% of Net Worth one's first F-Car should be...

Hah. From a totally different point of view - I have a miata that doubles in value when I put my laptop inside of it.

 

damn, im going to print this and save it......... i live this way NOW!!!




great words of wisdom Sir!

 

Depends. In my opinion, as long as you have your priorities straight (6 month emergency fund, adequate progress in your retirement account, decent equity in your house, not swimming in credit card debt, etc.), I don't think there is a set percentage you should have in a car.

For example, my net worth is about 250K with no debt. I paid 35K for my Ferrari which is 14% of my net worth. However, it is causing me no financial difficulties, I'm very happy enjoying the car, and I'm confident if I ever did need the money I could get most of it back. I do all my own auto work, so fixing things that go wrong cost about 1/3 of what it takes at a mechanic.

Of course, I don't have any kids either so I don't have to worry about braces, college, cars, insurance, or any of the other expenses that children bring (but I hear they are worth it). I don't have any regrets about purchasing the car, and it sure beats having regrets when I'm 50 about not purchasing it.

 

Interesting thread, I especially got a laugh from Martin and Wharts response's. I don't think I would worry about a particular percentage. Be more concerned about not carrying "foolish" debt, as in wasteful trendy stuff without purpose. And never carry credit card debt, that will eat you up. If you find your Ferrari expenses are too high, sell the car, and move on to something more affordable. There will always be another ferrari available in the future. And like many said, do what you enjoy, life is short!

 

I followed your teachings !!
Bought a 250 GTE 3 years ago. Then bought a Boxster for a daily driver. Then traded it for a depreciated Maserati Coupe (55% of MSRP with factory warranty).
For once.......something makes sense.

 

My grandad once told me:

Give 10 percent ("first fruits") to the Lord
Save 10 percent

Enjoy the rest.

I can tell you this much: I have practiced this over the last 10 years and I have been blessed enough to see my net worth shoot to levels I only dreamed about.

Of course, when buying a Ferrari, I would only buy an older model that is fully depreciated and way "in the money" so that it is easily liquid. If you have enough money to pay for, say, 6 months of living expenses if something goes wrong (without HAVING to sell your Ferrari), you should be fine with a Ferrari of this sort!

Good luck!

 

So, then how in the world does anyone here justify racing. Any person I have ever met who goes racing sacrifices almost everything to do it and then some. People who have children of extreme talent sacrifice things to help their children possibly fulfill their aspirations, the same holds true for individuals. You never want to say, I should have. Quite frankly I’m shocked at the conservative nature here, because I thought most are entrepreneurs - who are usually risk takers and what makes them financially successful.

5% is an absurd # without relevance. Art is comfortable w/ 5%; others are comfortable w/ 20% or more. It is subjective to your needs and your age. To me if you are saving 15% of your annual gross income and pay all your bills, the amount of discretionary income you have is what you have to make your decisions.

Of course all of us Ferrari owners know there are bills that present themselves with Ferrari ownership that many probably have not experienced nor are prepared to experience(it just can’t be justified it their head, same holds true for $8,000 bespoke suits), if they have not owned an exotic and can’t do their own repairs. Think in terms of 1500 – 3000 a year and you should be safe, some years $100 the next $6000.

Let’s talk about housing, what percentage are you putting into housing. See the priorities of some are not the priorities of others so all answers will be different.

 

0% of my gross income goes into my house. I am a true "home owner".

 

Erik excellent, I'm fast approaching that same nirvana.

 

Really? No taxes, no repairs, no operating expenses? Given that all that has shown up in the anti-car arguments, it has to apply here.

That said, good for you!

 

Well then, let's see. The house is being leased while I am in Asia. The taxes are covered by 1 month's rent. We put the rest in a slush fund to cover maintenance. Not sure how E&Y will structure it for me as a source of income (probably go on my wife's side of the sheets).

Damn, it isn't a liability, its an asset! I'm making money off the damn thing!

Seriously, when I live in it and don't collect rent on it, we're talking <1% of my gross goes into maintenance and taxes...

 

For the true fan, 75!

 

I think the percentage number is irrelevant, what I do think is important though is that you have savings for unexpected f-car costs.

And believe me, they will come when you least expect them...

I have around 15000 put away for that purpose.

/Peter

 

Amen brother.

 

About 2 years ago, a friend decided to change cars when his lease ran out. I had owned 2 P993s and had good luck with them. He decided to buy a 996 cab.

Last month, from out of nowhere, he was found to have a brain tumor. He's doing well, but the prognosis is guarded.

When I saw him last week, he said "No matter what happens, thanks for letting me enjoy the P car for the last 2 years. I can't drive it now, but as I look back, few things made me smile more."

I think if owning the car of your dreams doesn't interfere with putting money into retirement, the kids' education, paying off other debts, and so on, we have to live along the way. My Fcar takes something that would otherwise be mundane and makes it fun.

I'm sure my friend isn't worried about whether he strayed over 5%. If the car isn't limiting other things you need to do, enjoy it.

steve

 

It is all relative:

1, Make sure you are saving at a good rate
2. Make sure that people who depend on you are taken care off, and you are not "taking food out of the mouths of babes"
3. You have no credit card debt, and own a house (I belive in buying a house before you buy toys. I might be on the conservative side), and your general debt to asset ratio is the right color.

Anything else left over, enjoy life, get a fun car.
A friend who worked at Genentech juist passed away with 400 mln in his bank account. He never indulged in anything, just worked 18 hour days and weekends. He had no kids, because he had no time for them, so the government took most of his money when he passed on.

The first exotic I bought, I sold for the same money. The second one doubled in value. The third I bought fully depreciated and it is my daily driver. Perhaps is it is 15K more than what I would have otherwise bought for a driver.
Yes, cars make up more of my net worth than the average Joe. But the hobby is what keeps me sane, allows me to relate to other human beings with similar interests, keeps the passion pilot light lit...

 

My wife makes nearly as much as me, drives a car worth $2500, and actively encourages me to sell my Esprit and buy an F355, citing that "you'll always wish you did". I'm the brakes on the whole deal, reading too much about headers and valve guides. That, and noone has let me drive one! I'm not going to sell my Esprit w/o knowing I really prefer the 355 but nobody wants to let me drive a car I'm obviously not going to buy for (at least) several months.

What were we talking about?

 

I would guess that no "toy" such as a Ferrari should exceed 5% of your net worth.

 

Whatever you're comfortable with. And remember you can't buy time.

 

Once I hit close to $800k-1mm I'm bagging an F355. If I don't get there by the time I'm 25, I'll bag a 328.

5 years ago, I promised myself a Ferrari of some sort for my 25th birthday, and I intend to keep that promise in some form or another!

 

That's awesome Ben! I'm around your age. If you have a second, PM me and tell me a bit about yourself. I'm always interested in meeting people and learning something new. Congrats - you'll be driving a Ferrari in no time.

 

I figure my net worth to be 90% perspiration, 10% inspiration, and 10% Ferrari...

 

The 5% number is just an approximation of what is a good balance. Obviously things will change, depending on the economy, your particular lifestyle,etc. I'm almost as old as Marty, and started late with Ferraris, although I've had Porsches for a while.

My net worth would let me get a much more expensive car than I've got now, even following the 5% rule, but I think I've got about the best car I could buy. Maybe a 430 in the future, or a second Ferrari, a 328.

If you're young, are still building net worth (and thats important to you and your family) the 5% rule generally works well.

Art

 

This is the real key, not some arbitrary percentage of net worth. In other words, buy smart and start trading your way up. For example, I brought a 1998 Maranello for $115k, drove it for over a year, and sold it for $115k. At the same time, a buddy of mine brought a new Porsche GT2 for almost $200k. He drove it for a year and then sold it for $120k. For a short while, my buddy got to be the biggest dick in town. However, I got to keep my working capital intact and buy more toys.

This is why, for some of us, we fret over the values of these cars. Simply put, I can't afford to take an $80k hit on a car. My buddy can. Different strokes, eh?

Dale

 

Probably 25% .