whodatmofo

-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?

clevelandporsche

It's not uncommon for auto enthusiast just out of residency to splurge on a nice car. I'm not a financial advisor. Some will say don't borrow money to buy a toy, some will insist you should take care of student loans (if any) first. I will say if you can afford it, do it. Don't put it off just because you're young. You'll only wish you'd have done it sooner.

sc235813

no. you're not crazy... but i suggest you buy used (i mean pre-owned) and avoid financing. maybe try a 996 gt3 instead...

sc235813

never mind that last post... 996 gt3 values have risen considerably since last i checked...

ace37

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.

LexVan

Since you asked:

Get out of debt, first.

Fully fund your retirement this year.

Hope you have a garage to park the toy.

Make the car payment to yourself for 6-12 months. Then go pay cash.

Spouse, kids, charity? Would change my response/advice a little.

Buy a used 991 Turbo S. All the new 2017 Carreras are turbocharged.

Spyerx

LOL. I remember when I was 31 :-) (And it wasn't long ago)
If you're not debt free (other than real estate) fix that first.
And if you're living in CA, NY, or any other place where a desirable home is 1.5m+ consider that salary after the tax man won't get you that far no matter how much it feels like right now. Especially if you're carrying 300k+ in student loan debt.
Then lease and get it out of system.

RONGLOS

Yes.focus on a home first if you plan on staying in the area that you are residing in. I've had many cars and after 6 months they are just a car. Location is so much more important.

ace37

Ah yes, housing is a good point. That could change the picture.

We built a nice custom home a few years before she finished up and we didn't need to move. We have some equity and don't feel the need to upgrade until the loans are gone and we have some money invested. Her loans are relatively modest at just under $200k.

My wife and I actually met on a blind date that was set up by a fellow med student that I knew. He went on to do an ortho surgery residency in Indianapolis.

Mark Dreyer

plus if he's looking at a 911TT, the 996 GT3 is a totally different animal. It's a beast of a car, not at all a comfortable DD.

TurnOne

I wouldn't recommend it! But I think just asking/posting this question, you already know this.

What cars have you been driving. I'm guessing there are quite a few steps between what you are driving and a brand new Turbo S.

What would you step up to in a few years?

As others have said, get rid of debt first. Get a place to live that is likely to appreciate in value. Or has good rental income potential if you move.

Seems a lot of people burn out early but are 'stuck' working due to previous life choices (read blowing money on stupid ****).

Buy fun cars for cash.

RONGLOS

It sounds like you have all of your bases covered. Enjoy the car.

BertoneBertoni

As a long-standing (and occasionally long-suffering) shareholder of Porsche AG may I unequivocally and wholeheartedly recommend you get down to your local Porsche center and 'buy new'. Like now.

You'll find their leasing rates almost charitably low. Yes, Oliver Blume and I think you should definitely do this. Vielen dank.

Mark Dreyer

Your perspective of a $400k salary just out of residency probably makes you think you won the lottery. Be careful, your expenses can always rise to meet your income. Listen to the wise advise of other posters on paying off debt, save for a house (if home ownership is a goal), and minimize your tax liability while maximizing retirement savings. Once that's all done, you might find you can afford a $200k car, but you also may find just as much fun in a car that is much cheaper, allowing you to meet other important financial goals. So, are you crazy? No. But you will find that $400k doesn't go as far as it used to, :-)

jkl

It is nice to be in a cash flow position that allows you to be able to purchase your dream car at a relatively young age. You definitely can afford to do it. It would just be a matter of putting off some other goals, or not funding them as much. However, it is for you to decide what the right balance would be with regards to living for the moment, or living for the future. Being in the medical field, you definitely understand that nothing is guaranteed and life situations can change instantly.

There were many many excellent points made, but I would like to add one more. The medical environment is changing, therefore, my concern for you is how stable is your job? Is there a potential for your group to lose contracts, be bought out, or other scenarios where this may have an effect on your salary, bonus, incentive structure? Perhaps you may have a change of heart with your group and want to look into joining another group. With less financial obligations, you would have more freedom to move to another practice that may provide more job satisfaction, and/or a better lifestyle even if provided less of an income.

Just some food for thought. The boost is addictive though.