 

[tekdemon]

This is an interesting article The 1/10th Rule For Car Buying Everyone Must Follow | Financial Samurai

To be honest I did not quite follow that rule....

The last car I sold off I owned until it was worth <1% of our household income since I drove it for 14 years. Finally decided it was time to stop being a cheapo and still drive this ancient thing, so the Model 3 is replacing it.

 

[KarenRei]

This is an interesting article The 1/10th Rule For Car Buying Everyone Must Follow | Financial Samurai

To be honest I did not quite follow that rule....

Stupid overgeneralization.

I've been averaging a couple thousand dollars per year in nonscheduled maintenance on my Gen1 Insight. I spend a couple thousand dollars per year in gasoline. Swap out a car? There's not going to be some combination of "low maintenance", "low fuel cost", and "low purchase price" that can be arrived at - not in Iceland, at least. If it's cheap, it's probably old, inefficient, and full of maintenance problems. The reason being that new cars here cost a fortune due to high VAT and fees.

Except for EVs. Which have no VAT nor fees. In a country with expensive gasoline (nearly $8/gal), but cheap electricity.

Buying a M3 will save me something like $5k per year. It's a no-brainer in my situation. Saying that I shouldn't because it's "more than 10% of my income" (like I'm supposed to make over 4 million USD per year?) is nonsense.

Everybody's situation is different. And everybody's priorities are different. Everyone should evaluate all of their purchase prices on their own. Furthermore, I seriously doubt that such a "10% rule" should apply to almost anybody. Vehicles are usually the second most expensive thing people own, after a house. What does this person think that people are supposed to be spending their money on instead? It's normal to spend much more than that on vehicles because it is one of the main things people spend money on.

The rule should just be "don't spend out of your means". Be aware of depreciation, be realistic in your assessments of all maintenance and fees, take into account the unpredictability of the future, etc... then make a budget, and stick to it.

 

[SageBrush]

You're absolutely right that hard work makes a difference, but it's hardly determinative.

Without a doubt.

 

[siggyfreud]

Liked your post until this point, as this creates the side effect of inadvertently hurting those who might be qualified but are denied because of a quota. Qualifications and aptitude should be the foremost prerequisites for job ops.

Except for decades it wasn't, and favored one race over another. And after getting the hand up to turn around and say "sorry, wouldn't be fair to have affirmative action," is, in my opinion, wrong.

 

[T34ME]

Qualifications and aptitude should be the foremost prerequisites for job ops.

Agree, that should always be the prerequisite. But for too long historicaly it wasn't that way and in too many places that favor a particular race (white) and gender(male) it still isn't that way. So how do you propose to fix that injustice if not by affirmative action?

For example in California, military veterans are given significant "bonus points" for qualification for any State job. Frequently, a military veteran will get the job even though less qualified and with lower aptitude.

 

[JeffK]

So how do you propose to fix that injustice if not by affirmative action?

For example in California, military veterans are given significant "bonus points" for qualification for any State job. Frequently, a military veteran will get the job even though less qualified and with lower aptitude.

Not counting racial or sexual biases of HR staff, I feel that no one should get bonus points and everyone should be hired based on merits.

However, there's the issue of recruiting. Action should be taken to make sure recruiters are looking for recruits from diverse backgrounds, as this often leads to diverse thought, and many times better outcomes for a business. Think of Apple's whole "Think Different"[ly] stuff. Apple doesn't practice what they preach, but that's beside the point. This doesn't mean they should hire based on race or a quota, but make sure as many people as possible have been informed about the opportunities available at that company and give equal opportunity to those who end up applying.

Once hired workers should get paid according to experience, merit, and seniority vs arbitrarily based on racial or sexual biases, which is, unfortunately, sometimes what we end up seeing in industry.

 

[Canuck]

I don't understand why some people get so worked up over affirmative action. By and large, it's a non-issue if you work hard and pursue your goals. I missed out on my preferred law school because they took a certain amount of native Americans who did not have nearly the same grades and LSAT score as I did. Plus, decades ago when I went to law school the bar was overwhelming male so there was quota of more females than males in order to even out the profession. I was number 3 on the wait list and without affirmative action I would have went to my preferred school. But I understood we need a more diverse legal profession and I didn't put all my eggs in one basket -- I applied to a number of law schools and went to my second choice. I also told people at that time who said I should be upset about it, and one person even suggested a lawsuit, that I was all for it. This was decades ago when affirmative action was a novelty.

People who get worked up about it, like Trump, usually never had to compete for anything when starting out. He got money and connections from his father, and fails to even understand how some people start with a huge negative and others start with a huge plus, so we need to even out the playing field. In fact, he has the gall to say he only got one million $ from his father, which is BS, aside from the fact that the connections his father gave him means more than the money. It drives me nuts when I am with white males of privilege complaining about affirmative action. Then there's those who don't work hard but still complain that others are taking spots that they would have never got in the first place.

Also, to suggest that those who best qualify make the best in the field has been proven wrong over and over again. It's usually those in the middle of the pack that are most successful, and some affirmative actions benefactors end up in the middle of the pack but among the best in their field. Case in point: Barack Obama.

Giving someone a boost who has rarely got a break, often just based on the colour of their skin or their gender, is how a just and equitable society should be governed, at least in my view, even if that break means others who are more qualified lose out, like I did.

 

[JeffK]

I don't understand why some people get so worked up over affirmative action. By and large, it's a non-issue if you work hard and pursue your goals. I missed out on my preferred law school because they took a certain amount of native Americans who did not have nearly the same grades and LSAT score as I did. Plus, decades ago when I went to law school the bar was overwhelming male so there was quota of more females than males in order to even out the profession. I was number 3 on the wait list and without affirmative action I would have went to my preferred school. But I understood we need a more diverse legal profession and I didn't put all my eggs in one basket -- I applied to a number of law schools and went to my second choice. I also told people at that time who said I should be upset about it, and one person even suggested a lawsuit, that I was all for it. This was decades ago when affirmative action was a novelty.

People who get worked up about it, like Trump, usually never had to compete for anything when starting out. He got money and connections from his father, and fails to even understand how some people start with a huge negative and others start with a huge plus, so we need to even out the playing field. In fact, he has the gall to say he only got one million $ from his father, which is BS, aside from the fact that the connections his father gave him means more than the money. It drives me nuts when I am with white males of privilege complaining about affirmative action. Then there's those who don't work hard but still complain that others are taking spots that they would have never got in the first place.

Also, to suggest that those who best qualify make the best in the field has been proven wrong over and over again. It's usually those in the middle of the pack that are most successful, and some affirmative actions benefactors end up in the middle of the pack but among the best in their field. Case in point: Barack Obama.

Giving someone a boost who has rarely got a break, often just based on the colour of their skin or their gender, is how a just and equitable society should be governed, at least in my view, even if that break means others who are more qualified lose out, like I did.

I disagree, I don't think it's ever acceptable to hire solely based on race, sex, religion, etc (unless the job is very specifically dependent on those factors). Whether that's trying to fill an artificial quota or otherwise. That's at least my personal opinion.

We might be a bit off topic from the thread at this point.

 

[SageBrush]

Giving someone a boost who has rarely got a break, often just based on the colour of their skin or their gender, is how a just and equitable society should be governed, at least in my view, even if that break means others who are more qualified lose out, like I did.

I'm somewhat in the middle of the political spectrum on this. I think all people should have adequate opportunity to succeed: good pre-schools, good elementary schools, good high schools, great libraries and free internet access. Then leave it up to people to rise or fall as their abilities and work ethics allow.

The examples of affirmative action I saw when my children were growing up was mostly political correctness, giving advantage to kids that could check off a minority box but were part of my children's cohort and social group. So while I agree with the idea of affirmative action, I have to say that it fails in practice.

My other more immediate experience with a type of affirmative action is at work where I am an independent contractor for a hospital that practices racial preference. It has given rise to a mafia of incompetent, politically corrected natives who are incapable of running the hospital, let alone efficiently. I certainly understand their desire to promote and advance the local community but instead they have a hospital that sucks the community dry through inefficiency and corruption.

 

[T34ME]

Once hired workers should get paid according to experience, merit, and seniority vs arbitrarily based on racial or sexual biases, which is, unfortunately, sometimes what we end up seeing in industry.

Yes, and that's how we get to the truth that in general men are paid more than women for doing exactly the same work.

I was number 3 on the wait list and without affirmative action I would have went to my preferred school. But I understood we need a more diverse legal profession and I didn't put all my eggs in one basket -- I applied to a number of law schools and went to my second choice. ..............................Giving someone a boost who has rarely got a break, often just based on the colour of their skin or their gender, is how a just and equitable society should be governed, at least in my view, even if that break means others who are more qualified lose out, like I did.

A sincere congratulations on overcoming what you initially thought would be devastating to your chosen career. Perseverance is a key component for success. I know I have "come to the plate" many times in my lifetime and "struck out" more times than I care to admit. But overall, my batting average is maybe 700 to 800 percent. I had a professor in grad school who was visiting from Lebanon. He said that it is foolish not to take a chance in American business because "the deck is stacked in your favor." He who endures to the finish, endures best.

 

[T34ME]

The examples of affirmative action I saw when my children were growing up was mostly political correctness, giving advantage to kids that could check off a minority box but were part of my children's cohort and social group. So while I agree with the idea of affirmative action, I have to say that it fails in practice.

But in your children's case, politically correct affirmative action did work in practice. Your children were exposed on a first hand basis to "disadvantaged" children and those children learned from your children. I went to a private parochial grammar school that my parents paid for "tuition". Qualifying minority and majority children attended at no fee. So my parents were in fact subsidizing those children to some extent. We children didn't know or care who was paying and who was attending for free. Upon graduating, we all attended a free public high school and many of my grammar school minority friends continued to be my best friends in high school. Yes, politically correct affirmative action can and more often than not, does work in practice. Let me give you an example - my primary care physician is Mexican, my cardiologist is anglo white, my neurologist is Filipino, my sleep doctor is Chinese, my ENT doctor is Filipino (before I moved I had one that was black), my audiologist is Asian, my dentist is anglo white, my endodontist is Hispanic, my optometrist is female Hispanic, and my daughter is an anglo female PsyD (and is paid the same as her male counterparts) - all of them highly skilled and professional. And I have about half of them interested in purchasing a Tesla!

 

[siggyfreud]

I think many in society tend to ignore the huge advantage while people have received over the past two centuries. Pretend you've been playing in a poker tournament, and for the last two days you've been getting 7 cards dealt to you while the other guy has gotten 5. Because of this, you've had a huge advantage, and taken a lot of the winnings. At some point, someone recognizes this isn't fair, it's bad, and should change, so they take away the two extra cards you're playing with. Now there are those that would look at that and say "okay, now it's fair," but doing some completely ignores the advantage that has put you in a better position to play in for the rest of the tournament.

Not having things like affirmative action is like ignoring the fact that you received much of those winnings because of the distinctive advantage you had. All affirmative action is trying to do is even the pot back up and reset the playing field.

 

[SageBrush]

But in your children's case, politically correct affirmative action did work in practice. Your children were exposed on a first hand basis to "disadvantaged" children and those children learned from your children.

You misunderstand. The kids that gained a leg up were not disadvantaged at all. Their parents were the same professional class as everybody else but they had a parent or grand-parent who was "latino" or "black."

 

[kbM3]

I never quite understand people who finance depreciating assets, regardless of the reason.

Simply because it is the wisest decision whenever you can make more gains by investing the money than the interest you pay on the loan.

Mathematically, the question of whether the asset is depreciating, neutral or appreciating is absolutely irrelevant to the question of whether to finance.

Let's take an example on a $100k purchase. You pay $10k in interest and your investment of the money that would have gone to pay cash yields $5k.
You lose 5k by virtue of borrowing whether the purchase appreciates or depreciates.

Let's say you pay $5k in interest and your investment gains $10k.
You gain 5k by virtue of borrowing whether the purchase appreciates or depreciates.

In the case of borrowing:
Gain = Appreciation + investment gain - interest paid.

In the case of paying cash:
Gain = Appreciation + interest saved by not borrowing - gains lost by not investing.

Again, the appreciation or depreciation is completely irrelevant! You get the same appreciation (or lose the same depreciation) whether you finance or not.

The appreciation or depreciation is only relevant in the question of whether or not to purchase. It has ZERO relevance to the question of whether to finance!

 

[Canuck]

Simply because it is the wisest decision whenever you can make more gains by investing the money than the interest you pay on the loan.

I wasn't talking about fixed rates of return investments. It's hard to make money that way, especially if you need money from a vehicle loan to invest. Take away your fixed rate of return and your whole post falls apart. Keep it and it's a waste of my time to make pennies if anything at all since I'll take the cash back instead of low APR.

When I bought TSLA I knew I could lose all or substantially all of my money much like most of my investments. So I invest what I can afford to lose. If you need money from a depreciating investment loan then you can't afford to lose it. There's a huge difference to me between investing money I have to invest and money borrowed to invest which I would never do. I'm surprised you see no difference.

But thanks for the lecture even though it's was better saved for old ladies or men when selling reverse mortgages. They make the same arguments never being honest and saying you could lose it all -- then many elderly do. I'm not old enough yet to fall for your number game.

It was also like listening to so many investment advisors who set out simple but fatally flawed ways to invest because most people of all ages don't look past the shell game they play with numbers like in your post.

 

[GeekGirls]

In the case of borrowing:
Gain = Appreciation + investment gain - interest paid

More precisely:
Gain = Appreciation + Investment Gain - Taxes on Investment Gain - Interest Paid - Loan Administration Fees

The missing parts of the equation you cited can tip the balance pretty easily, especially if you're in a relatively high tax bracket.

 

[kbM3]

More precisely:
Gain = Appreciation + Investment Gain - Taxes on Investment Gain - Interest Paid - Loan Administration Fees

The missing parts of the equation you cited can tip the balance pretty easily, especially if you're in a relatively high tax bracket.

You are correct. I was simplifying. The investment gain I was referring to was a net gain. My main point was that whether the purchase appreciates or depreciates is irrelevant.