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

Well, if we're going on "Net" worth, I'd say I have myself covered pretty well. Assuming all my current owned assets could be liquidated, I'd say the tooling in my machine shop/repair shop would value out at near the $175-200K range. Plus asset value of my 11 vehicles, etc... I'm doing pretty well, and can also say I OWE NOTHING to ANYONE. Just rent at the shop, and the phone bill and utilities. I could walk away right now, and I own everything I have cash outright. That's ALWAYS the best position to be in when it's time for a toy.

Although NOT a homeowner yet (my father's health is currently failing, and I've moved back to take care of him... House has a larger payoff than it's worth due to re-fi for health care costs). So, within the next 4-6 months, I'll be "aquiring" the home I grew up in for a value over what it's worth. Might not be a "good" buy, but it'll keep my mother planted, take over my fathers bills allowing him to pass on without having to declare bankruptcy, and still keep more than just food on the table.

Does it sound like it's time to sell the motor home, the Ducati, the Jet Ski, the Ferrari, one of the 2 del Sol's, one of the 2 Honda bikes, the 67 chevelle or the race car trailer?

No. Not at all. Unless I want to!!! As I said, everything I own I own cash out. So long as I have enough to just BUY what I want, I can purchase anything I desire or want, so long as it doesn't interphere with bills/retirement/food/family. And as it's been said 100 times over here in this thread, "don't spend what you can't budget". I say one step further. If you can't just buy it, you don't need it. Get something you CAN buy, and play with it. When you're done playing with it, PROFIT from it. If you feel like selling it, and can PROFIT from that sale to upgrade your next toy, then you've done what NOT everyone can do. I've made a collection out of doing just that.

I got my 308 for around $10K out of pocket, and a LOT of labor. The labor could be directly related to lost income at my shop because it was purchased from a customer that ran out of $$$ during the repair, but so what. It didn't come out of my register, and it didn't come out of my pocket. Was it a deal I couldn't pass up? Yes, it was. It's pretty much how I got ALL of my vehicles.

My brother is another story. I'd say he'd be the guy to fall out of an airplane, land on a trampoline factory DURING it's foreclosure auction, make a bid by mistake, win the bid, and the gimic of him falling out of an airplane onto this trampoline factory would later sell 100 million tramolines worldwide over the next 12 months. Then he'd sell the thing for 500 million dollars. THAT'S my brother's luck. Both of his Porsche 944's he got for under a grand broken (of course again, broken customers cars) and now would value out at about $7,500-$10,000 each. So, taking HIS luck into account, try looking NOT for the "car you want", but instead look for "the deal that will get you closer to the car you want, even if it's NOT the car you want". He's now got 13 cars, 11 that are in fine working order, and just sold his Kodiak tractor trailer rig for $25,000 more than he bought it for. He then went out and bought ANOTHER Kodiak to tow his race car"S" with, because he got another BIGGER and BETTER Kodiak for the same price he bought his first one for, and had enough to buy a rolling Top Sportsman chassis to go in the back.

I've found that people who HAVE GREAT CARS have 1 thing in common. We've all OWNED many great cars, and off'd a LOT of them in order to get closer to what we REALLY want.

Choose something like a 308 for a starter. I did. It's STILL a Ferrari. Find one for a KILLER ass deal and pick it up. Put some time and $$$ into it, and in a few years, OFF IT. Move up to maybe a killer deal on a Testarossa for say $25-35K with something wrong with it. Again, BUY IT OUTRIGHT. Take some time. Play with it. Off it.......

NOW you've got $15K saved up, a car worth about $50K, and the F355 you wanted 7 years ago is for sale for $65K. Hmmm.... What do you do NOW??

I've owned 6 Honda's on the way to getting my 1993 del Sol VXi, right hand drive, transtop-retractable hardtop car. Buy it, fix it, off it and upgrade the next one. 7 years later, I have my dream Honda. The same month, I get the Ferrari for a song and a dance.

Soon, I'll be selling my '93 Samba green del Sol Si, my 2 Honda bikes, and possibly the Yami jet ski and/or the 440 Rupp Nitro. WHY?? So I can use that $$$ to put into the Ferrari.

Fix it up...

Drive it around....

Sell it....

Get a Testarossa.....

Fix it....

Sell it...

See the pattern? JUST like owning a home. If you can MAKE your cars act like equity..... You can eventualy have all you'll ever desire!

Stick

 

Great angles from all the replies.

To oversimplify, it's different things to different people.

Old Spanish proverb:

 

If you are a young dude and get a wad of cash (which many people don't get early on) do something with it now and buy the Ferrari with the growth.

Most people look at getting their big wad of cash when they get older. Then something hits them like divorce or job loss. Everyone gets their ass kicked once or more. Could be as simple as a defined benefit retirement being stopped and you do it with a 401K.

It requires delayed gratification. When I bought my 360 spider it was because we have done great in my biz and I wanted it. I had nice cars. I had an option to buy an apartment building instead. Had I done that I could now buy a 430 cash from the growth.

I look at it like this. I should be able to retire now at my present living standard then have a woop. You need a fall back position.

Having said that, I suggest instead you come to my store and get some $40,000 loudspeakers.

 

If you want to base if off of income, I say 1/3 of income for the value of the car and 3x income for the value of the house. So if you make $100k, buy a $33k car and a $300k house. This of course is if you finance.

 

and to me cars like Ferraris are a big part of what makes life fun (second only to my great wife and my kids). I work very hard, usually 12 hours a day. I have made and make a lot of money (at least compared to the average American - not by Trump standards). I feel I paid my dues (I have had my share of failures including a hard divorce) and now I buy fun cars for myself because it greatly improves the quality of my life. Last year I bought my first "exotic", at least exotic for me, a new Z8 Alpina. I plan to add a used 550 to my garage next week. Between the two, and my everyday driver (a new 05 Mustang GT) I think I will have everything I need in the vehicle part of my life. That will change of course. But for now, that is my plan. The fact is I am buying these toys now, at 42, after several businesses and many investments put me in the position to do it. I could of possibly bought a $80 - $120K used Ferrari in my 20s or 30s but it would of been a financial burden and it would of impacted where I am today in a very negative way. Everyone is in a different position of course but for me it was work and build net worth first then buy toys second. I know waiting until 42 seems like forever when you are 22 but at 42 I most likely will have many years to enjoy my hard earned rewards. What I would of regreted is waiting too long, and never living my dream. Don't do that.

 

I would add that you should be a homeowner first. With that said a lot of homeowners have seen thier net worth skyrocket. Here a house that cost 300k in 98 is now worth maybe 800K. Now for most people that would be the bulk of thier net worth. This would skew the percentage greatly. However its not likey that you will sell the house and find another one cheaper.

 

I elected to retire 7 years early and in doing so gave up the income that would have financed a meaningful vintage Ferrari tradeup and/or additional collector or sports cars. I'm happy with my 330 2+2 and consider myself fortunate to be able to own it.

If I could go back to the late 1970's when I was between college and marriage/other priorities, I would be looking for a 275GTB...I actually could have afforded it then, and it would have been about 100% of my net worth.

 

Earth is 5 billion years old. Humans may get to 100 years. The moral here is "life is really short!"
Do what you want regardless of "acceptable social standards"like how much of your net worth an unnecessary or frivolous item should represent. Just understand that everything you choose to do in your life has a consequence - good, bad or immaterial.
I'm pretty sure that you won't be lying on your deathbed 80 years from now saying you should have worked harder or bought a Volvo instead of a Ferrari.

 

amen.....
i can't add anything else to this.....

 

5% sounds about right, and pay cash...never finance a toy! FYI, in a recent episode of 5th Gear a BMW Z4 won out as the best roadster daily driver and was faster around the track they used for testing than a Boxster.

 

Was this the new or old Boxster?

 

Both the Z4 and Boxster were 2003 models I believe.

 

The answer is - whatever you are comfortable with.

Personally, I think 5% is a decent number - although I'm even more conservative than that with my toys. Since you are young, do not allow your spending to outpace the incremental cash flow and you'll be just fine [protect the principal - someone worked very hard for it].

 

I have a substantial net-worth but I don't let that dictate the % of car I'll get. Enter the market cautiously and conservatively. Even though I can absorb the purchase easily entering the "areana" requires you to be prudent in your decision. I spent a year researching and have found the fellow F-chatters to be invaluable in my "first purchase." hopefully to come in the next month or so.

Frankly, just receiving a trust...you should give thought to investing the principle and buying whatever car you want w/ the interest derived thereof. Whether it's $50 bucks a month or $3000 a month in interest/dividend income. Be smart so that money can work for you through your life and buy you a Porche, Lambo, Ferrari, Noble or whatever you may want next..and after that and after that.

Great question though....your approach I think is Smart!!

 

Well, I got mine when the dot-com balloon burst, and a flood of used F-cars hit the market.

How's that for a "'net" worth? (Or would that be a "'net worthless"?)

("Dot-Com, all ye faithful ...")

 

I'm wondering if this real estate bubble bursts, how many will come on the market?

 

I'm worried about that myself. I figure that it's time to start hammering that principal into dust, one TD, one property at a time. I remember the early to mid 1990s in Los Angeles and Silly Valley in '00 to '01.

Back on topic, I agree with the 5% +/- 2 range, with the caveat that one's net worth not be tied up in highly leveraged properties. Such networth in equity probably doesn't generate a whole lot of cash flow initially and can vanish in a heartbeat if market valuation dips.