$$$$ women or 360/430 F car

Solution, buy a 355 and cut the other habit in half.

 

This thread is good, because it gives a lot of diverse suggestions. But, on the most important points, I agree with Ray.

ESPECIALLY NOW.

If you read my posts from last spring, I harped on the economy and how it was falling apart. Recently, some guys from my company and I were on a conference call with some large investment bankers and capital markets guys. Here are their words, "It is not as bad as you think out there--it is worse!" "Dont worry about whether we are going into a recession--we are already there." (For the record, I said this at Thanksgiving. Not gloating, you can look it up.)

Ferrari prices--along with everything else except gas and gold--are falling. Foreclosures on homes are the highest since the great depression--and all those people who used their rising home equity as an ATM card will lose their homes when the bill comes due. Subprime meltdown is a $950 Billion problem. The next shoe to fall is credit card debt--which is, spooky or coincidence, about $950 billion, too. Job growth is flat to negative. Credit Card laws require higher payments at the wrong time. Government intervention in the subprime will make it worse (when has the government ever done anything better than private enterprise?) The Robin Hood stimulus package takes $150 billion from the most productive of our society and funnels it to the least productive, and is a band aid at best.

Check this fact . . . from the IRS itself, the top 25% of taxpayers pay 85.99% of all income taxes. Yet, the tope 25% of wage earners will not see a dime of the tax rebates from the stimulus package.

BACK TO THE POINT . . . now is not the time to go in debt to buy an expensive Ferrari. If you have $3,000 extra a month in income, buy a 355 and put $2,000 a month into a China mutual fund. You get your Ferrari--OK, it's not a 430, but it is still a Ferrari. Tale care of it and in 3 years you will still have a car worth $50K less its debt. And, you will have about $100K in the stock fund--which means you can trade up.

And, I swear this is true. The first day I had my 355, a girl literally hopped over the door into my car at a traffic light. She did not know how to open the door on the 355, which is hidden in the side intake, so she just jumped in.

The last thing you need is to somehow have that $3,000 go to $2,500 for some unknown reason and put you in a tough spot.

 

YOU ONLY LIVE ONCE!!! GO FOR IT!!! LOL!!

 

Your personal view is STUPID!!!

I lease my car and write the entire thing off. Plus I get a new sports car every year. Why pay sales tax all up front. Then sell your car later on. That is like saying I should not live in a 9 million dollar home because I cant pay cash for it.

 

i bought my mini cash...does that count?

i lease b/c i can write off more $$$ than if i purchase

 

It only makes sense to lease if you can write off the payment and let the government pay 48%. The only other reason to lease is if you like to switch cars every two years and you avoid most of the tax. I looked at auto loans and they were around 8% and my money was only earning 5% in the bank and then I am paying 48% tax on that interest and I cannot write off the auto loan unless I take an equity line on my houe. So I decide to just buy the car and avoid the payment. I also know that even if the economy goes bad and my income drops I do not have to worry about a payment. I really only believe in paying interest on an investment or on something that is deductible.

 

My other personal view is that people who go around using all caps are usually a bit on the wacky-nut-job side.



As far as buying vs. leasing, it doesn't really change the core discussion here - can you afford the car? Also, I didn't say you should pay cash, I said "until you can pay cash for a Ferrari".

There's a big difference between a guy with a million dollars in the bank leasing a Ferrari (or getting a car loan) and a kid who cannot afford a $150K exotic car, but gets a loan anyway and ends up wasting a huge percentage of his free cash flow to do it.

Ray

 

Now you are starting to mince your words a bit.. are you now saying that the concern you have is that a kid who doesn't have 150k liquid should not be buying a ferrari, but someone who has over a million liquid can?

If that is the case then I know plenty of people with the liquid income who still finance their cars.. I know people with over 5 million liquid income that still finance their cars, and I'm not talking ferrari's either I'm talking 50k SUV's...

I think some people just feel better making payments on something instead of watching a chunk of cash dissapear immediately.. I think it makes them feel that they didn't actually spend that cash at all...

In any case.. me personally have financed most of a 100k car before, but than I have also outright bought a car at almost the same price.. Looking back I felt more responsible w/ the car I financed.. Mostly because if my business was slowing down and I had slower months I still had all that cash on hand to float me until my business kicked up again..

Again I don't think either route is wrong.. after all most people who buy 100+k cars usually know how to make and keep making money.

 

I love it when we try to make owning an expensive impractical toy logical. I try not to delude myself into thinking any of this make sense. You cannot make a case that owning a 200k plus car makes financial sense. I just do it anyway. Check my profile.

 

I think each person has a different situation then the next, how they value money etc. I know many people that can buy their cars with writing a check for the full amount, but they dont... why? Im sure its for more then just 1 reason... maybe they like seeing the money in a bank, maybe they plan on using it to buy real estate soon, maybe they get to write off the car payments...maybe they have most of the cash net worth in real estate, a business?? who really knows... I agree if you do finance a car, your month payment should not be more then a weeks paycheck amount... but again we all have different idea's and thoughts on what is right and wrong.. thats what makes us different.

 

Where do you get your women from?

 

Get the Ferrari and screw the women, you always have your hand at the end of the day and legal teenagers aren't expensive to keep happy.

 

It is really only about what it costs to own the car. My guess that a 2001-2003 150k car will cost you at least 50 bucks a day to own regardless if you drive it or not. Maybe this cost is 55 if you finance it. So it really is a matter of if you are OK with handing burning up a extra $50 bill every day. I say extra because you will probably be spending all of money you do now on top of this. If you are 23 years old and have a high income it may not be such a big deal if your net worth is still increasing a little every month. The older you get the more important it is to be saving more of course. If you can handle the delayed satisfaction when you are young (few can) money saved turns into a lot when you get older. All of this being said, if you are making 100k a year and all of your income is earned income, you are taking home about $178 per day. If you are in this situation, (I don't know how much money you make) I personally don't think it makes much sense to spend almost a third of this on a car especially with the current economic climate.

 

Best post of this thread IMHO. Buying a sports car, boat, or airplane is something one does for the pure enjoyment of it. It is extremely rare for the purchase to work out as "an investment" or a "good use of money".

In the end, we make money to spend it, don't we?

 

Here is some more math, especially for the younger readers:

Hypothetically, you are 35 and buy a 360 for 150K. Put 50K down, finance 100K at 7%.
You keep the car 5 years and sell for 100K. Let's summarize:

Depreciation 50K
Finance (5 years) app 20K
Insurance 7500.
Maintenance 10K
Gas, inciddentals: 5K

Total: 92.5K

So, owning the car has wiped out your initial 50K + 42.5K more.
Let's say you invested 92.5K fairly conservatively making 3% more than inflation.
At 65 years old, you would have $224,521 in today's dollars which can conservatively yield (at 5%) $11,226 per year for the rest of your life. This is the true cost of owning a 360 for 5 years.

If you already have enough wealth (not income) to not have to worry about retirement, great. Likewise, if you are already saving at a rate that will ensure a happy, wealthy future, and have money to blow left over, great.

But if you are 35, making good money but have not yet built up a nest egg that you are contributing to on a regular basis, then the consequences of blowing money on an exotic toy at your age can be really bad.

If this analysis scares you, don't despair......there are ways to greatly reduce the cost. The most obvious is to buy an older car where the depreciation is essentially all done. Second is to pay cash and avoid the finance charge

And, of course, the older you are, the less consequential the long term investment losses are.

Dave

 

I think the main issue is to make sure you can afford it.

When I see threads about "do you think I can afford XYZ car" my gut reaction tends to be "if you have to ask..."

Ray

 

There have been some very good points raised in this thread.

I'll give my perspective;

-> Housing Equity
Best not to rely on it! After all we are now in a recession and its is not real money until you sell the said asset (and then where will you live?). Once the housing slump really hits hard that $300k property you thought was worth $1m is back down to $250k again - at least until you can ride out the storm! Toys like F-cars are virtually unsellable in this kind of market and if your forced to sell you'll take a HUGE hit - just like for the houses. What about if you loose your great job? What investments can you call on to be able to ensure you can afford your mortgage payments?

-> Multiple car ownership
You cannot really park a Ferrari just anywhere (think theft, vandal damage, etc.), so you'll definately need another car as the everyday transport. Seriously this is 100% true.
Not only for parking but for mileage reasons, depreciation is heavy if an F-car is used, useability, even servicing times can put you off the road for a while, lots to consider. Also dont think you can buy a cheapy 2nd car when owning a F-car, you'll hate it, you'll want something nice for your everyday transport. Remember the F-car is not everyday transport!

-> Potential for big bills
Something very true of virtually all supercars (especially Italian exotics) is that if they go wrong they can be very expensive to fix. That 2nd gear that seemed a little stiff can turn into a $10,000 bill at the drop of a hat - and take your F-car off the road for several months waiting for parts to arrive. Told you they arent every day cars. Can you afford a big bill if your paying finance every month?

-> Depreciation
Very big, factor in at least around $2 per mile.

-> Running Costs
Even if you dont drive the car the insurance and servicing (yes even a 0 mile per year car still needs servicing!) will run into several thousand dollars.

I agree with Ray about being able to afford the car 100% before actually buying it. If you buy before you can afford you take huge financial risks.

Lets face it, its also living a bit of a lie really, like wearing a rented Rolex watch... a Ferrari is seen as a symbol of financial heath to many people but if you dont own the car and cannot take the occasional $10k hit on the chin then your just lying to yourself. The large yearly depreciation, servicing and other running costs can shock you! Also why buy a F-car only not to be able to afford a good social life too? To me this whole idea seems crazy!

... No point in taking the girl up to the alter if you can't afford the wedding!

 

A few other points I forgot to mention are that some so called 'friends' will begin to hate you (green with jealousy) and even some people you thought where good friends will stop calling you - the image of the car can unfortunately bring out the worst in some people.

... Then there's also the neighbours thing, do any of the neighbours own any comparable cars?

If not, can your area abd house actually take the car? I.e. does it look out of place at your property or should you consider moving to a better area/house first before considering the F-car purchase? If not you could make yourself a target for theft, vandalism, hatred and jealousy and even get your neighbours snubbing you. All very relevant considerations too...

 

... and don't think you can just turn up to most workplaces in it either and not p*ss of your boss - and if your the boss, don't do it either or you'll have workers thinking your earning too much and demanding a pay rise... either way its a weekend indulgence, a toy!

 

I'm with Ray for sure.

First, you are simply not going to find a risk free investment that would equal the cost of a car loan on one of these cars.

Second, if you are "writing off" the whole amount of the lease, I promise the IRS is going to nail you; there is simply no business expense for which they will agree a Ferrari is needed. Plenty of people have tried, plenty of people have cried.

Third, I think Ray is right in that the majority of folks that want to take a loan for these cars deep down simply don't have the resource to buy outright and will come up with arguments that don't hold water.

Fourth, to say you would have come out great buying a Lusso or a Daytona 4 years ago (with a loan) is like saying I should have picked the right lotto ticket.

 

Rememer though...equity write offs are typically only good up to 1M in 1st and second home mortgage interest. Over a million is typically not tax deductable. So If you have a primary residence and/or a vacation residence totalling more than 1M in mortgage you are maxed out on mortgage write offs. Sucks!! but I suspect more than a few here are in this boat.

Some here may see their first and second homes as nice right offs and in part as investments to be dealt depending on market forces. In this view paying all of your mortgages down (but keeping 1M) can free up substantial cash reserves and also significantly lower your taxable income.

 

Money is cheap to borrow right now and with the declining dollar it will be even cheaper to pay back later. That being said I did pay for my car in full only because that works best for me as I don't keep cars for long periods of time. It makes it eaiser to swap them out when I am ready for something new.

However I am considering keeping this car for a while and if I do I will be taking out a loan against it, at 4.5% and buying another rental property that will pay for the car and then soem. In fact it will make me about 1k a month and I wn't have to carry PMI either. As well in 5 years when the loan is paid off the property will still generate income and the car will still be mine and paid for with other peoples money.
It really is about what is best for the individual person. One plan does not work for everyone.

 

Where are you getting 4.5% loans?

Dom