Income/Finances needed to justify Emira purchase?

[John777]

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.

when your 60? what if your 59? lol
2 million..wow.. I'm fu.ked..

 

[RPM]

when your 60? what if your 59? lol
2 million..wow.. I'm fu.ked..

At a 10% return 130K will give you $13K in your first year for a total nest egg of $143K. If you plan to make money with compound interest, time is your best friend. But hey, there's other ways to make money, buy property and start renting it, start your own business, etc.

 

[John777]

At a 10% return 130K will give you $13K in your first year for a total nest egg of $143K. If you plan to make money with compound interest, time is your best friend. But hey, there's other ways to make money, buy property and start renting it, start your own business, etc.

Your assuming everyone has $130k laying around.. and I haven't found a 10% return investment. I don't have 130k cash laying around so that point is moot. If I borrowed $130k looking at 7 or 8%.. unless I got a mortgage maybe 6%.

 

[Drambeenie]

I haven't found a 10% return investment.

SP500 ?

 

[marc1adrien]

Fascinating thread. Good advice.

One thing I'd add: don't think of an Emira as a car. Money-wise, it's a toy, last of its kind, and I suspect it won't depreciate much beyond a certain floor. It might even appreciate from there. This makes it financially different than a Camry or an F150. It's closer to a limited edition watch.

As for me, in my decision-making...I have a very small mortgage I can pay off anytime and is for less than 1/4 of my home value. I've paid for my kid's college education, and have plenty set aside for retirement such that if I stop saving (which I won't), I can retire comfortably enough in the next few years.

Perhaps more importantly, I love to drive, and I like unusual and uncommon things. I've wanted a Lotus since I was eight. I spent longer than I care to admit running hard in jobs I didn't love to try to make enough money to "feed the beast" of a personal circumstance I won't get into here. That said, that's done now, and here I am, and all is well.

Buying this thing, I think, was only slightly stupid, but by no means monumentally stupid. And yes, I can afford it by even the most conservative measures listed by those here. I even had it blessed by my financial advisor. Would I have bought one at 30? I don't think so, TBH.

 

[RPM]

Your assuming everyone has $130k laying around.. and I haven't found a 10% return investment. I don't have 130k cash laying around so that point is moot. If I borrowed $130k looking at 7 or 8%.. unless I got a mortgage maybe 6%.

Then you should not be buying an Emira. This thread is about buying an Emira, ergo you have at least $100K US sitting around. If you are financing a $100K toy, I have no financial advice for you.

 

[John777]

Then you should not be buying an Emira. This thread is about buying an Emira, ergo you have at least $100K US sitting around. If you are financing a $100K toy, I have no financial advice for you.

Who are you to tell me anything. I said most people don't have $130k laying around.
I invested heavily in realestate.

I don't have the extra $150k..in cash

I will be taking out a mortgage on my primary residence that's paid for..in order to secure a cheaper rate than a car loan or even a LOC.

Lots of people finance
Keep your advice I wasn't asking.

 

[cyanmauve]

There’s this nasty little thing called tax. It’s pretty good at eroding those 10% gains.

 

[73JPS]

Probably by this point the OP has left the building…

My interpretation of most of the answers here probably makes me seem like a pedantic dick (“Let’s break it down for you” would be the phrase these days in popular media), but it seems to me that generally speaking, the advice from folks such as @RPM @LuckysDad @K_Squared @Aero @Rupes (to name but a few) is that which provides the most sound and secure way to behave if one wants to try and build financial security and wealth. Sometimes it works, sometimes it doesn’t, but almost assuredly if you don’t treat finances that way, you’re far more likely to be “broke”, no matter what your income.

Maybe this is most neatly summarized with this question: “Do you just want to look like you have money, or do actually want to have money?”

I’m not really sure there’s an audience for this particular post, but I’ve definitely trended in my financial behaviour towards the “broke” end of the spectrum. That said, although I don’t have all of the financial bedrocks that the really financially sound guys here are advocating, I do have safety nets that would keep me afloat if certain hardships befell me.

I guess my point is that if a person can only “afford” to buy this car by financing it, as long as they are in a position (through whatever means) to survive without immediately losing the necessities of life if something financially catastrophic happened, then go ahead and buy the car. You’ll just probably never “get ahead”, let alone be wealthy. But hey: you’ll have a kickass car!

 

[Hell4Leather]

. You’ll just probably never “get ahead”, let alone be wealthy. But hey: you’ll have a kickass car!

Facts! I can’t say I would enjoy being perpetually broke no matter the income but that’s also the reason to go ahead and get the car; you’ll just spend it on something else. And besides, if everything goes to hell in a hand basket you can just sell the thing. You’ll take a hit but it won’t be as bad as some people are suggesting (30-40%). Probably closer to 15-20% after a few years.

 

[John777]

This is short sighted.

"I guess my point is that if a person can only “afford” to buy this car by financing it, as long as they are in a position (through whatever means) to survive without immediately losing the necessities of life if something financially catastrophic happened, then go ahead and buy the car. You’ll just probably never “get ahead”, let alone be wealthy. But hey: you’ll have a kickass car!"

*Just because someone finances a car doesn't mean they will never get ahead or be wealthy. That's where I disagree.

In my example.. I've invested heavily in realestate. Let's say I have not going broke ever. Just don't have extra $150k in cash. Easily afford a big car payment.

 

[73JPS]

This is short sighted.

"I guess my point is that if a person can only “afford” to buy this car by financing it, as long as they are in a position (through whatever means) to survive without immediately losing the necessities of life if something financially catastrophic happened, then go ahead and buy the car. You’ll just probably never “get ahead”, let alone be wealthy. But hey: you’ll have a kickass car!"

*Just because someone finances a car doesn't mean they will never get ahead or be wealthy. That's where I disagree.

In my example.. I've invested heavily in realestate. Let's say I have not going broke ever. Just don't have extra $150k in cash. Easily afford a big car payment.

Generally speaking, if you don’t have the cash, and are willing give up ‘x’ dollars per month in interest at anything over 4% to finance the majority of a (here in Canada) $150,000 purchase, you probably don’t have the mindset to become wealthy.

Lots of people make lots of money they just don’t have lots of money. While they got lotsa fancy crap, that doesn’t amount to wealth.

 

[Porter]

Let's please settle down in this thread. The amount of judgmental back-and-forth in the prior pages (that I missed entirely at the time, sorry) is not necessary.

Remember, and I mean this gently... if you aren't a CFP, ChFC, or other certified or licensed financial planning professional or a former/retired professional from that industry, you probably don't have any business giving out financial planning advice to strangers.

The original question that was asked in this thread has been answered, ad nauseum. Let's please keep any additional posts in a light, respectful tone, or we'll close the thread.

 

[John777]

Generally speaking, if you don’t have the cash, and are willing give up ‘x’ dollars per month in interest at anything over 4% to finance the majority of a (here in Canada) $150,000 purchase, you probably don’t have the mindset to become wealthy.

Lots of people make lots of money they just don’t have lots of money. While they got lotsa fancy crap, that doesn’t amount to wealth.

I already am wealthy.. As well as 6 figure income and cash flowing rentals.
I don't need 150 bands of cash laying around like some wannbe gangsta rapper.
So according to you..someone paying 4%+ interest "doesn't have the mindset to become wealthy.." What a crock really!.. Do you pay intetest on a mortgage? Did you pay cash for your house..? wtf you even talking about.

You may have 150k cash but you have 500k mortgage .

I don't have a mortgage.. so i can afford to get a loan and pay interest. But cheaper to get a mortgage for 150k on my PAID off house..

So your fancy house doesn't amount to wealth either..
.
You guys make alot assumptions.
Just because someone gets a loan on a car doesn't mean they are broke or don't have the mindset to become wealthy.. makes no sense..wow..

 

[RPM]

There’s this nasty little thing called tax. It’s pretty good at eroding those 10% gains.

You are not taxed until you sell, and only on the amount you sell. Interest compounds, tax does not. If I make $5M in the market I am not taxed until I sell. If I only sell $200K at a time as an annual income, then I am only taxed at that income rate. My remaining $4.8M are unaffected and still earn interest/dividends. If I invest in certain municipal bonds, the return is lower (more like 5%), but the earning are not taxed.

Inflation is a greater drain to your investments that tax. Even still, as long as your portfolio outpaces the inflation rate - you will be ahead.

 

[RPM]

Who are you to tell me anything. I said most people don't have $130k laying around.
I invested heavily in realestate.

I don't have the extra $150k..in cash

I will be taking out a mortgage on my primary residence that's paid for..in order to secure a cheaper rate than a car loan or even a LOC.

Lots of people finance
Keep your advice I wasn't asking.

If you are financing a $100K toy, I have no financial advice for you.

I literally said, "I have no advice for you". so this post is obviously not directed at you, ever.

 

[Porter]

I'm going to just post this so we can have a laugh, and hope that some of you will stop taking yourselves quite so seriously.

 

[cyanmauve]

You are not taxed until you sell, and only on the amount you sell. Interest compounds, tax does not. If I make $5M in the market I am not taxed until I sell. If I only sell $200K at a time as an annual income, then I am only taxed at that income rate. My remaining $4.8M are unaffected and still earn interest/dividends. If I invest in certain municipal bonds, the return is lower (more like 5%), but the earning are not taxed.

Inflation is a greater drain to your investments that tax. Even still, as long as your portfolio outpaces the inflation rate - you will be ahead.

Yes, assuming current tax law stays the same, and you don’t need to withdraw more than you planned, and you don’t need to withdraw money during a downturn, etc., etc., etc., all that can go according to plan. It probably does much of the time for many people. In the aggregate.

However, there’s a lot more volatility, external factors, and just plain life, that keeps investing in the stock market, or any investment for that matter, from being as rock solid as it’s often made out to be. Call me cynical.

 

[ADC]

I'm going to just post this so we can have a laugh, and hope that some of you will stop taking yourselves quite so seriously.

View attachment 46736

Does this guy have a newsletter? (Ideally a paid subscription one, printed and mailed out)
I'd love some pointers on the optimal number of cold showers and LinkedIn posts it takes to turn 22M into 19M

 

[cyanmauve]

So your fancy house doesn't amount to wealth either..

Yes but I need people who I don't know that drive by my fancy house to THINK that I'm wealthy! Who doesn't want the approval of people they don't know?