Income/Finances needed to justify Emira purchase?

[MRLayoutLife]

I have always considered myself very financially disciplined but I have completely fell in love with the Emira. I have never wanted a car more in my life.

I am wondering what kind of financial situation people are in to justify a 6 figure car. How do you justify spending that much $ to your partner?

I'm curious if I am close to the typical situation of an owner or would I be making a horrible financial decision by purchasing one?

For context:
I'm 30 years old.
I have a mortgage of $400,000
Household income of $190,000 CAD ($140K USD)
No debt besides mortgage.
Never had a car payment before.
Don't have a business that would allow me to write off the payments.
Already own a very fun car.

I know it is completely irrational decision but I'm so captivated by this car. Would I be dumb to spend that kind of money before paying off my mortgage?

Appreciate any advice.

 

[LuckysDad]

Many use the 35 rule.
35% of your gross income is how much car you can afford.
When I was working I was more conservative and used 25% as my number.
I'm a retired investor, so instead of an income basis, I use a percentage of net worth as my measure for car purchases. I don't allow my car collection to exceed 10% of net worth.
As net worth increases so can my car collection.

Conversely, my father was a CPA for high income (not necessarily high net worth individuals). I used to ask him how they could afford all that stuff. He said "all they gotta do is make the payments". Eventually they'd each have some sort of setback and nothing to fall back on. They'd lose it all either in bankruptcy, divorce or leaving their family with debts at the time of death.

My brother lives his life this way. He's ten years older than me and still has to work.
My wife and I retired at 50.

 

[K_Squared]

I can completely understand your love affair with the Emira. As for financial discipline, I had set the following rule for myself in buying a fun car:

1. I must be able to pay cash for it
2. It must not be more than a specific percentage of my net worth (which I will withhold for obvious reasons -- and this was just arbitrary anyways)
3. The purchase must not require that I sacrifice any of my important financial investments for my family's future.

The Emira met all of these for me. That being said, I'm sure plenty of people financed it when a financial advisor would've advised them otherwise, but then again, YOLO

 

[Aero]

For a data point, I bought my Emira and had zero debt (including nice house paid off). I personally don't buy (after learning life lessons) any car unless I can pay cash for it and maintain a good emergency fund.
Dont think I'd be comfortable if had your income to mortgage ratio with a car payment in addition. The monthly Emira payments (insurance too) might make it uncomfortable when some financial crisis hits (lose job etc).
If your other fun car is worth quite a bit you might look at selling that to put toward your Emira goal.
Just my personal opinion/experience.

 

[Rupes]

I wouldn't buy an Emira if I was in your situation, but that's just one datapoint, so take it for what it's worth.

A car is almost always a depreciating asset - or said differently, you're likely to have a higher return investing somewhere else.

I also wouldn't pay off my house, as I earn more interest through my savings account than my low mortgage rate (and I get to write off a portion of those payments anyway). Again, your results may vary depending on when you locked in your mortgage.

It sounds like you're in a phase of your life where building a nest egg to secure you and your family's future is the priority.

 

[scc.131.fe]

Mid 40s here, paid off mortgage in 2018, only existing loan is 0% on a tractor and I have the principle invested. I only bought the Emira because I could pay cash for it. I also only bought it because I got a 1.0 slot. I also only bought it because my wife has a car she's in love with and she'll probably have it for 10-15 more years. And I love my job and will probably work for 20 more years because I want to.

At the end of the day, it was exactly the car I wanted and I didn't need that cash for any other home projects or expensive travel within the next several years. And it absolutely did not jeopardize emergency fund, nor did I borrow against 401k or anything like that.

Part of what helped me to save was spending 12k on a good used BMW back in 2008 (that I still have) with never a payment and 75% DIY maintenance.

To do the "If I was you" and I wanted another car, I'd be test driving every Elise or earlier Evora that I could find for less than half of the Emira money. But the patient are victorious. Who knows when the next big recession hits and you might get a deal on an Emira.

 

[chatman]

In your described position I would not be able to justify an Emira, no matter how much I like it. I am considering an Emira next year and, given my last sports car purchase (Cayman GTS 4.0 last year), I ask myself the following questions:
1. Can I pay cash for the car? (no financing for fun unless it's 0%)
2. Have I saved an equivalent of half the car's cash value separately into my daughter's education fund in the same year I buy the car?
3. Have I saved an equivalent of half the car's cash value separately into retirement or other savings in the same year I buy the car?
4. Do I have a place where I can garage the car for free?

 

[DerTheDer]

Household income is worthless at 140k since you need to break it down to what your monthly income is. 140k seems like a lot but with taxs..insurance...retirement that number could be really lower.

So build outa budget, and if you can afford it, go for it.

 

[Rainier]

 

[T6061]

You should always live within your means, even if you have to borrow to do it! That's the Orange County mantra!!

 

[eriegz]

Reading through this thread and hearing that I shouldn't have bought an Emira...

 

[Lotustoronto]

I have always considered myself very financially disciplined but I have completely fell in love with the Emira. I have never wanted a car more in my life.

I am wondering what kind of financial situation people are in to justify a 6 figure car. How do you justify spending that much $ to your partner?

I'm curious if I am close to the typical situation of an owner or would I be making a horrible financial decision by purchasing one?

For context:
I'm 30 years old.
I have a mortgage of $400,000
Household income of $190,000 CAD ($140K USD)
No debt besides mortgage.
Never had a car payment before.
Don't have a business that would allow me to write off the payments.
Already own a very fun car.

I know it is completely irrational decision but I'm so captivated by this car. Would I be dumb to spend that kind of money before paying off my mortgage?

Appreciate any advice.

My thoughts... It is sound advice from everyone on here that unless you can pay it cash, probably not a good idea. On the flip side, life is short. Sorry for all the older gentleman on the Forum (not that I am that young at 42), but I would rather drive an Emira in my 30's than 55. I would do it, ONLY if you have a decent amount of savings to back up any mis-steps. I don't mean a 3 month emergency fund... to me that is not good enough, my minimum is 1-2 years worth of savings. Anything less, DO NOT buy a sports car. Just my 2 cents.

 

[K_Squared]

I already responded once but thought more about it and wanted to provide actual advice rather than just my ruleset and decision-making process.

I'm 39 and I've been blessed with a wonderful wife and two amazing little girls (one born in January and the other 2 years prior). I work in the Cybersecurity field so I don't make millions per year but it does pay more than I could have ever imagined a decade ago. That being said, 9 years ago (your current age), I had very little net worth (probably just a bit more than the Emira is worth today) but I was patient, invested almost everything I made in real estate, stocks, etc., and lived a relatively inexpensive lifestyle.

Now, 9 years later and still not quite 40, because of those decisions, I was able to buy an Emira with cash and not bat an eye. It's MUCH more fulfilling to know you waited and did it right rather than potentially sinking your financial ship before it leaves the dock. It's really hard to make that first chunk of money but it gets much easier once you have some and start making it work for you.

Not that I'm old enough to be your dad or anything, but if I imagine myself at 60 and you're my 30 year old son, I'd strongly advise you to wait until you can make the purchase without any sense of "Is this okay for me to do?". When I bought the Emira, I KNEW it was not going to set me back in the long run. 9 years ago, it definitely would have and I'd probably be far more strapped overall having spent my main seed money on a car that has since turned into much more.

I hope that's helpful for you. As much as I want you to have an Emira at 30 (and of course it's entirely your choice), you certainly don't want it to become a source of stress or financial setback for years to come. You asked for advice and that's the best I've got.

Best of luck to you in your decision!

 

[cyanmauve]

A few thoughts.

First:
Can you get an Emira and meet your financial obligations and responsibilities to your spouse and children, (assuming you have both, or either)?

Second:
If you buy the car now, and realize that it wasn’t a good financial decision, you can always sell it. Yes, you will probably lose money on the transaction, but you’re not going to come anywhere close to losing the purchase price of the car. It would suck to lose $20k or $30k in short order, but probably not a “my financial future is now ruined forever” kind of loss.

Third:
Just because you don’t buy the car, and invest it elsewhere, doesn’t mean that there isn’t risk to that as well. The stock market, and many other investments, are ultimately a crapshoot. Many will tell you of the money they have made, few will tell you how much they lost on the way there.

Based on what you posted about your financial situation, I would not have been comfortable purchasing a car at 30. But that doesn’t mean I’m right.

I decided I could justify buying my Emira because I felt I had a handle on my duties/obligations/responsibilities to my wife and kids, and could buy the car without denying them the security I owe them.

Also, life’s short, we’re not promised tomorrow, and I place a very high value on sharing this car and my passion for cars with my family.

 

[cyanmauve]

Also, I plan on keeping this car. Forever. When I buy, which is rare, I get exactly what I want. So I don’t care much about it depreciating, as the resale value is detached from what I value the car to be.

I also valued buying this car brand new and getting to configure it to my spec.

This was/is a once in a lifetime thing for me, and the fruition of a literal childhood dream.

If I swapped or traded cars, or planned on getting rid of the Emira when I got bored of it, or when it wasn’t the new hot thing, I would probably have looked at this completely differently.

 

[Drambeenie]

Buy it!!!

 

[MRLayoutLife]

Love Dave Ramsey's advice. Watching his courses 11 years ago is a big part of why I'm in such a good situation now.

 

[MRLayoutLife]

@LuckysDad @K_Squared @Aero @Rupes @scc.131.fe @chatman @Lotustoronto @cyanmauve

I truly appreciate the advice you guys provided. Thank you for commenting.

100K cars seem so common in my city but I want to be financially smart if/when I do get there.

I will make sure to pay off mortgage, and be able to buy in cash. Unfortunately that means I'll have to put the Emira dream in a box for 8-10 years. Hopefully Lotus is still producing them for years to come!

 

[neiru37]

Ask me 3-4 years ago (which is when I put a deposit down lol) and I would have said I couldn't afford it. It was definitely more than 35% of my monthly income at the time, and if I were to have bought it back then I would have needed to sacrifice a few things, which wouldn't be smart.

But I'm fortunate enough to have HODL'd a few company RSU's and it more than doubled in value, enough to pay for the Emira in full, though I did finance cause I didn't want that big of an instant net worth drop.

 

[Raskits]

After reading this thread, I concluded I should have not purchased this car. (But knew already prior what I was getting into)

Life is short and felt like if I cancel my order, I had a feeling I will never have the same opportunity again. When Boardwalk received my car and during financial talk I cancelled on them twice and asked for deposit back. At the end, I sat with my wife and told her how harder everything will be (financially) and I was okay to let it go and get deposit back. Also told my wife if I take the Emira home, my duties/obligations/responsibilities for her will be compromised. She was extremely supportive of me after telling her all that. She knew how long I waited for it and how much I wanted it. We made a game plan together and she was willing to compromise on a lot of things to make it all work till I'm better financially. That talk with her forced me to work even harder. I have now accepted working with my father on weekends for his business where eventually he will be passing it on to me. Prior to that, my ambition to take over the family business was not in my intention since my current business has caused me to live comfortably.

Anyways, cant wait to start her up! After a long work week in my company, extremely looking forward to drown that financial mistake. I truly forget all about them when I drive it. Sure not the best financial decision in my end, but right now we have ZERO regrets and don't feel miserable at all So far we have adjusted well and making ends meet.