Author Topic: Is my math right - may buy an expensive car  (Read 4575 times)

brian313313

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Re: Is my math right - may buy an expensive car
« Reply #50 on: November 13, 2017, 10:59:37 AM »
Sorry, I should have run the math along with my earlier posts. My rough calculations come up with 7.2 extra months to FI if you finance the purchase and 8 extra months if you pay cash for the vehicle. It's even longer if the running costs of the $40k vehicle increase your living expenses. This is almost double your estimate.

Can you tell me what you did different from my calc posted above? That's a pretty big difference and I'd like to know what changed. If not, no worries. I know I only posted a general outline of what I did.

Thanks.

I used an FI calculator and plugged in the different numbers, compared the difference in invested assets after 5 years (the approximate FI point) and divided that by your annual savings. This is just a rough calculation because it ignores compounding in the final months.

So I decided to do a full spreadsheet comparison (attached below as .csv). I came up with a 5.4 month difference assuming a 7% [post-inflation] investment return. The lower the assumed investment return the longer the difference will be. Also assumes that your increase in gas costs is the only increased cost. If you factor in increased maintenance/repair costs it will delay FI by longer.

Thanks. The difference now is accounted for in that I'm not using the 4% rule. I project it out with inflation/interest adjustments annually. I have to die by 90 though lol. I'm also counting on SSI in 11 years. The SSI estimator gives my wife & I between 2500-3000/mo. I used 2000/mo to be on the safe side. SSI may not pan out but I'm still saving.

CharlesBronzee

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Re: Is my math right - may buy an expensive car
« Reply #51 on: December 20, 2017, 11:54:46 AM »
If it has been your dream to drive an X3/BMW for a long time, I would do it. I did.  :)

This was pre-MMM, I leased a BMW 323xi.  This is after driving a corolla for 19 years, a volvo station wagon for 13.  Also, this was the year I reached two important milestones - I hit $1M in net worth and I turned 50.

Looking back, now that I'm more committed to becoming FI,  I would still do it again. Wife and I looove driving that car.  It's definitely not mustachian, but a lot of folks here have that one or two things in their life that others will not consider mustachian.  Taking dancing lessons for example, I think that's a senseless way to spend money but to another person it may be well worth it.  Or many people here pay for gym membership when they can exercise at home with minimal investment in equipment.  But to  each his own.  You seem to have your financial life in order, although imperfect (who has anyway).  So I say treat yourself and buy it!

Bicycle_B

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Re: Is my math right - may buy an expensive car
« Reply #52 on: December 24, 2017, 10:43:13 AM »
You feel your body breaking down and want to buy some joy before you're too old to enjoy it?

My advice as someone who's been there and done that:  don't buy the car.

I meant to take advantage of post-financial crash automaker desperation by purchasing a once-in-a-lifetime new car on the cheap.  I did it.  I bought a 35k-ish car that looked like 40k and felt like 40k and cost me 29k.   The same money left in the markets would be 55k now, but that's not what you're concerned about.  Here's what counts:

It didn't make a lot happier.  It only made me a little happier, and that wasn't worth it.

I did get some admiring glances every so often.  At three glances a month for three years, then two a month, then one, now none, I got probably 200+ admiring glances at a cost of $250 each.  I noticed maybe half of them, so $500 per ego stroke.  At 30 seconds per glow, maybe $1000 per minute ($60,000 per hour).  Not efficient, not sustaining.  Plus it got old after a bit.  And then, after a few years passed, other people didn't respect my car as much as I did, so even that was gone.

That's not the hard part.  The hard part is that the aches and pains happened anyway.  Some exercise and physical therapy helped, but I'm still an ex-marathoner, not a marathoner.  My hair turned gray.  I dye my beard.  I tell myself there's a bit of salt in the pepper after a week.  My honest friend just tells me my beard is gray.  Car or no, the 20something babes don't flip their hair at me any more, only the 45 to 55 year olds do.  My parent and my best friend and my other best friend died. I grieved and cleaned up some of their junk and learned to be happy that I knew them.  I realized that all my life, old people had learned that these things were coming and left me in peace to learn on my own sweet time because like all young people, hearing about age just turned me off and made me scorn them. 

The car solved none of this, stopped none of this, was irrelevant.  The brief joy was too little.  I would have been better off renting a Lambo for $2000 one weekend, spending $1000 on race track lessons and a rented stock car, and putting a bike rack on top of a cheap sedan to look outdoorsy if I wanted a second glance from someone.  I would have been better off joining a bike club or a hike club, not a car club, or joining a cooking club for that matter to increase the company in my life.

Yes, there's a place for joy if your time is short.  But a new car if you're not even at FI isn't the place. 

I get the feeling of anticipation that you're confident, basically, that you have enough.  I get that now you're approaching enough, now that you feel it emotionally, you're saying "Can I spend for happiness now?"  I get that as the cold wind blows, you shiver and say "What about me?  What about now?  What can I have?" 

You can have anything you want, but a new car isn't a good way to get much of it.  In and of itself, it's a pretty inefficient purchase.  In fact, it's pretty much guaranteed to distract you from the important things that you can and should and must and will find right on the other side of the questions that you're asking.  You will find friends and joy and wisdom and peace, you will savor the years that remain, be they five or fifty. 

But you will not find these things efficiently in a car club. 

Ok, you might.  You're you.  But I didn't.   And most people won't.  Blessings and best wishes regardless.


sixup

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Re: Is my math right - may buy an expensive car
« Reply #53 on: December 25, 2017, 11:11:06 AM »
Wow great post Bicycle_B. Thank you.

Dr.Jeckyl

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Re: Is my math right - may buy an expensive car
« Reply #54 on: January 05, 2018, 01:36:38 PM »
As I read your vague set of clues about the brand, I thought. Here is another one who lusts after a BMW, has drank the kool-Aid, and found the forums where everybody swims in the group delusions of, "we are smart for buying great cars, and everything you read about them being poor quality, grossly overpriced, and unreliable is overblown".

You are smarter than that!  German luxury cars are always over-complicated and over-engineered to an extreme, and generally are hellaciously expensive to repair, and maintain and sub-par in reliability metrics.  BMWs are over-priced for what they are, and far from great cars. They may be great performers, they may be great at luxury or creating badge envy, but overall they are not even close to the product you want to believe that it is. Your $40K liability will be worth less than half that in a few years, and if you keep it, and drive it regularly, it will be about a third as reliable, and three times more expensive to operate than a similar Japanese brand. What is the point? So, you can be a BMW owner? Who gives a fuck. The other issue is this claim of off road performance. Seriously, that's an off-roader, like my fat ass is an Olympic sprinter. Just because I put a pair of $400 running shoes on, doesn't mean I belong on the running track. I have been in the San Juans in CO. in a rented, stock Wrangler, and done things that scared the shit out of me, and caused a passenger to get out and walk, since they just knew that we were all going to die. Attempting 1/10th of that in an X whatever, would result in a pretty little German station wagon, high centered and waiting on a tow truck, in sight of the blacktop.

Sorry for the rough review, but this is MMM, and you asked. If you can't go through life without crossing this one off the list, lease if for two years, like Goldielocks suggested. That way, you won't be on the hook for the stupid cost of maintaining it, and when you get to the "WTF was I thinking" point, the count down to handing it back is short.

As I'm reading this post I can't help but think that a Mazda would be the better choice. 1/2 the price and Mazda much like BMW actually cares about the driving experience. Plus Japanese engineering typically means reliability and cheaper repairs when something does go wrong. Get a CX-5 loaded or better yet if you want to splurge on a car that has no reason to exist except to have fun then get a Miata.

DK666

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Re: Is my math right - may buy an expensive car
« Reply #55 on: January 06, 2018, 09:00:31 AM »

Life is about maximizing your utility over your lifetime. If youíre on track to retire when you want, then any additional savings will likely end up as a big pile of cash when you die or wasted consumption later... or retiring even earlier.

My point being, if you donít want to retire even earlier then splurge. It could be on a car or a trip or on charitable giving. You have the right thought process... you need to weigh the marginal cost of the more expensive vehicle (or any other one of expense) vs dying with a huge pile of cash.

Luxuries are a waste of money... but if you have money to waste then my bet is youíre more likely to regret not buying the car then buying the car.

brian313313

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Re: Is my math right - may buy an expensive car
« Reply #56 on: January 14, 2018, 09:41:10 AM »
I hadn't noticed the replies to this. Bicycle_B, you have a lot of insight. The age part you're spot on. Unfortunately, physical therapy hasn't helped for me. Exercise does but my ability to do that is going down with arthritis. My motivation is different though. I'm a sport-car type guy and love performance cars. I'm also a DIY guy so can use something for light hauling. The reason the X3 appealed to me is the performance car-like acceleration & handling. I could still do some light hauling and with a mild lift kit & accessories this can be made into a very nice looking vehicle. I don't care if people look at me, but if I did I'd certainly need something more impressive than an X3. I live in Atlanta where BMW is quite common. Probably because their headquarters is about 150 miles from here in South Carolina. This started out with me looking at used cars in the 25k range that could be modified into what I want. When I looked into the X3, it can be so unreliable I was momentarily convinced it would be better to buy new so it could get the real maintenance it needs, rather than the 10k maintenance that is there because the manufacturer pays for it. My wife has convinced me that I'm a muscle car guy though so I should stick to that.

One thing I did was a delay tactic and decided to wait until I'd saved the money. I'll still finance the vehicle because of rates and also, about half of the savings is going into 401k. It gives me time to make sure I'm interested and I have to wait based on this.

My real goal though is more along the lines of building my own. It's not so much of getting what I want as it is that I enjoy the design & build process. With age, I have been getting a lot of anhedonia and this is one of the few things that still interest me a lot. I haven't actually done much car work in the last ten years. I've maybe bought about ten cars at auction in that time and flipped them but that was over five years ago. I don't have a garage now living in a condo so that's been a challenge with that. However, my mother-in-law just moved to a different apartment and they have garages. I'm looking into renting one of those. They only rent to tenants but she would be able to rent it for me. I have an apartment complex about 1/3 mile from me that also has garages but unfortunately, they also will only rent to tenants. The leasing agent there wanted to rent to me but said I would have to find a tenant and work it out with them. In the meantime, I've been building some things in our condo. If we ever want to sell it will all have to be removed so I'm building it appropriately. Mostly just 2x4 and plywood construction since there's no need to make it look nice. My next project is a cat habitat which my wife is real excited about. Just some carpeted shelves & boxes over in our spare space. We really only need one bedroom so the other is my hobby area. That's where the construction is going.

Thanks again to everyone for their feedback. The dialog and the waiting has helped me become more certain on what I'm going to do.

Bicycle_B

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Re: Is my math right - may buy an expensive car
« Reply #57 on: January 14, 2018, 09:47:58 PM »
"Anhedonia"?...(googles)...

Holy smokes, Brian, I feel sad just reading about it!  Glad you are enjoying at least some projects.  Clearly you are exploring your options and have a plan.  Good luck in your new builds.