Am I crazy for thinking of buying a Turbo S?
02-19-2017, 04:43 PM
#46
Rennlist Member
Well not sure where this person lives but I personally live in California and I can promise you homes here are much higher then Utah so again there are a few variables here.
My point is very simple, not smart to buy such an expensive car without even owning a home. That is not putting your priorities in the right order.
My point is very simple, not smart to buy such an expensive car without even owning a home. That is not putting your priorities in the right order.
02-19-2017, 05:08 PM
#47
Rennlist Member
You are young with lots of income potential. First priority: saving and investing while you still have time on your side. Did you know you can likely find a gorgeous, low mileage 991.1 911 Turbo or even an S for 30-40% less than a new one? And it would likely satisfy 90-95% of your wish list. I'm looking at exactly this, and there are some really nice ones out there...
I'm a retired engineer, and personal finance is a hobby of mine, but f I were a pro-bono financial advisor, I'd rather have u put $80k + sales tax into savings/investments, and find a dream 911 Turbo for $130k or less, with a 60 month loan at around 2%. Starting with the 991.1 2014 911 Turbo and 911 Turbo S, they are virtually all the same spec. If you can write the car off as a business expense, do a lease. Otherwise, buying it is cheaper. That's my opinion and in sticking to it, even tho others may disagree...
I'm a retired engineer, and personal finance is a hobby of mine, but f I were a pro-bono financial advisor, I'd rather have u put $80k + sales tax into savings/investments, and find a dream 911 Turbo for $130k or less, with a 60 month loan at around 2%. Starting with the 991.1 2014 911 Turbo and 911 Turbo S, they are virtually all the same spec. If you can write the car off as a business expense, do a lease. Otherwise, buying it is cheaper. That's my opinion and in sticking to it, even tho others may disagree...
Last edited by PCA1983; 02-20-2017 at 12:08 AM.
02-22-2017, 04:04 PM
#48
Pro
I like your plan of starting out with a C63 S. Beautiful car and I hear its way better than the M3/4
Like others have said, pay off the debt, buy a house and out of curiosity what state are you in?
I also believe in sacrificing a few years of saving up.
Like others have said, pay off the debt, buy a house and out of curiosity what state are you in?
I also believe in sacrificing a few years of saving up.
02-22-2017, 09:08 PM
#49
I am in my 40s, married, no kids, self-employed, and this is my take:
I agree with all to kill the student loan ASAP. No tax benefit at your income range to keep it. Housing market is hot so no hurry to enter it if you are not in it yet. Personally, I set myself a budget for yearly savings/investments and yearly discretionary expenses. For me, cars and vacations are the big parts of that discretionary expense budget. I know I have car ADD and will spend money cars as others would on going out, watches, luxury goods, vacations etc. I either look for good deals on used cars or lease new ones. I usually finance some of the purchases to maintain flexibility as I don't keep the cars for long, especially since money is fairly cheap right now.
Living in CA, sales tax is big hit when buying so leasing is good on cars that I am just feeling out. I always look at the depreciation tables for lease deals and plan depreciation curves on used purchases. I look at the money spent on this depreciation as AN EXPENSE that makes me happy.
I am not looking to retire early as I cannot imagine not working some capacity so I have a retirement account schedule that reflects that. Also, my wife and I travel as much as we can and do so with moderate costs because we don't think Manchu Picchu would be fun at 65 years old.
So when I look at cars, I look at cost of use and budget it from there. If I did not love cars the way that I personally love them, I would buy a reliable and easy to fix car and drive it till it died, rinse and repeat. I don't think there is any CORRECT method. It is all about life priorities and planning. We could all get hit by a car tomorrow or live till a 120 and run out of cash. There is only so much planning and life deferring you can do.
If I was in your situation and had the same or similar car bug, I would use all cash to payoff student loan, get a CPO 2014 911 TTS with a 2.9% or less 60 month loan from PFS with little to no money down, save as much as possible for house down payment, and max out 401K and IRAs. After buying home, re-work monthly cash flow to hit retirement schedule beyond 401K and IRAs. If you dislike or change your mind about the 911 TTS while you are still paying for it, you will lose no more than 10% a year from your purchase price if you take care of it and don't put crazy miles on it. This flexibility is key if your financial situation, family situation, or car interest situation changes.
In the end, 99% of all modern cars are depreciating assets or straight expenses so it just depends on how much you want money you want to allocate to your car fun budget.
I agree with all to kill the student loan ASAP. No tax benefit at your income range to keep it. Housing market is hot so no hurry to enter it if you are not in it yet. Personally, I set myself a budget for yearly savings/investments and yearly discretionary expenses. For me, cars and vacations are the big parts of that discretionary expense budget. I know I have car ADD and will spend money cars as others would on going out, watches, luxury goods, vacations etc. I either look for good deals on used cars or lease new ones. I usually finance some of the purchases to maintain flexibility as I don't keep the cars for long, especially since money is fairly cheap right now.
Living in CA, sales tax is big hit when buying so leasing is good on cars that I am just feeling out. I always look at the depreciation tables for lease deals and plan depreciation curves on used purchases. I look at the money spent on this depreciation as AN EXPENSE that makes me happy.
I am not looking to retire early as I cannot imagine not working some capacity so I have a retirement account schedule that reflects that. Also, my wife and I travel as much as we can and do so with moderate costs because we don't think Manchu Picchu would be fun at 65 years old.
So when I look at cars, I look at cost of use and budget it from there. If I did not love cars the way that I personally love them, I would buy a reliable and easy to fix car and drive it till it died, rinse and repeat. I don't think there is any CORRECT method. It is all about life priorities and planning. We could all get hit by a car tomorrow or live till a 120 and run out of cash. There is only so much planning and life deferring you can do.
If I was in your situation and had the same or similar car bug, I would use all cash to payoff student loan, get a CPO 2014 911 TTS with a 2.9% or less 60 month loan from PFS with little to no money down, save as much as possible for house down payment, and max out 401K and IRAs. After buying home, re-work monthly cash flow to hit retirement schedule beyond 401K and IRAs. If you dislike or change your mind about the 911 TTS while you are still paying for it, you will lose no more than 10% a year from your purchase price if you take care of it and don't put crazy miles on it. This flexibility is key if your financial situation, family situation, or car interest situation changes.
In the end, 99% of all modern cars are depreciating assets or straight expenses so it just depends on how much you want money you want to allocate to your car fun budget.
02-22-2017, 09:23 PM
#50
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Nope, you're not at all crazy. I have an ordinary white collar job and my wife is in a similar position to you with a well paying first "real" job after residency and a large raise at partner coming up in 18 months. She finished her second fellowship last year. I have a new TT coming next month.
We have short, mid, and long term financial goals. The Porsche does not interfere with them. If you haven't yet, I'd suggest you decide on personal financial goals, priorities, and timelines. See how you can enjoy today, next year, and all the way to the end of your life. If you aren't good at this get a good financial adviser (long term or for a one time consult) and that person will be worth the wage.
In the here and now term:
1) Maintain adequate cash flow - tying up money reduces rates but too much tied up and things get tight which adds stress. I say this because you are probably looking at refi options for your student loans if you haven't done it already. On that add up the numbers and see how much interest is capitalized per year for the reasonable options. It surprised me. While we plan to pay them off in ~4 years we ended up going with a float rate and a 15 year term instead of a five year term with a lower APR. The incremental capitalized cost was worth the freedom in terms of cash flow - it's nice not to have a huge minimum monthly obligation.
2) Depreciation/interest versus outlay - what you spend and recover later is very different from what you spend and never recover. The latter is more expensive despite the strong emotional tendency to experience sticker shock at any large outlay. This is where the appeal of a CPO car comes in and is why travel is expensive.
3) Most studies on happiness talk about how it's better to buy experiences than things. Travel is a common example. To me some cars fit that experience category, some are just appliances, and some are halfway. There is an uncanny valley where you're paying too much for an appliance but still not getting the experience either. As long as you stay out of that it's reasonable if it fits your plans and priorities.
If I were not a serious car nut I'd have an Audi A4 or similar and get a 911 in a decade or two after we'd put a lot of money away and it was much cheaper in relative terms. But if not on a car then we'd eventually spend the 911 money elsewhere depending on hobbies and interests. For us it would probably go to travel or a house. Jackie doesn't care about cars so she drives a very 'cute' purple Mini Cooper. She does like nice homes though and that's an easy way to spend a huge sum. The principal is no big deal but interest can be pretty staggering if you finance a lot of money and it can make the depreciation on a 911 look cheap.
So in short, definitely not crazy. But since so much has changed you'll need to get out the paper and do some figuring before you decide if this is an area where you want to and can comfortably afford to splurge. The opportunity cost is the key metric as you can have just about anything you want but you certainly can't have everything, and the bigger the things (including a nice retirement) the less of them you get to have.
My wife's colleague also likes cars. He just had an M2 and traded it on a Focus RS. Much cheaper cars but he gets a new one every year or two so depreciation isn't trivial. To him that's the way to get an experience.
We have short, mid, and long term financial goals. The Porsche does not interfere with them. If you haven't yet, I'd suggest you decide on personal financial goals, priorities, and timelines. See how you can enjoy today, next year, and all the way to the end of your life. If you aren't good at this get a good financial adviser (long term or for a one time consult) and that person will be worth the wage.
In the here and now term:
1) Maintain adequate cash flow - tying up money reduces rates but too much tied up and things get tight which adds stress. I say this because you are probably looking at refi options for your student loans if you haven't done it already. On that add up the numbers and see how much interest is capitalized per year for the reasonable options. It surprised me. While we plan to pay them off in ~4 years we ended up going with a float rate and a 15 year term instead of a five year term with a lower APR. The incremental capitalized cost was worth the freedom in terms of cash flow - it's nice not to have a huge minimum monthly obligation.
2) Depreciation/interest versus outlay - what you spend and recover later is very different from what you spend and never recover. The latter is more expensive despite the strong emotional tendency to experience sticker shock at any large outlay. This is where the appeal of a CPO car comes in and is why travel is expensive.
3) Most studies on happiness talk about how it's better to buy experiences than things. Travel is a common example. To me some cars fit that experience category, some are just appliances, and some are halfway. There is an uncanny valley where you're paying too much for an appliance but still not getting the experience either. As long as you stay out of that it's reasonable if it fits your plans and priorities.
If I were not a serious car nut I'd have an Audi A4 or similar and get a 911 in a decade or two after we'd put a lot of money away and it was much cheaper in relative terms. But if not on a car then we'd eventually spend the 911 money elsewhere depending on hobbies and interests. For us it would probably go to travel or a house. Jackie doesn't care about cars so she drives a very 'cute' purple Mini Cooper. She does like nice homes though and that's an easy way to spend a huge sum. The principal is no big deal but interest can be pretty staggering if you finance a lot of money and it can make the depreciation on a 911 look cheap.
So in short, definitely not crazy. But since so much has changed you'll need to get out the paper and do some figuring before you decide if this is an area where you want to and can comfortably afford to splurge. The opportunity cost is the key metric as you can have just about anything you want but you certainly can't have everything, and the bigger the things (including a nice retirement) the less of them you get to have.
My wife's colleague also likes cars. He just had an M2 and traded it on a Focus RS. Much cheaper cars but he gets a new one every year or two so depreciation isn't trivial. To him that's the way to get an experience.
02-22-2017, 10:39 PM
#51
Rennlist Member
Our original student loan rate from the US government was 6.8%! And many physicians don't even bother to refinance. My wife wasn't going to - she didn't know it was a thing and she was spending too much time working to care. A lot of physicians rely on financial planners. They (physicians) are quite smart but may lack both the time and the inclination to learn even the basics of finance. A spreadsheet isn't the first thing most of us reach for when we're exhausted, and for many physicians exhaustion is just a way of life for 5-10 years.
02-23-2017, 01:06 PM
#52
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To your question, I have no idea. I think you missed a key word in the quote; that refers to student loans. My wife is a physician in a very similar position to the OP and student loan repayment is an important piece of the financial picture for physicians at this career stage. And unlike the fixed rate loans, term extensions with the variable rate loans have a very marginal cost, so a 15 year term was an educated decision balancing additional cash flow against slightly higher amortized costs over a 3-5 year repayment.
Our original student loan rate from the US government was 6.8%! And many physicians don't even bother to refinance. My wife wasn't going to - she didn't know it was a thing and she was spending too much time working to care. A lot of physicians rely on financial planners. They (physicians) are quite smart but may lack both the time and the inclination to learn even the basics of finance. A spreadsheet isn't the first thing most of us reach for when we're exhausted, and for many physicians exhaustion is just a way of life for 5-10 years.
Our original student loan rate from the US government was 6.8%! And many physicians don't even bother to refinance. My wife wasn't going to - she didn't know it was a thing and she was spending too much time working to care. A lot of physicians rely on financial planners. They (physicians) are quite smart but may lack both the time and the inclination to learn even the basics of finance. A spreadsheet isn't the first thing most of us reach for when we're exhausted, and for many physicians exhaustion is just a way of life for 5-10 years.
02-23-2017, 11:19 PM
#53
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That is an amazing car I'm sure! Do what makes you happy and worst case scenario you decide to sell it and you lose some money with depreciation. Not a big risk IMHO
Good luck and have fun!
Good luck and have fun!
Last edited by dan911; 02-24-2017 at 08:16 PM.
02-25-2017, 05:16 AM
#54
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If you are dreaming it for a long time, I think you must make a great plan on how to manage your finance and get your dreamed Turbo S. Of course it is not crazy to dream a great car. Only, you need to make it possible without big problems. Just a little bit of advice here. In my case, I dreamed for the 2017 Porsche 911 Turbo Coupe. I will just make a way in order to find great solution in my finance. That could be a great solution for me.
05-31-2018, 02:30 PM
#56
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-Just finished orthopedic surgery residency and am working
-Making 380k this year + 50k in incentives + 40k signing bonus
-Both incentives and signing bonus would go towards down payment
-Not paying outright cash because I don't want ~200k tied up in a car.
-Dreamt of buying a new Turbo S for the longest time
-Turning 31 next month
-Am I crazy?
-Making 380k this year + 50k in incentives + 40k signing bonus
-Both incentives and signing bonus would go towards down payment
-Not paying outright cash because I don't want ~200k tied up in a car.
-Dreamt of buying a new Turbo S for the longest time
-Turning 31 next month
-Am I crazy?
Dont' buy a house but rent a reasonable home/condo/apartment that meets your needs.
Max out 401k+profit sharing up to 55k limit
Contribute 5500 TIRA and convert to RIRA.
Stick to a defined budget.
Contribute the remaining excess cash flow into a taxable account towards retirement consisting of the lowest expense ratio/tax efficient index funds and tax exempt municipal bonds. Vanguard is an outstanding choice and contains some of the lowest expense ratio index funds around. Last time I checked Schwab is even lower.
Open up a high yield savings account and contribute excess cash flow toward your car fund. I think Barclays is the best at the moment offering a 1.65% APR. If you put away 2k/month you'll have about 124k in 5 years and about 260k in 10 years to pay for your car in cash.
Due to your age, a cash balance benefit plan may not be worth it to you at this point. Nonetheless, the combination of 401k + CBBP could allow you to put away 55,000 + 48470 = 103,470 pretax dollar per year toward retirement.
In the end, the choice is yours. Nonetheless, I have plenty of friends/colleagues that essentially are working to live and support their lifestyles.
It's also a balance. If you make sure and save, max out retirement, and live below your means and you still have the excess cash on hand to comfortably afford it? Then go ahead and enjoy within reason of course.
cheers!
Last edited by Rayd8tr; 05-31-2018 at 02:54 PM.
06-01-2018, 12:51 AM
#57
Rennlist Member
Get a 991 tts with at least 100,000 miles on with full service history and zero issues pay $90K for it and use it as a DD. My simple plan until sadly I fell for a 997.2.
06-01-2018, 01:39 AM
#58
Rennlist Member
FYI the OP said this /\/\ back in February 2017.
06-01-2018, 01:59 AM
#59
I’m late to the post but better late then never.
I start by the premise that we love cars, otherwise we wouldn’t be reading and posting here.
Here’s my story: I had average debt coming out of med school (~$160k) because wife was working and paid for living expenses. I was fortunate to get into a higher paying speciality. I have always bought 1-2 year cars. First car was a 2007 Mini Cooper S bought in 2007 during my first year of residency for ~$25k. Second car was a 2010 M3 bought for ~$50k in 2012 at the end of fellowship in 2012. Most recently I made partner in 2017 and bought a 2017 911 C4S bought for ~$113k. I have paid off the Mini and M3. But I am in no hurry to pay student loans (~1.75% APR) or Porsche loan (1.5%). If there is any debt I looking to pay off quicker, it’s my home loan (3.25%). I trust the markets more, which has historically been averaged out 6-7%. In recent years there has been good debt as long as it’s managed and budgeted.
Everybody’s budget is also highly variable. Cost of living? Other expensive hilobbies such as traveling and fine dining? Housing price? # of kids? # of kids desires? Private primary or secondary schools? Children’s college tuition savings? Projected retirement age? $$$ at retirement? Changes in healthcare? It’s funny how quickly $500-999k/year can quickly disappear!
We live in a more rural area where $500k buys you a luxury home. We are in our early 40’s and have one kid public school. So yes the 911 fits in our budget unless we start getting paid like plummers. Our neighbor, a real estate developer just bought a Huracan but he also had the dough to recently buy an 18-hole golf course!
911 Turbo more befits a surgeon. Huracan is more for a cosmetic/plastics doctor. I was very close to getting a GT3 but it was just out of my budget and also not a car I want to commute daily in.
I start by the premise that we love cars, otherwise we wouldn’t be reading and posting here.
Here’s my story: I had average debt coming out of med school (~$160k) because wife was working and paid for living expenses. I was fortunate to get into a higher paying speciality. I have always bought 1-2 year cars. First car was a 2007 Mini Cooper S bought in 2007 during my first year of residency for ~$25k. Second car was a 2010 M3 bought for ~$50k in 2012 at the end of fellowship in 2012. Most recently I made partner in 2017 and bought a 2017 911 C4S bought for ~$113k. I have paid off the Mini and M3. But I am in no hurry to pay student loans (~1.75% APR) or Porsche loan (1.5%). If there is any debt I looking to pay off quicker, it’s my home loan (3.25%). I trust the markets more, which has historically been averaged out 6-7%. In recent years there has been good debt as long as it’s managed and budgeted.
Everybody’s budget is also highly variable. Cost of living? Other expensive hilobbies such as traveling and fine dining? Housing price? # of kids? # of kids desires? Private primary or secondary schools? Children’s college tuition savings? Projected retirement age? $$$ at retirement? Changes in healthcare? It’s funny how quickly $500-999k/year can quickly disappear!
We live in a more rural area where $500k buys you a luxury home. We are in our early 40’s and have one kid public school. So yes the 911 fits in our budget unless we start getting paid like plummers. Our neighbor, a real estate developer just bought a Huracan but he also had the dough to recently buy an 18-hole golf course!
911 Turbo more befits a surgeon. Huracan is more for a cosmetic/plastics doctor. I was very close to getting a GT3 but it was just out of my budget and also not a car I want to commute daily in.
Last edited by freeman727; 06-01-2018 at 02:35 AM.
