The biggest money pit I see when I interview prospects with financial problems is the car — always. I have even seen people paying half of their disposable income in car payments (plus insurance, tolls, repairs, maintenance, tickets and all the other costs we don’t often consider). It’s insane. Here’s a post from Jay Miles in Quora.com, in answer to a young man thinking about buying a Tesla, that says it perfectly:
“No, don’t buy a car. Cars don’t make money. They’re depreciating assets. You already have a wife, so there’s no need to show off.
Mathematically, it doesn’t make sense to ever spend more than $20,000 on a vehicle. Despite being a cool Tesla, it won’t hold its residual value any more than another flashy brand.
If you must, consider a sublease. I’m sure someone was in your boat several months ago, and has come down off the emotional high.
That person would love to hang that lease around your neck. At least with a sublease, you don’t have to place any money down or subscribe to the ridiculous mileage requirements; he does.
After six months you’ll get sick of the car and the insurance. You’ll be glad that you tried it out before marrying the ridiculous car payment.
Pay yourself first. You would make a killing if your invested your salary in some index funds as the market tanks. Leave the hot cars for bachelors like me.
Spend some money on your kids or make some memories by taking trips with your wife. She won’t care about your car in the end, and she’s already wearing a diamond.
Economically speaking, there are more affordable ways to provide utils of satisfaction. Just pay $500 to drive hot cars around Vegas or a closed track on a weekend.
You could also join a car club and switch hot cars every few months. Quite frankly, $135,000 isn’t a lot of money. Use that salary to improve your passive income before buying an expensive car.
When you do buy any car, buy used (x >= 3 years), spend cash only, and buy from the Internet (volume) salesman at end of month, preferably on rainy/snow days.
He has to meet his quota and you’ll earn a better deal with cash in hand. Negotiating over the phone will save tons of nonsense at dealership.
Be willing to announce that you’ll walk away after twenty minutes if they’re stalling. Their warranties are also worthless and only help maximize their margin.
You can buy the car after test driving it on the highway and checking it out elsewhere (look for leaks below and under hood after 20 minutes). Lemon laws give you a few days if you don’t want to be that thorough.
Why not purchase and ride some expensive bikes with your wife? Lose weight and leverage the serotonin produced while cycling for the emotional high. As a couple, you two may make cycling a habit and grow as a couple.
Ultimately, a Tesla car on your salary is simply too expensive to buy outright. Sublease or rent that lifestyle for awhile to supply that emotional high.
Marital memories make more sense than materials in the long run. Workout with your wife, shower, and make love afterward. Cycling may buy you free dates for years to come.
Think about it.