Would you? Making $400k/yr and buying a $200k car

[Hank]

Since the poster on Reddit is full of it, this isn’t really a valid discussion about someone’s actionable financial problem or concern. Thread locked.

[Turf Doc]

I'll assume the poster is being truthful since its more fun that way.

They can obviously afford the car. Just the fact that they only have 50k in student debt is enough to "afford" it. If they don't live in a HCOL area, boom another giant monkey off their back. No or few kids? even better. Money is fungible. Plus its not like they buy the car and poof 200k is gone. My understanding is these porsches hold their value very well.

I want a porsche too, but ill probably go for a boxster a long way down the road. Maybe the 911 turbo s is all that but i feel like if i was spending 200k on a car id want something that seemed a little more exotic

[CordMcNally]

As usual, this Reddit poster is full of ******. Go back through his history. A few months ago he mentions being a CA-3 and several months before that mentions he wants to get a quarter sleeve tattoo once he secures a fellowship position. Another post 4 months ago says he has $600k in a brokerage, $50k in 403b, and $60k in checking. That's a far cry from the $2.1M he said he had in January and the current $1.7M he states he has now in the car thread.

[Hatton]

I too think the student loans should be paid off first. I would never never pay this much for a car. I used to own a porsche. I paid cash and bought it used off ebay motors.

[G]

Income has little to do with purchasing power or wisdom of purchase.

If the doc in question has a NW of mid-7 figures, he should buy it. But given the question, I would wager that he doesn't have that NW. I would further bet that it will be a long time coming--or never--that he reaches that financial milestone.

As always, I am fascinated by the amount of car threads on the forum!

[White.Beard.Doc]

Hah, I would never spend that much on a car! I am older, with higher net worth and higher income, but I drove practical Japanese cars for many years until I caught the Tesla bug.

I agree that if his/her basic needs are covered, the emergency fund is in good shape, and the minimum of 20% retirement investments are steadily funded, he/she can spend the extra on an expensive car. But I would definitely recommend paying off all student loan debt first before considering that expensive Porsche. The psychology of financial decisions is important. Expensive, over the top luxuries don't make sense until all of the basics are covered, and that means all student loan balances paid in full.

[xraygoggles]

My guess is that the ending will be the same as many previous generations. Most people's net worth will be tied up in their house. It's a story as old as time.

A primary house is basically a savings account, except with higher yield. Historically, houses appreciate at inflation rate (3-4%) assuming you're in a semi-decent location.

Since most people have trouble saving in general, buying a house for most people (avg Americans, and high-income docs) is a good way to force savings.

[StarTrekDoc]

My guess is that the ending will be the same as many previous generations. Most people's net worth will be tied up in their house. It's a story as old as time.

'living the american dream' -- single family home ownership. It's not the worst idea, but certainly supported by american industry and until recently strongly encouraged by the tax code before the standard deduction got supersized.

[Tim]

My guess is that the ending will be the same as many previous generations. Most people's net worth will be tied up in their house. It's a story as old as time.

I hope that doesn’t happen to physicians.
At least for those saving 20% for retirement.
https://www.medscape.com/slideshow/2...h-debt-6013910
Medscape doesn’t make me optimistic.

[CordMcNally]

I actually feel sorry for this generation. Some painful financial lessons are ahead. They can probably afford them but will pay a high tuition.

My guess is that the ending will be the same as many previous generations. Most people's net worth will be tied up in their house. It's a story as old as time.

[Tim]

Last Sunday I took my daughter and wife for a Mother’s Day brunch. After, dd insisted on a few “open house” visits.
On Tuesday about 7am I received my “assignment”. Run the numbers on a property we had seen. This would be a $1m mortgage!
A single female with a dog does not need a 4br townhouse no matter the neighborhood or curb appeal.
Behavioral finance and human behavior on wants are polar opposites. Thank goodness they had accepted an offer minutes before we arrived for our “powwow”. That was close.
No sense of macro timing was saved by no sense about micro timing.
What caused the delay was a rough estimate of the cost of putting in a cocktail pool!

Peer pressure and everyone is doing it seems to be the emotional driver. “Just say no” is ineffective. At least she has accepted the 20% retirement and mortgage rules of thumb.
Thank you WCI community for that.

I actually feel sorry for this generation. Some painful financial lessons are ahead. They can probably afford them but will pay a high tuition.

[CordMcNally]

I see a familiar name over on that Reddit thread trying to spout off common sense and a level-headed approach. Nysoz , don't you know that Reddit is no place for that kind of talk?

[8arclay]

I think he can pretty clearly make the payments work, but I think the post gives us a glimpse into what most of society outside of our little WCI bubble here believe. Years ago while I was still in training, I mentioned to my wife the idea of saving extra towards retirement and possibly retiring early. She was dumbfounded and had never even considered it a possibility, a bit of an "Aha!" moment for her. I suspect OP is of this mindset, and working until his 60's is the only consideration. The replies in the thread reaffirm that we are certainly in the minority in our financial mindset

[Tim]

Gross-taxes-20% retirement =spending
Sure he/she can afford it currently. The question is dropping 50% of gross in a car (cash or loan simply spreads cash flow) is that going to provide value to the buyer? I doubt it even after three years. Save for 3 years and see if he/she still wants to drop the cash on a car. My guess is a house, partner or kid or something else will be more important. My suggestion would be a 3 year lease with a purchase option. Expensive, but exit options for making a “mistake”. This one impo is a big one. But, it’s a choice of the best of poor options. Poor choice allocating income, but limit the damage.
It will be more than $2-$3k per month.

[MPMD]

i don't think it's helpful to look at things like this with the mindset of "well if he's a car guy then maybe it's worth it."

if you make 400k and you want a 200k car then your hobbies/interests are too expensive, full stop.

a fun purchase of 10% of what he thinking of spending is still quite a bit when you are young and still have debt.

this is a bad idea.

also i would worry that the kind person who feels entitled to a $200k car in their 30s might not have the mindset that's going to be required to undo the damage later in life.

30s: i want this 200k car, yolo
70s: why am i still working? i'm so tired, i hate this.