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Ideal Supercar Expense/Income-Net Worth Ratio???

Discussion in 'General Automotive Discussion' started by dev98GT3, May 12, 2020.

  1. Ianjoub

    Ianjoub Formula Junior

    Dec 22, 2019
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    Ian Joubert
    So, how about the working schmuck who has to buy a $10k used car who isn't worth anything? Is he equally foolish?
     
  2. bamaman

    bamaman Karting

    Nov 27, 2015
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    B.J. Lyon
     
  3. bamaman

    bamaman Karting

    Nov 27, 2015
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    The Cadster: Great analysis and just like me who thinks, eats and sleeps cars--I borrowed money to get into Ferraris in the 80's buy a 308 GTS, then a Daytona, then a BB 512 in Europe (which turned into a serious cottage business ---say 40 of them) three ex race BBLM's, a 28GTO and finally part of a 250 GTO. It was a blast and led to a lifetime friendship with Jacques Swaters and his number one, who I am still in touch with--so hell, go for it. You only live once. I have not had a Ferrari in 30 years but watch every Grand Prix, and just bought the best 2007 599 out there. Life is good. If you want it, buy it.
     
  4. bamaman

    bamaman Karting

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    288 GTO, sorry for not checking the spelling.
     
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  5. Shark01

    Shark01 F1 Rookie

    Jun 25, 2005
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    I respect that you risked catching some flack to give your honest opinion.

    I wholeheartedly agree with what you have in bold......I hate depreciation with a passion so a guy with my financial limitations needs to avoid it and cannot afford to make mistakes. My first supercar (horns up) has increased in value over 75% in 6 years, and they are now collectible enough that very few come to market (although they only made 142 to start with).

    As I alluded to, I recently bought the least expensive non-salvage, non-accident Ford GT that I have seen in years. I thought seriously about buying a FGT in the $275k range, but couldn't pass this one up. I don't expect to lose significant money on this car either.
     
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  6. Shark01

    Shark01 F1 Rookie

    Jun 25, 2005
    3,540
    Thanks for the kind words, mad respect for your passion and the way you you drive and enjoy your cars.

    Yeah, I'd be lying if I said I was giving up my car habit. One thing I haven't tried is a fully modern 2020 era car with a new style double clutch transmission. I also want another Porsche. It's a shame the 991.1 GT3s have those engine issues. The other Porsche I have a thing for is a 993TT. If not those, maybe a 3 year old Corvette C8....but would have to overcome the stigma of seeing one at every corner.

    My dream Ferrari would be a 512 Boxer....what a car.
     
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  7. Jo Sta7

    Jo Sta7 F1 Rookie
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    untrue. There’s a difference between being smart and being perfectly prudent or whatever you put it. Having $500k liquid and spending 40% of it on a super car isn’t smart. I don’t see how this is a controversial viewpoint! I’m not saying that it’s the worlds greatest tragedy or that the doer of said deed has ruined his life. It’s just not a wise financial move.
     
  8. Jo Sta7

    Jo Sta7 F1 Rookie
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    You were smart with your purchases. I hope you get miles of enjoyment and I wish you nothing but success!

    oh btw, I concur on the bbi. I’d buy one, park it in my man cave and leave it for everyone to look at because it’s such a beautiful thing. But, it’s too expensive ;)
     
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  9. Shark01

    Shark01 F1 Rookie

    Jun 25, 2005
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    Before I bought the FGT, I took a serious look at BBIs, and while I could have bought one in the $225k range cash, all of the cars in that price range seemed to need $40k of work plus ongoing maintenance, which took me out of my comfort zone.

    I have a few years of saving ahead of me before the next purchase decision anyway.
     
  10. absent

    absent F1 Veteran
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    Nov 2, 2003
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    Not everything we do has to be smart, if we did, our lives would be very, very boring indeed.
    Sometimes we make not smart financial decisions because the personal gratification, pleasure and satisfaction is more important to us then the knowledge of having more digits in our savings account then other folks.
    You can't take your cash to the next whatever destination you believe you will go after death but the experiences and fun you had will definitely stay with you.
     
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  11. Jo Sta7

    Jo Sta7 F1 Rookie
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    Can’t take it with but if you do it right you live a great life and set up your heirs for generations.
     
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  12. Ziad El-Akabi

    Ziad El-Akabi Rookie

    Mar 29, 2020
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    First I hope everyone is safe and sound. if I may add my pennies thought to this conversation. I am new to FC so I do apologies in advance if I come across rude in anyway whatsoever not intended at all. I find this topic very interesting because there is no wrong or right as it depends on too many variants and most important the person personality and how he or her choose to live there lives.

    life is a journey and as we are all individuals we choose different paths and have different experiences good or bad. We hope as we get older we get wiser but deep down we all have that child inside us that want to have fun, enjoy be rebellious, be free but unfortunately we suppress that because society tells us that is not the way an adult should conduct there lives (which in my opinion is very wrong).

    some are very fortunate, some have worked extremely hard, some just act on the moment without thinking it through, some are very intelligent how they buy and some just want to have fun, and some maybe not able to afford it. Who am I to judge anyone how they choose to live there life, hence why there is no wrong or right answer to this, only personal experiences.

    Family is the most important factor and your children future but at the same time they have there own journey to lead and all we can do is give them advice from our own personal experience which again is so different between each individual. I personally put all the cars I buy in a trust for my daughters hoping one day they will enjoy them as much as me and also god forbid they fall on hard time they have some sort of security in there lives. I try to buy wisely but passion plays a big part and like everyone I made some mistakes but I do not regret because our mistakes makes us who we are.( hopefully wiser lol)

    when we are all old and not able to drive our cars our passion for whatever reason we will have great memories and stories for us to think back on and put a smile on our face, and I am sure you all have great stories to tell your grandchildren about your life and your cars which will put a smile on you and more important a smile to your loved ones.

    Like Elvis said " Once the Curtain comes down there is no rehearsal "

    Make sure everyday you register a great memory.

    There are no strangers just friends you haven't met.
     
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  13. Thecadster

    Thecadster Formula 3
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    It’s good to have a goal. Few things in life give more purpose and meaning than striving and working towards a special payoff.
     
  14. Thecadster

    Thecadster Formula 3
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    So I can think of dozens of scenarios where a purchase in the aforementioned scenario might be justified. Here’s a couple:
    • Individual has $20M non-liquid, but largely secure assets (real estate equity, business concerns, etc).
    • Individual has $5M annual income and pumps all surplus into building their portfolio.
    • Individual has guaranteed $100,000 monthly post tax income from family trusts.
    So yeah, there are no hard and fast rules or formulas for what makes a purchase financially prudent. I still think it comes down to how bad you want it, and how much it means to you to have it. I have found that when I want something bad enough, I’ve always figured out how to get it. My mission is to inspire people to not be scared away from buying a dream car. Sometimes certain purchases are worth the stretch. Obligation creates ambition.
     
  15. Thecadster

    Thecadster Formula 3
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    Well said, and welcome to Fchat. Good to have you here. Excellent point about memories. Many people would rather have more memories and a little less money. I know I would.
     
  16. rob lay

    rob lay Administrator
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    Dec 1, 2000
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    different strokes for different folks. easier for me to just throw out some random data points.
    • I bought the 328 in 2000 for $40k and my income was only $75k, but I had no family or kids. The best investment ever as because of it I started FerrariChat. I had to finance it too!
    • The 355 Challenge in 2003 I had more income, but I then had a wife no kid. It worked because it was mostly a business expense and it worked out great especially because it appreciated over the ears.
    • Funny enough the Cali 30 and Cali T 2016/2017 we had more income and net worth than ever, but stung the most because of the depreciation.
    • Income (cash flow) > Net Worth when it comes to exotics. If you are trust fund or retired and don't want to draw down your net worth, then you are limited to cash flow of $50k or less for every million. That means if an exotic should only be 10% of your cash flow, then you need to be worth $10-20 million just to afford a new Ferrari.
    • As contrast someone who makes $500k-1mm a year without the high net worth can afford the same new Ferrari.
    • As of recent and especially as people figure out "the game" isn't in their favor, depreciation is becoming a HUGE variable. I think this variable has been under appreciated lately and is going to come back to bite more and more. Better to be the 2nd or 3rd owner and take less of a hit or still "play the game"?
     
  17. Jo Sta7

    Jo Sta7 F1 Rookie
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    you didn’t read my earlier posts. I Included real estate assets in net worth position, obviously that makes sense to do. People are way too eager to stretch themselves thin for extravagant purchases. But I’m done with these convos, I’ve given my .02.
     
  18. bamaman

    bamaman Karting

    Nov 27, 2015
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    B.J. Lyon
    I bet if you were to accurately assess the net worth/cash flow of most Ferrari owners, precious few would be in the financial class Cadster mentions would justify a purchase. A Ferrari which is well bought and well cared for is no less a liquid asset than real estate, a security, or a large boat (not my taste) and a helluva lot more fun to enjoy. Each to his own, but I will take the prancing horses for wonderful experiences and glorious memories!
     
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  19. Thecadster

    Thecadster Formula 3
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    To be clear, I was only responding to the previous poster that was critical of anyone who might buy a $200,000 with only $500,000 in liquid assets. I think that absurd, and was only intending to provide absurd counter examples, which I think I did effectively. Finally, I am solidly in the camp that for the right person (total car freak), stretching out for a crazy purchase might make sense, even if it doesn’t make perfect financial sense. Amongst this crowd, I am pretty much the lone dissenter. Turn dreams into reality. Fortune favors the bold. YOLO. YMMV.
     
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  20. bamaman

    bamaman Karting

    Nov 27, 2015
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    Correctamundo! YOLO
     
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  21. LightGuy

    LightGuy Three Time F1 World Champ
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    #46 LightGuy, Jun 21, 2020
    Last edited: Jun 21, 2020
    I passed on a Lancia Stratos at 17.500 when that was half my net worth.
    Later on I passed on an F40 at 350k when that was half my net worth.
    Do I regret those decisions ?
    You damn right I do.

    I wouldnt dream of buying a highly depreciating exotic no matter what my net worth.
    That not how Im built.
     
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  22. amenasce

    amenasce Two Time F1 World Champ
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    If people followed this, Ferrari, McLaren etc would be out of business.
     
  23. ferrariwithsnowtires

    Dec 17, 2005
    119
    I kinda think the nine to ten figure asset folks buffer the risk for these manufacturers

    The number of super rich folks who add to their collections on an annual basis would be fun to know
     
  24. absent

    absent F1 Veteran
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    For ultimate car enthusiast the proper ratio is 1:1
     
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  25. technom3

    technom3 F1 Rookie
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    According to Dave Ramsey the world is full of reliable cars for 1-2k dollars. Lol
     

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