grkmec

Some food for thought....

Back in 2005, I was making about $200k a year living in NYC. I moved to CT and needed a car. To be frugal, I bought a 10yr old BMW (320is I think it was with 70k miles) from a buddy that had been meticulously maintained. I think I paid 5,000 cash. Over the next twelve months I purchased new tires, had transmission issues, replaced radiator and water pump... I must have spent close to what I paid in the 1yr in repairs. I was absolutely disgusted. About a year into this debacle my father-in-law told me he was getting rid of his 15 year old Toyota Corolla with 150,000 miles and was going to send it to the junkyard. I asked him if I could have it and while surprised in my request, readily agreed. I then donated the bmw to a charity.

I proceed to drive this corolla for a year racking up 15,000 miles incurring zero maintenance costs. My philosophy was that if I couldn't bring myself to buy the car I wanted, then I was going to drive the cheapest car I could find and save the maximum amount of money. After I had had enough of the corolla, I went and leased a bmw 330 for $400 / month. Funny how that new BMW cost me less than the 10yr old bmw I had bought a couple years ago.

Fast forward to today. I am much stronger financially than 2005 but for the last 3 years I have been driving a pickup truck. I could go out tomorrow and pay pash for a 991 Turbo S but I am looking for a used 997TT instead. I would rather keep growing my investment portfolio and get it to a size where it throws off a new turbo every year.

dasams

He should follow your example and save money and buy a 997 when he has the cash to do so. Funny thing is, once he reaches $25k in savings, I'll bet dollars to donuts that he won't tap it because it just feels so good to have your first pile of cash. In that case, I'd recommend that he finance the car and keep the case for a rainy day.

As to your question about what should he buy to replace the BMW, I'd suggest an inexpensive, reliable used car that's < $10k.

This alone should tell him that he's not ready financially to buy a $35k car.

targaC4S

He loses his job and a small car payment is a big deal? What about his huge mortgage? Financially ready for WHAT?

Jake951

And your average soccer Mom probably runs high credit card debt, doesn't save enough for retirement, and her kids will probably leave college with huge financial debt. Don't be in the business of copying people like this.

If you are financially responsible, this is exactly how you want to be thinking.

Now for a simple math lesson:
Suppose you are age 30 and put away $35k into investments (ideally a 401(k) or IRA) for retirement. Let's also assume your average return is 7% a year, a reasonable figure for stock market investments over the long term. By age 65 your $35k will have turned into nearly $375k. I guarantee you your $35k Porsche will not do the same. If you wait until age 40 to invest the same money, your investment grows to $190k, which is still not bad but is about $185k less than if you had started 10 years earlier. Now if you don't start investing until age 50, you have just a bit over $95k.

Any professional financial planner will tell you the same thing.

cvtbenhogan

I hate to discourage someone from a Pcar. But housing and establishing good savings behavior are much more important. I'd advise to sort these out first and then you can pursue the Pcar.

The way I see it, you'll have plenty of time to strive and look forward to the right Pcar. If your like most of us, you'll always want the better and more expensive Pcar or another great car. If your a total car nut, go for it but make the sacrifices keeping the big priorities in mind.

I made the mistake of buying new cars right out of college. I learned and reprioritized. I'm fairly content now with two good cars. Of course I had to watch a new Top Gear episode showing the new McLaren. I'm slightly less content and mildly restless now. . .

yemenmocha

Agree with many points above on the side of not getting it yet. I think you need to look at while including the overall economic point about opportunity cost. Where could that money go instead? If you're not maxing out IRA savings each year and 401k, assuming you have a good 401k or a match, then that's one heavy opportunity cost. The home ownership is another with mortgage interest deduction and other factors (another thread in itself).

Big Thing - you haven't told us much about job security and your backup plan if things go wrong. The one lesson I'm surprised so many still have not learned is that job security may not be what one thinks it is, and there needs to be viable backup plans if things go south. The reason I mention this is because the whole aim of your post is laying things out on the table because you worry, or might not be, ready for the financial costs of ownership under the condition that things are fine with your job. If it's a stretch or a big "maybe" when things are good, then that could be a concern.

I think the default answer to threads like this is almost always a 'no'. It's a deeper explanation of the old cliche regarding the having to ask. If you're already financially secure, then you don't have to ask. Buying and cost of owning is no big deal. If you make a very large salary, even thought not financially secure, then relative to that big income the cost of buying and owning are no big deal.

As others said, the cost of ownership is more important than many people realize. I don't track my car and I still need two rear tires every 10k miles ($400 each). Used and older cars will have more repairs, too, and if it's not something you can do yourself then you could have some big bills on your hands.

caitov

Wow, this thread is a downer. I say screw it - life's short and there's no guarantees.
Buy the Porsche and have fun!





*Disclaimer
I waited until I was 45 and very stable financially to buy my first P car.

NoRush993/951

Turn the screws down, save up, then pay cash. I assure you that driving a Pcar in your twenties can't be compared to having it in your forties. I bought the 951 back in 1990, put 200k miles on it and still have it today. Best time to enjoy it is when you're single and going out all the time. The right car will find you when you're ready to own it.

PrimeMvr

I work for a credit union and we repo more newer cars than beaters. When we triage the loan it's almost always the case that the borrower had a good income and the loan was a no-brainer. What we generally are unable to see when we make the loan is whether the person is paycheck to paycheck, has an emergency fund, etc. One medical emergency, loss of job, broken furnace, and the first thing to stop paying on is the car. We also repo a lot of cars that broke and the borrower had no money to fix it, so they walk away, FICO be damned. That red one in the pic to the left was a repo from a 20 year old.

The point is, you can live for today and hope you stay ahead of the wave or that you die before it crashes down. Or you can invest in your future early and not worry about a thing for the majority of a long life. I started adulthood in the bury myself in debt and enjoy it now cuz I might die tomorrow category. Once I flipped that philosophy and sacrificed a bit for just a few years, I now think nothing of walking into a car dealer and driving off with whatever car I feel like. Within MY reason (everything is relative), which doesn't include a brand new 991 Turbo. Could I pay for it, yeah, but SHOULD I? No, not right now. 5 more years when I'm sure my daughter is well on her way, you bet. I could sell the cars I have now and buy one, but I like variety. That variety cannot comfortably, without any thought at all, include a 991 Turbo, and IMHO that's the financial litmus test for cars that are beyond basic transportation. BTW, I don't make $500 grand a year, my wife is an incredible budgeter and we are very focused on what we spend our money on. We get the things we really want, instead of lots of things we kinda want.

Everything here is advice and should be taken as just that. Use it to form your own sense of your future. There is no right or wrong, but there is a lot of collective experience talking here. I forget who said it, but to paraphrase "you don't know what it's like to be 44, but I know what it's like to be 29". Then again, you get what you pay for for free advice Given where you're at today, I think with just a bit of discipline now you'll own many Porsches over your lifetime.

PS I put my first down payment on a Porsche when I was 19. It was a 10 year old 924 and I thought it was the coolest thing in the world. My dad talked me into walking away and giving up my $300 deposit, which was a lot of money for me then. I got a used Honda Civic for less money and put 80,000 miles on it. One of the smartest things he ever taught me, but it took me 10 more years to understand it.

GSIRM3

Gee, that is so old school. Don't you know that he should be counting on the government to support him. Why save when you can count on riding the backs of those that live within their means, build wealth and become successful.

dputnam36

I'm in a similar situation as the OP, although I'm a little older and make a little more money. I've lusted after a 911 for as long as I can remember, and have had an 86 944 and an E34 M5.

My wife and I live a pretty simple life. We bought a cheap house when a lot of our friends and family members bought something A LOT more expensive. We have a 2001 Jeep Wrangler with 150k miles that we DD. Neither of us has an employer matched 401k, but we pour money into our IRA. We've built a pretty nice cash reserve. As mentioned earlier, once you get that much money stashed away - it feels great to have it there and it's tough to find a justifiable reason to pull it out.

Could I afford to finance a 997 with a large down payment and maintain it? Sure. As much fun as it would be to have one, at this point I can't justify having that expensive of a toy at this stage in my life. If I stay the course I should be able to pull the trigger in 5 or 10 years when I'm in my late 30s or early 40s. Then I'll be able to use the mid life crisis excuse to help me talk my wife into letting me do it.

Can you afford it? Yeah you probably can. The opportunity cost post above is what you need to consider. What are you going to have to give up down the road if you buy a 997 now?

Tcc1999

Just to finish the lesson, if you know the basic formula for the above calculation you can get a good approximation on your own. It is:

(1 + interest rate) e^y x cash you started with

Where y is the number of years you hold the investment
Note that e^y may be y^x on some calculators

In the above example:

1.07 e^35 = 10.676581
10.676581 x 35,000. = 373,680.335

Now I'm going to go back to enjoying the show.

beden1

A friend of mine sent this email. Sad reality:

THE NEW ANT and the Grasshopper, Two Versions:

THE OLD VERSION OF THE ANT AND THE GRASSHOPPER:

The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.

Come winter, the ant is warm and well fed.

The grasshopper has no food or shelter, so he dies out in the cold

MORAL OF THE OLD STORY: Be responsible for yourself!

MODERN VERSION:

The ant works hard in the withering heat and the rain all summer long, building his house and laying up supplies for the winter.

The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.

Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while he is cold and starving..

CBS, NBC, PBS, CNN, and ABC show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food. America is stunned by the sharp contrast.

How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so?

Kermit the Frog appears on Oprah with the grasshopper and everybody cries when they sing, 'It's Not EasyBeing Green ...'

Occupy the Anthill stages a demonstration in front of the ant's house where the news stations film the SEIU group singing, We shall overcome.

Then Rev Al Sharpton's assistant has the group kneel down to pray for the grasshopper while he damns the ants. The Reverend Al can not attend as he has contractual commitments to appear on his MSNBC show for which he is paid over two million dollars a year to complain that rich people do not care.

President Obama condemns the ant and blames President Bush 43, President Bush 41, President Reagan, Christopher Columbus, and the Pope for the grasshopper's plight….

Nancy Pelosi & Harry Reid exclaim in an interview on The View that the ant has gotten rich off the back of the grasshopper, and both call for an immediate tax hike on the ant to make him pay his fair share.

Finally, the EEOC drafts the Economic Equity & Anti-Grasshopper Act retroactive to the beginning of the summer.

The ant is fined for failing to hire a proportionate number of green bugs and, having nothing left to pay his retroactive taxes, his home is confiscated by the Government Green Czar and given to the grasshopper ..

The story ends as we see the grasshopper and his free-loading friends finishing up the last bits of the ant's food while the government house he is in, which, as you recall, just happens to be the ant's old house,
crumbles around them because the grasshopper doesn't maintain it.

The ant has disappeared in the snow, never to be seen again.

The grasshopper is found dead in a drug related incident, and the house, now abandoned, is taken over by a gang of spiders who terrorize the ramshackle, once prosperous and peaceful, neighborhood.

myw

^^^ LOL you guys.

GSIRM3

That's hilarious, but also sad because it is true.