Afford a Stradale?

What kind of Stradale? Lancia 037 Stradale? Lancia Stratos Stradale? Fiat 131 Abarth Stradale? There are lots of Stradales....

However, since you're here, I figure you mean a 360 Challenge Stradale. I'd get the 037 myself. There is one for sale in Vegas.

 

I think you should either buy it now or wait and not settle for a Modena, not saying a Modena is settling of sorts but if you really want a CS wait until you can

afford it. You don't want to look in your garage and wish you had a just spent the extra money for the CS.

Just my .02

 

Buy it. Enjoy it.

You live once. You can always make more money, but you will never again be able to drive a CS while you're 32 yrs old.

Do you want to enjoy a CS when you're 32, 37, 42, 47, 52, 57.... you decide when.

Forget about the lost future earnings from the $200k... what about the time/years lost of no CS in your garage?

 

I'm a kid, and I too worry about the paycheck to paycheck, since it gets pretty tight around here.

If I were you, I would wait until you have no doubt that you will be comfortable living with that deficit. That is my goal in life as well, just to give my family a better life than my parents were able to give me. My life isn't bad, I know that a lot of people have it bad. But having a comfortable life is my goal.

Peter Hatch

 

If you have a $500K mortgage, you don't quite own that nice, depreciating house. You can get a 360 Modena for half the price of the CS and put a socking huge payment on the home. Unless you track the car, any 360 is 10 times the car you'll ever need, performance-wise.

Also, living in San Diego, I think the housing market around here is going down hard for the next couple of years.

If you want to retire early, work on that mortgage, and buy a Ferrari that won't make you think twice about its purchase price. If you don't have an IRA, get one -- I started when I was 24.

 

Put the money to work, even think about putting a chunk into paying off the mortgage. I know everyone will tell you not to pay off the house but the reality is you may put the money into speculative investments and actually loose some of it and be worse off than if you put it into the house. 4 or 5 years from now when you sell it (if that is somewhere in you plans) the market should be much better and you will have a tremendous amount of equity.

Buy a 360 Modena. Have you driven the 360? It is an amazing car! If everything keeps going as well as it has been for you you can pick up a Stradale in a few years. You could buy the Modena now and perhaps get on the list with Ferrari to buy a new Stradale down the road! I would pick it up at the Factory and go directy to German to drive on the Autobahn! (Does Ferrari do Euopean delivery??)

 

600k @ 6%, which is conservative will make you $36k annually, which comes out to $3k/month. You can choose not to reinvest part of or all of the interest and use it to pay for financing on your Ferrari-- perhaps take half from income and half from interest (or something like that). With an adequate down payment, it won't cost too much monthly. That way you can have some good debt that will help you build up more credit-- which is extremely important. It also allows you to keep your equity, and a somewhat liquid car (I see Ferraris as commodity cars) that you can easily sell... at a decent price... if the needs arises.

Generally, with luxuries, people tend not to economize. Usually, they also say one should not stretch to have a certain luxury. With a Ferrari, even in our slowing economy, you will always be able to find a buyer at a not-so-bad-price assuming you bought the car "right." I'm not saying to buy a car you aren't comfortable with financially, but take some solace in the notion that you are indeed buying a "valuable liability". While the opportunity cost is there, your consumer benefit can be used to "offset" it.

I'd say with that plan you'd enjoy the car without much stress. Go get it!



Joe

 

buying a 360 of any stripe right now is a big money losing proposition. Just wait another six months when all the real estate/mortgage/wall street guys start dumping them. i predict a bloodbath. From the little info you give, it sounds like your net worth is below mine and i wouldn't even consider buying a depreciating 200k asset. start with something that has bottomed and is stable like a 308,328,348,tr. maybe even a 355 if you can get a good deal. if you want to spend 200, get a vintage front engined 12 cylinder. This is of course all sound advice. when it comes to cars, people usually don't want to hear it.

 

The key question is: what is your net worth? If you have several million in stocks, land, gold, whatever, and the $600K is "mad money" then the $200K for a FCar is not a big deal. However, with a $500K mortgage and if the $600K is your nest egg, then spending 1/3rd of it on a car seems inadvisable (unless your salary is well over $300K annually). California living ain't cheap. The 360 market is flooded now and as WetPet says, it will be more so in the next year. So you have a buying opportunity but it should be done with good fiscal sense.

 

I like you already. Welcome to FChat!

 

I would buy a small retail center. I have a couple for sale for under 2 million. You can put the $500 k down and get a 7% return on your investment. Factor in depreciation and rent bumps in a couple of years and you will be very close to 9% return. When it is paid off you have over $15K a month in income.

That is the way I do it. Even in a recesion people drink coffie and buy tacos....

Oh, buy the way. Finance 1/2 of a 360. Your investment will more than make the payment...

Good luck

 

If you are making a decent salary and have the ability to pay all your bills comfortably (and even put some away) then my suggestion is to go for it. Buy your dream car. It's not as if you'll be strapping yourself to acquire the car. A Stradale is not likely to "plunge" in price anytime soon. I consider a Stradale to be a "collectible" of sorts which I think will keep prices stable. They may not rise much in the near future but I think it's safe to say that they'll "maintain" at or near their current levels. If for whatever reason you decide to/have to sell it - you'll get a majority of your money back. Now if you were asking about buying a new Maserati or Lamborghini - that would be another story!

Others will argue that you could invest it wisely yada yada yada. All true and likely to financially reward you better than the purchase of the Stradale. But life is not always about being rational. Sometimes you have to act a little irrationally to have some fun. Take some calculated risks (although this is not necessarily a risk). You're not endangering the ability to meet your obligations by buying the car. You're not spending frivolously. Your enjoying the fruits of your labor.

 

No!

No!

No!

No!

Unless, and still not a good idea, a car that is not depreciating.

If you want a modern car, 5% max, not 33%!!

 

Here's my put:

If you're single, and not worried about other family obligations (like future college educations)...

If your job is stable and not likely to change in the near future...

If your "fairly high salary" is enough to cover your current expenses, AND put a reasonable chunk (~20%) aside each month for savings, AND put aside $500 per month into an Fcar maintenance fund...

... then go for it.

By the time I was your age, I had the finanical means to afford a Ferrari, but I had other family priorities (like those college educations I mentioned above) -- all of that had to come first. That's all taken care of now, and so now I am a Ferrari owner. But I still think about how much fun it would have been to have the Fcar when I was much younger and free-er (if that's a word). No matter what, you can never get your youth back, so there is a lot of merit in enjoying it while you are young.

If you take the plunge, you have to recognize that nothing is certain in the Fcar market -- the Challenge Stradale that looks like it is fully depreciated today could be in the tank in 3 months. And if at some point you change your priorities, you may decide that a $200k car in the garage isn't such a good idea. So you need to consider the $200k as an expense, not an investment. But look at it this way: if you rewrote your original post and said you have $400k in the bank (instead of $600k) and are saving for an Fcar in the next few years, we would have all said, "yep, you're in good shape" -- so a $200k expense for you to get your dream car at this stage in your life isn't unreasonable (IMHO).

Final point: I'm fundamentally conservative, so I entered the world of Ferrari ownership at the lower end, well within my means, with the idea that if in 5 years I am still enjoying having the Italian mistress, then I can trade up. These cars are all great, so it's not like it's a big sacrifice to be driving "only" a 308/328/348 etc. Also, keep in mind that if the Challenge Stradale is your dream/goal car, there is some merit to keeping that goal in front of you to keep you striving...

End of rambling...

- Eric

 

bwana- I passed through and experienced the same decisions at 32y/o that you are now considering. Although, I wasn't in the running for a Ferrari, I was weighing the purchase of an Acura NSX or Porsche 911 (the financial implications are basically the same - should I purchase a depreciating asset or put the money to work). Long story short, I started with the NSX and just finished with the 911 C4S (I am now 43y/o).
I have no regrets; however, I will say that overtime most persons priorities and desires change (I now desire an architectual house, I don't like seeing the car/money sit idle due to weather and pampering, I like a more plush/smooth ride, I don't care what I am seen driving). I do contemplate what the money in my cars could have done for me today and in the future (I am currently designing & building a new house). However, I don't feel much guilt because I did not pull the trigger on the cars without my other financial responsibilities in place (i.e. retirement investments, emergency funds, fixed mortgages with good equity, etc.), and the monthly outlay for the cars did not affect any of my other financial and personal needs (taking care of the wife, travel, second home, etc). If you get the car now, you will feel more comfortable with your decision in the future if you know that the rest of your personal finances were in good order and not being sacrificed for this purchase.
All of the above posts have relevant advice, take the time to assess what we are all saying and then chose what is the most comfortable decision for you. Assuming your personal finances are in excellent order and priority, then I would recommend pursuing the purchase of a Ferrari. I was very happy driving nice sports cars in my 30's and not waiting until I was in my 50's.

 

It is an enviable position you find yourself. Congratulations on the sale.

My two cents would be to pay off $300k of the house, then refi the remaining balance for say 15 years to take advantage of the lower rates available. Pay cash for the car. It seems to make sense if you are going to finance some portion of either to keep the interest tax deductible.

That leaves the remaining $100k available for a rainy day, to start another business, or for a charitble contribution.

 

i'd be interested in how you came to this conclusion. the cs has been dropping in price since shortly after its release. It has stabilized a little in the last few months. but, i can't really see it's current price as a bottom or near bottom. Specially considering the trouble the base model will be facing soon. That will have an effect on the cs. I'd go out on a limb and predict at least a 20% devaluation in the current price over the next year or two. I don't mean to be argumentative, i am just interested in this subject and would like more info on your conclusion.

 

Normally this is where I, as a conservative spender would make a big long post about how that 200k along with the 400k extra could be working for you and potentially allow you to afford just about any number of exotics you might want in the future...

But I'm not going to do that because I think at 32 you have worked hard, done some things many people your age simply aren't capable of doing and have had some fair success in it. One thing that all the money in the world in 20 years can't buy you - is being able to drive around in a Ferrari at 32 and all the experiences and fun that it will give you. So I say, go for it...I think it might even give you incentive to work harder so that you can continue to enjoy it and other nice things.

The older I get, the more in touch with mortality I get...and I am focusing more on today than I am my future. Sure I have a lot of money in my 401k and my Roth, but it means jack if I die at 50. Anything outside of those two accounts will be split between investments and "today" play money. Life is too short to live for tomorrow. Get your Ferrari - I very doubt you'll regret owning a Ferrari at 32 when you are 50.

As for the CS...I think it is more dependent upon the rawness and price of the 430s

 

The CS sold for about $200,000 in 2004. Today (2008) it sells for about $200,000, and that price just may be the bottom.

 

If you really want it, then you should definitely do it. Here's why:

When you are much older, you will have a memory of how you sold your business and bought your dream car. That memory will become priceless to you. You won't think back and say "my retirement portfolio is X% larger because I didn't buy that Ferrari, thank God I didn't buy my dream car!".

It's important to celebrate your wins. People act like cash is an end, it's a means. You're not spending your entire savings and at $400k at age 32, you're still in great shape and you still have many earning years ahead of you.

And here's another perspective: the only reason this decision pains you at all if because you feel like you are LOSING 200k. If you got 400k + a Stradale for your business, you wouldn't think "ooh, I should sell the Stradale so I can have 600k in cash". This is the irrationality of human thought. A loss is more painful than a gain is pleasurable.

My Ferrari has been the source of a great deal of joy, unique experiences, and new friendships.

 

Just buy the damn car!

The sound of the engine will surely drown out the sound of your sorrow and bitterness.

A Ferrari is like a "Catalytic Converter" for your stress!

 

$550K will get you 6% if invested fairly conservatively. So thats $33K per year of income or roughly $24K after taxes ($2K per month). So you put down, $50K and it can be paid off with "only" 1/12 of your original capital. So the opportunity cost is really about $2K per month over 7 years. If you really "want" a CS then think about the financial impact in those terms. If your monthly income can cover your lifestyle + savings + $2K and this will make you really happy, then I say go for it..

I think the CS is a rare Ferrari and will not depreciate nearly as much as a 360. So unless you plan to drive it 10,000 miles a year, it will hold its value fairly well. Sometimes the more expensive a car is a better financial decision" than a cheaper one. For example, buy an S55 Mercedes for $120K and it will be worth $50K at best in 6-7 years. The $200K CS will not lose half its value. No way. So you could "lose" maybe $40-50K in depreciation on the F car. Obviously IMO.

Good luck with your decision.