Mar 3, 2016
rpiolends Hello good people of the Tesla Motor's Club.
I have a story to tell you. Now I know, the internet is not known to be very tolerant of long stories. I will provide a TL;DR at the end, but I just jumping to it will remove the emotional justification I have for my idea. So, if you feel that emotion can be an important part of decision making, I hope you will take the time to dive deeply into my story. If you believe that the best decisions are based on the facts alone, the bottom of this post is for you.
They say that those who fail to learn history are doomed to repeat it. The very tone of the sentence implies that we can only learn from the failures and that the prudent course is evasion. What if history, like truth is in the eye of the beholder.
When I was a young man, fresh out of college, It was my dream to own the most technically advanced automobile of the time. That car was then, the Toyota Prius. Back in the day, when the cars came from japan, and the waitlist was 6-9 months long. I was poor college graduate, I could not afford a brand new car, but I had a dream. So, I threw myself into learning about it. I joined the newly created Prius chat website, I followed bloggers, downloaded manuals. At gas stations I would speak to those happy few who got their new shiny. At car shows, I would sit in the models. I would answer questions that people asked, even before the showman could say, �Let me look that up.� One dealer had be throw on a sweater from his dealership and do a TV interview. I felt like the Prius king. Alas, the emperor had no clothes, and I had no Prius.
Forward a few months, I had gotten my first �real� job. The beginnings of a career, that will last a life time. It was a damn good job, the starting salary was more than I could fathom at my young age. Today, it is a small amount, but back then I was rich. $55k. Being young and brash. I took my future earnings and then and there set out to fulfil my dream. I ordered a Prius and began to wait.
The car arrived with 8 miles on the odometer, and along with it the bill for $31,853. Financing arranged, I set out on the wheels of my dream. The Prius was my loyal car. Even when my commute stretched itself to 150 miles a day it saw me through. 8 years and 132k miles later I said goodbye.
My commute shorted to a measly 10 miles, my family had grown, and the Prius was just sitting more often than not. But I remember the days, and felt empowered by a dream fulfilled.
Now to today. I may have an opportunity to receive a substantial raise in pay (+$30,000), but it will mean returning to the 150 mile commute. On a commute such as this, I know even a Prius will wear over time. More oil changes, brakes, filters, and fuel. I today am just as enamored with the Model S as I was with the Prius.
I joined a website of enthusiasts, I read articles, and watch youtube videos. I contacted my local tesla store and arranged an extended test drive. I have convinced myself that the tesla will be the most cost efficient commuting car to handle this possibly new commute.
At the same time, I�m not as young as I used to be. Spending 60% of your annual income when you are young is a lot different then when you are (supposed to be) a responsible family man.
TL;DR begins here
I have convinced myself, the question is, am I blinded by my dream. I need a jury of my peers. If I take this opportunity, should I spend 60% of my one year�s salary to buy a model S 70 because I believe it is the car most qualified to handle my 150 mile commute. Or should I stick with a Prius, while no longer as flashy and edgy as it used to be represents a safe and prudent choice going forward.
I look forward to your questions and comments
Thank you�
Mar 3, 2016
HookBill Having been down that road before, my best advice would be not to do anything financially stupid early in life. Only you can make that decision for you and your family. I remained financially conservative through life and was able to retire early and living comfortably in my latter years.�
Mar 3, 2016
Rockster The fact that you're asking a Tesla enthusiast community to offer an opinion tells me that deep down you know what you need to do. :wink:�
Mar 3, 2016
Drucifer My rules of thumb is a car should be no more than 50% of annual salary and a mortgage should be no more than 3 years. If you have more to put down for a house, you can go bigger as long as the mortgage stays in bounds.
That said, with Model S you can exceed it slightly due to gas and maintenance savings, but that might get you a bump of about $10k or so.
Stay in your comfort zone. For me that would be a reasonably well optioned 70 or lightly optioned 85D or loaded CPO. I am an "options whore" so I did the CPO. YMMV�
Mar 3, 2016
brianman Well said.
- - - Updated - - -
If you can wait until 2018 (maybe 2019) to take delivery, the answer will change to Model 3. Something to consider.�
Mar 3, 2016
Max* There are a lot of financially savvy people on this board, and the running opinion that I keep hearing is "don't do anything risky financially" yadda yadda yadda. Now, for most people, that's very sound advice.
I've done some things which I knew were very high risk (not the Model S), which most of these people would think I was crazy. Thankfully most (not all) have paid off in the long run.
Now, before I can answer your question: "60% of your annual income", I don't understand.
Does that mean the total value of the car is 60% of the total amount you make in a year? If so, I say do it. That means you're banking about $150k, that's a good salary for someone single with no kids (regardless of which metro area you live in)
Does that mean that the monthly loan payment will be 60% of your gross take-home pay? If so, are you @#$%ing crazy? No way in hell should you do it.�
Mar 3, 2016
rpiolends Max,
The opportunity in question would give me a salary at $125K per year. 60% of that would be $75k or the approximate cost of a Model S 70. To answer the other half of your equation. Financing on 75K would be about $1,100 per month, where gross monthly salary of 125k would be about $10k per month, or just over 10%.�
Mar 3, 2016
Max* I don't know the rest of your financial life (and don't tell me), but IMO 10% is VERY safe. I think the typical financial planning advice is 20% on debt (car, student loans, etc.)
The other thing to think about, you can take a longer loan. Yes, people will yell at me for this, I know.
But wait, there's more! Take a longer loan, at a slightly higher APR, but try to pay it off quicker. In the end, you may still pay it off in about the same amount of time as you would with a shorter loan, BUT if something were to happen (you needed the money that month, etc.), you could revert back to paying just the minimum car payments.
You will pay more in the long run, but it gives you a security blanket.�
Mar 3, 2016
rpiolends My Wife does not work outside the home. So 125k will represent out total income. We have 3 kids, 7,4,and 7 months.�
Mar 3, 2016
Max* You just changed my "hell yeah, do it!" into a "hmmm"... that's a tougher decision then.
I got 2 little ones, and I know how expensive some things get...�
Mar 3, 2016
ItsNotAboutTheMoney I have a very simple rule: never borrow for fun.
So, no. Well, you did ask.
Instead, set the extra money aside, improve your fiscal position, and then in a few years maybe you'll be able to buy without worrying about the risk.�
Mar 3, 2016
Drucifer Oh. $125k with a family of 5 would put me with a $1000 deposit on Model 3 on 3/31/16 and running the crap out of the Prius for the next 2 years while I wait.�
Mar 3, 2016
freeewilly I love Model S the same way you love Prius. I did something I never done before, purchased a CPO instead of new, no regret so far.�
Mar 3, 2016
ReddyLeaf Everyone's personal and financial situation is different, so I won't presume to tell you what to do. For myself, I wouldn't trade anything for a 150 mi commute, even a $30K salary increase and a Tesla, that's just too much of my life. In financial terms, $30K will net you maybe $20-$25K after taxes, with about 3 hr/day commute (maybe two extra hr), accounting for vehicle costs/depreciation is always tough, but maybe $10-15K/yr for an ICE and $20-25K/yr for a Tesla. Figuring all that in, it's a money losing proposition. Add the extra stress of commuting traffic, and I would go crazy. Perhaps someone who loves rush hour traffic or listens to podcasts might enjoy it, but not me. Instead, I have a 8 mi RT commute so that I can bicycle about 6 mo/yr.
The 70D cost me more much than 100% of my salary, but I paid cash, so rules of thumb don't always apply. I always look long-term. I tell people that I paid $10K for it, I just started saving for it 20 years ago (which is true). I do not borrow to buy anything that I would consider a monthly expense, a consumable, or a depreciating asset in this case. This is my third car, the 2011 Leaf is my 2nd, my 1st is from the 90's. I still have all three and together they have less than 220,000 mi. Financially, it makes no sense for me to own even the Leaf, let alone the Tesla. However, not all decisions are based on financials.�
Mar 3, 2016
McRat I used to commute 150 miles a day.
I now live 2.5 miles from work.
I could never go back to spending my life commuting. In my case, traffic would keep me on the road up to 5 hours per day unless I was riding my motorcycles and splitting lanes, which could cut it down to 3 hours a day.
But to each their own. Just remember your time is fixed.�
Mar 3, 2016
SmartElectric +1.
I went from 3 hours of total commuting per day in heavy traffic to less than 40 minutes on back streets with little traffic.
It was life changing, in a good way.
I missed most of my oldest's early years, but made up for it by enjoying most of my youngest's early years.�
Mar 3, 2016
ElectricTundra My first thought when reading your OP was nothing about buying a Tesla but the insanity of a 150 mile commute. When I saw the ages of your kids it was confirmed. There is no amount of money that is worth that much extra time away from your family not to mention the potential for your arriving home in an irritable mood from the idiotic drivers you've had to deal with.�
Mar 3, 2016
EcoHeliGuy Here is my advice and it's a little more broad. Not enough people get good sound financial advice for free in life.
1) work to live, don't live to work. No matter if it's your dream job or not. The latter is fine as long as your not a family or people person.
2) if a loan payment is $700 a month, and $660 of that is just to cover interest. Paying $740 a month is two payments. To many people get discouraged thinking they need to put $1400 down to make a difference.
This one is my personal favorite:
3) Cash flow is king, to many people don't realize how much effect cash flow has. A Starbucks coffee a day could be 15-30 mins of your work day in earnings. Do you smoke? Again it adds up. All of a sudden your working 7hrs a day just to cover bad spending habits.
I had a student loan years ago that was a monthly payment of $388 per month for 12 years. I decided I couldn't afford to lose that cash flow for 12 years. Looked up the interest portion ($366) and start paying $400 a month. 2 years later got a nice raise at work and started paying $500 a month. Took no where near 12 yrs and then I had $500 extra cash flow a month to put towards something else. Or I could have paid $388 up to now and beyond.�
Mar 3, 2016
EcoHeliGuy My point with cash flow really is:
If buying the Model S frees up cash flow down the road, then it's a good idea. If you going to trade the car 3-5 years out. I would consider the prius�
Mar 3, 2016
lolachampcar This decision can only be made by the person that suffers the consequences of the decision (good or bad).�
Mar 3, 2016
EcoHeliGuy Which makes this one a 5 person decision�
Mar 3, 2016
rpiolends unfortunately, I think the focus has shifted from my intended target. I wished to focus on the car buying portion of the decision. Not the should I take the job question. It basically comes down to, my current job will not be available any longer.�
Mar 3, 2016
tonglaji My advice is a definite NO because my intuition is that a 125k salary is not enough to buy a tesla and support a comfortable life of 5. It does not seem you have counted income tax, housing expense, child care, etc in your budget yet. On top of that, you need to save for college tuition x3 and your retirement. I don't think this board will give you a realistic financial view. Maybe you need to sit down with a good financial adviser and figure out the monthly amount you ought to spend on transportation and go from there.�
Mar 3, 2016
Canuck Yes, you are blinded by your dream. Don't do it. I am financially independent today partly because I purchased the cheapest cars while investing my hard earned money.
I know you're not a doctor (neither am I) but there's a lot to be learned from this post, which I happen to feel is one of the best posts ever on this site. Read it few times and really digest it:
Guidance aimed at those in the medical field, when financing while in Res/Fellowship. - Page 5
There will be a time for you to have the car of your dreams, especially if you invest wisely. It's just not right now.�
Mar 3, 2016
AB4EJ I agree with the above. Dave Ramsey would definitely advise against a new Model S at this time; however, the Model 3 might be an option when it arrives; or a used Model S.
Here's an experiment: get another Prius and see if you can bank the difference between the payment on the Prius and the payment on a Model S for a solid year. (Betcha ya can't - but if you can, you may be frugal enough for the Model S).�
Mar 3, 2016
sorka Except that a 150 mile commute of a long period is going to blow through the warranty. I have a Prius too with 215K miles on it. I'm pretty sure I can expect at least another 100K more trouble free miles out of it. I would not make the same bet that a Tesla could go anywhere near that without something major breaking and costing a lot of money.
I wouldn't buy an $75K car (reasonably optioned 70D after federal tax credit) without making at least double or triple that in yearly salary before taxes. There's no financial scenario where that makes more sense than continuing to drive your Prius which should last many more years and hundreds of thousands of miles. Plus the Prius has practically paid for itself now and every mile that it goes from now on has almost no depreciation.�
Mar 3, 2016
DougH
Agreed, he should keep the Prius.:wink:�
Mar 3, 2016
Saghost One piece of this I haven't seen discussed yet is the impact of Autopilot. If you're thinking that the opportunity is one you should pursue and you're going to live with the 150 mile daily commute regardless, having Autopilot would be a huge advantage - in both safety and in arriving to work/home relatively stress free.
Having said that, the money sounds marginal. With a family of five to support and colleges to think about in only a decade, that's a huge chunk to be spending on a car. Is it worth it? I think I'll have to join the general trend and say you'll have to weigh that for yourself.
If you aren't sure, keep in mind that the Model 3 is only two years away - and once you get to that point, it'd be an easy yes given your circumstances.�
Mar 3, 2016
wraithnot If you are going to have a 150 mile round trip commute then your life will be much improved with a car you really like to drive. I used to spend at least an hour and a half per day commuting (most of it in heavy traffic) and the commute in my Model S was a HUGE improvement. I went from dreading the drive to actually looking forward to it. You obviously have to make sure it fits into your budget with enough breathing room to handle the unexpected things life tends to throw at you so you don't trade an improved commute for constant anxiety about making ends meet. But if your impending raise (after taxes) will cover the extra cost of the car when savings on gas and maintenance are figured in then you should be just fine.
I have absolutely no regrets after 3 years and 70k miles even though the Model S was 3 times what I paid for my previous car and at least twice what I was expecting to spend for a new car. I got more enjoyment out of owning the car than the things I would have otherwise spent the money on. But your mileage may vary.�
Mar 3, 2016
Wknapp0924 I drive 130 miles a day for my commute. Mostly in a vanpool. I just bought a new Tesla and the commute is great. I make less than you, but I am in my 30s with a working wife who gets free housing and great pay too (military) and no kids planned in the near future. If kids were in the picture the Tesla would not be in my garage.
i say don't take pay raise and enjoy your life or do take pay raise and get a car with Tacc to hold you over for a couple years.�
Mar 3, 2016
Todd Burch Whether 60% of your income is too much depends on a ton of factors. My P85 is about 80% of my income, and I'm a family man (two kids), but I paid cash for mine, because I saved up and was lucky enough to invest in TSLA early on. (And I hate car loans!)
It depends on a lot of factors. How much debt you have, your savings, cost of living, whether you have an emergency fund, how many high risk investments you carry, your other costs (mortgage), etc.
Probably nobody here can give you a good answer for your personal situation without you baring all of your private financial details here. And even then, there are factors such as your risk tolerance and your expected standard of living to consider.
In other words, think about these things, run the numbers, and if YOU are comfortable with the results, go for it.�
Mar 3, 2016
Mike K Your latter days are not guaranteed. Don't be stupid with your money but do enjoy the life you have now rather than sacrificing everything for a time in the future that's not guaranteed.
Here's some food for thought... Since you're in a part of the country where it doesn't snow and since you're going to be out of the original warranty relatively quickly, why not consider a cheaper used S85? If you're in search of something with Autopilot than a 2014 S85 might be in order. It sounds like miles aren't going to be a chief concern for you on this car so why not save a substantial amount of money, get an S85 with some miles on it and have a faster car with more range as icing on the cake?�
Mar 3, 2016
Tennisballer Considering you have children that age having a fancy Tesla will not make up for the number of events that you will miss that your children would rather have you at. There is no way in hell I would take that job. When I turned 41 I had a 3 year old and realized I worked too much and hired someone to run my business. So I could spend as much time as possible with her and not having to work but 3 hours a week has made my life much better. That was 4 years ago now that she is 7 that was the best decision I ever made.�
Mar 3, 2016
jcaspar I would work 3 jobs and eat top ramen every night NOT to drive a Prius! If you don't get a Tesla, at least get something else...�
Mar 3, 2016
rpiolends I hear you on that, but I need to keep the question on the transportation side of it. It is not a question of if I will take the job or not if offered. I will take the job if offered as my current job will cease to exist on 7/1. The question becomes, do the commute in a Prius or a Tesla. Am I justified in putting weight in the advantages of autopilot, reduced fuel cost, the unlimited warranty on the battery.�
Mar 3, 2016
ElectricTundra What does your wife say?�
Mar 3, 2016
Discoducky For me, I put the kids and wife in the Tesla and commuted by bike.
The safety of the Tesla is what sold me. There is simply nothing safer for the family and I was very comfortable knowing that.�
Mar 3, 2016
InternetDude TLDR. I drove Prius' for 7 years before buying my S. My only regret was not dumping Prius sooner and going to Tesla.�
Mar 3, 2016
docherf Get the Tesla�
Mar 3, 2016
Rich_PSU What do you drive now? Without knowing any financial details its a tough for us to provide any help. Will you put $ down? What are your other monthly expenses ie mortgage, wife's car payment, student loans, credit cards, etc?
I know you said that your current job will end but why must you take the 150 mile commute job? If I knew my job was ending, I would either look for a new job or take the severance when my current job ends and find a new job with a shorter commute. The time I spend with my daughter is priceless. With a commute like that and the assumption you're working full time hours, there's a good chance that you will won't see your kids during the week. No car or job is worth that to me.
If I were to make some basic assumptions like ~$2000/month for mortgage or rent, 15% for retirement, $500/month wife car payment, $500 per month for misc expenses (utilities), $800/month for groceries, and $300/month employee contribution towards health insurance. This would leave you with ~$2000 to go towards the Tesla payment and whatever auto insurance would be. Based on these assumptions, my personal opinion would be to not go with a Tesla.�
Mar 3, 2016
wdolson It looks like you could run some numbers and get a feel for how much extra cost you're going to have. First off, is the commute 150 miles each way or round trip? If it's 150 miles each way, you'll have to stop at a supercharger everyday or charge the car at work somehow.
You will see an income increase of $30K a year, that's $2500 a month. Tesla's a cheaper to run than even a Prius, but you will have to figure out the difference based on your cost of electricity, whether you need to pay to charge at work, etc. So how much will it cost to drive a Prius (the current one or a new replacement) to the new job vs a Tesla?
After taxes you will be making say $20K a year more, how many years will it take to pay for the Tesla out of that? You will have some monthly savings in maintenance and energy costs, but it is a more expensive car. Run the numbers and see what comes up.
There is a spreadsheet floating around somewhere that compares the cost of ownership of a Tesla to an ICE. The creator had run the numbers against a Honda Odyssey, but you could plug in the numbers for your current car vs the Model S and see what comes out.
With an increase in your income, there will be a break even point where the car has paid for itself out of your increased income alone, but when that is depends on a lot of factors.�
Mar 3, 2016
rpiolends My wife thinks its a lot to spend on a car, but if I say we need it, then we need it.
My wife thinks motorcycles cause instant death. I tell her i'm well insured, but bless her heart she'd rather have me than the money.
I have a paid for prius, I have a nissan leaf, which is a lease due back next month. My wife's car is a hybrid highlander, Payment of 380 a month. To get the tesla, I would sell the prius, most likely for $4k. mortgage payment is 1900. 500 for utilities is accurate, groceries run 600 a month. I don't know what the health insurance contribution will be so lets go with your 300 assumption as well.
I am looking for work all around where I live. not much luck as palm beach is not known for its big business like Miami is. My work is currently governmental on an annual contract, as such there is no severance.�
Mar 3, 2016
Rich_PSU Ok. So based on that, you have about $2400/month net left over for the Tesla payment plus your auto insurance. You said that you estimated the Tesla payment would be about $1100 in an earlier post. So now you're down to $1300/month net. Let's assume auto insurance is $200/month for both vehicles. You're left with $900/month net. I think I personally would still hold off if I were you.
I think what might be a great exercise is for you to put $1100 into some form of an account every month for the next 10+ months. This allows you to see if it would truly create a financial strain without being bound to an auto note. If you can do this for 10+ months comfortably, you have a sense for how it will be to live with that kind of car payment plus you will have saved $11000+ dollars.�
Mar 3, 2016
Nosken This post convinced me!
Why you should not wait to buy | Tesla Motors�
Mar 3, 2016
Ulmo Let me throw a monkey bone of an answer in there: Here are some outcomes to consider:
1. Ruin your financial situation for half your life by getting an overpriced luxury car, lose jobs and families because of your bad decision, and don't get promoted because of being too flashy.
2. Die prematurely a third of your life from now in a crash that was caused by owning a non-luxury car.
3. Die in the luxury car rather soon.
4. Buy the luxury car, don't die, and end up being able to afford it easily.�
Mar 3, 2016
Drivin How much do you saving per month for:
- College tuition or are you planning on not helping your kids?
- Medical expenses (especially braces for kids)?
- Summer programs and other incidental education expenses
- OMG something bad happened savings?
- All the other normal expenses of raising 3 kids?
- Vacations?
- Home repairs?
- Retirement
- Etc. etc.
If you don't plan on saving any money for your kids and they are totally on their own at 18, that is okay, as long as you plan it that way.
Secondly, you should never compare pretax money (gross salary) with after tax expenses (the car). It is not 60% of your income unless you don't pay any taxes and have no paycheck deductions.
As many mentioned, you should actually have a realistic budget instead of this 60% of your income perspective.
There are plenty of people who live paycheck to paycheck and don't save much (62% have $1000 or less in savings) , so if that is your plan, you won't be alone.�
Mar 4, 2016
brianman I think he meant bicycle not motorcycle. FYI�
Mar 4, 2016
whitex The final decision has to be yours. First and foremost make sure you don't end up with a financial obligation that will suck all the fun out of this. If you are one of those people who don't feel comfortable with debt and the monthly payment will feel like a never ending toothache, don't do it. Btw, putting down some down-payment can alleviate some of these issues.
That said, also consider the other side of the coin - there are some things in life that you enjoy a lot more when you are younger. When I was 17 I took a loan to buy myself a nice 2-seater car - a used Toyota MR2 for ~$9K. It was FUN. A lot of fun. I sold it a year later because the insurance was draining my finances (no accidents or tickets, simply a teenage driver), but I never regretted it. By the time I was 27 I bought a brand new, custom ordered Porsche 911 C4 for ~$100K. I also had a lot fun and did some crazy things in that car, but I remember thinking to myself that even though the car was loads of fun, it wasn't as exciting as driving my MR2. The moral of the story is that there are certain things that are a lot more enjoyable at certain stages of life.
PS> I've been driving a Model S for over 2 years now - best cars I've ever owned!
�
Mar 4, 2016
davidc18 Safety was at the top of the reasons we have the 70D. We chalked up the price delta over all of my other options as paying forward for safety. The fact that the car is pretty fun to drive and had room for our 2 child seats was a bonus (none of my other choices had 4 seats).�
Mar 4, 2016
plaid This is easy:
*Take the job.
*Do NOT buy the car.
*Move close to your new job to cut commute time and cost.
*Evaluate in a year.
/�
Mar 4, 2016
Bimbels I agree with others that maybe you should wait for a CPO car (with AP, because that would make your life so much better) that won't stretch your budget OR keep your prius and wait for the Model 3.�
Mar 4, 2016
rpiolends The commute is approximately 75 miles each way, so the entire trip can be easily made on an 80-90% charge. Electricity is reasonably cheap in S.Fl .11/KW. I have started doing the numbers, but as always it is all in the unknown variables. Gas is <$2, but will it stay there, as this will be the primary cost. Secondary costs on repairs if I keep the 8 year old prius.
If I keep my lifestyle the same, which is the plan. Then that 20k could be used to cover the car. Then we are looking at 3.5 years. The loan for the car I was looking at was 6 years at 1,100 a month.
The kids have funded 529 accounts from their grandparents. 3k in emergency cash, regualar expenses are budgeted. Vacations / home repairs usualy come out of the extra 2 paychecks in the year, 26 2 week pays = 13 months instead of 12.
I have small pensions from each of my previous jobs.
In my case, it is hard to bike 75 miles
The closer you get to miami the more expensive housing generally gets. I have a wonderful house now that is the right size for my family, I'd worry that to move closer, I'd have to get a smaller house to stay on budget.�
Mar 4, 2016
mmccord I have a 150m round trip commute. It is a ton of wasted time every day, but my MS makes the drive stress-free.
If the M3 existed I'd have that instead. It might be worth waiting for at this point.�
Mar 4, 2016
Max* Yeah, if that's who I think it is, he got a 2nd Tesla.
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Your emergency fund for a family of 5 is very small. Minimum recommendation is 3 months of expenses (though lots of people recommend 6 months), and you obviously use more than $1k a month.
With that being said, if you have another place to get emergency cash from (like pulling it out of an existing HELOC, at a low APR), keeping hoards of emergency cash isn't that useful vs. paying down debt.
Is there a particular reason you don't want to go CPO or used?�
Mar 4, 2016
adamglass Wait, this post isn't about Trump?�
Mar 4, 2016
rpiolends Yes, The cash for the immediate emergency when no other form of currency is accepted then and there. My true emergency fund is in the 100k of equity I can access if necessary.
I'm not opposed to used, or a "new" service loaner. In fact my original goal was an 85 with auto pilot. The goal was to keep it at or near 70k in cost. With Tesla revamping their cpo site, I cannot find a match. I would be hoping that an 85 with autopilot will be traded it, and be available when I am ready to buy.�
Mar 4, 2016
Jool Hmm, I dunno. I do love my Model S, but if I were in your position I'd probably reconsider. Kids are super expensive! I have no children so my monthly expenditures aren't nearly as high as other people :smile: I would say hold onto that Prius and drive it into the ground until the Model 3 is released.�
Mar 4, 2016
TMobe I was living 5 miles from my work. I ended up moving 50 miles from my work. I have no CC debt but my gas cost was about $500 per month and Lexus payment was $350 per month. I wanted a Tesla. But to buy a new one..I am too frugal for that. I found a CPO loaded at $70k and put down $56k. It made sense for me since I charge at work everyday for free and the superchargers are near my home. I have yet to pay a penny to charge my car.
If I were you, I shop for the CPO you want with AP. It will come with a Tesla warranty. Or wait for the Model 3 if you can and rock the Prius till then.
Bias opinion...what ever Tesla you can afford...you wont be disappointed
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Oh, and please don't consider "My true emergency fund is in the 100k of equity I can access if necessary." as an fund. It is an emergency loan unless you sell your house for that $100k.�
Mar 4, 2016
rpiolends I don't believe it is a fund. I also don't believe in leaving cash, laying around doing "nothing"�
Mar 4, 2016
Drucifer Agree. I keep a HELOC for emergencies and keep all my money in a position where it is tax advantaged, working in less liquid investments, or both. When the banks start paying 5% or 6% interest in a 90 day CD again, I will reconsider.�
Mar 4, 2016
EcoHeliGuy What's why I like a little physical gold with my cash. If economy did get rocked good. The gold is worth more at that point then today.
Can I suggest the unthinkable? If you can't wait for the Model 3, the Volt (god I know, don't hate me) sounds more your fitting.
As someone that has a kid, and works away from home I feel I need to offer some advice (and I have been around your neck of the woods... Er sands)
I work remotely, many people don't really understand. When I go to work, it's for 28days straight. Helicopters are used if there are no roads. So by remote I mean at times the high Arctic islands in northern Canada. 28days straight, no weekends off. I am home with my daughter 14 days in between. FaceTime and Skype are life savers. Those 14 days off I cherish with a passion.
If your working an 8hr day and have at least 3 hour commute. Not including lunch that's 11hrs 5 days a week you don't see your kids. So possible 12 hours a day? So right there your kids wake up go to school and go to bed with out more then a glimpse. Saturday's are going to be spent resting from the week of 12hr days.
I could not do that. I understand that moving closer to the core of a city might make sacrifices on your real estate. But I would make that leap in a heartbeat before spending 12hrs a day away from home. In my mind that is absolutely crazy. Move to Miami and use transit. You will still get a nice house.
Humans have moved to survive since the beginning of time why is now different?�
Mar 4, 2016
mynameisjim If I were in your situation I would not buy the Tesla right now. I would move 140 miles closer to the new job and enjoy an additional 400 hours a year doing what I enjoy. Once you have the move figured out and more than $3,000 in emergency savings I would buy the Tesla.�
Mar 4, 2016
Jhall118 I'm young. Married with no kids yet (maybe 1 in the future). We bought our Tesla at 27. Household income under 100k a year.
We bought the Tesla (Performance version too). Like many in Seattle we rent. I didn't want to spend 500k on a house that is crap. We share a split level house with childhood friends in a suburb of Seattle. Our rent is $600 a month. It is a... old house.
I make plenty of sacrifices to afford it. I don't eat out, seems like a waste of money. Gave up that morning $3 coffee. I started my own part time ride sharing business (Uber and private clients on the side). I love the car, and have no regrets nearly 3 years later.
Honestly, this car isn't as expensive as people make it seem if you really want it. Especially if you don't have kids.
I feel bad for people that commute in crappy cars and pay for gas. I actually was involved in a total loss in my old Model S, and had to wait 3 months for a P85D. I chose to take a bus before driving an ICE.
It's just a car, but it's totally worth it to me. YMMV. Go drive one and decide.�
Mar 4, 2016
Max* I won't comment on you abusing the superchargers, but I will comment on this, this is not correct.
A home equity loan can be taken at about 3% APR nowadays from the equity you have. And you don't need to sell your house. But if you lose a job, I'm not sure they'll open the HELOC for you to deplete the equity in your primary residence (I just don't know), which is why I said an existing HELOC.
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+1000�
Mar 4, 2016
Canuck I sure do, especially in the past year looking at the market returns. Keeping money as "cash" is part of a wise investment strategy. It's not doing nothing. While it may not appreciate, it doesn't depreciate. Plus, it allows you the flexibility to buy that apartment building at a foreclosure sale without being subject to financing so your offer is accepted over others, or stock at a moment's notice when the price is right, etc. etc.
As Warren Buffet says, look at the what the wealthy are doing and follow that strategy. There's no need to reinvent the wheel:
A report by Capgemini and RBC Wealth Management in 2015 cites the total cash held by high net households or those who have $1 million or more investable assets in North America as $3.8 trillion. Out of that total, $3 trillion to 3.5 trillion of those assets are estimated to be in the U.S., said Gary Zimmerman, CEO of MaxMyInterest, a New York-based company that maximizes cash balances for savers.... wealthy people are allocating large sums of their assets in cash, with 23.7% of high net worth people keeping their portfolios in cash in 2015, according to the report.
�
Mar 4, 2016
Max* Sure it does - inflation.�
Mar 4, 2016
whitex No it's not. If you have a mortgage, put the money there and it will yield a guaranteed return (tax free too as this is interest saved rather than earned). Keep a HELOC open but unused in case you need the money back out. Then if you ever use it, any additional cash you have goes to pay off the HELOC first, then additional mortgage payments.�
Mar 4, 2016
Drucifer Exactly. I used my HELOC to finance a portion of a business expansion for one of my businesses. I am paying it off at a rate of $2500/mo and it will be zero by the end of next year. There is still enough unused credit to cover my living expenses for a year as well, if I were to need that. Low cost flexibility, that you pay interest on only when you use it, without having inflation eat at principle sitting in passbook savings somewhere. win-win-win.�
Mar 4, 2016
rpiolends I want to thank you all for your advice, both relating to the car and life. For the first part if I get the job, I will most likely drive the Prius until it breaks down or I go nuts which ever occurs first. I will probably establish an account and try to bank the money difference from the old job to the new job. Either way, I'll have money for a major Prius repair, or a larger down payment.
Feel free to continue to advise. I will update you all as things develop.�
Mar 4, 2016
whitex If you want to speed up the "nuts" outcome, arrange a 24hr test drive. If you'd rather wait, don't test drive at all and limit your TMC visits. ;-)�
Mar 4, 2016
rpiolends I've already had my 24hr test drive in a white 90D, named snow beast�
Mar 7, 2016
TMobe Originally Posted by TMobe
Oh, and please don't consider "My true emergency fund is in the 100k of equity I can access if necessary." as an fund. It is an emergency loan unless you sell your house for that $100k.
I think you misunderstand Max if this was to me. I charge for free at my work all week and use the SC's maybe once a week if I am returning from out of town. So, I don't abuse the SC's.
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And a HELOC...is a loan.�
Mar 7, 2016
brianman I've said it before. I'll say it again:
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Mar 7, 2016
iffatall rpiolends, did you check your Inbox here?�
Mar 7, 2016
rpiolends Indeed I did, I read the article you linked. I didn't have any further questions at this time, but I do appreciate your offer. I'll keep you updated, and be I'll be sure to consult with you.
Thanks�
Mar 7, 2016
FlatSix911 Don't listen to the naysayers ... life is too short!
Read this story again ...
Make sure you get autopilot ... it will dramatically improve your quality of life.
�
Mar 7, 2016
satoshi ... As a guy with a 9 year old prius (only 1 year of ownership is mine), and 200k miles and growing... I don't understand why you said goodbye so soon...�
Mar 7, 2016
GoTslaGo @rpiolends--
You have young kids (7, 4 and 7 month). This is the time where your presence will be needed. Sounds like you have an understanding (patient?) wife. But do not take that for granted. 150 mile commute is a considerable amount of time away from the house. Time where you cannot see your kids, help your wife or be near if something unforeseen and bad happens. Furthermore, when you get home, you will want to see and play with the kids who will be asleep. If not, they should be. Children that age need a considerable amount of sleep despite what it seems we all believe in the world. I've seen other kids fall asleep during lesson time in preschool/kindergarten because they aren't getting enough sleep... not good for developing kids and brains.
So let's say you buy the Tesla and are gone for 10-12 hours a day. Wife goes crazy by trying to raise 3 kids, without help (including yours, I'm assuming there is no nanny). 5-10 years from now that resentment will be there: how you were driving off in an expensive luxury car, while she was struggling with the kids. Doesn't matter how hard you work, your presence at home will be key. IMHO, buying the Tesla will be setting you up for a future divorce. I've seen this outcome with other folks I know, and similar circumstances.
Your best bet (if you HAVE to take the promotion, which based on other comment you have to, otherwise there is no work):
1) Move closer.
2) Drive the prius until it dies.
3) Be around for your family. Be around for your wife. Invest in your family now.
Good luck.
PS--
I know folks here talk about HELOC, etc.. but remember the biggest lesson from the great recession. Cash is king.�
Mar 8, 2016
rpiolends This is a primary reason for the car. I'm a poster child for the need of autopilot. 1. to maintain my sanity commuting. 2. My parents are getting older and live 1/2 a country away. Driving 1600 miles might be a bit easier if *someone* else was driving most of the way.
At the same time it seems to be very hard to find a CPO 85 made after October 2014 in the 60-70k range
At the time we had just gotten rid of my wife's pacifica, as we no longer had need of the AWD moving from NY to FL and having only 1 kid, and her just tooling around town, we got the leaf. fast forward to next kid, and visiting relatives, she felt the car was not to her needs. So as my commute shortened, I took the leaf and the prius was traded for a HyHighlander.
Now that the leaf is almost off it's lease, I bough a used Prius similar to the one I traded.(1 year newer, 30k less miles)
Interesting points. Worth pondering. I have done this commute before. I do generally leave before the kids are awake, so that we can have time at the end of each day to be a family. The points kind of weigh into the idea of I should drive the Prius for a while in the beginning, just to see how the transition is going. Hopefully that will also give time for more CPOs to show up.�
Mar 8, 2016
jcoverton I retired recently at 56. Last year, I bought a P90DL and it is by far the most expensive car that I have ever purchased. When I got out of college I bought my first car. I bought a modest car and took a 3 year note. After paying it off, I kept the car for three more years and made payments into my saving account. I traded that car and with the money I saved, I paid cash for the next one and every car since. Savings ahead rather than taking car loans caused each of my cars to be worth about 20% better based on the difference in interest rates . I looked at a car as an expense rather than an asset. I sometime kept my cars ten years. I paid off my mortgage with increases in income rather than change my lifestyle. My plan was to build real assets and minimize expenses. Over time my investments made more money than I did. The excess on income went into more investments. Today I can buy any car I want, live most any house and do what I wish. I have raised five kids and passed on this advise to them. The moral of the story is early sacrifices in life few pay tremendous returns later in life. I love my Model S, it is the most fun, best car ever. If I were you I would keep the Prius and put the excess earnings into paying off notes and building your investment portfolios.�
Mar 8, 2016
drsaab With a 120 mile commute I can say autopilot is life changing. If you take the job. Buy the car.�
Mar 9, 2016
whitex Everyone approaches life differently. I have a friend who never owned any cars, never had kids, rented small apartments, looked at every dollar he spent even after his income reached into 6 digits. He retired at 35 years old, even though he could have easily kept on working as he was an excellent engineer and manager. He's been traveling around the world for the last 6 years with his wife who he married shortly before retiring. That approach worked for him, but it's probably not for everyone. Personally, for me, I believe there are some things that I will enjoy much more earlier in life. Cars fall into that category, and so do kids by the way (I can't imagine having my first kid at 40, but it works for a some of my friends).
My point is that what is right for others may not be right for the OP. Only he can decide what is best for him.�
Mar 9, 2016
ElectricTundra That's very true. But there's a corollary that irresponsible decisions are irresponsible decisions. The OP has not just himself to think about but his wife and 3 kids and both financially and with his time.
If he had no other responsibilities and wanted to take the time and financial risk that's a very different thing. Or if he was taking the time and financial risk to start a company that would provide significant payback that might be different (OTOH I've seen a lot of screwed up offspring of absentee parents who wonder why their kids turned out so screwed up).�
Mar 9, 2016
Max* I agree. Everything in moderation, including moderation�
Mar 9, 2016
Chris TX Safety for my family was justification for a higher car payment, regardless of style, performance, or environmental impact. All the other cool stuff about the car was a bonus. Get the 3rd row seating, to.�
Mar 9, 2016
supratachophobia Do it the american way. Finance the crap out of it. Don't let these wet-blankets tell you what to do.�
Mar 9, 2016
whitex Did you hear him suggest he was going to pull a Will Smith from the "Pursuit of Happiness" and move into the local bus station with his kids? That is not the impression I got from the post. Heck, even what happened in that movie some people consider heroic (hence the movie glorifying it), though personally I thought what the main character did was completely irresponsible - so apparently no, "irresponsible decisions are not irresponsible decisions" - what is irresponsible varies on personal interpretation.
Generally speaking "no risk, no reward" is true in life. It is important to take calculated risks so that you can reap some of the rewards. You only live once.�
Mar 10, 2016
Kandiru OP do not ruin your family life! Move if you have to, but do not commute for hours.�
Mar 10, 2016
Max* I think people are missing the point.
-He's not switching jobs to get the Tesla, he's switching jobs because his old job will no longer be available.
-There might be 101 reasons why he can't move. Better schools where he lives now, he doesn't plan on working at the new job forever, housing costs 2x more at the new location, etc. It's easy to say "pack your stuff and move" to a stranger on the internet, but I bet half of you wouldn't just willy nilly pack your stuff and move.
/soapbox�
Mar 10, 2016
nienco2 The depreciation on a car that is going to turn at least 40000 miles a year will be devastating. you might still owe $40,000 on a car with 120,000 miles on it.
Also even with best case range estimates you could ill afford to not get a full charge almost every single day. I assume your commute wouldn't allow for stops at super chargers.
get the least expensive reliable car you like and consider it just a work related expense, like a laptop, nothing more.
Old mans perspective :wink:�
Mar 12, 2016
GoTslaGo This is exactly what we are doing. Willy nilly packing our stuff and moving. And yes it sucks. And yes we are moving from a neighborhood we love. But it needs to be done.�
Mar 14, 2016
doctorrod I'll provide a different perspective....I'm a physician and I frequently turn people's lives upside down with bad news. I've seen too many people work their whole lives saving up for that magical day when they don't have to work and then they get dementia, a stroke, cancer etc.
Get the car! Enjoy it while you have your health because you can't take your money with you when you're gone.�
Mar 14, 2016
BEEZR With a young family I would try to find a job with a shorter commute, unless this job is going to boost your career in other ways - then it could be worthwhile for a short stint. But your kids are only young once...
Only you know your financial situation and whether you can "afford" a car like this. My opinion is to wait a while. Maybe buy a used one. Maybe get a different car - instead of a Prius you could get a CPO Lexus CT200h, which is the sporty/luxury version of a Prius. That might give you some driving excitement but will only cost around $25K. See if you can put aside some money each month to save for the future Tesla, like a Model 3, or an S if that is your dream car. (As was said earlier, the insurance will be much higher for the Tesla, too.) At some point you may dig into that cash for other needs, and you'll be happy all your cash isn't sitting in your garage.
What does your wife drive? She needs a safe, sturdy, tank of a car to haul the kids around.�
Mar 16, 2016
rpiolends The job is not a done deal, however I know my specialty. It is more likely to occur in Miami than in Palm Beach. It was a hypothetical question with a purpose.
We also have a Hybrid Highlander with 3rd row seating. Very Tanky�
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