The need for Toys and the desire to FIRE

[jIMOh]

Or is it I need to FIRE and I desire to have toys?

I am currently running through the math on being able to afford an electric car (a Tesla).

If a $90,000 car could last "forever" (the motor has an infinite life according to sales pitch, the battery is less known), I am considering this to be more of an expense moderator (I drop $500-$750/mo on gas easily).

Any thoughts from the peanut gallery?
Thx

 

[kaudrey]

Yes, you don't NEED toys. You WANT a toy.

How will buying a $90K car affect your ability to FIRE when you want? If it means FIRE six months, a year, two years later, are you OK with that?

Without knowing anything about your finances or what your goals are, and how close you are to reaching them, what "thoughts" can we give you?

I have a friend who has a Tesla and he loves it. But he owns his own company and has a much higher income than me!

 

[MRG]

Sounds like a nice toy. If your going to buy one realize it's a toy. What about sales tax (don't know where you are), personal property tax(same disclaimer)? Here that would eat up a lot of the savings. For me it wouldn't be worth delaying my date. But we're all different.
Best wishes,
MRG

 

[A Bird In Hand]

Can you talk about the math you've run so far? Beyond the sales/property tax aspects already brought up, don't forget:

- insurance (ongoing, likely to be quite a bit more than a cheaper car).

- electricity. The price of electricity for charging the Tesla is probably going to be about 1/3 that of gas for an average sedan. Compared to a very fuel efficient sedan, the Tesla might only be a 50% savings in fuel cost. Compared to other electric or hybrids, there may be something approaching parity (or worse in some cases the Nissan leaf has a higher MPGe). Granted, if you're considering buying a $90k high performance car like the Tesla, you're probably not at all interested in those other cars. And who knows, maybe you can charge up for free at work or something?

- battery replacement. For many drivers this wouldn't be an issue, but you appear to do a huge amount of driving. I'm guessing 40k miles/year or more. What's the warranty on the battery? I would expect that your battery may need to be replaced in just a handful of years with that amount of driving.

In short, I think it's clear that the Tesla is an expensive toy that's not going to save you any money. Your..."expense moderation" will be more valuable if you currently drive a 10mpg SUV, but it will likely never make up for the initial outlay and increased recurring expenses. There's no doubt it's an awesome toy though!

 

[tfudtuckerpucker]

Or is it I need to FIRE and I desire to have toys?

I am currently running through the math on being able to afford an electric car (a Tesla).

If a $90,000 car could last "forever" (the motor has an infinite life according to sales pitch, the battery is less known), I am considering this to be more of an expense moderator (I drop $500-$750/mo on gas easily).

Any thoughts from the peanut gallery?
Thx

Yeah, about that sales pitch. Gas engines in today's cars can last 300,000 to 400,000 miles (at least in some Japanese models lol) . The rest of the car will be worn out by then- the body, interior, etc.

 

[athena53]

One other factor I'd include is maintenance. Maybe it takes less maintenance than other cars, I don't know- but you need to find out who's equipped to do routine maintenance and what they'd charge for oil changes, tune-ups, etc.

And even if it lasts "forever", will you want to keep it that long? Some people are happy driving the same car for years (DH and I sure are), but will you want to unload it in 5 years for something newer? Resale value is going to depend a lot on how they perform over the long run and whether the company is still in business to provide spare parts, etc.

We all have our splurges- DH and I have spent more on travel than any "normal" person would consider prudent, but we've never regretted a cent of the money we spent exploring the world. You may decide that a Tesla is that important to you.

 

[FUEGO]

What's your discount rate?

90,000 at 7% will fund a $525/month car payment forever.

I'll just say that I don't personally plan on spending $525/month on a car forever. Mark me down for a vote for "expensive toy".

 

[Rustic23]

I run out of the desire to own a car long before the car runs out of the ability to provide reliable transportation. i.e. I want the latest ________ (fill in the blanks) Therefore no car is worth $90,000 as the last car i will ever buy. As to savings on gas, I can't believe a Toyata or Honda Hybrid, or any other manufacturer, for $30-35 thousand would not be a more economical move. You can buy a lot of gas for $60,000.

So I see this as a desire for a toy. A VERY expensive toy. And, that's fine! It's your FIRE and you can get there anyway you want. That $100,000 for a new car is only $4,000 a year for the rest of your life at 4% safe withdrawal rate.

 

[daylatedollarshort]

$90K is a pretty long payback period. If you are older than 12, you might not see a great return on investment just from an ROI point of view, even if Teslas do last a long time.

If you have enough money, sure go and buy one. It is all about trade offs. I am probably willing to spend more on travel than some other posters here and travel has no resale value at all.

Keep in mind the most popular make of cars for millionaires is a Ford. Many millionaires are millionaires because they invest their money instead of spending it on depreciating consumer goods.

From the Millionaire Next Door authors blog -

"86% of those who drive prestige makes of motor vehicles are not millionaires [having an investment portfolio of $1M or more-see Stop Acting Rich]. Also, I mention the median price paid for the most recent motor vehicle purchased by a millionaire was $31,367 [for decamillionaires-$41, 997]. It is understandable why so many people relate wealth with the price tag of a motor vehicle. In a study of more than 2,000 respondents, The Wall Street Journal found that 35% believed that in order to qualify as being rich a person must drive a car that costs $75,000 or more. If I applied this $75,000 threshold to the millionaires whom I surveyed, more than 90% would fail to qualify.

Rich or Drive Rich?

"The following question was asked in The Millionaire Next Door: What makes of cars are most popular with millionaires? Number one in market share (9.4%) was Ford. . . the most popular models include the F-150 pickup. . . about three in ten millionaire Ford drivers own F-150 pickups."

Ford Pickup: #1 Vehicle in Sales & Profits

 

[RunningBum]

...
Keep in mind the most popular make of cars for millionaires is a Ford. Many millionaires are millionaires because they invest their money instead of spending it on depreciating consumer goods.

From the Millionaire Next Door authors blog -

"86% of those who drive prestige makes of motor vehicles are not millionaires [having an investment portfolio of $1M or more-see Stop Acting Rich]. Also, I mention the median price paid for the most recent motor vehicle purchased by a millionaire was $31,367 [for decamillionaires-$41, 997]. It is understandable why so many people relate wealth with the price tag of a motor vehicle. In a study of more than 2,000 respondents, The Wall Street Journal found that 35% believed that in order to qualify as being rich a person must drive a car that costs $75,000 or more. If I applied this $75,000 threshold to the millionaires whom I surveyed, more than 90% would fail to qualify.

Rich or Drive Rich?

"The following question was asked in The Millionaire Next Door: What makes of cars are most popular with millionaires? Number one in market share (9.4%) was Ford. . . the most popular models include the F-150 pickup. . . about three in ten millionaire Ford drivers own F-150 pickups."

Ford Pickup: #1 Vehicle in Sales & Profits

Ford has about a 15% market share in the US overall, so 9.4% among millionaires isn't really a push for Ford. The F-150 is Ford's best seller though I don't know if it's 30% of what Ford sells.

 

[RunningBum]

I would also echo the comments about where to get service in Ohio. How easy is it to find charging stations away from home too? I might consider one in California, but not yet elsewhere.

 

[38Chevy454]

As one that has a lot of vehicles, buying a new car that will depreciate is purely a "want to" choice. I have several older classic cars. These actually appreciate in value over time, so while they are my hobby and have expenses to keep them, I am getting enjoyment out of them while also recouping much of the costs when I (eventually) sell them.

If you can afford the cost, and the new car makes you happy, then you can decide to get it. Just be aware the costs of the decision. We can't always make decisions based purely on financial basis, there has to be some emotional component and in your case that is the part that must be weighted and choices made.

 

[haha]

Ford has about a 15% market share in the US overall, so 9.4% among millionaires isn't really a push for Ford. The F-150 is Ford's best seller though I don't know if it's 30% of what Ford sells.

Also, the data is highly suspect. There are plenty multi-millionaires around me, but pick-ups are rarely seen. Yesterday I was walking home from Lake Washington. I saw several Ferraris, a Corvette, and a couple 911s, but the only pickups I saw had grass clippings, shovels, and rakes in the back. So maybe most Millionaires next door are yard men?

My Dad had this same misunderstanding that expensive cars were only owned by people deeply in debt. He just believed this because it made him feel better.

Ha

 

[robnplunder]

Or is it I need to FIRE and I desire to have toys?

I am currently running through the math on being able to afford an electric car (a Tesla).

If a $90,000 car could last "forever" (the motor has an infinite life according to sales pitch, the battery is less known), I am considering this to be more of an expense moderator (I drop $500-$750/mo on gas easily).

Any thoughts from the peanut gallery?
Thx

I've run the math recently and opted not to buy a Tesla. I am doing OMY thingy to pad my RE fund. $90k is a significant set back and it will add 1/2 year to my RE date. Instead, I've opted for $33k car. YMMV.

Tesla looks really nice though. But it is a fad, a toy, a lifestyle statement, a status symbol. If you are into those things and can afford it, knock yourself out .

(PS - currently doing math on buying a 65" 4K UHD TV. Math/Logic is not adding up but the TV looks so cool.)

 

[A Bird In Hand]

Also, the data is highly suspect. There are plenty multi-millionaires around me, but pick-ups are rarely seen. Yesterday I was walking home from Lake Washington. I saw several Ferraris, a Corvette, and a couple 911s, but the only pickups I saw had grass clippings, shovels, and rakes in the back.

I can't vouch for the statistics cited earlier in the thread, but I'll note two things:

1) The statistics stated that Ford has a market share of 9.4% among millionaires (not multimillionaires FYI), and that three in ten of those Fords are F-150's. So of millionaires (or perhaps their households?), about three in one hundred own a F-150. How many cars of millionaire households did you observe on the way home? How many of those households were multimillionaires?

2) The statistics don't mention multiple cars per millionaire. Most people I know -- including millionaires -- own more than one car. So just because you saw a Porche doesn't mean that the Porche's owner wasn't out driving his F-150 at that moment.

 

[NW-Bound]

If a $90,000 car could last "forever" (the motor has an infinite life according to sales pitch, the battery is less known), I am considering this to be more of an expense moderator (I drop $500-$750/mo on gas easily).

If you are spending say $600/month on gas, paying $3.50/gal, and driving a car with 25mpg, that works out to 4,300 miles/month. That's a lot of driving!

In retirement, we do not drive much, and 2 out of our 3 cars are just parked. I had to plug in a battery maintainer for them. And then, when we are going on trip, an EV would not have enough range and I would need to rent an ordinary car if an EV is all I have.

It is often difficult to justify a more expensive vehicle based on fuel alone. For example, for my class C RV I debated a long time between a gas engine one and one with a diesel engine. But when I figure that even if I am going to drive it 100K miles, the difference between 10mpg and 15mpg is 3,333 gallons. The cost of the fuel is much less than the difference in price, and then a diesel engine requires more expensive fuel and costs more to maintain. So, in the end I am quite happy with the cheaper class C that I bought.

 

[travelover]

I'd offer up that I thought that it would be fun to buy a hybrid in 2007, which I did. Like anything else, though, eventually I've gotten somewhat bored with it, in spite of all the gee whiz technology. It only cost me $25K.

How long do you think that it will be before "Wow you've got a Tesla!" turns into, " Oh, I see you've got one of the old Gen 1 Teslas. The new ones are so much better"?

 

[kcowan]

We visited the Tesla dealer on Friday. It is a sweet ride. Very luxurious and does not compare to a $35k vehicle. More like a Mercedes/BMW. Great electronics. The screen is like a 17" LED turned sideways. The car is warranted for between 500k and 600k miles depending on driving pattern and then the battery needs replacing.

Charging stations will cover the states by 2015. But the key question is how do you drive? Our pattern in RE tends to be fewer longer trips than when we worked.

If you can justify an F150 as your utility vehicle, then the Tesla would be a nice replacement for the Porsche in the driveway...

 

[mpeirce]

I would also echo the comments about where to get service in Ohio.

There are two Tesla service centers in Ohio right now (Columbus and Cinncy) and Cleveland is "coming soon". There are even a couple of supercharger stations along I-80/90. Future plans include I-70.

I looked at a Tesla too. Nice car, but although its giant touch screen was nice and had comfy seats, it was seriously lacking in advanced safety features like automatic lane keeping, collision avoidance and so on that the german cars offer.

It is a pretty car though. If you want to turn heads with a four door car, the Porsche Panamera does that too...

 

[Rustic23]

HaHa,
It could be where you live. From a chart on the interenet I calculate that there are about 450,000 millionaires in Texas, and 150,000 in Washington, and everyone in Texas has a pickup in there garage! Well it sure seems like it.

United States Millionaire Map - Business Insider

 

[Birchwood]

I drive a Ford F150 , 2010 super crew truck with only 12000 miles. I intend to drive it around the country when I retire. Despite the very poor mileage of 13 to 18 mpg, if I drive it thru out the country at an average speed to
100,000 miles, the gas will cost about $15,000 to $18,000. That's cheap compared to even buying a new car.
My friend drives a $100,000 Nissan GTR sports car. He can't drive the car in the winter.
I make more money that he does, and guess who has more savings?

 

[FUEGO]

Also, the data is highly suspect. There are plenty multi-millionaires around me, but pick-ups are rarely seen. Yesterday I was walking home from Lake Washington. I saw several Ferraris, a Corvette, and a couple 911s, but the only pickups I saw had grass clippings, shovels, and rakes in the back. So maybe most Millionaires next door are yard men?

My Dad had this same misunderstanding that expensive cars were only owned by people deeply in debt. He just believed this because it made him feel better.

My millionaire next door neighbor* has a pickup and I believe it's an F-150. Their other cars are a 10 year old impala and a relatively new Honda Accord (for the lady). I've never seen this millionaire next door with yard tools in his pickup truck, but I see him mowing grass at his houses occasionally (he does outsource it sometimes). Lately I've seen him with a case of furnace filters in the back seat of his Impala. Guess it's HVAC maintenance time of year for his houses.

*He owns 5-6 rental houses in the neighborhood and all are mortgage free from my property record snooping, which adds up to about a million dollars just in income producing real estate.

 

[FUEGO]

How long do you think that it will be before "Wow you've got a Tesla!" turns into, " Oh, I see you've got one of the old Gen 1 Teslas. The new ones are so much better"?

More like "Ewww, you're still driving that Tesla? Why haven't you switched to the new Google iCar yet? You're just that into retro things from the 2010's?? Since Google bought Apple's electric car business back in 2019 and incorporated their own driverless tech into Apple's chassis, it's all the rage now. And at only $110,000 it's a steal since it will last forever!"

Welcome to the future dis/utopia.

 

[eytonxav]

If a $90,000 car could last "forever" (the motor has an infinite life according to sales pitch, the battery is less known), I am considering this to be more of an expense moderator (I drop $500-$750/mo on gas easily).

Are you trying to justify the purchase based on this or is this coming from the sales guy selling you? Motors certainly do not have infinite lives. Although I am no expert on electric cars, it seems to me if your spending that much on gas each month, I see a lot of recharge time in your future.

 

[Chuckanut]

On risk with Tesla is whether or not it will be around 5 to 10 years from now to provide parts and service. I am a great admirer of Elon Musk and what he has accomplished with both Tesla and SpaceX, but I think Tesla is still a gamble, more so than SpaceX, IMHO.

If Tesla goes belly up in five years and you can't get your Tesla fixed, will that bother you a lot? Will it alter your quality of life? Only you can decide. Also, keep in mind that most states and probably the Feds will find some way of taxing electric vehicles to make up for the gasoline tax they are not paying. It's hard to justify a growing fleet of electric vehicles driving on roads that others pay for every time they buy gas.