The financial reality of Ferrari ownership...

Thanks for the input....for 17K I'll keep it or take all the goodies off it and sell it for $15K

 

Ha, I'm doing the same thing with my 911 turbo I bought in May, although problem is I refuse to sell it too, so the F430 will have to be in addition to, not a replacement for. Definately an expensive addiction.

 

I totally agree. When it came time to sell my E39 M5 (and it had a bunch of goodies, including a Tubi exhaust) it had 95,000 miles and it was almost 8 years old.. got just over 21K for that car. Don't expect too much for your 330 and you won't get disappointed in the end. Especially if you have an Fcar in the stable.

 

Track insurance is available and not too expensive. Track days are the best with no worries. I don't do too many road course adventures, but I did purchase it for my drag car. Every time I go someones car usually ends up on a trailer, that didn't trailer it there. I just smile and continue having fun while the poor soul is crying like a school girl.

 

Considering your level of retirement savings I would not touch a Ferrari. 125k a year is not enough to sustain a Ferrari habit in my opinion. I am sure I will get flames but I think even a Porsche is a stretch.

 

why you never recoup accessory money, its for the owners enjoyment. Bimmers are very common and you want M3 money for a 330

take the money and move on. Its not an invest

 

how do you justify this? he did say that he can do mechanic which greatly reduces the cost of repairs.

I make in that ballpark and have owned 4 Porsches and 2 Ferraris.

 

Agreed. As the saying goes, "It's not what you make, it's what you take" meaning that if your cost of living is low (and in this case the only long term debt the poster has is a $70K mortgage) then it appears that most of his take home income can be devoted to fun stuff.

 

I fit in the middle category. Can't afford a new one yet, but have comfortable resources to have just purchased an F430 and can afford the maintenance, depreciation and even a catastrophic failure or two and my lifestyle and retirement will not be affected.

It has been a dream for 52 years and I knew my time has come. In the end, there is no practical nature to this purchase. So if you really have wanted one, you aint getting any younger.......Steve

 

I hope you are not eating cat food when you are 70.

 

Hate to come in with a buzzkill but i'd think in your income bracket you'd want to have close to a million bucks net worth before you'd even consider a 100k car and even at that level it's crazy to spend 10% of your net worth on a car.

You've got 20 more working years to attain enough savings to live for hopefully 25-30 years past your working years. You'd need $2-3 million in savings just to live 20 years at the lifestyle you lead now with 100k in income.

People always say when looking at expensive cars things like " If i had 200k i sure wouldn't spend it on a car". Well, people with 200k don't buy 200k cars..People with $5 million do (or only people in that category should IMO).

 

That being said, if the guy doesn't have anything else on his list of things to buy, if he does get that $200k car, he'll be having life experiences (the good ones like blazing up CA1 with the wind blowing through your hair, an Italian V8 singing behind you, not the lame ones like trying to manage money in order to make sure it doesn't get inflated to death, having family and friends ask for loans and awkwardly having to say no, etc. etc.) similar to someone with $5mm in the bank, except without having to do all the work!

To be honest, that's pretty awesome

 

At the end of the day buying a $200K car it may cost you $50 - $100K depending on how long you keep it. So the question becomes is getting a car you really want worth that over x amount of years?

Crap I bought a new rover in 06' for $75K or so (paid cash) and now it's in the low $20's. That's a $50K hit.

If I buy a $200K car, keep it for 3/4 years it may be worth $150 or so come time to sale. It will have cost me $50K for 3/4 years of good times, not $200K.

I would think that someone that has there finances in order and makes $100K+ a year can spend $50K or so over 3/4 years to live there dream.

Later

 

I like your thinking!

I appreciate you keeping me grounded as that is my logic as well. The numbers you crunched are indicative of every financial planner. What I struggle with is this; I don't believe I will need 100K to live when I retire. $100K when I am 75 or 80? I can't imagine it! What the heck would I be doing?? I have a hard time spending all that now

Like this year for example, at $150K, I saved $60K with throwing an extra $8K to pay down my mortgage which I plan to have paid off at age 50 simply for piece of mind. I live in a $260K house that is completely renovated from top to bottom. I have no expensive hobbies (just the car hobby and the need to purchase every electronic gizmo ever created) So my thought is if I have a comparable year in 2011 income wise, throw the $60K at the car plus the $20K from the sale of the BMW. So I do lose one year of savings which certainly will impact the bottom line in the future.

I realize its all cause and effect. I am certainly not planning to pull the trigger tomorrow and my conservative attitude is still holding me back. What I worry about is the "time" factor"......Do I see myself buzzing around in one of this when I am 65 and retired?? I don't think so, it's hard enough to get in and out of the BMW that already sits to low to the ground!

Again, I appreciate your input....thank you

 

you are in a better position then most people who buy these cars . just look at the number of high end repossessions . that is an indication that less people than mist trunk , do not pay cash for there toys.

Having a friend in that business , he said that the last few years have been lucrative with high end cars, boats and planes.

BUY THE BLOODY CAR AND SEND US PICTURES

 

Don't forget that little printing press running on overtime at the moment.

100k today equals what in 2040 dollars??

 

My first impression (high income, low mortgage, paid off cars) would be that you're doing great but your net worth suggests you only recently got going in the right direction or your income only just came up to that level. Am I right?

For example, you managed to save $60k last year but only have 190k non-IRA assets at age 44. It sounds like last year was an exception, rather than the norm. I would personally feel uncomfortable buying a late model Ferrari with the numbers you posted. A nice 348 that you do a lot of work on yourself would be no problem.

You're 330 is really nice, BTW.

 

You have heard of the old saying that if you have to ask how much you CAN'T afford it? In the end a Ferrari is just a car and a depreciating asset at that. DO NOT sacrifice the rest of your life for a car, any car. In the end it really is not worth it and may diminish the quality of your life as you know it.

 

You're ready to buy, search well and make sure you have enough to buy it outright, no loans, and thats for peace of mind. Good luck and post pictures when you get it.

 

Thanks for the compliments on the 330.

To be more specific to your question, my avg income over the past ten years is $135K/yr. The prior 5 year average was $54K/yr as we launched our business. In 2001 I bought a the BMW 330cic. In 2005 I bought a new E320 and eventually sold that in 2006 for a huge loss as our business partner had a change of heart. On the plus side, I've renovated every aspect of my home over the past ten years. That's just a few of the reasons why $190K is what it is. The blip in the radar in 2008 and my perpetual poor performance in the stock market makes the number what it is. I keep doing the right thing by saving more and more but the results are never there. Living through two recessions over this 10 year period hasn't been ideal to say the least as these have been my best earning years. At least I got to enjoy a few nice cars over this time frame and make my home a nice little palace with a very low mortgage.

Last year's income should be the norm going forward and quit possibly it should continue continue to climb. Last year was on par with 2008, $150K a year would remain constant if our business does not grow which is highly unlikely. If our sales go up, so does the salary. My income is tied to sales numbers, not profit (fortunately). However, I'd like to make this decision based on the assumption that it is 100-125K over the course of my remaining years of working.

 

Something else to consider is the relative value of owning a Ferrari based on age.

Sure, you could save for the next 30 years until you have a few million in the bank, but owning a Ferrari at 74 is much different than owning it at 44. I don't consider myself very wise in age by any means, but getting in and out of sports cars is a task designed for the limber. Scouting parking spots wide enough to fit in, hitting every driveway at an angle, the excess attention you'll get in good spots and in bad, all get more annoying with time. To me, once I'm 90 years old with millions stashed away, maybe I'll pay $200k for a Ferrari, but I'd pay a lot more for a Ferrari and to be 50 years younger.

Fact of the matter is, if your money is going to just be sitting in the bank, all you're really doing is giving your money to the banker, so he can loan it out to some other fellow who's going to use your money to buy a Ferrari

 

Maintenance:
Does anyone service their vehicles themselves after warranty has expired? It seems all of these numbers thrown out...$5k service bill, $10k service bill, $24.5k service bill...all of them would be a fraction of the cost if the owners performed their own fluid changes and even belt changes. For a small investment in tools (less than one trip to the dealer) any owner could have what he needs to keep the car in top health.

Even engine outs for a TR or 355 are possible in a home garage, there are threads on here to prove it.

Unexpected Repairs:
So with newer cars and their increased use of electronics, say a major component goes out and requires an expensive repair. These things are toys correct? Toys can sit for a few weeks or months until the owner is able to pay for the repair. What better motivation to forego a cruise or a few shopping trips than walking past your dead Ferrari sitting in the garage each morning?

Financing:
As for financing versus paying cash, that is a matter of personal preference. No financial planner is ever going to suggest buying a Ferrari at any point. It is an extravagance and that capital will always be better served in a real investment. So regardless of paying cash or financing, either way they are unwise financial decisions but one is slightly better than the other. You only live once and if you have the cash flow, why not?

Say hypothetically you currently have a 2006 Yukon for the family with 60,000 miles. Worth $15k. Might be time to get a new one. Or is it? It is a perfectly good vehicle, a 2011 has newer sheet metal but is it really better at $55k?

Option 1: Trade the Yukon and finance $40k for 48 months at 2.9% ($883/month). Five years later you have one worth $15k and time to trade again.

Option 2: Keep the Yukon for another 5 years and 60,000 miles, and use a bit more to finance $60k for 60 months at 4.9% ($941/month) on the Ferrari of your dreams? You have one more year of payments and a meager $58 more per month to cough up plus insurance on the additional vehicle. Is driving an older SUV plus $58/month worth it?

 

You know, people always present ideas like this, whereby foregoing X you save X and therefore you're permitted to spend X. It's a psychological argument. I'm sure the fellow has done all sorts of sacrificing up until now already, if he has 3 grown kids, and has made it this far without foreclosing on his mortgage during the crash. There's no need to keep looking forward to see where other things can be sacrificed. After saving that money on the hypothetical Yukon, all the same questions, arguments, pros, and cons will be raised again at the end of those 5 years.

For things that one is truly passionate about and can actually bring happiness, if you have the cash, buy it. Money is very seldom able to buy things that bring happiness, so when it can, it's the best use of it.

 

Very good points....particularly the analogy of the banker

I can certainly rationalize any purchase. I'm extremely good at that! Knowing that there are others in the same financial bracket/category helps the rationalization process along. I've seen some support to concur with the idea to buy one but am I to assume these individuals simply fall into the same category?

The thing realize for those who probe these type of threads? It really doesn't matter how much you have, it's what you want out of life. Would this be the most responsible purchase of my life? Absolutely not. I could put the money toward a retirement home for example. But saving for the future never guarantees anything. It's wise to save for tomorrow but saving and saving and not living enough will prove to be fatal as well. I've been saving and saving and my net worth hasn't grown as I would have expected. I am glad I bought a few cars with that cash along the way!

 

You are good to go. Buy the dang car already.