At what point does a new Ferrari become attainable?

No, I didn't say that, I gave at least three income points where you could "afford" it in different ways (lets leave taxes out of it for simplicity). $5M liquid @ 5% would be $250K to pay cash and no worries. $1M liquid @ 5% would be $50K to make annual lease/loan/insurance/repair payments of $50K and few worries. Salary income of $75K, no assets, living at home with few other expenses, could also "afford" an annual lease/loan payment of $50K per year but with lots of worries. We have owners here at all these levels. The point is what else are you wanting to spend money on and how "stress-free" do you want your ownership to be? Until you define how typical or atypical your needs and wants and lifestyle expectations are, I don't see how a more definite answer can be provided.

 

Cars have got to be the worst investment on the planet, unless you get a highly collectable Ferrari. I do not own a highly collectable Ferrari, but I can hope one day it might be ('76 308). Still, I know I can get at least what I paid for out of this car which is ok by me.

Regarding daily driver cars. My daily drivers have been beaters. I cannot purchase a new car, drive it off the lot, and know I just lost 25% in one day. Why Americans are obssesed with new POS cars that will be worth nothing by the time they pay off their loan is totally beyond me. I can't fathom the amount of wasted cash this economy wastes on poor car investments alone. Throw a little cash into a beater car to get you to and from work. Daily drivers are going to be beaten, rear ended, chipped up, and almost anything else you can think of, so why would someone blow a huge amount into one? Unless one has the cash to burn and does not care, new cars make no sense to me. Have a Ferrari at home for playtime and take care of it properly. IMO, just knowing you have a Ferrari at home is well worth driving a beater whatever car on a daily basis. Even if it is just a 308.

 

Another good reason for waiting BESIDES the money is that you NEVER want to blow your load too quickly. Build up to the car. I started with a honda to a mustang then my dads 53 (0morgan which i still have THNAKS DAD) to another honda then to a benz to a sl500 still have a jag still have and NOW @ 40 i am "thinking" Ferrari. Investment Not really. FUN YES!! Not an EGO thing which @ 21-27 was all i could think of. Just my .02

 

It's not a 430, but I had about 30,000 liquid left over after the purchase of my 95 355B. I put 30K down, and financed the rest. I don't own a home, and I'm self-employed. At 27, it wasn't the smartest thing to do financially, but from a life-quality standpoint I am a much happier person now that I have an F-car. People spend hundreds of thousands on a lifetime of psychotherapy stuff and still wind up killing themselves. Do what makes you happy, and if you can get a 430 before age 30, more power to ya! I agree with what someone said earlier, hold onto the M as long as possible and save up for a killer Ferrari. Then you'll have two sick rides! Or, just get a 355 like I did. They're cheap to buy, but maintenance is insane!
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You are a brave soul. But a happy one!

BT

 

if u dont mind me asking, wat is ur occupation? i was just wondering how a 21 year old could justify the M3 even tho u (did get it cheap) ?

 

I waited until my (non-retirement) investment income/gains reached the purchase price. Not in one month or one year but cumulative. That showed me that I could put money away and the car would not be a financial problem.

Once I started living under my means and investing, it did not take long. You could probably buy earlier than by my rule of thumb but it worked for me. The car is unalloyed fun, not a financial nightmare.

I really think if you have the means to consider one of these cars (and ownership is more than the purchase price) you by definition have the assets to become an investor. Where I live lots of people have large homes and high incomes but after a few glasses of wine confess that they had to beg the grandparents to write a check or the kids would be out of private school. I'm not saying private school is a better use of your income than a car, but honestly, at this level asking ma and pa to pay for your kids smacks of going back to live with them.

Oh, and I would have "liked" to own my Ferrari when I was 20. I could not afford it; life is unfair; "like" does not equal prudent or realistic.

 

The day you feel you don't need to ask this question, that's they day you are ready.

My advice, stop worrying about when you can afford it and start focusing on how you can afford it. There's no magic formula nor time limit...if you need to give second thoughts to the purchase, you can't afford it, yet.

You are 21 years old, unless you are a Artist, Record Mogul or an Heir to a Fortune 500 company, don't think about this until you are 26.

 

+1

I'm a strong believer that if you lease your way into your toys then you'll never have an incentive to really make it in your career, and never truly appreciate reaching goals on your own. If you're looking for skirts then consider it an investment in your crotch...like leasing an apartment or a big screen TV. But be honest with yourself that it's temporary. The problem with leases is they end and you have nothing to show for them (except for the memories, a lot of smiles, and hopefully not the clap) This may be fine for you (not the latter of course) but just be realistic.

Seriously, you need to save all you can in your 20's for a home or that next IPO idea. Take out a loan? I suppose for a reasonable daily driver but not for a $100K+ toy. Start small, and with something that you can work on yourself if you're mechanically inclined. Get yourself a nice 308, and move up as your career matures.

 

This isn't a bad answer. I've had a series of fun cars, other than my daily driver, that I successively sold and added cash to get to the next fun car. The cash for my Ferrari came from selling my Porsche. The Porsche money came in part from selling a Mercedes SLK. I never bit off more than I could chew -- i.e., I paid for all this with money that wasn't earmarked for my brokerage account, mortgage, etc.

I keep the 'car money' compartmentalized in my finances, so when the right Ferrari came along I didn't agonize over spending the money there. In fact I just left it in my savings account while I was Ferrari hunting so I could complete a deal rapidly and with no angst. I just accept that I've always been a car guy, so that psychological fence helps me rationalize it. If I ever sold the Ferrari, that cash would still be the 'car money'.

The other thing I've learned is that the car that will make you happiest doesn't have to be the most expensive one out there. If you commit financial suicide to get an F430, along will come the F430 Scuderia. And those will be old news in a couple years when the next Ferrari comes along and the 360/430 look 'old'. In non-exotics, the Porsche GT3 was the "it" car, but now comes the GT2. Set a reasonable automotive goal for yourself based on what you enjoy, not what the model year is. There's always some stupidly expensive new exotic out there that won't make you happier in the long term.

 

As you can see there is no 'right' answer to this question, explaining why it gets asked so often (just like 355 timing belt frequency!)

It all depends on how bad you want one. The first problem is trying to start off with a 'new' Ferrari. Unless you're on a list or are willing to pay way over sticker, it ain't gonna happen. Instead of waiting until you can afford a $250k+ Ferrari go for a used one for much less. This way you'll likely shave years of your waiting time to become an owner. Then step up over time. Another reason to go used first - losing less on depreciation.

My path was to pay off the house and cars, have a good retirement start, put down more than half on the 355 and finance the balance. And one thing that helped me get here was driving my $14k Integra for 10 yrs and selling it for $6k when I was done.

 

buy the Ferrari when u can pay for it, and not sit there at night and go "damn if I didnt buy that car I couldve invested the money into ....". And please make sure you own a house before you go off looking for ferraris.

 

jf 345
You mention wanting financial freedom as a goal and like other freedoms (speech, religion, etc.) it is very worthwhile to work for. It's nice to have a Ferrari or two in the garage, but much nicer still for them to be paid for along with a house, retirement funded, etc. Toys are nice, we all like toys but when they drain you and prevent you from taking cae of the important things in life, including yourself, then they are self destructive. You are young. Try this exercise: multiply 10K X 1.05 45 times to find out how much blowing 10K at your age really costs you in the long run.

Dave

 

Obtaining financial freedom, especially down here in Florida, is aggravating to say the least. The way I see it right now, unless I can keep earning $130,000+ annually, I will NOT be able to live here. I have a relatively modest home in a middle class neighborhood, zero credit card debt and I don't allow myself many luxuries. I have a leased car (an 05 Acura TL, hardly a luxury car). I am being eaten alive by housing costs (I have a pretty low fixed rate mortgage), property taxes, health insurance, income tax and property insurance. I have no kids. I've cut back on my cable TV. I feel totally ripped off living down here.

Considering what I make and what my meager house costs, I could have something 10x as nice somewhere else + a lot of money left over to buy a play toy. It's really aggravating - so much I've pretty much forgotten about ever getting a fun car. I put money away all the time but I know at least 1/3rd is going to Uncle Sam and the rest gets eaten by the aforementioned expenses. It really gets you down after a while.

I've pretty much given up at this point it's just so entirely hopeless. Maybe next month I'll feel different...who knows?



RMX

 

+1
NOTE THE OPERATIVE WORD, TOY. TOY TOY TOY.

 

Totally agree with Bullfighter. You're 21 - sell the M3 and get something that will allow you to maximize your savings. You're in a unique point in time in history where housing, while not at the level it was 5 years ago, is on the decline. Get yourself prepared to purchase a house in the next 2 - 4 years and make that your pride and joy. That house that you buy will appreciate over time and will not only provide you with a roof over your head (and a tax shelter), but will also increase your equity to the point where you can borrow against it (if you absolutely had to) for a nicer car. If you really, really want a Ferrari before you're 30 years old, I'd recommend looking into the 308/328 series cars as a start. Move onto the 360/430 when youre firmly established in your career.

Bob

 

If you only want a Ferrari if you can have the latest, then you don't want a Ferrari at all.

Get something that isn't going to hurt you severely, when your attention drifts.

At 21, I drove a Fiat 124. Very quickly. On dirt. Not the most expensive car, but certainly tons of fun. And it didn't cause me to break down an weep when I threw a shock through the hood. (Although I did feel bad for the guy behind me on the stage -- it was quite a distance before I could get out of the way and let him by.)

I'll go out on a limb and suggest that it's better for young people to start with a cheaper sports car. The top models will let you get away with sloppy technique ... until it catches you out. Start with something that demands better technique, and cheaper when you get it all wrong.

Once you've lived with pushing a machine with lower limits, you'll better appreciate something like a Ferrari.

Besides; on a budget sports car, you can be pushing the envelope and still only be doing 40 mph. The same limits in a Ferrari occur at a more lethal speed. Learn from your mistakes, rather than die from them.

And if you're only looking for a status symbol, you can get a used Roller quite cheaply.

 

It's not hard to get a new ferrari. If you have $250k to blow on a car, or if you want to lease and you can afford leasing, insurance, gas and maintenance, then you can get a ferrari. The real question is: Would you be living beyond your means? If you don't own a home or a condo, it's not realistic to even think of buying a ferrari.

The average net saving rate in the united states is something like -1%, so most people out there clearly live beyond their means. Driving a newer M3 at 21, is pretty much living beyond your means, if you state that it's draining your bank account. At least you can be respected for actually saying that it's damaging your financial health.

I'm 29, and when i was 19-21 i wasted a lot of money on cars.. every amont of money i had, i kind of spent it on cars and moficiations and it wasn't the best thing. I always wanted to keep up with the Joneses, and in the end it was all a waste. Then i matured, sold the cars i had, bought myself an e36 bmw 328is, that i drove for 5 years and sold it for about $15,000 less. $15,000 in 5 years in terms of depreciation and maintenance (i do my own work always) is not bad. I was saving money during this time and then bought a brand new house at 26.

My $300k house will be paid off in less than 2 years, and i'm already looking to buy land to build my new house that will be in the $500-750k range. Of course, it won't cost me $500-750k to build, so my goal is pretty realistic. I plan to pay whatever money i owe on a new house in 1-2 years after it's finished.

Ever since i was a young guy, i hated debt and chose to never carry any debt on my shoulders. This is what kills most people, especially on fixed salaries. They go into debt thinking that they are livng their life now, but they don't realize that they are messing up their future. If you carry any debt like credit cards, student loans, car loans.. first you should eliminate all of them.

So to answer your question... you can technically get a ferrari whenever you can afford to make the payments. BUT, it's up to you to decide at what point you can afford to make the payments, and you have to look at your priorities in life. If you want to have a new ferrari and live with your parents, and pay 80% of your take-home income in car payments, that's great... i know people like that. But it's not the best thing to do.

I can buy a brand new f430 spyder right now with my eyes closed, but i CHOOSE to use the money that i have wisely to grow my business, have a mortgage-free dream home, and be in a position where i can buy a brand new ferrari every year for cash and not feel bad about it.

Even at that point i'd probably never buy new... i'd let others take the depreciation hit first. You can never keep up with the Joneses, and there's always going to be someone out there who will have a more recent and expensive ride. So why bother? Just get yourself something that you find good, something that you can afford and something that's fun. I plan to start out with a 360 spyder soon. Sure a 430 would be nice, but it wouldnt' be the best financial decision i could make.

Just my 2 cents.

 

OP asks a very fair question. He is looking for advice from Ferrari owners as to the point in time when they felt comfortable blowing big bucks on a car. For me it happened in stages. In the beginning I worried about everything. After a while a threshold kicks in where you dont care about things that are less than x because they simply are immaterial. That threshold goes up as your resources go up and most importantly your confidence in the future goes up. It took me a long time to get to the point where my threshold allowed me to buy new cars let alone new Ferraris.

I drove a Honda (with roll up windows) that had been repossessed by a finance company and I bought very cheaply for many years. I would not spend more on another car as I felt the opportunity cost was too high at that stage in my life. My friends were buying nice cars and many times I was tempted but refrained until I had a big unexpected windfall on an investment and I spent 25% of that on my first nice car - a used M3. Even now I segregate cars into 2 distinct categories - ones that I consume and ones that I collect (in the same category as art). For cars that I consume I am rather careful. I set an annual budget of how much I want to lose and stick to it. Ferraris fall into both categories. I consume new ones but I also have some that I regard as collection. The reason for the distinction is that cars that I consume need to be replenished and that requires more funds. Cars that I collect I can write off as soon as I buy them and I can freeze my collection anytime.

So out of of my experience the answer to your question is that you will be ready to buy a new Ferrari when you are not concerned about the opportunity cost of doing so. Only you will know the answer to that as only you can evaluate. I hope your opportunity cost is too high for a long-time as that means that you are busy making money when you are young

 

Go read these books:

The Millionaire Next Door and The Millionaire Mind. Both are by Thomas J Stanley

You might also want to consider any of the "Finish Rich" books.

Shiny Side Up!
Bill

 

I guess my advice is to live somewhere where you won't get eaten alive by localized-type costs. That will make a HUGE difference and allow you to save. I have to envy those in SoCal who must have to bring in $500k min to even buy decent toilet paper.

RMX