When can I justify buying a nice car?

S

scientist

I'm just having a bit of a whinge.

I see so many nice cars around and the sort of person behind the wheel and I think to myself 'there cannot possibly be this many rich people around!'. Maybe I'm just sour, or maybe there really isn't that many rich people around, but quite a few 'financially irresponsible' people.

I'm in my late 20s, married with no kids yet, with a household income of 200k after tax and net household equity of around 2mil. I'd like to think I'm above average (certainly not wealthy but definitely doing well for my age) and I still cannot justify to myself spending 100k on the car of my dreams (mercedes c63 AMG) that probably will cost me $6k per year in petrol (will surely increase!) and probably the same in maintenance per year.

I did some thinking and my thoughts have come down to a list of pros and cons of my proposed actions:

Pros:
  • I'm young only once, and it's just a different feeling altogether if I'm 40 when I finally get my dream car. In other words, it doesn't feel special - I'm just another grey-haired man going through a mid-life crisis haha)
  • I can 'afford' it - meaning I have the cash and cashflow to support this new vice. Whether it's a sensible and responsible decision is another story. But I'm sick of being sensible and responsible.

Cons:
  • This vice / hobby is extremely expensive - combine fuel+maintenance+depreciation I'm looking at losing around $20k per year of ownership. (well probably minus $5k which is what running a more normal car would cost me, because I do need another car regardless)

I don't know... I'm leaning towards a 'No - reassess in 5 years' to my original question (because I'm a sensible and BORING person but a small part of me inside is yelling at me to live a little). As I said it's just a whinge, I know these are first world problems and I am very grateful I'm in this position. The old sensible me would end up buying a $10k Corolla and drive it to 300k kilometers doing oil changes / small jobs myself like a responsible car owner.

Just wondering - any older folks with more life experience than me have any comments or advice to offer? Or anyone more or less in a similar situation want to share their thoughts? Obviously if I posted this thread in a motoring enthusiasts forum I'd get the answer that makes me happy but I want to hear from like-minded sensible people (haha!).
 
You have a huge amount of equity, a great income, you say you can afford it, you clearly have worked hard to build up what you've got. What's holding you back? I say go for it! If it's not going to stop you still investing, what's the problem?
 
Short answer, live a little.

May I assume you are investing for financial freedom in the future to enjoy life? Would it make sense to sacrifice all luxuries now? End of the day, what guarantee will you have the future will be as you imagined.

I'm grateful I was/am able to balance investing with a great life so far full of travel and adventure. No regrets of all goes awry. If a nice car is really what you want, enjoy it.
 
If I was going to spend 100k on a non-essential item, I'd prefer to spend it on an experience rather than on a "thing" but that's just me. I imagine that the novelty would wear off after a while but it would still have high running costs
 
You can afford it when you decide that the upfront and ongoing costs would be best put to use in buying this car and not something else.

A $100k car of this nature is unlikely to ever become a priority for me, but I can see myself in a $40k car. When I decide my existing car has gone far enough I'll probably upgrade.

Instead of a $100k car with $20k pa ongoing costs, I'd probably prefer to have another IP or two.
 
cimbom said:
If I was going to spend 100k on a non-essential item, I'd prefer to spend it on an experience rather than on a "thing" but that's just me. I imagine that the novelty would wear off after a while but it would still have high running costs
Click to expand...

You're right I agree. I do go on a holiday with my wife once a year but I cannot do more because I lack the time in our schedules. What I do have is lots of small bits of free time throughout the week that are too short and useless to do anything substantial (e.g. cannot go on small trips regularly).

I think the next best thing to experiences is to have a hobby where I can use these small bits of spare time on.

nhg said:
Short answer, live a little.

May I assume you are investing for financial freedom in the future to enjoy life? Would it make sense to sacrifice all luxuries now? End of the day, what guarantee will you have the future will be as you imagined.

I'm grateful I was/am able to balance investing with a great life so far full of travel and adventure. No regrets of all goes awry. If a nice car is really what you want, enjoy it.
Click to expand...

Yes you're correct.

I invest for a better future. Of course, acquiring another IP would be a joy and bring a sense of accomplishment but at the end of the day it is still a job / chore / obligation etc. Basically when my mind switches off, I'm not thinking about my portfolio or my IPs or my share holdings or whatever. I just know that I live in a capitalist world and this skill of investing is the means to the life I want - I don't enjoy investing to the point where I invest for investing sake. So it better all be for something (other than my kids' inheritance!) else I would realise one day I lived a boring life.
 
Endless sacrifice gets a bit much after awhile. We did it until around 35 then finally took an overseas holiday/travelling and went 'woah we need to live a little, this is BRILLIANT!!'

For us the answer was stipulating money in the budget which could be spent on frivolous items, travelling, cars, etc. It doesn't have to be a massive amount but you have to earmark it as WHIM money. Once it's in the budget then it's easier to be ok about spending it.

I would think that a 100k car might be a bit OTT at the moment when the other side is a $10k car. Is there middle ground or is it all or nothing type desire?

As a car nut, I say go for it :) But if there is a super fun car that is more reasonable maybe do that. I bought a 1972 Karmann Ghia last year which is SUPER fun :)
 
westminster said:
I would think that a 100k car might be a bit OTT at the moment when the other side is a $10k car. Is there middle ground or is it all or nothing type desire?
Click to expand...

Unfortunately that's the way I am. My logic is - "that's the car I want, and anything else isn't worth its price (to me)" so now I need to buy a car, either I buy the car I want and pay for it (ouch!) or buy a car for utility purposes only, in which case I think I'll go for a several-year-old corolla or hyundai i30 diesel or something very sensible.
 
scientist said:
Unfortunately that's the way I am. My logic is - "that's the car I want, and anything else isn't worth its price (to me)" so now I need to buy a car, either I buy the car I want and pay for it (ouch!) or buy a car for utility purposes only, in which case I think I'll go for a several-year-old corolla or hyundai i30 diesel or something very sensible.
Click to expand...

For me a car is just transport. My car does the job, it's old, but it's reliable.

If a car was something else, then I wouldn't mind spending huge money on it.

Spend what you want on a car.
 
Hire one for a week & see if you still feel you 'need' one.... or does the materialistic feeling wear off after a few days.

Or keep your existing car, and spend the $6Kpa on hiring a different one each month!
 
Go for it. Just do it.

The goal of investing and making money is to improve your enjoyment of life. No one knows what the future brings. It is best to live in the now sometimes. Lets say you don't make 40 - then you will definitely regret not buying the dream car. And if you do live a long successful life, buying a car, regardless of price will not set you back too much in the overall scheme of things.

By the way, a brand new Mercedes C63 AMG costs 170k, not 100k. And although it is a very nice car, I wouldn't call it a dream car. If you like Mercedes and AMG, a dream car would be the Mercedes SLS AMG at 515k.

In a few years time whats the difference if you are worth 10 mil versus 10.17 mil?
 
With a net income of 200k and $2m in equity, you can buy whatever you want with reason. Only you can decide what level you are comfortable with. Not sure what the point of this thread is then, apart from a loosely veiled income/asset humblebrag?
 
china said:
By the way, a brand new Mercedes C63 AMG costs 170k, not 100k. And although it is a very nice car, I wouldn't call it a dream car. If you like Mercedes and AMG, a dream car would be the Mercedes SLS AMG at 515k.
Click to expand...

haha you know your mercs! Actually I have my eye on the c63 because it's something that I actually like and can afford right now (I'll be buying second hand but current gen, I'm definitely not in a position to afford brand new). If my budget increased to the 500k range, it wouldn't be for a merc anymore.


DaveM said:
With a net income of 200k and $2m in equity, you can buy whatever you want with reason. Only you can decide what level you are comfortable with. Not sure what the point of this thread is then, apart from a loosely veiled income/asset humblebrag?
Click to expand...

Absolutely not. I'd like to think I'm financially probably more or less average in this forum (except maybe age, where I concede I am proud to be younger than average). If I had the idea that I was significantly above the average, I'd certainly be more modest about it. Actually I'm posting for input, such as yours, e.g. when you say at this level I am free to buy what I want, it seems to suggest I'm in a good position in terms of my financial ability to spend frivolously (sorry I have no idea, I don't have a circle of investor-friends with whom I can gauge what is considered financially comfortable vs financially independent vs rich enough to stop caring and start spending for self gratification etc).

Not my intention to offend anyone, as I said earlier, this thread is just a whinge about when / if there is a point at which we can enjoy the fruits of our labour.

china said:
In a few years time whats the difference if you are worth 10 mil versus 10.17 mil?
Click to expand...

Hey I like maths, lets do some maths. 170k to buy, 7k in fuel per year(assuming 20,000km per year) and probably 5k per year in maintenance. Say I keep it for 10 years and sell it for 20k at the end of it. Total cost of the fantastic 10 years: 150 + 120 = 270k. Holy crap! Well I need to work out the PV which would be slightly lower, guestimating at 250k present value. Still, holy crap. Cannot. Self. Justify. Ok what if... buy second hand, and don't use as daily driver, only fun-times (friday night / weekend joyrides, no peak hour traffic). In that case, 100k to buy, fuel is probably 3k per year, maintenance 5k per year. After 10 years sell for 10k if lucky. Total cost of ownership: 90 + 80 = 170k. PV of probably 155k. With 155k TODAY I can maybe leverage it up by 5x (80% LVR) and watch it double every 7-12 years for the next 30 years and... it will turn into... billions! haha!

I see your point. That extra mil when I retire won't mean much. But I would have had a good time while I am young. I guess I'm still not comfortable spending so much on a toy, so most likely I'll just wait and reassess after several years.

china said:
By the way, a brand new Mercedes C63 AMG costs 170k, not 100k. And although it is a very nice car, I wouldn't call it a dream car. If you like Mercedes and AMG, a dream car would be the Mercedes SLS AMG at 515k.
Click to expand...

I like your post. So many points to reply to!

In regard to this, after thinking about it, even if money was no object, I would still prefer something like the c63. I guess I just don't like the attention of having an 'obviously' nice car. The c63 is perfect for my taste because to the untrained eye it just looks like a C-class which is nice and sensible and classy. I guess you can say I enjoy the understated / sleeper feel. That's why I said, even if I had a 500k budget, I wouldn't be looking at those next-level cars.
 
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At 2m equity, I think you are doing better than 90% of Australians, regardless of age.

To achieve this in your 20s means that you have the skill set, mindset and discipline to make money and you also have a lot of time on your side to make more money. And hence, there is no reason for you not to buy whatever you desire.
 
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