The Money Mustache Community
Learning, Sharing, and Teaching => Case Studies => Topic started by: brian313313 on November 07, 2017, 11:48:32 AM
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Hi,
So I've been saving at a great rate for about 10 years. I have an Equity spreadsheet and I'm pretty close to where I could FIRE. I don't have that type of personality though. I only feel like retiring when I'm burnt out and have generally worked for about 10 months/year. I recently decided to lower my savings rate because my wife & I don't have anyone to leave money to. We've assigned a charity for after we both die and bills have been paid for. So I starting thinking about what's most important to me that would make it interesting to spend some extra money on. I used to be a car fanatic but decided that it was too expensive. Well, I think I can afford it now. I am plugging numbers into my spreadsheet and I'm sort of blown away by how little effect it seems to have. Is there something wrong with my math here? The way I account for debt is put it as a negative equity against my cash assets. That gives me the effect of 8% interest although I'd be borrowing the money as long as it's so cheap.
Cash Flow
Income - $10,000/mo after tax. This is non-taxed 401k contributions + take home pay.
Bills - $2500/mo - This includes a small amount of frivolous stuff but things we don't give up when I'm not working.
Additional spending - $1000/mo - This is more frivolous stuff that goes away when I'm not working. Every Jan & Feb we scale back to the "Bills" section only to readjust and see how much we really "need" to live.
Assets
401k - $500,000
Paid for condo - $200,000
I'm considering a 40k vehicle. I know that this is completely unnecessary...it's a luxury item. I've never spent more than $21k on a car and that was in 2001 so it's sorta freaking me out. The math looks like at this point it has a rather insignificant impact on my portfolio growth. It sets me back about 4 months to the FIRE I don't plan on taking. It may even be a little less than that because I'm counting 1% interest as 8%. I'm really looking to ease anxiety here more than anything else, unless I have made a mistake in my math. I figure I'll get a lot of face-punches posting here but if there is a mistake, someone will notice it.
Math -
Assets - 500k - 40k = 460k
Contributions - Really stays the same, because the payment is accounted for in the artificial reduction in assets so I'm adding $6500/mo. (To explain this further, the debt is going down by the amount of payments pretty much at 1%. The 40k that is really still there earning 8% on average has less claim against it.)
Growth - $3000/mo.
This is the simple version. The spreadsheet also includes inflation, compounding, etc. but that doesn't have the largest share & I didn't want to upload my spreadsheet. (I admit I'm a geek and I created some Excel functions CalcFed, CalcState, CalcSSI, & CalcMedi that return the exact amounts based on gross income.)
TCO is less than the payments after about 2 years. Insurance goes up by 1.80 every six months so I ignored that. Gas goes from $28/month to $80/month.
I'm pretty sure my math is right but it's just blowing me away. The "tidal wave" as MMM put it in a post one time seems that it will wipe this out in short-term.
Also, in my life I've gone through periods of downsizing and upsizing and know that I don't have any emotional problems cutting back when I need to. (i.e. I can adjust to the hedonic adaptation going back.)
Thanks for double-checking my figures.
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If you don’t plan on retiring, this is a one-off splurge and not a regular occurrence, it doesn’t really matter, indulge. Just make sure your partner gets a similar extravagance.
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If you don’t plan on retiring, this is a one-off splurge and not a regular occurrence, it doesn’t really matter, indulge. Just make sure your partner gets a similar extravagance.
Great advice about looking out for your partner also. She's already has had her indulgence. She got 50k worth of remodeling. That was part for me but mostly for her. That's not an expense in quite the same way since that's a partially appreciating asset. She's behind this for me and considers it fair trade for the remodeling.
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Consider whether your maintenance costs will go up. My maintenance for my Toyota is about a third of the maintenance for the luxury brands I used to have.
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I need to know what the car is so that I can truly judge the decision.
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Consider whether your maintenance costs will go up. My maintenance for my Toyota is about a third of the maintenance for the luxury brands I used to have.
Yes, that's important. They will triple over time. I forgot to list them here but they are accounted for in TCO. I'm basically tripling the value of my current vehicle which will triple depreciation & maintenance. I was truly shocked when the insurance didn't go up also.
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No amount of math is going to answer this; you can obviously afford such a purchase. The question you need to ask yourself is will this purchase bring me x% more over the next cheapest alternative.
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I need to know what the car is so that I can truly judge the decision.
Sorry. I didn't list the specific car so this wouldn't get into a discussion of the merits of the car. I have done that on a car forum. Generically, it is a 6 month dealer demo so it has miles but is coming with the full new car warranty. It is a higher than average maintenance vehicle. I started looking at older ones but research made me decide I'd be better in the long term buying one with low mileage and doubling the amount of manufacturer maintenance. Most moto-philes claim the reliability problems have to do with the high-performance vehicle being on the same schedule as the low-performance ones. I plan on 5k oil changes instead of 10k plus some additional maintenance. I also like to turn a wrench as they say.
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FFFFFFFFFAAAAAAAAAAACCCCE PPPPPPPUUUUUUUUUNCH.
This is the Mr. Money Mustache forum.
No one NEEDS a $41k car. And if you WANT a $41k car and really, really, really think it will give you a proportional amount of actual happiness, whether you can afford it or not, maybe you need to take a step back and think about what makes you happy and why.
Good job on the savings.
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No amount of math is going to answer this; you can obviously afford such a purchase. The question you need to ask yourself is will this purchase bring me x% more over the next cheapest alternative.
The answer to that is not an easy one. If you're talking about the next cheapest vehicle, I have no reason to upgrade my Prius which is not worth a whole lot now with fuel prices low. The Prius is basic transportation but as far as basic transportation goes, I like that car. My wife doesn't though. She wants to stick a key in the ignition and loves our 15 year old Acura which will probably last another 15 with the 2400 miles/year she puts on it.
The reasons for the upgrade are more hobby oriented. I plan on joining a club if I buy this. There is something cheaper that would be functional but it's uncomfortable and I don't like that choice at all.
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FFFFFFFFFAAAAAAAAAAACCCCE PPPPPPPUUUUUUUUUNCH.
This is the Mr. Money Mustache forum.
No one NEEDS a $41k car. And if you WANT a $41k car and really, really, really think it will give you a proportional amount of actual happiness, whether you can afford it or not, maybe you need to take a step back and think about what makes you happy and why.
Good job on the savings.
MMM talks about spending money on what you want and can afford. Also realizing that luxuries are a want and not a need. (And almost everything we have is a luxury in the USA.) I think a good point to make on this to people on the other side side of the debt equation is eventually, you'll be able to easily afford the luxuries you want. The important thing is to keep luxuries in proportion to your income/net worth.
For me, the proportional happiness is between the car and money in the bank. I've just gotten to the point that I feel like I have enough in the bank. I'm still adding to it because one day I may change my mind about retirement, but I'm slowing down. Adding zero's won't bring so much happiness. I'm also attempting to go to 75% work although that's not so easy. I'm working on a lot of really cool stuff right now and I keep agreeing to do tasks.
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Run the numbers on keeping the car for one year. If you are not happy having it and end up selling it are you ok with the year costing you X$?
Also, you are buying a toy so you can join a clique. And I really hope you are not intending to "roll coal".
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From his statements above it sounds like it’s more of a sports car than a diesel truck. I’m also very curious to know what vehicle you’re considering, OP. I have some ideas from the clues you gave but I could be way off.
You can afford it, if you don’t like it you can always sell it, and you have a reliable mustachian vehicle. Why not? People who aren’t into motorsports are going to blast you as this being a huge waste, but they probably have their own hobbies and weaknesses that they waste money on. To each their own.
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$40k is not an expensive car. The average transaction price for a new car this year is about $35k (https://mediaroom.kbb.com/2017-11-01-Average-New-Car-Prices-Flat-Year-Over-Year-Flat-Prices-Combined-With-Growing-Incentive-Spending-Signals-Headwinds-For-New-Car-Market-According-To-Kelley-Blue-Book), so you're only 14% more spendy than your average American buying a new car. Based on the title of this thread I was expecting something closer to $80k.
Now it is still a lot of money to drop in one place and is purely optional so you really need to ensure that it will make you proportionally more happy.
You may be interesting in reading my journal (https://forum.mrmoneymustache.com/journals/pursuing-rear-wheel-drive/), though it sounds like you've already decided on a specific car. Are you sure you can't share what it is? Corvette? Porsche? Jaguar? Aston Martin? Lotus? So many good used sports car options at that price point.
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FFFFFFFFFAAAAAAAAAAACCCCE PPPPPPPUUUUUUUUUNCH.
This is the Mr. Money Mustache forum.
No one NEEDS a $41k car. And if you WANT a $41k car and really, really, really think it will give you a proportional amount of actual happiness, whether you can afford it or not, maybe you need to take a step back and think about what makes you happy and why.
Good job on the savings.
MMM talks about spending money on what you want and can afford. Also realizing that luxuries are a want and not a need. (And almost everything we have is a luxury in the USA.) I think a good point to make on this to people on the other side side of the debt equation is eventually, you'll be able to easily afford the luxuries you want. The important thing is to keep luxuries in proportion to your income/net worth.
For me, the proportional happiness is between the car and money in the bank. I've just gotten to the point that I feel like I have enough in the bank. I'm still adding to it because one day I may change my mind about retirement, but I'm slowing down. Adding zero's won't bring so much happiness. I'm also attempting to go to 75% work although that's not so easy. I'm working on a lot of really cool stuff right now and I keep agreeing to do tasks.
Look at it this way -- why if you have $41k to spend on anything at all, why or why would you choose to spend it on a car? I don't get that. A nice mode of transportation can be easily covered by $20k, topping off the car price would be quite low on my list...I would be looking into solar panels or money to my nieces' education, or sending DH to go see his grandparents because they are 92... that sort of thing.
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Are you considering a BMW X3 (http://www.bimmerfest.com/forums/showthread.php?t=1142241)? That seems like a really boring way to spend $40k. At least spice up your life with a Jaguar F-Type or something.
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Get a track car, get a collectible car, get a car you have some emotional attachment to. Don't get a $40k daily driver just so that you can sit in traffic with a nicer exhaust note. I'm failing to see how you are getting any incremental benefit from your current car, so yes, it is too expensive for the benefit you'll be getting.
You can afford to self insure, like cars, and like working on cars. Why do you want a dealer warranty?
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Face Punch. Extra Hard.
This is over 5% of your net worth, not counting maintenance!
5% of all the shit you put up with in life to amass that fortune is about to be lost forever.
I'm as much of a car nerd as anybody else (with a long history of face punch worthy vehicles), but there is nothing a $41k does better than a car that costs half as much except lose money.
But, as I've said. I'm a car nerd. State your case. I could be convinced to blow that amount of money on a car. I know I have.
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Are you considering a BMW X3 (http://www.bimmerfest.com/forums/showthread.php?t=1142241)? That seems like a really boring way to spend $40k. At least spice up your life with a Jaguar F-Type or something.
lol. You caught me. Yes, I wanted a small ORV but also like the high-performance aspect. I don't like the Jeep and there's just not much else in that category.
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You can afford to self insure, like cars, and like working on cars. Why do you want a dealer warranty?
I want to know the maintenance history of the vehicle. The warranty comes with it. Even if I do the work myself, parts are not cheap.
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OK, Face Punch Extra Hard, on it's way.
X3? Seriously?
Sure, the straight six is a beautiful, willing motor.
Utterly strangled to death in a chassis with the driving dynamics of a CR-V.
The X3 is built cheaply so people get to sport the roundel and still get the benefit of driving a transportation appliance.
Don't kid yourself on the ability of it to handle anything other than improved roads either. There's nothing "O" about it.
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Are you considering a BMW X3 (http://www.bimmerfest.com/forums/showthread.php?t=1142241)? That seems like a really boring way to spend $40k. At least spice up your life with a Jaguar F-Type or something.
lol. You caught me. Yes, I wanted a small ORV but also like the high-performance aspect. I don't like the Jeep and there's just not much else in that category.
I don't see the advantages of a $40k X3 over say a $20k Acura RDX (https://www.autotrader.com/cars-for-sale/vehicledetails.xhtml?listingId=458212079). Assuming we're comparing to the xDrive35i, the RDX is 400 lb lighter and gets better fuel economy, while also having an equivalent power-to-weight ratio. I'd assume the Acura would be more reliable as well.
Personally I don't like crossover SUVs. They're essentially appliances so there isn't much reason to spend extra on one. If you're going to spend a lot of money on a car it should at least be something special, preferably something like a collector's car that isn't going to depreciate.
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My advice: Any used Jeep Cherokee with a V8.
The single most popular model of automobile with millionaires at one point. *
My pick would be the 5.9 Limited ZJ, but that's going back a few years.
The WJs with the 4.7 are also pretty nice.
I'd imagine the more recent SRT models are also getting into the the $40k range as well.
Completely ridiculous car choice? Hell yeah!
But way cheaper, way more fun, and way more capable than an X3. Plus car nerds won't make fun of you.
* Seriously! As stated in "The Millionaire Next Door".
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OK, Face Punch Extra Hard, on it's way.
X3? Seriously?
+1
An X3?!? Duuude.
You need to wait. Spending >5% of your net worth on a car is definitely facepunch worthy.
Not to mention that you already spend $1000/month on "more frivolous stuff" because you work. Yeah, sure, I ate out 1-2x/month more when I was working because work sucked but $1000 more per month? Wtf? Is that multiple massages per week? Drowning yourself in alcohol?
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$40k is not an expensive car. The average transaction price for a new car this year is about $35k (https://mediaroom.kbb.com/2017-11-01-Average-New-Car-Prices-Flat-Year-Over-Year-Flat-Prices-Combined-With-Growing-Incentive-Spending-Signals-Headwinds-For-New-Car-Market-According-To-Kelley-Blue-Book), so you're only 14% more spendy than your average American buying a new car. Based on the title of this thread I was expecting something closer to $80k.
Now it is still a lot of money to drop in one place and is purely optional so you really need to ensure that it will make you proportionally more happy.
You may be interesting in reading my journal (https://forum.mrmoneymustache.com/journals/pursuing-rear-wheel-drive/), though it sounds like you've already decided on a specific car. Are you sure you can't share what it is? Corvette? Porsche? Jaguar? Aston Martin? Lotus? So many good used sports car options at that price point.
I'll read more of your journal later. Sounds like we have a lot in common concerning cars. I have had a Porsche Cayman before. Beautiful car. It was actually very Mustachian (or at least economical) for me also. I worked for Porsche and it was a company lease. It was $300/mo and that included insurance. I had to pay for gas & car washes. I had a 1500 mile/month limit for 6 months. It was pretty cool but my boss was a complete a-hole so I left and lost that benefit. I figured if I wanted I could buy one later. My search started out looking at Porsche & Corvette but I switched to the X3 because I'll get more utility out of it. Also, I don't have a garage and the Porsche & Corvette will attract a lot more attention that I don't want. They get vandalized. An X3 is pretty common around where I live so won't draw much attention. It'll still to a 5.2 0-60 and that's plenty for me.
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OK, Face Punch Extra Hard, on it's way.
X3? Seriously?
+1
An X3?!? Duuude.
You need to wait. Spending >5% of your net worth on a car is definitely facepunch worthy.
Not to mention that you already spend $1000/month on "more frivolous stuff" because you work. Yeah, sure, I ate out 1-2x/month more when I was working because work sucked but $1000 more per month? Wtf? Is that multiple massages per week? Drowning yourself in alcohol?
Probably half of that is vacations/mountain trips. The rest is everything that's not in our budget. Could be a piece of furniture, hobbies, etc.
I know I spend more than most on here dollar-wise. There are a lot of people who could put me to shame on budget but I believe in more balance. Some for today, some for tomorrow.
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Are you considering a BMW X3 (http://www.bimmerfest.com/forums/showthread.php?t=1142241)? That seems like a really boring way to spend $40k. At least spice up your life with a Jaguar F-Type or something.
lol. You caught me. Yes, I wanted a small ORV but also like the high-performance aspect. I don't like the Jeep and there's just not much else in that category.
I don't see the advantages of a $40k X3 over say a $20k Acura RDX (https://www.autotrader.com/cars-for-sale/vehicledetails.xhtml?listingId=458212079). Assuming we're comparing to the xDrive35i, the RDX is 400 lb lighter and gets better fuel economy, while also having an equivalent power-to-weight ratio. I'd assume the Acura would be more reliable as well.
Personally I don't like crossover SUVs. They're essentially appliances so there isn't much reason to spend extra on one. If you're going to spend a lot of money on a car it should at least be something special, preferably something like a collector's car that isn't going to depreciate.
Acura RDX is a great choice also. That was my first choice but couldn't figure what I would do to mod it. I had a hard time deciding between them and I would definitely choose the RDX over the 28i. However with the 35i, the performance, appearance, & interior are all superior to me. It made me decide it was worth the extra. I'm looking for a luxury item so I wanted something that looked new. I would have been in the 25k minimum on a used RDX. And honestly, I still haven't made the purchase because I keep looking at the 15k difference.
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My advice: Any used Jeep Cherokee with a V8.
The single most popular model of automobile with millionaires at one point. *
My pick would be the 5.9 Limited ZJ, but that's going back a few years.
The WJs with the 4.7 are also pretty nice.
I'd imagine the more recent SRT models are also getting into the the $40k range as well.
Completely ridiculous car choice? Hell yeah!
But way cheaper, way more fun, and way more capable than an X3. Plus car nerds won't make fun of you.
* Seriously! As stated in "The Millionaire Next Door".
I agree with you that Jeep is was more capable off-road. I'm pretty mild though. I'm usually trying to get to a trail-head to hike somewhere more than off-roading. My Prius can make most of it but it does bottom out occasionally or I have to turn around. I test-drove all the Jeeps and the only one I liked was the Grand Cherokee but it's larger & about the same price.
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After shopping the used lots, and looking at the repair costs of 4, 5, 6 year old vehicles, I have a theory..
BMW's are listed at a higher than true market price so that so many people will justify the lease rates on them. BMW does intend to actually sell these cars new. Locally, the lots are filled with lease return BMW X5 and X3's. There can be 5 each of them at any one time on a single lot.
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After shopping the used lots, and looking at the repair costs of 4, 5, 6 year old vehicles, I have a theory..
BMW's are listed at a higher than true market price so that so many people will justify the lease rates on them. BMW does intend to actually sell these cars new. Locally, the lots are filled with lease return BMW X5 and X3's. There can be 5 each of them at any one time on a single lot.
I agree with this. BMW finance also has super-low rates which reduces "payment" if you keep a vehicle for the whole term. The rate is low for finance or lease. I haven't thought payment in over 20 years though. I'm a TCO type guy which I think almost everyone on here is after a short time. If you overpay for a low rate that's the same as taking the rate instead of cash back which doesn't usually work.
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OP if you really want this specific car, and want a new shiny one at that... and of course, if you have the money to spend on wants...
Why not consider a 2 year lease? e.g., rent the car for $14k and pay insurance, then return it and buy a different used vehicle that fits your financial goals in the future?
I mean, if you really want it, why not get it but avoid the negatives? This way the only negative is paying too much up front for short term use, but it does not "linger" after 2 years.
Most of us (ok, me) imagine that you will find that this car is nice for a while, but does not fit well with your driving needs.
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I think now more than ever this is a dumb decision. Cars are going to plummet in value over the next decade. ICE cars at least. Spending 40k for something the avg person spends 4% of their life in doesn't make sense. The electric and ai car are literally a few years away and will completely disrupt how society views cars. Get rid of the mouth to feed and now you've got cheap affordable transportation in the form of Uber robot cars or some other company equivalent.
So if you plan on your car being worth 0 dollars in 10 or so then you're probably on the correct path for how you've done the math. And 10 is probably a stretch.
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OP if you really want this specific car, and want a new shiny one at that... and of course, if you have the money to spend on wants...
Why not consider a 2 year lease? e.g., rent the car for $14k and pay insurance, then return it and buy a different used vehicle that fits your financial goals in the future?
I mean, if you really want it, why not get it but avoid the negatives? This way the only negative is paying too much up front for short term use, but it does not "linger" after 2 years.
Most of us (ok, me) imagine that you will find that this car is nice for a while, but does not fit well with your driving needs.
I think now more than ever this is a dumb decision. Cars are going to plummet in value over the next decade. ICE cars at least. Spending 40k for something the avg person spends 4% of their life in doesn't make sense. The electric and ai car are literally a few years away and will completely disrupt how society views cars. Get rid of the mouth to feed and now you've got cheap affordable transportation in the form of Uber robot cars or some other company equivalent.
So if you plan on your car being worth 0 dollars in 10 or so then you're probably on the correct path for how you've done the math. And 10 is probably a stretch.
I've considered leasing for both of these reasons.
Now, I'm reconsidering going the X3 route at all. I started thinking about my reasons for doing this and a new vehicle has some problems. The good is that modifications are a smaller percentage & I should be able to keep one vehicle instead of it being a second. I don't have official parking for another vehicle. The bad is that it's not a beater. One of my favorite off-road vehicles I've had was a Chevy Suburban 4x4 I got for $50. Whenever a big branch scraped down the side I could just smile and know that the new scratch would blend in with the old. The Suburban got 2mpg on-road and 1/2mpg off-road so that's not much of an option anymore. I'm considering just overpaying for something used. I say overpaying but it's more about not paying attention to the KBB values. A nice, rust-free vehicle is never anywhere in the KBB range. I want small so I can drive around the city and park it. I want some decent hp & 4WD/AWD. If I go back about 15 years the average vehicle is a decent size. Like a 2004 Toyota Tacoma is a compact truck. I hate how large the new ones are. I still want it to be nice and look new inside so I'm going to pay a bit more for that. I can re-carpet & upholster easily enough though if it's a common vehicle. I don't care as much about how the outside looks. I don't have to look at that. As long as it's not so bad that I keep getting pulled over or it has body panels falling off.
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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.
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I don't understand why anyone would look for approval on the MMM forums for expensive car purchases. This is a forum about optimizing your expenses, making your savings work hard for you, and generally living life better while doing that.
Fancy cars are the epitome of being a consumer-sucka and tiny details exaggeration syndrome.
If I was going to buy something like this, I would do it in the full knowledge that it was silly and the vast majority of sane people on this forum would not applaud it.
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Get the car. If you're living well below your means, are hitting your savings goals, and don't plan on retiring in the near future, allow yourself a splurge. Be smart about it... i.e. buy used if you can, shop around on interest rate, etc.
I know this is the MMM forum but isn't Mustachianism all about prioritizing spending on things you value while saving on areas you do not?
But take this with a grain of salt. I bought myself a Tesla earlier this year and it was over 5% of my net worth.
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Get the car. If you're living well below your means, are hitting your savings goals, and don't plan on retiring in the near future, allow yourself a splurge. Be smart about it... i.e. buy used if you can, shop around on interest rate, etc.
I know this is the MMM forum but isn't Mustachianism all about prioritizing spending on things you value while saving on areas you do not?
But take this with a grain of salt. I bought myself a Tesla earlier this year and it was over 5% of my net worth.
So your answer is I made a dumb financial decision so you should too
Wrong
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I know this is the MMM forum but isn't Mustachianism all about prioritizing spending on things you value while saving on areas you do not?
No, it's about obtaining happiness for yourself and humanity as a whole.
http://www.mrmoneymustache.com/2016/06/08/happiness-is-the-only-logical-pursuit/
http://www.mrmoneymustache.com/2016/10/10/how-to-be-happy-rich-and-save-the-world/
Spending more on a car even when you value cars won't necessarily increase your happiness. You may be happier with the car's performance and/or features but on the flip side more worried about someone dinging it in a parking lot. And the more you spend on something the more likely small flaws will bug you.
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I don't understand why anyone would look for approval on the MMM forums for expensive car purchases. This is a forum about optimizing your expenses, making your savings work hard for you, and generally living life better while doing that.
Fancy cars are the epitome of being a consumer-sucka and tiny details exaggeration syndrome.
If I was going to buy something like this, I would do it in the full knowledge that it was silly and the vast majority of sane people on this forum would not applaud it.
So true. I think if I were going to purchase a spanking new Beamer, a Dooney bag or an emerald ring *, this would be the last place in the world I'd go to to get permission for or to justify the spending. I prefer taking my cash out at night and rolling around on it. **
* I wouldn't buy any of those things.
** I can't do that because my money is at Fidelity where it grows.
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Yeah, wrong car for the stated purpose.
First, it’ll kill you on maintenance.
Second, it doesn’t say “I’m a car guy.” It says “look, I’m a generic suburban wanna-be like everyone else.”
Third, if you actually want to go off-road, you’ve already identified the fundamental problem: what’s the point if you have to worry about messing up your fancy leather seats? Buy something that is actually built for off-roading — and cheap enough that you won’t care if you screw it up.
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Have you made a list of all the amazing things you could do with $40k before deciding that a housewife BmW wagon was optimal? You want a white one I’m guessing. You could change your life for forty grand. Get plastic surgery. New teeth. Hair implant. Tummy tuck. Invest in a lucrative business venture. Take a first class vacation for a month. Sponsor 100 poor World Vision kids for a year. Endow a chair at your favorite university.
If it is a car you must have, you can pay less than half for one which is faster or better off road or less common and vulgar. What are all the alternatives you have considered?
And yes, it is too early and too much of your net worth. I have more than ten times your net worth and don’t own a vehicle. I may get a toy one day but for now prefer to see the investments compound. In forty years your forty grand could be half a million. Imagine what you might get for that.
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I did this (buy a fancy german sports car) two years ago. While I like it, I regret it. The depreciation has been brutal. I would sell it, but it has already depreciated so much there's no point, I might as well drive it now.
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Have you made a list of all the amazing things you could do with $40k before deciding that a housewife BmW wagon was optimal? You want a white one I’m guessing. You could change your life for forty grand. Get plastic surgery. New teeth. Hair implant. Tummy tuck. Invest in a lucrative business venture. Take a first class vacation for a month. Sponsor 100 poor World Vision kids for a year. Endow a chair at your favorite university.
If it is a car you must have, you can pay less than half for one which is faster or better off road or less common and vulgar. What are all the alternatives you have considered?
And yes, it is too early and too much of your net worth. I have more than ten times your net worth and don’t own a vehicle. I may get a toy one day but for now prefer to see the investments compound. In forty years your forty grand could be half a million. Imagine what you might get for that.
Buy 2 100k rental properties.
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I find myself drooling over Teslas and those T8 Volvos, but when I'm having a hard time with work or my kids I think "Would having a Tesla make this better?"
It wouldn't.
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Buy a $3k e-bike and smoke all the $40k cars stuck in traffic.
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I find myself drooling over Teslas and those T8 Volvos, but when I'm having a hard time with work or my kids I think "Would having a Tesla make this better?"
It wouldn't.
I bet even if you only calculated the sales tax and licensing fees on said Tesla you'do come to the same conclusion.
+1 to OP asking this question in the wrong place. Unless what you really seek is help saying "NO" to your inner child. We can help you with that ;-)
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OP here.
Thank you for all the helpful advice. I'm not decided against this purchase, but I not getting the BMW. I never intended to discuss the vehicle because I was not decided. Since I use the same handle on other forums, someone posted a link to something else I posted related to the X3. I was quite certain when I made that other post, but I have a cooling down period that is non-flexible because of potential buyer's remorse. I was really looking for someone to double-check my math as it seemed to me that something was wrong. In the past, when I've evaluated expensive purchases it has made quite a bit of an extension on my FI spreadsheet and this really surprised me when it did not. I posted here because this is a place where there are a lot of good finance people. I'm pretty good myself but I couldn't believe my spreadsheet at first.
I will say a couple things about the money advice. I'm old enough that things are breaking down and I'm no longer able to do all the things that I wish I could. The $/happiness ratio is good to think about, but it's not always applicable. I can enjoy a book for $10 and the ratio would be much greater than something at $40k. However, 4000 books doesn't have the same ratio as one book. Excess cash has a ratio also. For most of my life this has had a high ratio, but I'm making a conscious decision to lower that. Sometimes you save for the future, and sometimes the future is now. The last think I want from life is to be old and incapacitated with a large balance sheet.
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It sets me back about 4 months to the FIRE I don't plan on taking.
I was really looking for someone to double-check my math as it seemed to me that something was wrong. In the past, when I've evaluated expensive purchases it has made quite a bit of an extension on my FI spreadsheet and this really surprised me when it did not. I posted here because this is a place where there are a lot of good finance people. I'm pretty good myself but I couldn't believe my spreadsheet at first.
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.
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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.
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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.
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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.
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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!
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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.
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Wow great post Bicycle_B. Thank you.
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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.
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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.
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"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.
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Good deal deciding not to buy the x3.
I was going to recommend buying 2 cars:
1990s Jeep Cherokee/Grand/Wrangler ($4k) to deal with anything you think might get dirty. Even a Subaru would do.
$3-15k actual-real-good-sweet-people-actually-like-driving car. On the cheap/reliable side a nice Miata, on the expensive/higher side, a Boxter, 1990s BMW M-series. You'd still be way ahead of the game.
Seriously though, at least get something with a manual transmission.
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Good deal deciding not to buy the x3.
I was going to recommend buying 2 cars:
1990s Jeep Cherokee/Grand/Wrangler ($4k) to deal with anything you think might get dirty. Even a Subaru would do.
$3-15k actual-real-good-sweet-people-actually-like-driving car. On the cheap/reliable side a nice Miata, on the expensive/higher side, a Boxter, 1990s BMW M-series. You'd still be way ahead of the game.
Seriously though, at least get something with a manual transmission.
This is what I was thinking. I really like the 2000ish Jeep Cherokee Sport. I could probably get a decent one around 2-3k. There are a few smaller 4x4s that I like also that get better mpg.
When I graduated from college I had 4 cars so 2 is not a stretch. The insurance company probably hated me. I would change insurance depending on which one I was driving. Two of them were friends parents' trade-ins that I bought just because they were incredibly cheap ($50 and $200) and ran. I had a Firebird project car which I never got running because of time. (I still turned a $200 profit when I sold it because I knew more about cars than the person who sold it to me.) My daily driver makes 4. I sold them all for a down payment on a new car so I would have something reliable for college. It was a Toyota Tercel base, not even a radio. It was a good start because I paid that off in 3 years.
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Yep. I had a 1997 Cherokee, same generation as the 2000. Drove it for 8 years with virtually nothing ever going wrong. I would have kept it but unibody construction and Upstate NY salted winters do not lead to a long life. If you live in an area without salt, I'd definitely recommend buying one.
I have 4 cars *now*, if you count my wife's old honda that I inherited. A work truck, Miata, and 4x4 extended cab van. Yes, I'm in the process of getting rid of them. Oddly enough, if you do all the work on them yourself, it's actually a pretty cheap hobby.
I think MMM had an article about a guy who bought used cars and then sold them for more than he paid. I've done that plenty of times.