Robin5

Time to give my 2 cents.

In his place I would not buy that car. Simply put, as a few of you mentioned, his salary of 150k is just not that much when you add the fact that he has a young family. Add that to the 500k mortgage and to me he has to many other priorities that are pressing.

I leased my porsche because I could turn that money into more money. Any way you look at it, the true cost of the porsche is the difference between what it costs me per year over what leasing another car would be...and it was not a significant amount. On the other hand I purchased my wifes car because it was a good opportunity. I bought her an Infiniti QX56 that was 6 months old and repossessed. Retail here for that car is $78k, got it for 52.6K (Canadian dollars) with under 10k miles. This made more sense as she keeps her cars longer than me.

I find that to many people have way to much debt. I would never be able to justify a car like this, either buying or leasing, with a 500k mortgage. I would never dream of telling anyone how to live their life, but just for fun calculate how much you paid in interest (all interest) over the last 20 years and you will not believe it.

Do I need the Porsche ? Absolutely not. I just turned 40 last April, have a beautiful wife (married 16 years this coming Tues 9-11) and 5 great children all in private school. The car keeps me sane. Doesn't matter if I am on the way to the gym, work or out with the wife for supper....I smile everytime I take down the top and start the engine.

In his place my only goal would be to reduce debt and then to accumulate wealth. No pain, no gain.

Note: The Porsche is therapy when you see what we are going through with our oldest who is about to turn 14

996toomey

This has been an interesting thread to read. Lots of good opinions and different ideas.

pl

well said, robin. the smile when getting into the porsche

here is my numbers break-down.
lease: 1100*12 = 13200 / yr
ins.: 4800 / yr
maintain + gas: 1000
total ownship cost: 19000/year
i plan to drive it 6 hours/week. (5 hours during work day, 1 hour weekend)
total seat time: 312 / year

seat time cost: 60.89 / hour

what do you think now? $60 for a smile? worth it or not?

LOL, excuse me but i deal with numbers everyday, so i tend to deal everything using numbers.

Robin5

Let me answer this way: My house is worth in the area of 1M. In about 6 months I will no longer have a mortgage.

You are so ahead of most families your age. Take advantage of it. Owning a 997 in your shoes might make most guys (me included) complacent at that age.

We just made an offer on a larger house which unfortunately did not go through (someone out of the blue offered much more than I thought it was worth). Had the sale gone through, and had it been required (which it would not), I would have sold my cab in a second only to ensure I did not have a mortgage, or to at least reduce it. What I am saying is that debt, in any form, is your worst enemy.

I am self employed, I buy large lots of overstocks, liquidations etc.. in high end brand names. In other words, I buy the mistakes of others. You would not believe what shape some companies are in...some of these companies are 50 to 100 years old. It is just to easy to borrow these days. Pretty much any money I pay for these inventories goes to reduce debt that has been accumulated over years of mismanagement. If I buy wrong I take my loss and move on. It is not accumulated with compounded interest.

OK, maybe I am going to far rambling on, but some of the kids are in my bed watching a movie. Only you know what is good for you. Sometimes a little reward to yourself for hard work is a great motivator. Regardless of your decision I wish you the best of luck.

Time to kick the kids out of my bed.

Robin5

One more quick not pl. Your calculation of $60/hour is scary and could cause alot of us here to sell our cars and cause an overstock of 997's (which I would gladly buy at a greatly reduced price).

If I had to choose between a porsche and a full time limo with driver taking me anywhere I want anytime I want and waiting for me.....well, hmmm....That would be a difficult choice.

"Get the car, James"

pl

look, i assuming 5 hours on conmuuting to work each week.

realisticlly, if i don't drive to work, my seat time will be max. 1 hr/week.

that brings total seat time to 52 hr/ year.
seat time cost: $365/hour

weekend toy is expensive, indeed

pl

robin5, thank you for your good well.
this is a little off topic. but good/big house is what i always enjoy.

i don't have problem putting money on house cause it's investment. (somehow)

i brought a house in my early age and was able to buy my house(half cash, half morgage) i don't have other debt, either.

my plan is to pay off in 5-7 yrs. but by then, the question will become: bigger house or nice car? (assuming i didn't buy 997 this time around.)

i enjoyed this open conversion a lot.
this stuff can't be easily discussed among friends/relatives. well, on the internet, who knows i am a dog!

mooty

random thoughts.

if you keep a car 1-3 years then it is cheaper to lease than finance or pay cash.
if you lease simply b/c tax break, you are in a hole. tax break is a side benefit, it' s not that much.
if you hate selling cars and meeting 10 tire kickers who can't afford the rubber the car runs on, then lease.

don't try to convince yourself that you can afford it b/c leasing has lower pmt.

RDKJ

not that my opinion matters, has anyone else noticed that for someone making 150k a year, he has likely overextended himself by living in a 1+million dollar home, with a mortgage of 500k. My guess his house payment is 6-7k a month, nearly 50% of his earnings. The math doesn't work, he should not buy a 997 or any new import.

My 2nd guess it that he didn't buy a 1.1 million dollar house, he likely paid 600k and has been the lucky recipient of fast rising home values on the left or right coast.

rss997

If your house is worth a million and you wont have a mortgage, you are mismanaging your money. No tax write off and not having your money working for you elsewhere seems like more of a concern than owning a 997 or not....

RDKJ

rss,

i agree with you. My accountant gave me the same advice. There really is no advantage to paying off your mortgage in the US, since your interest is fully deductable. The problem the original poster has is that his income may be too low to support a 500k mortgage, new 997, wife, and new baby ~ we all know just how expensive a wife can be!

Robin5

RDJK, You kind of put my whole post into one sentence re: 150k is not enough to afford that mortgage. I strongly believe that the economy is going to go downward and that a major correction in housing costs will shock us all. If pl loses his job 1 day he is in a worse situation than he can ever imagine and having a porsche will only add to that.

RSS997, having a mortgage on a million dollar house only makes sense if A) It is a manageable amount, or B) If you took that money to invest elsewhere. Otherwise your debt ratio would be just to high should anything happen.

Here in Canada (Montreal) we are taxed so high with no tax benefits on our mortgages.

boolala

That depends on whether or not you can invest the money at a higher rate of return than the mortgage you are paying out. In my case I had money earning 3% in CDs and decided to buy my home (800 K) in cash. I would have gotten nowhere fast taking out a 6.5% mortgage and earning only 3% on my money. Of course I can hear people say "why not invest it at more than 3%?" Well that's easier said than done. In fact you might invest it (say in the stock market) and actually lose money. Many people who invested in the NASDAQ just prior to the dot com bubble know what I'm talking about. Many of us (including myself) who have their
retirement funds in the stock market have seen no appreciation in the last 4 years.

In my case I have neither the interest nor the talent to invest my money at a rate that is higher than what a mortgage will cost me so it makes to economic sense not to pay it off.

There's another, intangible, benefit to paying off all your debts, including your mortgage: The security of owning the roof over your head outright that no one can repossess from you (provided you pay your reality taxes which are a small percentage of the home's worth). I don't have to shell out $5000 a month for a mortgage. Nearly everything I make is mad money and can spend it like I please. That surely makes it easy to budget don't you think?

I'm not at the whim of changing economic conditions. I don't have to worry if I'll lose my home if I lose my job (do you?)

It's all about living within your means. Paying cash guarantees that I always am.

That's my story and I'm sticking to it.

Sean

Boolala said it well. Mortgage = debt. Investing your money elsewhere may seem attractive until those investments tank (see, generally, the dot-com crash). There's an intangible feeling of security in having no mortgage.

Of course not everyone can buy a home without taking out a mortgage, but retiring that mortgage should be high on the priority list (certainly above buying absurdly priced depreciating assets!).

I'm a believer in having no monthly debt payments, for cars or houses. If you want to buy a cool Porsche, look to the vintage market. You can find great weekend rides (say, a clean 356 coupe) that will be far rarer than the new cars, and may even appreciate during your ownership.

RDKJ

boolala,

The point of the whole thing is that your interest amount is fully deductable (ie. you get it back). Hence, if your are paying 7% on your mortgage and getting 3% in a cd ~ then you are 3% ahead. This is only the case in the US.

If I were you, I would go finance my house and put the cash in the bank earning 3%. 3% of 800k, is 24k a year which happens to equal a 1/4 of the cost of new 997s. That means if you follow my instructions you can have a new P every 4 years (almost, interest is taxable).