I’ve owned different generations of the same car (FRS and GR86) despite my income growing 10x between the years I bought them. The difference is now I feel financially comfortable modding and tracking the car. This brings me more enjoyment than climbing the ladder of increasingly expensive cars, which is a dangerous game to play. I didn’t really understand this before owning faster and more expensive cars, but I’ve gotten that out of my system now. Putting a lot of equity from my last car into the stock market has also done well for me so far.
As both a car and personal finance enthusiast, I’ve always struggled between placating both sides. However, even as a die hard car enthusiast, you want to be in a financial place where if your car ran off the cliff tomorrow, it would suck, but your overall livelihood would be minimally impacted. To achieve that, the Money Guy’s 20/3/8 rule for car buying is a great guideline to follow. At least 20% down for no more than 3 year loan with car payment no more than 8% of your income. This is meant for just reliable transportation like Civic, Corolla, etc. For luxury cars and sports cars, because these cars typically depreciate a lot more, the Money Guys recommend paying off those cars within a year.
20/3/8 is probably OK for a reliable A to B appliance car, but if you're buying a fun car you should really consider that part of your entertainment budget. If it's your daily driver it's probably OK to stretch it to 20/4/10
@@mikeydude750 yeah it's a hobby, different pool of cash... but sometimes you can cheat and make the fun car your daily and pull from two places in your budget ;)
@@dasmg that's exactly what i did! bought a gr corolla last year, i'm an apartment dweller so i don't have room for multiple cars so i decided to combine my daily with some fun on the weekends
Life is short and you should definitely enjoy it without risking too much financial stability. I am dumb and bought an NSX when I should have not haha. But no regrets. Things come out differently with life events sometimes.
Wish more auto enthusiasts would would talk about this. If you are wondering if you can afford a USD 100K car, you probably cannot. If you do not have the liquid assets to buy an Emira cash if you chose to, you cannot afford it (without tapping into your emergency funds of 3-6 months; or touching any of your wealthy building investments). I am not going to give a net worth number requirement here because that is relative to one's age, but If you have bad debt that should take priority, are behind on your wealthy building goals (I rather use this term instead of "retirement") you cannot afford a Lotus. The whole life is too short rationale is often overrated and overused to justify bad decisions. On the flip side, life is too short to make bad financial decisions that will cost you the opportunity to build options in life---e.g.. to never be tied down to a job and have the freedom to wake up and choose how you want to live your life. The satisfaction of owning a car one cannot afford is short-lived when you do not have your life in order.
These cars function like cash. Not sure id put 100K on an Emira as it will depreciate more than its peers at least from value standpoint. It’s funny that people don’t think twice about dropping $100K on a SUV but when it’s a sports car it’s a no no. Decide how much of your NW you are OK with sitting / stagnating which is a very personal question and go from there. If you invest the same $ you would have put into that car, you’ll always be able to buy it in the future.
I think you needed to place certain cars at certain milestones. If you're net worth is less than 100k you main focus should be on being debt free and learning budgeting. Car debt at this level can be a massive damper on your ability to grow. You should primarily be looking for cash cars and or vehicles in the 10-15k range. At this price point Toyota and Honda shine. If you're a car guy the first gen 86/brz is perfect or even the Honda Civic SI is a great option. Once you're net worth is between 100-500k this where dedication is most important because you're going to start to feel like you've made it and you'll probably have more money than most of your friends and even some family members. It's important not to get ahead of yourself and buy cars that are outside your budget. This is very easy to do because you think you're richer than you really are. Keep your head down and keep going. You can start to move up in vehicles as well. You starter 10k car is probably rough around the edges. 20-40k is probably a good range for you. If your net worth is over 100k or you're older than 30 than there's no reason you should have consumer debt so these cars should be cash purchases that you've saved for. You still should avoid luxury brands like bmw, Mercedes and Land Rover. If you do want something luxury at this price id recommend Lexus or Acura. For my car guys some really solid options just avoid vehicles that have expensive maintenance at this net worth and above you'll probably have a car shop do most of your maintenance so don't go overboard. Lastly is the 500k-1M+ net worth at this point you've been consistent and you're obviously good with your money just keep it as percentages of net worth either 10% or whatever you're comfortable with honestly. Just remember if you cant afford to buy it twice you can't afford it once. Hopefully this helps you on your car buying journey good luck and enjoy.
I would say it's more than just income and net worth - it depends on a lot of factors such as age, marital status, having children or not, renting or owning a house, overall portfolio, etc. so everyone is different. It comes down to overall income vs spending, short-term and long-term financial goals. Any big purchase should be planned and well thought out. If buying a car and enjoying the car brings more value to you than spending the money somewhere else like buying a house or investing, then I think it's worth it. I know I'm spending more money on cars than most people would, but I have made sure my finance is under control and heading in the right direction.
Car value is tricky because a lot of expensive cars don’t depreciate much if any at all. But if you buy a new “cheap” 30-40k commuter you will for sure lose 20k in a few years. You have to know your acquisition cost, opportunity cost, and resale value. I’ve owned 100K+ of vehicles and lost less than most people who drive a 15k 5 year old kia.
I would say that you should be able to still max out your 401k contribution and save 5%-10% after rent, essential expenses and the Emira payment. On a net worth basis, I would go more like
Kudos for seeking to add nuance to the consideration of financial prudence and car enthusiasm (and how they live in harmony). I think it’s beyond some % calc of your income w net worth considered. Also factor in things like: Are you married? Kids? Do you plan to pay for their education? Own a home? How stable is your career? Growth in said career When and in what style do you want to retire? Only when grappling with those things can you determine if a $100k car - which if it follows suit with other lotus efforts, wont be reliable- is a sensible choice for you. I was a young man in my early thirties who dearly wanted a 3 series BMW (maybe 25 years ago) and wondered if $30k for a used daily wasn’t too extravagant. 6 BMWs later and a number of other cars tells me you can enjoy fun cars without having to spend more than $100k. It’s ironic that you’re talking about the virtue of buying a pretty expensive lotus while driving one of the best fun-per-dollar cars ever mass produced. At this point - I won’t buy a car unless I can buy it with cash.
well said! i have mixed feelings about the miata. i think stock it's actually quite overrated by the community. but i have plans on modding it to my heart's content =) cheers
@@jubbalandcars- fun factor is highly subjective. I find my 3 model year old club to be every bit as enjoyable as the 981 boxster s I had before it (although of course they are quite different) and it was less to buy and maintain. The Miata has a cult following - and with that hyperbole ensues. Something can be overrated and still be awesome. But hope you find a modified future with the car that pleases you.
Everybodys situation is vastly different. But my personal rule of thumb is never buying a car worth more than 10 percent of my net worth. I wont have a net worth of a million till my early to mid 40s ( 37 now ). And even then I dont know if I would spend 100k on a car. So far my car fleet includes a 2011 mx5, 2015 tacoma, 2023 gr corolla. I only have the room for one more vehicle, and honestly, that's enough. 4 cars with insurance maintenance tires etc gets expensive quick.
I take in as much information as possible and do a risk assessment. The right answer, is usually somewhere in the middle between two extremes. Living below my means, being happy with what I have and being honest with myself has worked well for me. I know cars bring me joy but also know being financially irresponsible makes me miserable. Growing up in poverty definitely skews my decisions and I'm grateful for how I grew up. If you worked hard/smart enough to get to a place where you are contemplating purchasing a relatively expensive car. You are probably going to be ok with the decision. You have to trust yourself that everything will be ok. It is easy to be overly confident and just as easy to be overly conservative. I find myself, in the latter group even after getting to where I am(thank God).
Have less, live more guys :). A car will not change your life. There are many cheap good enough cars that you can have fun with. For the Emira you can have second hand MX-5 and Mazda3 for daily. Why not :)
I make between 90-100k+/yr and I have an Emira. Sold my Elise for almost 50k, and I'm financing 70K. Over 12 Years. 9.5% Woodside Credit in Newport Beach. Granted the car is under my business, it is used as a business expensive (marketing). Financially responsible? Up to the individual. As long as you can make rent, save money, be financially responsible, you should be okay. How far you can stretch the dollar is up to you. But if you're losing money everything, no. Not financially responsible. As soon as interests drops, hell yes I'll re-fi. But probably at a personal loan since many banks do not finance vehicles for businesses, but personally, unless it's a fleet of vehicles.
@ it’s absolutely terrible interest rates. But, I can refi it, once things come down (if they do come down) as a personal loan, and after 2 years, I can sell the car to myself personally from my business and transfer it to cali title instead of Montana title as a used car. Still net positive, and obviously this is where GAP insurance comes in, because 70% goes towards interest while 30% goes towards principle per month
Life is short...too many variables....set a goal..own a double wide trailer on 1 acre....live and enjoy. When u turn 70 no shoulda coulda woulda" dont believe this??? Just go volunteer at a senior retirement home...
Dudes. I am an irresponsible person. So I am just gonna say, as long as you are happy and not hurting anyone? Go for it. Of course it is multi dimensional question.
This W2 peasant talk is crazy. Start a business (or LLC with a rent house) and get the car as a corporate vehicle and just don't pay yourself. Run the Actual cost model come tax time not milage rate. Interest, maintenance, modifications, running costs are all deductible. Depreciation also helps. I use the 20% rule. fancy business car never exceeds 20% of free cashflow. The Miata is my personal and costs nothing, and if I travel for business I use the GTS.
I’ve owned different generations of the same car (FRS and GR86) despite my income growing 10x between the years I bought them. The difference is now I feel financially comfortable modding and tracking the car. This brings me more enjoyment than climbing the ladder of increasingly expensive cars, which is a dangerous game to play. I didn’t really understand this before owning faster and more expensive cars, but I’ve gotten that out of my system now. Putting a lot of equity from my last car into the stock market has also done well for me so far.
You have wisdom my friend!
As both a car and personal finance enthusiast, I’ve always struggled between placating both sides. However, even as a die hard car enthusiast, you want to be in a financial place where if your car ran off the cliff tomorrow, it would suck, but your overall livelihood would be minimally impacted. To achieve that, the Money Guy’s 20/3/8 rule for car buying is a great guideline to follow. At least 20% down for no more than 3 year loan with car payment no more than 8% of your income. This is meant for just reliable transportation like Civic, Corolla, etc. For luxury cars and sports cars, because these cars typically depreciate a lot more, the Money Guys recommend paying off those cars within a year.
For luxury cars they recommend paying cash. 1 year rule is only to take advantage of financing terms if they’re available
20/3/8 is probably OK for a reliable A to B appliance car, but if you're buying a fun car you should really consider that part of your entertainment budget. If it's your daily driver it's probably OK to stretch it to 20/4/10
@@mikeydude750 yeah it's a hobby, different pool of cash... but sometimes you can cheat and make the fun car your daily and pull from two places in your budget ;)
@@dasmg that's exactly what i did! bought a gr corolla last year, i'm an apartment dweller so i don't have room for multiple cars so i decided to combine my daily with some fun on the weekends
Life is short and you should definitely enjoy it without risking too much financial stability. I am dumb and bought an NSX when I should have not haha. But no regrets. Things come out differently with life events sometimes.
Wish more auto enthusiasts would would talk about this. If you are wondering if you can afford a USD 100K car, you probably cannot. If you do not have the liquid assets to buy an Emira cash if you chose to, you cannot afford it (without tapping into your emergency funds of 3-6 months; or touching any of your wealthy building investments). I am not going to give a net worth number requirement here because that is relative to one's age, but If you have bad debt that should take priority, are behind on your wealthy building goals (I rather use this term instead of "retirement") you cannot afford a Lotus. The whole life is too short rationale is often overrated and overused to justify bad decisions. On the flip side, life is too short to make bad financial decisions that will cost you the opportunity to build options in life---e.g.. to never be tied down to a job and have the freedom to wake up and choose how you want to live your life. The satisfaction of owning a car one cannot afford is short-lived when you do not have your life in order.
Well said! Emergency fund is another thing I want to cover in a future video since I have a different take on that
@apollo - having the wherewithal to buy an Emira is not the sole consideration. I could buy one cash tomorrow but I choose not to do so.
These cars function like cash. Not sure id put 100K on an Emira as it will depreciate more than its peers at least from value standpoint. It’s funny that people don’t think twice about dropping $100K on a SUV but when it’s a sports car it’s a no no. Decide how much of your NW you are OK with sitting / stagnating which is a very personal question and go from there. If you invest the same $ you would have put into that car, you’ll always be able to buy it in the future.
I think you needed to place certain cars at certain milestones. If you're net worth is less than 100k you main focus should be on being debt free and learning budgeting. Car debt at this level can be a massive damper on your ability to grow. You should primarily be looking for cash cars and or vehicles in the 10-15k range. At this price point Toyota and Honda shine. If you're a car guy the first gen 86/brz is perfect or even the Honda Civic SI is a great option. Once you're net worth is between 100-500k this where dedication is most important because you're going to start to feel like you've made it and you'll probably have more money than most of your friends and even some family members. It's important not to get ahead of yourself and buy cars that are outside your budget. This is very easy to do because you think you're richer than you really are. Keep your head down and keep going. You can start to move up in vehicles as well. You starter 10k car is probably rough around the edges. 20-40k is probably a good range for you. If your net worth is over 100k or you're older than 30 than there's no reason you should have consumer debt so these cars should be cash purchases that you've saved for. You still should avoid luxury brands like bmw, Mercedes and Land Rover. If you do want something luxury at this price id recommend Lexus or Acura. For my car guys some really solid options just avoid vehicles that have expensive maintenance at this net worth and above you'll probably have a car shop do most of your maintenance so don't go overboard. Lastly is the 500k-1M+ net worth at this point you've been consistent and you're obviously good with your money just keep it as percentages of net worth either 10% or whatever you're comfortable with honestly. Just remember if you cant afford to buy it twice you can't afford it once. Hopefully this helps you on your car buying journey good luck and enjoy.
I would say it's more than just income and net worth - it depends on a lot of factors such as age, marital status, having children or not, renting or owning a house, overall portfolio, etc. so everyone is different. It comes down to overall income vs spending, short-term and long-term financial goals. Any big purchase should be planned and well thought out. If buying a car and enjoying the car brings more value to you than spending the money somewhere else like buying a house or investing, then I think it's worth it. I know I'm spending more money on cars than most people would, but I have made sure my finance is under control and heading in the right direction.
Came to hear about people money problems but I got hypnotized 😵💫 by sharp smooth handling of Miata
😂
Car value is tricky because a lot of expensive cars don’t depreciate much if any at all. But if you buy a new “cheap” 30-40k commuter you will for sure lose 20k in a few years. You have to know your acquisition cost, opportunity cost, and resale value. I’ve owned 100K+ of vehicles and lost less than most people who drive a 15k 5 year old kia.
Porsche sports cars are great for this. Even newer 911s don’t depreciate much. Just need the capital to get started and a good independent shop.
I would say that you should be able to still max out your 401k contribution and save 5%-10% after rent, essential expenses and the Emira payment. On a net worth basis, I would go more like
Kudos for seeking to add nuance to the consideration of financial prudence and car enthusiasm (and how they live in harmony).
I think it’s beyond some % calc of your income w net worth considered.
Also factor in things like:
Are you married?
Kids?
Do you plan to pay for their education?
Own a home?
How stable is your career?
Growth in said career
When and in what style do you want to retire?
Only when grappling with those things can you determine if a $100k car - which if it follows suit with other lotus efforts, wont be reliable- is a sensible choice for you.
I was a young man in my early thirties who dearly wanted a 3 series BMW (maybe 25 years ago) and wondered if $30k for a used daily wasn’t too extravagant. 6 BMWs later and a number of other cars tells me you can enjoy fun cars without having to spend more than $100k.
It’s ironic that you’re talking about the virtue of buying a pretty expensive lotus while driving one of the best fun-per-dollar cars ever mass produced.
At this point - I won’t buy a car unless I can buy it with cash.
well said!
i have mixed feelings about the miata. i think stock it's actually quite overrated by the community. but i have plans on modding it to my heart's content =)
cheers
@@jubbalandcars- fun factor is highly subjective. I find my 3 model year old club to be every bit as enjoyable as the 981 boxster s I had before it (although of course they are quite different) and it was less to buy and maintain. The Miata has a cult following - and with that hyperbole ensues. Something can be overrated and still be awesome.
But hope you find a modified future with the car that pleases you.
i like your perspective. agreed
Great video. Where are you driving? Can you give a detailed description? I'm in LV and would like to put some rubber down on that road. :)
I wish Vegas had roads like these!
This is pretty much why one should purchase a reliable sports car like a Porsche Boxster or Cayman. The cars appreciate in value.
Everybodys situation is vastly different. But my personal rule of thumb is never buying a car worth more than 10 percent of my net worth. I wont have a net worth of a million till my early to mid 40s ( 37 now ). And even then I dont know if I would spend 100k on a car. So far my car fleet includes a 2011 mx5, 2015 tacoma, 2023 gr corolla. I only have the room for one more vehicle, and honestly, that's enough. 4 cars with insurance maintenance tires etc gets expensive quick.
Lots of people are willing to go into debt to impress others that play no significant role in their life.
I take in as much information as possible and do a risk assessment. The right answer, is usually somewhere in the middle between two extremes. Living below my means, being happy with what I have and being honest with myself has worked well for me. I know cars bring me joy but also know being financially irresponsible makes me miserable. Growing up in poverty definitely skews my decisions and I'm grateful for how I grew up.
If you worked hard/smart enough to get to a place where you are contemplating purchasing a relatively expensive car. You are probably going to be ok with the decision. You have to trust yourself that everything will be ok. It is easy to be overly confident and just as easy to be overly conservative. I find myself, in the latter group even after getting to where I am(thank God).
Have less, live more guys :). A car will not change your life. There are many cheap good enough cars that you can have fun with. For the Emira you can have second hand MX-5 and Mazda3 for daily. Why not :)
I make between 90-100k+/yr and I have an Emira. Sold my Elise for almost 50k, and I'm financing 70K. Over 12 Years. 9.5% Woodside Credit in Newport Beach. Granted the car is under my business, it is used as a business expensive (marketing). Financially responsible? Up to the individual. As long as you can make rent, save money, be financially responsible, you should be okay. How far you can stretch the dollar is up to you. But if you're losing money everything, no. Not financially responsible. As soon as interests drops, hell yes I'll re-fi. But probably at a personal loan since many banks do not finance vehicles for businesses, but personally, unless it's a fleet of vehicles.
That's $48,000 in Interest not including sales tax. I couldn't do it.
@ it’s absolutely terrible interest rates. But, I can refi it, once things come down (if they do come down) as a personal loan, and after 2 years, I can sell the car to myself personally from my business and transfer it to cali title instead of Montana title as a used car. Still net positive, and obviously this is where GAP insurance comes in, because 70% goes towards interest while 30% goes towards principle per month
Regrets only happen after one does not have enough to retired..
You can afford a Lotus on less than 100k a year...
IMHO, a car's MSRP shouldn't exceed 5% of an individual's net worth, in order to own it comfortably AND maintain it properly.
Are you insane? Lol. You shouldn’t have to be worth $600k to buy a $30,000 car lol
Just save up and buy one genius
my mind is blown
@jubbalandcars hahaha
Ok Mr Miata
He's driving his Miata in the video. What's your point? He also has an Emira.
😂😂 I’m a hair dresser too
Life is short...too many variables....set a goal..own a double wide trailer on 1 acre....live and enjoy. When u turn 70 no shoulda coulda woulda" dont believe this??? Just go volunteer at a senior retirement home...
Dudes. I am an irresponsible person. So I am just gonna say, as long as you are happy and not hurting anyone? Go for it. Of course it is multi dimensional question.
Of course the Miata owner is a Redditor
This W2 peasant talk is crazy.
Start a business (or LLC with a rent house) and get the car as a corporate vehicle and just don't pay yourself. Run the Actual cost model come tax time not milage rate. Interest, maintenance, modifications, running costs are all deductible. Depreciation also helps. I use the 20% rule. fancy business car never exceeds 20% of free cashflow.
The Miata is my personal and costs nothing, and if I travel for business I use the GTS.
Reddit is a liberal cesspool with people who don't know anything about finances lol.
$1M net worth is nothing these days.
Not true
It's something if you worked your ass off for it. Such rage-bait lol.
@@brandonnhol Depends how old you are. If you're 30 it's a nice start. If you're 50 it's sad.
Ideally, you would want a paid off house, debt free, and to have a million in assests on top of that for retirement.
TikTok brain rot is real..
If you have $1M liquid, and your yearly spend is $35k, 99.9% chance you will never run out of money. It’s all relative.