The financial reality of Ferrari ownership...

over 35, under 40. And your point is well taken... I feel that way, I feel lucky. But keep in mind, I have been making this for exactly ONE YEAR. year prior was rougly 1/3 as much, year before that a little lower, and prior to that, I was making $50-60K per year for a few years.



I guess the word for me might be PARANOID or pessimistic. ?

But I do feel lucky and I do have fun with my new money, I do some cool / fun stuff, just smaller bits at a time, not a huge purchase like $150K for a car. not yet.

 

I don't want to make it look like I'm pushing for you to make a $150K purchase for a car but I think you need to ask yourself...if not now...then when?

You're in between 35 and 40 years old. You have your own house. It appears you are single. Do you plan on getting married and having kids? If the answer is yes...then all I can say is that it is a lot harder to justify purchasing a car when being married and having kids unless you got tons and tons of money saved up for their future.

And as another poster mentioned...it appears you think once you made the purchase...the $150K is all gone. It isn't. The car is still an asset...just most likely a depreciating one. So what you buy now for $150K...you can perhaps still sell for half that price sometime down the road. What you're paying for is the enjoyment of owning and driving the car. Some people spend on boats or expensive vacations....others on cars.

The other alternative is to finally start driving that nice car when you're 50+ years old.

 

Respectfully, I could not disagree with you more. Your suggestion typifies why the country is in financial trouble. Live beyond your means with no savings. Live now, gain immediate gratification. You have the money so spend it. "Get a Ferrari now", like it is important to get one before a certain age. They has not made enough money. He has no security. He has a projected life span of 50 more years. I can see why Obama will win. Best

 

If you're not comfortable with buying yet you shouldn't imho.
Putting it off for a year isn't abandoning the dream for ever.

Although it could be argued on financial grounds I suggest emotional factors say you're not quite ready to get it yet.
Your Ferrari should be a source of joy. You'll have no nagging doubts or fears when its really the right time for you.

 

No worries. Glad you ae not taking it personal buddy!

B

 

Pano,

You learn something new everyday. I do have tracked my cars in a long time. (brought the 95 Lotus to Lime Rock four times), but its good feedback to know that Kuhmo are good tires. I honestly never knew and therefore owe you an appology for my ignorance. I guess the reason I have stuck with OEM stuff is that I have asumed that these tire manufacturers specifically design tires for particular models. It may be more contractual promoting than design.

Thanks agian,

B

 

Bora,

it likely is all about contractual obligations.. one thing I noticed about the Pilots is that they are harder tires on the track and road.. and when pushed they will be more likely to break free or tear in the front.. Kuhmo's do that less often.. you can research them online.. Many people prefer them but this is in no way insulting the pilot's.. it just happens to me the popular opinion with people I know that Kuhmo's are better on the track (and absolutely on the drag strip, not that I do that since I sold my viper )

 

Thanks again Pano,


B

 

Hello All,

Well, I have enjoyed reading all the different posts on this thread. My question goes back to the initial question regarding Ferrari ownership and more specifically to the F430. I completely understand the issue with paying over MSRP and the impact that has on cost of ownership. What I really want to know is from those that have bought a new or as close to new F430 what costs have they encountered? I personally have always wondered what kind of wear and cost an F1 trans has over a standard trans? And before someone posts I have done some searches on this here. The other thing is that it has been said with every new Ferrari that the build quality is better but does that equate to better longevity and lower maintenance?

Thanks

 

The other thing to consider is this . . . part of the reason for the hesitation is that this guy is sitting and reflecting on where he has been and where he is. He is probably think about how hard and how much he has worked to get to this position and he does not take lightly the obligation to spend $100+ on a car.

One thing to consider is this . . . if you threw $150K away completely, where does that put you right now? If it hurts, but does not have a major impact on what you do--other than working hard to replace it, then I would inch over into the column of buying the car. Why? Because if you write down the price, totally, to ZERO in your mind right now, then you will have an asset that is worth something--maybe it is $150K minus something, but it is not ZERO.

However, this formula only works on the following condition. When you start to need liquidity, you SELL THE CAR, and you DO NOT BORROW AGAINST THE CAR.

When it is time to sell--then sell. Don't hang on with your fingernails and get youself into deeper trouble.

 

Routine maintenance is pretty reasonable on 430's. The first year was about 350. This was somewhat lower than normal because the E-diff fluid had been changed during a TSB update for free. The 2 nd year requires more and was about 1200. This year was about 400. I've also bought a set of tires, a set of brake pads (track use) and had an alignment. Under warranty, I got a new rear main seal (supposed to be a very rare problem) and a set of exhaust manifolds which are a common problem but there is now a new design which has hopefully cured it.

Dave

 

We are not that far off in our thinking. I have just seen too many who can't wait to spend, maybe pent up frsutration from working (for nothing) or feeling they are falling behind (some imaginary competitor). I spend part of my time in Vegas and tell people, don't bring to the Casino what you cannot afford to give away. Best

 

I predicted this thread would turn into the debate about whether to pay cash or finance, which is also the carpe diem and buy vs. the save your money and wait until all other buckets are filled debate. Right answer comes down to his personal situation. We also don't know his particular career and how secure his 7 figure income is. It is doubtful that it's pure W-2 income from a AAA credit employer, but more likely partner draw for a good year, bonus money for a good year, stock options maturing, windfall for real estate sale, and several other possibilities. $1 million straight and consistent salaries are not common, but salary plus bonus or profit sharing/ownership, etc. is more likely, and those sources can fluctuate year to year depending on industry, etc.

It seems rational and prudent to put away some capital and fund some reserves before shelling out for the dream car. Makes owning it more comfortable and less stressful. Again, though it could depend. If he is certain to receive 7 figures for the next ten years or rest of his career, seems like a fairly low risk proposition to buy now as he should have time to fund reserves and build wealth. I personally wouldn't put the car before the portfolio, but I am in a different life situation. If he is not married yet, he could get the Ferrari purchase cleared in the prenump.

As for accountants being able to figure out how to keep more income, it seems to me that in this income range, with altmin, etc., it is difficult to find tax shelters without flaunting the law, other than mortgage interest and maxing out tax-advantaged retirement accounts. I am guessing he is living in CA or NYC, or a place with high state and/or local income tax. He could move to a more tax-advantaged state such as FL.

 

much easier to do if you own the business as well.. if he is an employee it's a harder game right there..

 

ding ding ding - give this man a prize. Income is potentially meaningless. What happens if you make $1M but are also leveraged. You may be "scraping by". $1M comes in and $1M goes out.

lf you have no net worth, then you shouldnt buy a Ferrari. You could "lose" your income at any time. I believe you need contingency for unforseen circumstances like what we are going through right now. Who woulda thunk the Dow going from 14,000 to 8,200 in 1 year. Or real estate crashing to the extent it did. The country is over leveraged and so are the citizens.

 

I spend a lot of time in Vegas, but I know I will--in the long run--lose money there.

I was at the Bacarat table in May with a guy betting $5,000 a hand. (He called the $5,000 chip a "chocolate chip cookie" because it was brown and big)

He had a stack of chips that was probably worth $250K in front of him. I started up a conversation and he said he had this system for beating the house at Bacarat.

My casino host laughed and looked at me and said.

"The guys with a system? We send the jet to pick them up and bring them here!"

 

Dave,

I think you are absolutely right.. However it really does depend on this particular man's situation.. you are referring to a way of thinking.. while I am referring to purchase the ferrari in question..

I think that he can splurge on the car in his current situation 1M in a year.. under 40.. not many bills etc. etc.. I am not saying he should be spending that money every year.. but if he buys an expensive toy every 3-4 years and he is still making 500k+ a year then I don't see why he shouldn't..

I think making 1M a year under 40 is a remarkable achievement.. something to be proud of.. and I think he deserves a ferrari.. I also think he could die any day.. (I hope not) and that life and happiness is in the eye of the beholder.. yes I think he should buy the car.. have that be his gift to himself this year.. then spend the next year or two or three being the super responsible guy you are

 

Financial planning (or lack thereof) on the concept of you can die any day is just a stupid excuse to have instant gratification. I should introduce you to people who lived this way and retired paupers or can't retire at all. BTW, neither of my parents made it to age 50, so I have more visceral appreciation for the concept than most. If you get hit by a truck tomorrow, you won't miss not having the Ferrari.

Dave

 

Yeah Pano, give him a gun like you wanted to give one to me, and maybe he will thank you for it.



Just kidding

 

But if you have the Ferrari, you won't be crossing the street to get his by the truck -- or you will simply outrun it.

With the Ferrari, you die with a smile on your face.

 

Dave,


You seem to be taking my opinion to an extreme.. I am not saying this man should spend all his money on toys and die poor.. I am just saying it's ok to spend 150k on a ferrari if he makes 1M a year or so..

I also think that given the current economic climate certain things that were considered good safe investments like real estate (which would be included in you 5M net worth right?) are not quite as solid as they once were..

Moderation is the key to a life without chaos.. and moderation in my opinion varies from situation to situation.. I think in this man's particular situation he will be OK buying himself a 150k car..

-----------> I also seem to notice on here there is an elitist mentality within the ranks of ferrari owners.. there are the owners who 1) purchased the car partically financed or financed with little net worth 2) People who purchased the car cash with great net worth <-- it seems time and time again the people in column 2 seem to critique the people in column 1 over their life choices.. I notice this and have to wonder if the people in column 2 feel they are more qualified to own the car since they did it the "right" way.. which the rest of the people in column 1 (as I am unfortunately in hehe) are the pseudo owners who have possibly risked all to own one of these fine automobiles

 

you know that was actually a quote from PLANES TRAINS AND AUTOMOBILES.. hilarious movie.. "yeah here's a gun so you can blow your brains out you'll thank me for it" <-- steve martin..

 

Your damn right they are more qualified! They paid for it. The rest are posers!

 

I should clarify that last paragraph that you just quoted was written with the sarcasm thickly plastered on.. but I'm glad your insight chimed in an proved my point!

 

And sometimes those with the means are the ones that can appreciate something the least.

Money has never been able to buy anyone class or taste...