Income/Finances needed to justify Emira purchase?

[FlyNavy01]

Only person that can justify it is you as each person's individual situation, risk tolerance, and values are going to vary wildly.

I'm similar age and income to OP but income is mostly irrelevant to a purchase like this compared to net worth IMO. I certainly could've re-invested the $108k cash I paid for the Emira and have 1-2 million more when I'm 65, but that doesn't appeal to me as I'm already maxing my retirement accounts and will likely have more than I need by that age anyways. As mentioned above, life is all about balance. Dying rich is worthless to me and money is simply a tool to build a life that you enjoy.

My justification was simply to make sure everything else was budgeted for first then I'd allow myself toys with any extra cash. I used investment funds to purchase the car in cash since my traditional income pays for all living expenses and funds any tax advantaged accounts. I personally want to enjoy some of my passions while I'm younger before I have bigger responsibilities like a family. My income will increase by $50k next year if I stay in the military, or by much more than that if I decided to jump ship to the airlines, so I'm okay with a little more risk this early in life. Only thing I'd say is I wouldn't do it if affects your daily finances.

 

[cyanmauve]

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Ain’t that the truth!

My parents are in their mid 70’s. My Dad still works 2-3 days a week, because he enjoys it, and it gives him just enough income that he doesn’t have to touch retirement accounts unless there’s something big he wants to do or buy.

They started traveling a lot about 5 years ago. Thankfully, they are still in good health and are fit enough to enjoy hiking, biking, etc. But that could all change tomorrow.

When friends they knew (even people who had taken good care of their health) started having health problems that limited mobility, and some died, they realized that the time to travel and enjoy life is now.

Absolutely prepare for the future, but enjoy life along the way.

For some that means a $10,000 toy car, for others a $100,000 toy car.

Having kids changed my perspective on this a little too. I’d rather share experiences with them now than keep it for myself to enjoy when they’re grown. Obviously there’s a balance to this, and I refuse to be a financial burden on my kids as I age.

 

[DCRAM]

Honestly, just wait 2-3 years when you can pick up a used one for 30-40% off. That's a much better move for you financially.

 

[nickorette]

You only live once. If it's something you've been obsessing over and can't live without then go for it, because you'll never get another chance to get an Emira new. A few years it's rumored the V6 will be gone, leaving just i4.

If you're worried about finances, then pick up a side hassle to cover the extra payments.

 

[Lotus64]

Buy it no matter the stretch! What else is there to live for? Heaven is here on earth!

 

[EMIRADILEMMA]

If you do not already have kids, do factor in whether you're planning on having them as, regardless of age, they will be a major drain on your finances

 

[wallstbear]

I got a massive pay cut (50%+) recently because our country's big boss decided that our industry shouldn't be well paid like before (Ironically I also won a major award in my company for 2023 for my outstanding performance).

Fortunately I did not overextend my finances to afford the Emira, so now even though I am in significantly worse financial condition that a year ago, I still should be able to get by fine, but may have to cut down on some expenses. Had I acted on impulse and bought an Aston Martin which I absolutely love, I'd be pretty much screwed right now.

Life can throw you some curve balls. Be prepared.

 

[cyanmauve]

If you do not already have kids, do factor in whether you're planning on having them as, regardless of age, they will be a major drain on your finances

And how! They're the best "luxury" purchases I have ever made!

 

[Nova]

IMO, traveling is different, though. We spend *much* more on travel than we do on cars. Personally, I think people should travel far and often, and there are inexpensive ways to do it, especially if you are young. On a trip to Panama we met this guy in his early 30s, with a tattered passport that's been stamped to its last bit of space. He teaches at a college and spends his summers backpacking everywhere. At that particular time, he was making his way north, starting from Chile. I was instantly envious of all the experiences and adventures he must have had.

I traveled in my early career for work quite a bit but had a break in my 30s as I was hunkering down to build a career and family. I wish I travelled more during that time.

If given a choice between the Emira and travelling for equivalent cost, I would eagerly give up the Emira. I am blessed to be able to do both.

 

[cyanmauve]

Honestly, just wait 2-3 years when you can pick up a used one for 30-40% off. That's a much better move for you financially.

Excellent advice.

 

[R1272]

Pay off your house. In fact, if there's no prepayment penalty, blast another few payments at your loan each year to reduce your principal. At 30, you sound ahead of the curve. Stay there. I agree that buying used will get you what you want at a discounted price. Like my Alfa 4C, many early adopters decided the car wasn't for them and sold in the first few years.

One more time. Pay off your house.

 

[hbar]

Pay off your house. In fact, if there's no prepayment penalty, blast another few payments at your loan each year to reduce your principal. At 30, you sound ahead of the curve. Stay there. I agree that buying used will get you what you want at a discounted price. Like my Alfa 4C, many early adopters decided the car wasn't for them and sold in the first few years.

One more time. Pay off your house.

This thread is so interesting. You see so many different perspectives on how to handle money, including among highly financially successful people. This is an example. My mortgage is around 2.5%. I could easily pay it off, but instead I have the remaining balance in things like government bonds yielding over 5%. I'll arb that as long as I can. As best I can tell, it makes me something like 200K richer to do it that way. 2 emiras!

 

[KaZe]

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.

Some fantastic advice from folks on this forum! I wouldn't usually comment on a topic like this because finances vary so much from person to person. Oddly, I'm inclined to add my 2 cents since we're both from Canada, similar in age, and I just picked up my lovely Emira a few days ago.

Our current interest rates are abysmal, but we're starting to see some improvement. I'm seeing 0% at Ford and other brands so it's a good sign. On top of that though, our car market is quite different compared to our friends in the USA and across the pond in the UK. We're still seeing inflated used car prices and the few Emiras currently for sale are being marked up. Unless you had an FE 1.0 order, it's probably a good idea to wait it out and see if you can pick up a good deal. In the meantime, you can save up a big down payment to avoid paying a ridiculous amount in interest.

As for my situation, I paid cash, have a decent amount invested for my future, and have a rainy day fund that can pay the bills for 1.5-2 years if I lose my source of income tomorrow. I absolutely refuse to buy any new vehicle that is marked up (that isn't super limited) or any used car that was cheaper prior to the pandemic. This stubbornness of mine worked favourably for Lotus, as I waited just short of 3 years for my Emira. With that said, I have nowhere near the $3 million working for me that a previous member advised we should all have before buying this vehicle. Like many others, if following this advice (good advice), I shouldn't have bought this car.

On the other hand, life can turn upside down and bend you over in the blink of an eye. I had a close friend who dreamt of owning a Nissan GT-R. He'd always say "I'm going to buy a GT-R by the time we turn 30" and I'd hear this from him almost daily. He passed away at 20 during a tragic accident and I will never get to cruise alongside my dear friend with him in his GT-R and me in my Emira. How does the saying go again? "Life is too short to drive boring cars?" I wholeheartedly agree.

I'd say if you have a decent chunk saved up for a down payment, don't plan on having any offspring in the next few years, you and your spouse have steady jobs that will still allow you to save a bit for your future, then GO BUY YOUR EMIRA! Here for a good time, not a long time

 

[MRLayoutLife]

On top of that though, our car market is quite different compared to our friends in the USA and across the pond in the UK. We're still seeing inflated used car prices and the few Emiras currently for sale are being marked up. Unless you had an FE 1.0 order, it's probably a good idea to wait it out and see if you can pick up a good deal. In the meantime, you can save up a big down payment to avoid paying a ridiculous amount in interest.

Thanks for your input, its nice to hear from someone in similar location and situation as me.

I hope there is some end in sight, I feel like it will be a long time before used Emira's even come down to MSRP in Canada.
It seems ever since covid all vehicles used 2-4 years are still selling right around msrp.

 

[slotus]

Nearly everything we purchase is a luxury we don't need. We eat out, have multiple cars, go on vacations and to concerts, its just a matter of how much you want it.

For a major asset purchase I think the best way to view it is against the opportunity cost. Right now interest rates are about 5%, so you are giving up $5000 a year in interest to purchase an Emira. Depreciation is an open question. Historically Lotus has held value very well, but Emiras with higher production may not. Government fiscal policy remains inflationary too, which causes assets retain dollar price value.

 

[CHEESE]

I dont think you can ever justify such a purchase. theres no way i am going to rationalize this as being a smart thing to do. its not, never will. absolutely worth it tho! I have never been so excited for something!

for me, the way I cope with this crazy decision i made at 31 is:
1. zero debt
2. paid in cash

We're not just alike in username, fellow millennial. I'm in the same situation (paid cash, no debt) and look at it pretty much the same way: it's not a good financial decision in any circumstance, but it's well worth it!

In addition, cars are my original, #1 passion, and I see the Emira as essentially the last opportunity to get a car like this; a fulfillment of the mid-engine, manual transmission sportscar dream (and the exotic looks and Lotus rarity are icing on the cake).

 

[idleuser]

Remember it's a want not a need. If you're trying to "justify" buying a 6 figure car at the detriment of your family financial well being then it's definitely falls into the category of want.

You don't need to a millionaire, investment banker, nor a wealthy entrepreneur to purchase this car. You can definitely buy this car with good financial planning and with a big down payment with manageable monthly payments. It all depends on your financial situation and how much you can afford.

 

[Hell4Leather]

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.

10% of net worth for cars is spot on

 

[73JPS]

 

[RPM]

There is a lot missing from the equation. Kids? How many? Investments? How much? Home equity? Mortgage rate? No need to answer them here. Seems like a lot to broadcast publicly, BUT they are part of the equation.

Owing $400K on a $440K home at 8% is different than owing $400K on a $950K home at 3%. Having one kid is different than raising five. If your primary source of long-term wealth and retirement your 401K? How much is in there? How much do you contribute annually? Can you give up $2M in retirement funds? $130K sitting in an ETF earning 10% will be worth $2.5M when you are 60.

You SHOULD enjoy your money. It is why I started racing in my 30's, and not waiting for some wealthy future. BUT you should also not mortgage your future for fun today. Which is why I race a 25-year-old Miata and still maintained an aggressive investment plan.

So, can you write a $130K check, not touch retirement funds, still pay all your bills, still maintain the same rate of investment and keep your retirement on track, have a considerable emergency fund to ensure you stay comfortable, still have the same monthly spending money, and pay for all your family obligations? If yes, I'd say do it.