Help me calibrate my dreams

Well, you have to keep in mind that you have not filled out your profile or joined the site. Literally hundreds of guys have shown up here blowing smoke over the years, and you fit the profile. I lurked here for a long time and saw a few of those guys. So, I didn't join or post until I bought my car. You have your info, so start shopping.

 

No, I don;t see how it was taken out of context. That saying is by far one of the dumbest things ever said, and is only well known because of the absurdity of the inference. The richest guy in the world isn't throwing money away just because he has it (maybe his kids do), he is assessing risk with every investment or purchase. That's how he most likely became rich, education...not jumping into things willy-nilly. That ridiculous saying (If you have to ask, you can't afford it) only gives the impression of a pretentious elite wannabe who is so empty that they are only defined by their protected social status because they have nothing else to offer. I'm glad that mindset is in the definite minority on this site.

There's another side here..going along with my previous reply, 95% of the people here are awesome, and the ones I've met in person don't disappoint. Even the 488/F40 owners have treated this lowly 360 owner with utmost respect because we all share the same passion. The other 5%, when I first started posting here to gather info and educate myself, accused me of "answer shopping", of being a "poser", and "not serious" about buying a Ferrari...within 6 months of joining the site, I had my 360 and a year later of working on it, maintaining it, dumping $$ into it, and of course driving it, have a much better understanding of the car, know almost every nook and cranny, and how to maintain the car without wasting more money than I need to. So I understand the OP perfectly and will never treat a new member (that has not established himself as a troll) without respect because they haven't joined the little elite "club" yet.

That's perfectly fine, like I said before, focus a little bit and don't buy until you are ready or feel that you have educated yourself. Some guys spend years researching before making a purchase. The "search" function on this site is worth it's weight in gold, every question you have has most likely been asked before. Spend hours, days, months, researching on this site. It is the #1 most valuable asset to a Ferrari owner or prospective buyer IMO. Good luck.

 

The 10% is conservative, but that's just my own risk tolerance. Just depends on your individual situation. My advice is try to drive them each and see what speaks to your soul. I love the Dino, but actually liked driving the heavier 412, which is much cheaper. So much depends on you. Whatever that car is, make that the goal. Best wishes on your hunt.

Cheers

 

I, like many of the people here, lusted after these cars long before we could afford them. There's some good advice here (no more than 10% as a great example). I'll add my own piece that was the personal restriction I set:

Don't buy one of these cars until you own a house nice enough to park it in front of.

Or in the wise words of E-40:

 

I limit my auto assets to no more than 3% of my net worth.

 

I've followed this thread with interest, as I'm in the position of "can I afford a Ferrari?". Not so much from a purchase point of view, but a maintenance point of view. Buying one isn't a problem - I've done my budgets, and yes, I can afford to buy one. Being able to pay for the repairs on a bad one if you have bad luck is another story.

I'm a computer programmer mostly, but I also do business analysis. Hearing the theories in here is interesting, and helps formulate a plan in mind. But also highlights flaws. Well, flaws as my mind sees them:

One theory is to spend 75% of your budget purchasing the car, keep 25% getting it right. Not knocking the person who offered this theory, but that might work if you plan to keep the car for say 3-5 years. If you plan to keep it for 20 years plus, then 25% to look after it for "life" is marginal.

Another theory was 5% of your net worth, plus 5% additional for maintenance. Yeah. No. Same again - if you plan to keep it 3-5 years, planning 100% of the purchase price for maintenance might be excessive. If you plan to keep it for your lifetime, it depends how old and unhealthy you are

There's some things that are known costs - belt change for example. From the research I have done, they're about $4k for a V8 model - regardless of what you pay. So that can't be expressed as a percentage. Likewise annual fluid changes etc - they're the same if you have the cheapest V8 up to the most expensive.

As for don't own an expensive car before you own a home... hmm, yeah. Sort of. Maybe. I already have an expensive car (well, 2016 BMW M3 fairly well spec'd - lets just say it's not a Honda Civic). I rent my apartment. It works for me for now - we're in the "ramp-up" stage of a startup that's highly successful. I don't like doing gardens or lawns. I like the fact that I can just call maintenance when I need anything fixed in the place. I could afford to buy a home but I don't want to. Not sure this city is where I want to live, and I feel the property market here is over-inflated. I don't see the point in suffering the hassle of buying a house "for the capital gains" when I can forgo all that hassle, put my energy into the company, and reap rewards from that of over 150% annual growth... vastly more than any house would give me.

Anyway - I'm rambling. The point was, I have my own "theory":

Purchase Price: Whatever you feel comfortable with
Getting it right: Depends on the quality of the car you purchase. Perhaps one of the original theories could be modified to be "expect to spend x% of the purchase price on getting it right" where X might be 10 to 25 - depends on the car. Obviously paying more for a better car might mean lower "getting it right" costs. So the original theory was pretty sound, but I'm thinking see that as a one off.
Maintenance: set aside 0.5% to 1% of the purchase price per month for maintenance including belts etc.

0.5% to 1% should be enough to cover expected maintenance, and the occasional unexpected item.

 

The whole concept is person-specific.

Select a car, find out it’s upkeep and determine if it’s worth it to you. That could be 5-10-hell even 50% of your worth or income ....whatever your comfortable with financially.

Whatever works for you....just know what ur getting into and avoid obvious debt associated with upkeep/ownership. Just don’t say no one warned you with a surprise bill.

 

The 10% of net worth equation is too simplistic. You can't reduce it to a single variable. I can think of half a dozen variables. Your age, your household income, your long term forecast for family expense (particularly kids' college and your retirement IRA/401K), the reliability of your household income, etc., all make a difference.

For example, if your entire net worth consists of a $4 million tract home in Palo Alto, encumbered by a $2 million mortgage, and you are a mid-level manager with little chance of substantial upward wage growth, and your wife does not work, and your three kids' college needs are not funded, and your income is barely enough to pay your mortgage and living expenses, you have no business buying a $100,000 Ferrari 328.

But if your net worth consists of a $500K mansion in Arizona plus $1.5 million in a well-diversified portfolio of mid-cap stocks yielding 2% in dividends, and your kids have finished college, and you and your wife are earning $150K per year in combined wage income, then, by all means, go buy a $200K Ferrari.

Here is a suggestion: There are two methods to calculate your purchasing power.

One is "disposable income method" that assumes a zero net worth, but meaningful disposable income.

The other is "net worth method" that assumes a meaningful net worth, but zero disposable income.

It is a rather trivial exercise to use each method to come up with an aggregate purchasing power. The two methods will yield different numbers. Then, calculate a weighted average of the two numbers. If you are young, you give more weight to the disposable income figure. If you are closer to retirement, you give more weight to the net worth figure.

Once you have the weighted average of your realistic purchasing power, you find a suitable Ferrari whose aggregate ownership cost (acquisition cost plus maintenance, insurance, and operational cost) is 90% of your realistic purchasing power.

 

They said there would be no math involved!

 

The fixed cost of belt changes was one of the reasons I decided on a Boxer vs a Testarossa 10 years ago.
The Boxer was 100K.
TRs were selling at 60ish and 512TRs at 100 as well.
Belt changes/services were 10k.
I thought which car is going to be more valuable long term because service is the same no matter what.

My theory is to buy a "special" Ferrari at the bottom of its depreciation cycle.
This will piss off some but foe example a F1 360 isn't that car. A 360 Challenge Stradale is. Maintenance is the same. Storage is the same.
Buy a car that is "right" to begin with.
No matter how much $$$ you throw at a car with a storied car fax it wont change that.

Yes some say its overthinking.
To me much of the pleasure comes in the hunt.
I'm a guy that doesnt have a steady 6 figure income ( own a business that is seasonal and economy dependant) so money IS an object.
I dont sell cars I accumulate them. They are part of my retirement plan and net worth.
Plus I like the satisfaction of getting it right... my batting average is pretty good .
So get it right.