Can I afford this car?

[SirBrass]

Originally Posted by strat61caster

I think you're attacking this very aggressively from a flawed position. Rephrase your argument and nobody would be disagreeing.

Cars are not an investment, they invariably go down in value (lets not talk about collector cars). Financially it would be more prudent to buy lightly used economical vehicles. Sports cars have higher insurance rates, generally higher fueling costs and higher replacement part costs, not to mention higher initial purchase price.

Other side of the coin is that the happiness for the amount of money spent can be well worth it.

Cars should rather be considered a depreciating asset whose investment cost is amortized over the life of owning the car. Holding a better value over the term of amortization will also help fund the replacement when the time comes. The car is, as you said, not used as a source of appreciating income but a necessary expense whose cost is absorbed through income-producing sources which the necessary expense helps accomplish.

[AG74683]

Wow, this thread has really taken off!!

I don't think these cars are anything that someone could possibly need. I don't need it, I want it, which is why the thread wasn't titled "Do I need a BRZ?"

What I was looking for was a fun secondary car for the weekends, and whenever my DD Cherokee inevitably takes a dump. I also live in the middle of nowhere. To get to anything major, I need to drive a minimum of 30-45 minutes one way. Most of my trips are for small items. The Jeep drinks a lot of gas.

I'm also extremely picky with how my cars look for the most part. I wouldn't want my dog in a brand new car like the BRZ. I love her, but she can get nasty and sheds about a pound of hair a day. Takes HOURS to get out of the Jeep when I finally get around to it, hence why I do not want to get rid of my current car.

[extrashaky]

Originally Posted by poundsand

"no" might be a kneejerk reaction to the question, but if you have to ask, you probably shouldn't, even if you can, as you are clueless enough about your own finances that you're asking on an internet forum, where nobody knows you, how much you actually make, or your expenses. let that sink in - so clueless about that stuff that they're asking people who have no idea about their situation.

You could look at it that way, and certainly a lot of the near-minimum-wage kids who ask that question on this forum certainly fit that description.

What I saw instead in this thread is a guy who appears to have a reasonably good head on his shoulders gathering information about a process with which he's not entirely familiar. When I bought my first car in the dark ages before the internet, I sure wish there had been message boards where I could ask that kind of question.

You're certainly correct that our advice is going to be necessarily limited by the limited amount of information we have. But I suspect that he has been reading this thread, considering the different points of view and applying them to his own situation to make up his own mind. I think there's a very good possibility that he can afford it, and where you're not willing to say he should based on limited information, by that same token I'm not willing to tell him he shouldn't.

[Jac]

Originally Posted by extrashaky

Now you're changing your language. We weren't talking about good investments. You singled out sports cars as bad investments, but you haven't shown how being a sports car makes it any worse an investment than a minivan.



That's an incredibly simplistic view, since it completely ignores income producing assets whose value is derived from cash flow rather than growth (like rental properties or dividend stocks). It also ignores investment in cost centers that create no cash flow on their own but contribute to overall profitability. A company may build an industrial building that loses market value over time and seems to do nothing but cost the company money, yet that structure is necessary for the company to produce its product and operate profitably.

I take a similar view toward my own personal finances. I bought the BRZ as an asset that contributes to my overall profitability by allowing me to perform certain job duties (specifically travel) at a relatively low cost. If I had not bought a car, I would not have been able to keep my job, and therefore not buying a car would have been more costly in terms of opportunity cost than buying one.

The truth is that the BRZ actually appears to be making me money right now. So far I'm getting more in mileage reimbursement tax free from my employer than it is costing me to own and operate the car. At my current monthly mileage, I'm projecting that condition to continue for four years, but I'm planning for three just to be on the safe side. When the asset reaches the end of its useful life, I'm still expecting a pretty decent salvage (resale) value to recover some of my investment (although I doubt I'll actually sell it at that point).

So no, even in purely financial terms, I do not agree that this is a bad investment. A $60K or $70K sports car might not have been as sound an investment because of the leverage required and the cost of interest, but this is not a $60K or $70K car. And none of this even takes into account the value of the pleasure I receive from the asset and how that pleasure helps me do my job. That's just a bonus.

Full disclosure: I'm a former Big 4 accountant with a finance background, currently working in the insurance industry. I do understand a little bit about finance, although I usually try to keep my posts more conversational.



I don't need four seats, the gas mileage is only slightly better, it's not really that much cheaper, and it's not possible for you to say at this time that the car is more reliable, when the BRZ has only been out for a couple of years. At the same time, the Corolla is a car designed to drive until it dies and throw it away. I seriously doubt a Corolla is going to hold its value the way a BRZ will.

So even if I save $5K up front on a Corolla, I'm going to get more than that back in residual value on the other end, when the BRZ can still be sold and the Corolla is at Pull-a-Part. I haven't crunched the numbers, but I anticipate that the present value of that difference in salvage value at the end of the asset's useful life will make the BRZ a better investment than a Corolla.



Since you like numbered lists:

1. Again, you're changing the language, which is usually a sign someone realizes he has stepped in it. You singled out sports cars as bad investments without providing any support whatsoever for that distinction.

2. Cars in general are not necessarily bad investments either when considered as part of a complete financial strategy.



Prove yourself right. Basically all you have said is that sports cars are bad investments because sports cars are bad investments. If you're going to make a sweeping generalization, you ought to be able to back it up without resorting to circular logic or saying "prove me wrong" when you can't.

Disclaimer: i didn't read your whole post, apologies.

1. I love lists, much easier to read.
2. My point wasn't that sports cars are worse investments than other types of automobile. I would agree that sports cars are just as bad as others. Do we agree that cars (in general, barring air cooled 911s and other classics) are not an appreciating asset?
3. You could've easily found something cheaper and more economical (gas/insurance) than a BRZ that would've met your needs just fine. You did not need a BRZ, you wanted one. Same as me.

[AG74683]

Originally Posted by poundsand

"no" might be a kneejerk reaction to the question, but if you have to ask, you probably shouldn't, even if you can, as you are clueless enough about your own finances that you're asking on an internet forum, where nobody knows you, how much you actually make, or your expenses. let that sink in - so clueless about that stuff that they're asking people who have no idea about their situation.

That's not at all why I asked. I know I can afford the car in the sense that I could make the monthly payments. I asked because I assume that a car such as this has a reasonably diverse crowd of enthusiasts, including people who are thinking about buying the car (in the same situation I am), who have recently purchased and could perhaps detail how the purchase has affected them (both positively and negatively) or someone who might be a bit older (ie "wiser") and could give advice on how a purchase like this impacted their life years after.

[extrashaky]

Originally Posted by SirBrass

The car is, as you said, not used as a source of appreciating income but a necessary expense whose cost is absorbed through income-producing sources which the necessary expense helps accomplish.

I do not view cars that way at all. It's a cost center, but like all cost centers my cars contribute to my overall profitability.

To illustrate, I did not have a car at all most of the time I lived in NYC. A car would have been a luxury. This was before I became an accountant, when I worked in the entertainment business. I got a gig in upper New Jersey that required a considerable commute, so I bought a large vehicle to haul me, my gear (which made me money) and people to and from the location. Although the vehicle cost me money, it made it possible for me to take the job and make money. From that perspective it was most definitely an investment, and a good one.

As I outlined in my verbose post above, I bought the BRZ with the same considerations. I am now making money off this car. I get more in tax-free mileage reimbursement each month than it costs to own and operate it. At the end of its useful life, the residual value will be considerably higher than that of an econobox.

The way I see it, this car was and continues to be a good investment in the big picture. I could have afforded something considerably more expensive. I could have bought something considerably less expensive. Neither direction would have given me a better investment.

[poundsand]

Originally Posted by AG74683

That's not at all why I asked. I know I can afford the car in the sense that I could make the monthly payments. I asked because I assume that a car such as this has a reasonably diverse crowd of enthusiasts, including people who are thinking about buying the car (in the same situation I am), who have recently purchased and could perhaps detail how the purchase has affected them (both positively and negatively) or someone who might be a bit older (ie "wiser") and could give advice on how a purchase like this impacted their life years after.

it might not be why you asked, but it is what you asked. people can tell you how it affects them, but again, without your income, savings, and how much you save (or if you prefer, how much you spend), and what you want to do in the future (buy a house, travel, retire at some point, etc) nobody can tell you anything meaningful. numbers that are "about" right don't mean much.

if you want super general advice, the super rough numbers you've thrown out appear within the affordability rules of thumbs, but look a bit high, and i sure as heck wouldn't do it. but again, that doesn't mean anything.

[extrashaky]

Originally Posted by Jac

Do we agree that cars (in general, barring air cooled 911s and other classics) are not an appreciating asset?

Sure. But that is not the correct definition of an investment, because it ignores assets whose value is derived from cash flow and investment in PP&E that contributes to profitability. My BRZ is most certainly an investment, and a good one.

Originally Posted by Jac

You could've easily found something cheaper and more economical (gas/insurance) than a BRZ that would've met your needs just fine. You did not need a BRZ, you wanted one. Same as me.

What I really wanted was an Ariel Atom. But that would not have been a good investment.

An econobox also would not have been as good an investment, because the salvage value of the BRZ will be much higher. Considering the cost to own it and what I expect to be a high residual value at the end of its useful life, the BRZ is a better investment than a Corolla could ever hope to be.

The fact that I love the car is a bonus.

[kuhlka]

Originally Posted by Tgionet

Like this

That's cheating! My dog is 3x that size and furry like a wolf!

[SirBrass]

Originally Posted by AG74683

That's not at all why I asked. I know I can afford the car in the sense that I could make the monthly payments. I asked because I assume that a car such as this has a reasonably diverse crowd of enthusiasts, including people who are thinking about buying the car (in the same situation I am), who have recently purchased and could perhaps detail how the purchase has affected them (both positively and negatively) or someone who might be a bit older (ie "wiser") and could give advice on how a purchase like this impacted their life years after.

Buying this car saved my financial rear end, even though $4k was tacked onto the cost thanks to me being under water on my STI trade-in. The STI was simply that big of a financial drain, mainly from its abhorrent mileage despite me trying everything to reduce gas consumption. The insurance rate increase SUCKED, but it wasn't the biggest hurt. A $60+ gasoline bill more than twice a week made a significant impact to my finances which hurt greatly. It hurt even worse when in the middle of July I got idled (I'm a contractor, so I wasn't laid off, but was told "we don't have any work for you right now") till early November, and there I was with a few-month-old gas-guzzling car. It was a rock and a hard place that I figured I'd simply have to ride out. It simply got intolerable. The financial strain (even though I missed no payments) simply got to me and I couldn't stand the car. Every time I looked at it, instead of a beautifully ugly 300hp AWD turbo monster, I saw dollar bills being poured into a storm drain. Every time I felt that glorious boost, I dreaded the amount of fuel being poured into the engine. I was basically miserable and I hated having bought the car when I'd been so close to paying off my 2008 WRX. Thing was, for years the STI had been my dream car. And here I was with my supposed dream car and I was miserable.

Then I test drove a BRZ after having watched Chris Harris' videos on it. From all user reports on the gas mileage it was nice and efficient, if under powered, but the test drive confirmed that the numbers lied. And it was $10k less than the STI, wouldn't hurt on insurance nearly as much, and was WAY more economical in fuel. And it was a blast to test drive. THIS was the car I had wanted the STI to be. And I felt like an even bigger idiot.

Finally, the same day I'm told that I can come back to work was the day I couldn't stand it any longer and was signing paperwork on the BRZ. No sticker shock at all. Even with the trade being under water, I was still going to have a smaller payment. Sticker shock? More like sticker relief. I felt like I could breathe easier. Well, financially I COULD. My financial belt basically got a lot more breathing room with that move to the BRZ, and I'm still incredibly happy with it. It's satisfying to drive, it's WAY more cost effective to own, and still has some practicality. True it can't haul as much or as many as the STI or WRX could, and the entry size to the trunk means certain items are very awkward to fit in it, but I work around it.

The STI put me at the max limits of my financial ability. The BRZ's costs to own, fuel, operate, and insure are ALL lower across the board to varying degrees than the STI. I got my affordable car with an increase, not a decrease, to my driving enjoyment. That's a win-win right there and the reason I so adore the 86 platform.

Buying the powerful, expensive, high-insurance-cost performance car was the wrong move. The lightweight, rwd, cost-efficient sports coupe was the right move. I learned my lesson the hard way, but at least I won't have to learn it again.

[blackhawkdown]

I always ask myself before I make a big purchase if I really need it or do I really want it. I look at my finances before I make that decision on the "want it." I look at it this way. If my payment for example is $500 and my insurance is $160 and the average cost of gas is $55 a week, a total of $715 and my monthly net income is less then $1200, to me it's not worth it. The debt to income ratio is to high.

OP, hopefully your payments are low and your insurance is low and your commute/driving habits help you out on whether or not you can afford one. Just be smart about it. I have seen to many people buy a car they like and 5 months down the road they cannot afford it no more and have to sell it. They think they can afford it but in reality they can't.

[kuhlka]

Originally Posted by extrashaky

I would disagree. If the BRZ holds its value better than the cheaper car, which I think it will, then that extra money is an investment and not just a frivolous luxury.

I seriously doubt they'll hold 50% of their value after ten years. I'd be lucky to get HALF of what I paid for my 2005 STI considering most are going for $17,000, even the 07's. Most vehicles lose like $5k as soon as you roll out of the dealership.

Vehicles aren't an investment unless you're talking classic cars, and those take like 30 years to go back up to their original value. If you're lucky, you pick an Eleanore and it's worth a TON of money 20+ years later.

Also, your car better be in like new condition to get anywhere close to what you paid for it. Good luck with that after decades of driving and hauling a dog in the back...

Originally Posted by extrashaky

So what if he's young? Young people can't have nice things?

So what if he's not making a ton of money? The question was whether he can afford it, not whether he had to be rich to afford it (which he doesn't). This car is not expensive.

So what if he has a dog? If he has a St. Bernard or a Great Dane, maybe it won't work, but I could easily fold down the back seat and put a lab or pit bull back there.

You do realize that your passenger seat slides forward, right?

Sliding the passenger seat forward isn't going to prevent my full-bred collie from scratching up the interior with his clumsy claws on the way in and out. He's huge. Plus, fur everywhere. The rear bumper of my wife's Prius looks horrible after him hopping in and out all the time. The carpet looks like crap as well.

Unless your dog is purse-sized and you can carry and toss it into the back seat, I wouldn't recommend hauling bigger dogs.

Your first two arguments ignored the original post where the OP said they make somewhere in the 40k range. Unless they live in a dirt cheap part of the country, rent can be higher than $1500 in areas like NY, Dallas, Socal... Add student loans, utilities, etc and you're not left with much after your insurance and car payment. Keep in mind 20-somethings tend to pay much higher insurance, especially for sports cars.

So, YOLO (you oughta look out), but YOLO (you only live once). The car is fun, but you can't beat living frugally in your 20s so your 30s and beyond are debt free and you can afford to buy stuff with cash. I've been lucky to have good jobs and a wife who loves fun vehicles as much as me. I don't think I'd be able to have the vehicles we've got if I were single.

Back to the OP... MARRY A GOOD LAWYER WHO LOVES RACING.

[Jac]

Originally Posted by extrashaky

Sure. But that is not the correct definition of an investment, because it ignores assets whose value is derived from cash flow and investment in PP&E that contributes to profitability. My BRZ is most certainly an investment, and a good one.

Agreed, although the cash flow you're receiving is inherent with any mode of transportation. Whether that's a sports car, gyrocopter, or a pair of shoes.

Originally Posted by extrashaky

What I really wanted was an Ariel Atom. But that would not have been a good investment.

YOLO

Originally Posted by extrashaky

An econobox also would not have been as good an investment, because the salvage value of the BRZ will be much higher. Considering the cost to own it and what I expect to be a high residual value at the end of its useful life, the BRZ is a better investment than a Corolla could ever hope to be.

Whilst I hope you're right there are definitely cars out that'll have lower TCOs and thanks to the Internet i don't have to do any work to prove it:

http://www.forbes.com/sites/jimgorze...-least-to-own/

[Tgionet]

Originally Posted by kuhlka

That's cheating! My dog is 3x that size and furry like a wolf!

Fine