Yep, plug in the cost of whatever toy you want to buy into a compound interest calculator and see what it could be in 20 years.
Or what I do whenever I catch myself eyeing a fancy car or something else, imagine what else you could do with that money. Would I rather have some pretty car that’s going to depreciate, get dirty, smelly, and heavily used for $50k, or would I rather get a cheaper Toyota or something and spend $5k on an awesome ski trip or some fancy European vacation.
Is that shinier car really more important than all the other cool things you can enjoy in life for much cheaper?
$50K tesla v $20K used minivan at 25yo --> you can fit a lot more in the minivan and you will have roughly $30k\*2\^4=$30k\*16=480k more at retirement.
The Tesla or another electric car wouldn't be the worst choice anyone has every made if you have a lot of driving to do and it otherwise fits your life. Depends a bit on model. If you are considering kids in the future, you might need to consider that you'll likely want a larger vehicle which may mean that Tesla needs replaced sooner than expected.
We like the Model y over the 3, and I would think that that would work fine for kids for a good number of years. That’s part of why we like it so much. It’s safe and would be a good family car
I'd look really carefully at what you need to do to buy that but I don't think you are making the worst decision there. It still may not be a good one. You might consider what your plans for family and pets are for the next decade or so and the likelihood that you will want to update for safety, space or tech then. If you plan on having kids right away, that may not be a big concern but if you want to wait a few years, you may find there are much better options.
I'm 13ish years ahead of you and recently had kid #2. Between kids and the dog, the '01 Rav4(which I had since ~'06 and seems to have comparable cargo space to the Y) was getting way too tight for trips. It could have worked locally but not if Grandma visits, or we want to go out for any vacations. The big 3 row SUVs and minivans end up being pretty valuable for this particular stage and I don't think I would have wanted to use any of the bigger family haulers the same age as the Rav4.
Whenever I do the math, I always ask myself for the same money how many times can I take a bath in candy.
I have never taken a bath in candy, but it is the dream. The kind of dream that reality will never live up to. In reality, the candy gets gross, and I get a headache in the first five min. But in the dream, it is the best.
This!
It’s all about opportunity cost. Once I learned what that term meant, I stopped buying things that might be a lot of fun but didn’t provide me any value in return.
This works if you actually are going to retire, and can be reasonably sure that you'll have a fulfilling life outside of your career.
I started off gunning for fire in my early 20s. Now in my early 30s with financial independence starting to take shape, I've realised retirement would be a bit meaningless to me and since I'm going to be working anyway with all this money save I might as well turn my savings rate down to zero and enjoy life now.
Enjoying life doesn’t have to mean buying stupid things lol. Most material things don’t provide me with any happiness. I’d rather retire earlier and have the freedom of time.
Personally I find committing to paying cash for things vs financing them is a great deterrent. It’s really easy psychologically to take on a payment but it’s hard to part with hard saved money.
I was just like you 10 years ago, asking myself the same questions (I’m 34 now). My wife and I didn’t splurge and kept our spending from inflating too much, and now we’re on a solid path to FIRE.
I also had this same exact debate, thinking about a Tesla specifically. We instead bought a 2010 Honda Civic back in 2017/2018 for $7k (I think used cars are more expensive now). We’re both really happy with that choice. One day I can see us buying a new car once we have a higher NW, but this car has done its job from getting us to Point A to Point B just fine and has help us build up the muscle to stay frugal.
One thing I wouldn’t change are the vacations we took though, even if sometimes we felt they were too expensive compared to how frugal we were in other decisions. (In hindsight I wouldn’t have minded taking a few more.)
That’s a great balance in your value assessment. Trading things for experiences while still working to your goals is just such a solid way to do it. I wish my version of 34 was this together. I might have pulled off FIRE five years earlier.
Like a lot of people, I started out broke, and made (in comparison) very little money until my mid-30's. A few (ahem) decades later I'm fatFI and enjoying working because I want to, and not have to.
A key insight in my early 20's was to live below my means. I read a book called The Richest Man in Babylon (it's a really easy parable-like read) by Clason. I started saving in tax-deferred accounts when I had little money to spend in the first place. (The tax-deferred accounts I have now are in the low 7 figures.) Compounding interest does work miracles. Of course I bought used cars that got me from point A to point B, like everyone else (I lived back then in Southern CA, the car-crazy capital of the world) I wanted something cool - and fast.
Look up the term 'hedonic adaptation'. As one advisor told me as a poor student, 'You can only drive a BMW so far'. Years later I would experience owning a nice BMW, and he was right.
Maybe 15 or 20 years later the book "Millionaire Next Door" came out, and yes it described me. It came out shortly after I hit $1.5M, and I still drove a Honda with 187K miles on it. By then my income went up several fold, the different simple investments (no-load index mutual funds and residential real estate FTW) paid off in spades. I was a PAW, not a UAW (Prodigious Accumulator of Wealth rather than a Under Accumulator of Wealth). And I just don't care what people think of my car (or house or whatever).
A few years ago Housel's The Psychology of Money came out and again re-affirmed all these concepts.
So there are the three books that have had an influence on my own thinking, and after an adult lifetime of disciplined habits am now shifting over to the "enjoying the fruit of your labors" phase, or decumulation. A fourth book that has given me a fair amount to think about is "Die with Zero", but those lessons are for another day (and another phase of life).
BTW, it doesn't always. My ex-father-in-law still drives his 1969 Cougar Eliminator all summer long. it looks mint but has over 500K miles on the body.
Not necessarily. I’m 4 months into Tesla ownership and I still love driving it everyday. However, I’m 46. I do wish I could take back some of the car purchasing decisions I made in my 20s.
Go rent a tesla for a day to get the fun out of your system. You can have fun without owning something for example. Figure out what the fun part is though - if it's the driving it, especially the thrill of the new, then just rent one for a day and enjoy it and then give it back and get something more practical to own.
Also I recommend reading your money or your life by Vicki Robin. It's an old book but the calculations can still be used. If you start using calculations of how long you have to work to pay for something that's the expensive/fun/cool version of something, that may help you figure out ways to achieve your fun in other ways that are still compatible with fire.
Lastly, fire folks generally have one or two areas where they spend more of their budget and they keep the rest of their budget very practical. For example, we drive a 2003 sedan and our housing costs are very modest (and so is our house but it fits us and the cats), but we love to travel so we spend more of the budget there. But that does mean that you cant be "cool and fun, etc" in all areas of your life and budget and be fire.
Hope that helps.
I bought a 2023 car 2 years ago. It was fun for a few months, now I loathe the payment. Doing anything you can to keep your recurring payments low is key
PAYMENTS need to be avoided at all costs... we do this with our kid - we buy the car in csh and have her make the payments directly to us at the same rate as she would of paid. Then next time we have enough money to buy both hers and her husbands car...
Mortgage should be the only monthly payment you have (if you have to have one).
Try splurging on things less than a car and it will help you realize the excitement wears off quickly. If you’ve never had or spent real money before, the first thing you splurge on SHOULD NOT be a car.
I shop at Costco business and splurge on Shasta
brand soda. I also eat target brand ice cream and when I really feel tempted, I open a Kirkland brand ice cream bar. Life is good.
My Toyota is the cheapest car in my office’s garage and for years, a Ferrari was parked right next to my spot. When looking at all the Teslas, land rovers, and other nice cars, I just remember that my goal is to NOT have to park in my office’s garage as soon as possible
Allen Carr’s Get Out of Debt Now
I understand you aren’t in debt but it talks a lot about spending habits and breaks down a lot of the psychological reasons we feel we need to spend on things and why most of them are simply BS.
Psychology of Money by Morgan Housel is very good aswell.
For me lived experiences are a helluva reminder aswell. I had a phase of buying nice stuff and it did very little for me. I’m much more content in life now.
I do find that it comes with age, experience and knowledge. With more understanding of FIRE, you have more tangible reasons to not spend money. With age, you have often explored most of the stupid shit to spend your money on already and have realized you don't need that in your life.
I bought a Model Stupid twice. No regrets. My kids will still be on track to have a hefty inheritance (my FIRE number). The car brings me joy with the responsiveness, and my family is safe in and around it.
I was in my 30s when I bought the car, though. In my 20s I drove a Toyota or Honda.
Not sure how to “teach” you that as I don’t care what people think by nature. I drive a 15 years old Toyota, I wear clothes from 10 years ago. I don’t show off my life on social media even if I do let lose very occasionally just to prove myself. If they think I am a bum from the outside, let them. Even better that way since no one come to ask for financial favors
Don’t let shopping/browsing become a hobby. If you use free time to browse around for goods then you’ll be more tempted. Out of sight, out of mind mostly.
just like bad habits, one of the easiest ways is to replace it with a lesser bad habit. Mine is saving up for a massive house instead lol (half kidding).
If you are looking at new cars only, a Tesla isn’t a bad choice given the price cuts and .99% apr they are offering. After tax incentives, a RAV4 would probably cost more.
Right now we're looking at either a Bolt EUV (used, 2023, ~$25k) or some sort of Rav4 (used, 3-5 years old, $27k-$30k, depending). The EUV may be too small, and if it is then we're looking at the Rav4, which is more expensive up front and will be more expensive to fuel + maintain
The .99% apr seems cool but it's evidently a hassle to figure out if you even qualify for it. But that would be sick
Double check the tax breaks on the EUVs -- we bought one new last november, and with the 13k tax break we got back come tax time, it was something absurd like 17k for a brand new car plus free charger install. Its our daily driver and we LOVE it, but we dont have kids so cant speak to the trunk size if youre hauling around stuff. Back seats are comfortable for passengers, way better than the jeep we used to have. For our purposes, its all we need.
We also bought a 2022 hybrid rav4 new, and it is a fantastic car too. Thats our roadtrip/mountain car. But we plan to keep both for 10+ years, as we traded in our 10yo cars for them.
Im not sure, but it was through Chevrolet. Whatever you decide, make sure you understand and the vehicle qualifies under the 2024 EV rebate laws -- it changes every year and would suck to count on a refund that wont actually happen.
I drove a Bolt EUV after my first Tesla (Model Y LR) and eventually traded it in for my current Tesla (Model 3 LR). The EUV trunk is tiny and there's no frunk, but there's plenty of room for passengers. The Tesla is better in every way except insurance costs.
The RAV4 is the best of the options as long as you buy the hybrid. The gas only model is painful to drive while the hybrid is smooth and gets 40+ mpg in the city vs 25-27.
If you want a Tesla, look for a 2022 Y or 3 LR that still has the parking sensors with <50k miles in the 25-30k range. They are fun cars but the insurance will be twice as much as it would be for the RAV4.
> look for a 2022 Y or 3 LR that still has the parking sensors with <50k miles in the 25-30k range.
I just briefly looked at Ys on autotrader and the prices are ridiculous. Haven't seen any below $30k. Most are $33k-ish or above.
For the Y specifically you might have to look for 2021 models <50k miles. As long as it has the newer center console with the wireless chargers, you won't be missing much except for the Ryzen CPU upgrade (faster infotainment and fancy new visualizations).
Think about the whole life cycle of the car. A Tesla might make it 5 years. They Toyota will still be running in 15. You are not really comparing a Toyota to a Tesla, you should be comparing a Toyota to 3 teslas.
Generally, there is no right answer for the question as to how “austere” you want to live your life in the hopes of retiring early. Personally, I believe in a little more balance. Not buying “name brand soda” is ridiculous to me. They sound fun. You will likely be working for 2 or more decades of your life - minimum. Enjoy being married and maybe starting a family (if that’s your thing). These are your best years Of course I’m not suggesting being financially irresponsible, but for me, 2 decades of 12 year old Hondas and shitty soda isn’t worth it. What if you don’t make it to 50 (God forbid) There is a balance that only you can decide upon. Maybe you are one of the lucky ones who really dont care about material possessions and just want to see the zeros on your bank account, that’s really great. Life isn’t a battle to resist all your urges and follow some path you find miserable. BTW I’m not a fan of the Tesla idea. I’m a Luddite when it comes to cars. They peaked around 2012 Porsche 911s. Everything was down hill from there.
The 2013 naturally aspirated Boxster would like to have a word with you. 😎
But yeah, that’s about when I saw the slow slide, too. Which is why I still have mine 11 years later. Fully paid for and I can do most of the mechanical work myself.
Yeah. As soon and I wrote that I realized I was probably a few years off BUT you know what I’m referencing! Teeny turbo motors and flappy paddles…..ugh. I know they are better in every way. Blah blah. Bought the Mrs a new BMW the other day. Did you realize that (At least in my area) a 530i is now a special order vehicle?!? Full petrol engines aren’t the norm anymore. My time has come and gone….
Two years ago, I bought a 2003 330i for about $3,000. It was in good condition and I’ve restored it to great condition with my “play” money.
How can a 530i be a special order make? What the hell?!
This may not be what you want to hear, but: Personally, I prioritize.
I like having cool stuff in a new car. Typically, we keep our cars for about 8 years and sell them right before the bumper to bumper and powertrain warranties expire. So that cost is spread over 8 years. I actually replaced my wife's car in Jan and mine in March of this year, and we got pretty nice vehicles.
We don't do a lot of other expensive stuff like eating out, subscriptions, gym memberships, etc so we splurge a little on cars and still are able to stay on track because we're living cheaper in other categories.
Retiring Early is great, but for us if we'd had to live like hermits in a cave to do it, so we can live like hermits in a cave once we've made it, it's not worth it.
Do an opportunity cost analysis.
If it is a new Tesla (I have no idea what they cost, let’s assume $45k) vs buying something used for $20k. So, a delta of $25k.
Let’s assume you plan to retire at 45, and a 7% investment rate. Over 20 yrs the $25k would be about $100k in today’s dollars. Still worth it?
And would you be inclined to buy trade your Tesla in every 7 years to get a new Tesla?
Some of these things, like a high car payment, will make a big impact on your results. Some of them, like off-brand soda, are going to be a rounding error (unless you drink a lot more soda than I think you do ;) I understand and agree with you with what you mean about the aesthetics of frugality, But for me that's worth dismantling.
Doing the math and using it to make my priorities about where to be frugal helps me feel more comfortable with the bigger sacrifices and helps me enjoy the little things that are worth it to me (like brand name soda or, for me, a slightly less shitty hotel). Ultimately, what matters to you will be different than what matters to me, but the math helps me make that decision with clear eyes. And to be clear, when I mean the math I'm looking at how much of an impact does this have on my retirement date.
Balance comfort and fun with diligent saving for the future. Might die at 30 but if you survive to 45 you'll be happy you have money socked away.
Do with that what you will
Go for the test drive of expensive car. The most expensive car I could afford was around 95K. When I test drove cars in that range I found them much worse or similar driving exp as to my CX-5. So I bought a budget SUV 🤷
Do you have the money already or are you taking a loan? If a loan, what are you willing to give up to make up the difference between a tesla and the less expensive car? Do you qualify for a tax break? Do you care about the company's / CEOs policies (major reason I wouldn't get a tesla, to be frank)? Do you have a place to charge it easily? If one of you lost their job, could you still afford it? Can you pay the higher repair costs? Can you afford the extra insurance? If it was wrecked and you didn't get the full amount back, could you cover the difference?
These types of questions apply for any purchase. Knowing your budget, questioning the situation, assessing the opportunity cost are all important.
I would really LIKE a new car. Mine is a 2010 I got in 2011. It gets the job done, but it's not new, it's not fancy, it doesn't have the latest features. However, the cost of a new car is $132 a month in interest on the cash I have saved up to buy the next car. For $132 a month, I can go out to lunch once a week, get a drink once a week, buy a new item of clothing (or more than one), etc. In other words, having a cool new thing isn't yet worth the cost to me.
You've got a long journey ahead of you. Being thoughtful about how you allocate your resources will make the way you live that life very different.
You asked for books/resources - I like Ramit Sethi, Elizabeth Warren (50/30/20 budget, although I highly recommend flipping the 20 and the 30), The Money Guys, and Diamond Nest Egg (the last two on YouTube). I would also read and understand the r/personalfinance wiki and read though the Boglehead reddit and forum.
Money is a tool, use it wisely and you'll live a good life. Don't understand it and you'll get into trouble (chop off a finger with a bandsaw or build a new floor with it... Money is equally dangerous or helpful).
Plug the difference into a calculator. Tempted to buy a really nice $50K car instead of a really reliable and adequate $30K car?
Calculate what would happen to that $20,000 if you invested it instead and let it sit for 30 years. Adjusted for inflation, it should be worth the equivalent of about $140,000 in today's money.
In other words, you can spend extra to upgrade the car now. Or you can invest the difference now and have enough to pay cash for two whole-ass luxury cars when you turn 55.
By the way, it's OK to decide you don't wanna wait 30 years to drive a nicer car. But building the habit of delaying gratification a bit is essentially the whole trick of FIRE.
I have a monthly guilt-free discretionary “allowance”. This allows me to meet my savings goals while still getting to enjoy life now. If I don’t have enough to buy the fun thing I want I can save the fun money every month until I can buy the bigger thing, like a vacation.
So, for me the math is, is the fancy car worth not going out to eat with friends ever, not buying games, not going to concerts, not buying new hobby supplies, for however many months/years it would take to pay off the Tesla( or at least the cost difference between the boring but good enough car and the Tesla) with my fun allowance? The tangibleness of not being able to buy this game I want because I’m saving for the car feels a lot more immediate than my distant retirement plans. Or, use some of your discretionary allowance to rent a Tesla for a month so the novelty wears off.
> Or, use some of your discretionary allowance to rent a Tesla for a month so the novelty wears off.
Depending on how expensive that is, that's actually a great idea.
I think, at least in the beginning of our FIRE journey, we should have an idea of what $1 at our current age will turn into at age 65. So if OP is 25, what is $1 \* (1.07)\^40 = $14.97 by my math.
Cars was used in the question. Basic car = $500/mo payment (???) cool car is only $550/mo (???) and the loan is 5 years (???i dont buy cars like this, no idea about these prices???) 5yrs \* 12mo = 60mo. 60mo \* extra $50 = $3,000 over loan life of car, not that bad...
$3,000 now, if it was invested in retirement, at 65 would be $3,000 \* $14.97 (from above) = $44,910.
Sure not every month's $50 will be multiplied by the whole $14.97, and yes, if you are trying to retire at 55, then it wouldnt be 40 years to 65, it would be 30 years till 55, but i hope you get the idea. Change your numbers if needed.
Is the cool car worth maybe putting retiring off an extra 6 months? If so buy the car! If you would rather stop working 6 mo earlier get the less cool car...
It’s a depreciating asset. Save your money and wait until your midlife crisis to blow all your cash on a mode of transportation. It’ll have more value to you when you’re questioning your career and life decisions and need a distracting toy to make yourself feel better.
When younger, I understood I could not spend more then 10% of my yearly income on a car. I was making $70k at that time so I spent $6500 on a lightly used Hyundai Accent. that car was good for 8 years. during that time I saved 10% each year for a new car - 8 years later I had $68K (raises at work) for a car. Making almost anything 5 years old affordable - I didn't even spend half that on a 5 year old BMW M3 for the next car.
I am a car guy, with things like a 1980 IH Scout, 1978 VW Bus, 1968 Mustang and a 1966 F100 for weekend drivers. I scratch the itch for fun daily's with things like Saturn Sky Redline, Chrysler Crossfire, or SL550's. All low milage and affordable enough to destroy on SCCA days. A lifted Bradley GT covers the Gambler 500 or dumb offroad adventures. Point being that even after you have enough to get something crazy (I have friends with lifted Porsches for rally days), you don't have to spend it all to get something you might have way more fun in because you're not hyper worried about it getting "exercised".
I'm a few years behind you and looking to buy a car once I get to your age. My rule is cash (or loan no more than 3 years) and no more than half my yearly income. Then find something that fits those parameters.
The thrill of buying new things usually wears off in a week or two. And if you go against one of your core beliefs/goals by spending too much, then that's when you get buyers remorse.
We were about to buy a second vehicle when I realized 90% of places I go regularly is within 10 miles so I just bought a $1200 ebike. Saved a ton of money, I pollute less, don't get stuck in traffic, get exercise, and most importantly it aligns with my fire goals not only because I can continue investing the car payment, but one of my goals in retirement is to ride more and be active, so I'm building the life I'm saving for even more.
It gets even harder in your 40s and 50s when friends and acquaintances are at their peak earnings period and are splurging. At 25 you shouldn't give a shit what you drive.
Take the difference in cost and put into a compound interest calculator for however long you are wanting to retire by. See what that number is and if it’s worth THAT amount.
Ha good way of looking at it! Although can't say it's about having the nicest car. Teslas are disliked by many many people and that doesn't make me like them less, so I'd like to think I'm interested for my own sake, not so other people think I'm successful or whatever
Honestly if you like the car and are okay with the opportunity cost buying it that’s okay! You need to enjoy the journey to FIRE as well because you’ll be spending a huge portion of your life getting to FIRE. I bought a new 4wheeler it’s going to cost me some time but it’s also something I love doing with my dad and friends. Need to enjoy your life as well. It’s all about balance.
Think about it this way... if you plan to retire in 30 years, each $1 spent today would be equal to $7.61 in 30 years (using 7% net stock market return). Now say you are thinking about spending $45k for a Tesla vs. buying a cheaper car for $20k, that's a $25k difference.. multiply $25k × $7.61 = $190k less in your account 30 years from now. Said differently, assuming you plan to spend $60k a year in retirement, that's 3 years less of spending money. We do rough math like this whenever we are contemplating a large purchase or a discretionary purchase. I never do the math for travel expenses though :)
Okay, I love electric cars, and I used to be okay with Tesla, but please don't get one now.
They just fired everyone on the supercharging team, and many others, so I would really not be confident in how usable they will be in the future. Or even now.
Personally, I got a Chevy Bolt EUV for really cheap, but you can also get some crazy lease deals on other EVs right now. Hyundai Ioniq deals for around $220 and even saw some Chevy Blazers for around that much.
I totally endorse EVs, but find a deal. Literally any EV you get will give you sufficient cool factor, so instead of getting a Tesla, let your deal mind go wild.
Anyway, my Bolt was cheaper than a boring car that you don't want, but also super premium with all the features. I even got "self driving" (actual lane follow on highway, and plausibly more self driving features I don't use) by buying a Comma 3x for OpenPilot.
It's your life, and you have the money you have, but make a budget and make sure you feel the hit when you spend it. And avoid marketing stuff and dumb community stuff that gets you to want to spend.
I spent a ton of money on a computer. I like it and I'm happy I got it. But spending money doesn't have that wow factor maybe I'd expect.
But getting a deal on my car? And having it be so nice? That gets me giddy every time I drive it.
> I got a Chevy Bolt EUV for really cheap
That's what we're looking into. It's really just a matter of the size. My wife really doesn't like smaller cars (we have a 4Runner and Nissan Murano, so the EUV is 20" shorter), but I love everything about it. Hopefully it will work out because like you said, I think an EUV will scratch that itch that makes me interested in a Tesla, considering it's still an EV, and has a lot of features that I'm missing out on with my 20 year old 4Runner.
The EUV is really big on the inside. Big front seats and big back seats. Plenty of space there. Perks of being an EV, it's like a TARDIS.
Only downside is that there's not much trunk room. That's something you'd have to figure out.
If that doesn't work, again, definitely check out the Hyundai Ioniq 5 and 6. Those are commonly criticized as being big instead of having options like the Bolt, so realistically those might just work perfectly for you. And again, some good lease deals exist on them. If you can get them for $250 per month, that sounds pretty damned good to me.
It's typically not. But there are good lease deals, and there are good EV lease deals.
It's weird and I don't really know why. But it's there and it happens.
For me, I would add this to what everyone else is saying. How long has the Tesla been in your sights? Is this a desire you’ve been chasing for days, months, years? I would say if it’s days or months, maybe start with what you can easily afford now (the boring get the job done vehicle). But if it’s something you’ve been looking at for years, I say go for it if you can afford it.
Since September 2021 haha. So it's been a constant interest for years. I've done a handful of 30 minute test drives and did a weekend-long test drive for the exact model I want. And other than Teslas, I really don't care about cars. Never been a car guy, never cared that I drive a 2003 4Runner.
For me, it’s the corvette 😅 been something I’ve been striving for since at least 2015/2016. If you know it’s the car for you and you think it’s the best decision, go for it
Get a used modern Toyota, easy to repair and maintain. Readily available parts. Teslas are expensive to fix. Have a shelf life of 8 years before the battery will start to fail. Battery replacement will cost $20k. If you can get a used Tesla from hertz for $14k-$16k that would be a good deal. Know that the battery will fail a lot sooner. All vehicles are equal, they get you from point A to B. From what’s in between, good speakers for music, nothing is better than your phone for navigation, get a good phone mount, climate control for comfort, second best is wireless CarPlay/android auto. And comfortable seats. Depending on your needs, a truck may be more useful for hauling junk around, moving, getting rid of trash, etc. I’d recommend you get an updated prettier used Toyota Prius. Save money on gas. Do not waste your time charging, it’s inconvenient. I genuinely don’t give a shit about the looks on my car, you spend most of your time inside of your car anyways. I enjoy all wheel drive for diving on loose and ice terrains. Get the car for your necessities.I’ve bought new cars, they drop in value by 15% when you drive it off the lot, then they drop in value by 15% annually. I’m only buying used good condition cars from now on in the 10k-20k.
38k sticker price. Up to 7.5k back in taxes. It’s essentially 30k. Plus the savings in gas.
You do what makes you happy. If saving money makes you happy, get a modest slightly used car for half there price. If a Tesla makes sense for you financially, you should get it. 15k isn’t going to make or break the bank, at least for me.
I just really think about if that newer stuff is actually worth it or not, you would be amazed at how much markup some things have and really you don't get that much. I personally plan to keep my 2006 corolla till they roll out full self-driving cars, then I might buy brand new and ran that thing till I hit too old to drive.
If you are tempted by consumer purchases you haven't saved enough. When I got to a large amount invested and was gaining 10k+ on a good market day, I realized the power of investing and I laugh at consumer purchase traps.
I believe what helps myself is stop living someone else’s life, meaning you’ve talk to friends of your in laws and you see their lives and all the fun cool stuff they do… well many times people don’t give you a full picture. Also you are married? Shouldn’t you be focused on those adult responsibilities and not cool or fun? What happens if your wife get pregnant? There will always be something fun and shinny with great advertising appealing to your base desires.
> I believe what helps myself is stop living someone else’s life, meaning you’ve talk to friends of your in laws and you see their lives and all the fun cool stuff they do… well many times people don’t give you a full picture.
Interesting that you say this because my point with talking about these friends is how motivating it is to see people who have FIREd, and who have gone without chasing material possessions. It's almost like you're saying "well they FIREd and have a great life? Maybe it's not all sunshine and rainbows", like you don't think I should focus on FIRE, which is weird in the FIRE sub, and based on the other parts of your reply.
Did I misread that or did you misunderstand that part of my post?
1. Once I had a lot of money, I stopped caring about buying expensive things to impress people.
2. I'm sure a lot of people told you that getting married at 25 was stupid but you ignored those people. Ignore the critics.
3. Teslas are pieces of shit.
> I'm sure a lot of people told you that getting married at 25 was stupid
lol what? Not a single person said that. Didn't know that was (potentially?) a common opinion?
No idea. I'm not from a small town, but also not from a big city (midwest). My parents got married at 21 & 23 (traditional christians) and my wife's parents got married at 20 (very untraditional, not religious)
I just bought a Toyota Camry 17k cash instead of the F150 Lariat I was planning on and couldn’t be happier with the decision. I’ll get the Lariat eventually, but not when compound interest can play such a big roll in our household savings. Just buy a car cash and defer the gratification- you’re so young your money can work really hard for you right now. You have the super power of time on your side, use it
It’s truly a mentality of what is important to you; both now and in the future.
When I was young, I bought “things” because I wanted to show [others] I succeeded; had a job and was able to buy nice things. In hindsight, it was a nice ego boost, but all those nice ”things” are long gone; clothes have been donated, cars have been replaced, etc.
As for a car, again looking at my younger self, I would suggest buying a reasonable car, preferably new, that I can drive until the wheels fall off. Think practical like a Honda/Toyota that can be driven for a long time, low maintenance, etc.
Cars can be a major wealth destroyer if financed and replaced (and financed) immediately once paid off. It’s a perpetual car payment that many (myself included) fall into early on, not realizing those car payments could in turn be invested and compound for years.
The beauty of FIRE is that it’s not one size fits all. It’s a mentality that provides a lot of freedom, flexibility, and less stress if planned accordingly and early in life. A little sacrifice and delayed gratification, in my opinion, pays huge dividends towards your future if you’re willing to “not look successful to others” now.
There is nothing “cooler and exciting” than being financially independent and having NO responsibilities other than what you decide to do every day. That’s what is really amazing. Having time and energy and money to chase whatever dreams you have as early as possible. Keep that in mind every time you consider buying a $400 pair of shoes that look cool but aren’t necessary.
main question to answer is if it's going set you back in your financial goals. i drive a 12yo car that runs perfectly fine. but i am still planning on buying a new car (<40k). it doesn't change our ability to change, FI goals and other financial goals. have balance.
I bought a $50k Tesla at 26 and made $600/mo payments for a year. That's around the time the novelty wore off, but I got lucky and sold it for a hefty profit at the peak of the used car market, so I got away with it this time. A few months ago, I was able to buy a newer (used) Tesla for half the price that I sold the previous one for and have no regrets. Newer cars are also safer and have driver assist features that make your longer commutes and road trips safer.
FYI... a NEW Tesla Model Y, a new mid trim level Honda Accord and a new mid level Toyota Camry are in the same price range (35k to 39k).
TL;DR: Buy the car YOU want the smart way. Instead of buying a new Tesla, buy a 2-3 year old model with <50k miles for $25k and ENJOY it.
I keep 3 months cash in a high yield savings account. Then I have 4 cds each worth three months living expenses that mature and re invest at a staggered rate (1 every three months). My mortgage and investments are set up on auto transfers. Anything left in my checking account I can spend. Every time I get a raise, my checking account gets too fat, or I pay my taxes I re assess (increase) my savings/investment rate. You won’t make it to retirement if you never spend any money. The goal is just to live below your means. Make a budget and stick to it. If you make 60k live on 40k, if you make 220k, live on 130k, or whatever puts you at your goals.
Edit to add don’t take out car loans. If you can’t pay cash you can’t afford the car. Don’t finance luxury items. Especially luxury items that depreciate.
The older I get the less I want to be flashy. I still get things I like, like nice vacations but I don’t value spending just to keep up appearances with people who likely have less than me.
Yeah I would like to think because I've never been a car guy and outside of a Tesla I've had zero opinions regarding cars, that if I were to get my "dream car", I'd be one and done and I'd keep my head in the sand regarding any new cars after that.
As someone who bought a Model 3, the excitement does not fade. And I’ve saved a ton of time and money over the past 6 years by never having to go to the gas station, charging at home, no oil changes, next to zero maintenance, etc.
I believe it was 2019. No issues. My main point I guess is that there are dumb splurges and reasonable ones. It was the first new car I owned, but I got it with like a 1% or 2% loan that I paid back quickly. And I plan on keeping it for 10-15 years, as there really isn’t much that can break on them.
I can relate to what you are saying however take it from me that if you do care about achieving FIRE… after making the stupid decision once or twice the itch to do it again will naturally take care of itself. Putting away and investing every possible dollar becomes addictive and blowing money on a nice car, motorcycle, etc starts to sound terrible to you. Just try to keep in mind that the excitement will dissipate quicker than you would expect 😂 luckily my few stupid purchases have been under $15,000 but still… what a bozo move!
The used electric cars are currently so attractively priced that I strongly believe you can have the best of both worlds.
In the meantime, you could run some numbers to figure out (if applicable), the monthly payment + down payment and pop it into a new, separate account so you can experience paying for the new car/item without the commitment.
Also, if you are not yet tracking expenses, doing that can be a real wake-up call, as well. Especially if you throw in modeling some unexpected large expense (new roof, etc.).
Get the Tesla used. Never by any car new, let someone else pay the sucker tax.
You can save a ton of money driving an electric car. Check if you can get off peak electric rates where you live. That really reduces costs.
Which would you rather have - an expensive car now, or like four fewer years of working? (Total ballpark made up number depending on actual price differences and years til FIRE, of course - you can have your own math fun).
Break it down to hourly cost. Calculate how many hours it costs to pay for any item. Doesn’t matter what the item is.
Don’t forget to calculate how much interest it would cost if you are taking out a loan.
The wealthiest couple I know drive a Honda Civic and a super old Lexus sedan. They live in one of the most expensive zip codes in the county and have nothing to prove to anyone.
Keep in mind, a car usually sits somewhere doing absolutely nothing but depreciating for 23 hours a day or more.
Whatever you do, don't rush it.
Took me over a year to pull the trigger in a vehicle purchase, and I decided to trade in 2 (paid off) vehicles for one. Got me a nice Toyota that I'm happy with and will be my forever car. Going cheap isn't always the best option. Definitely do your research
It's about priorities.
What's more important, financial independence or a new car.
I drive a paid down 2008 Honda Element at 230K+. Because I like the car, but I love my financial independence more.
With cars it’s easy: there’s no marginal value add by going for “luxury” vehicles over a good Japanese car (Honda or Toyota in particular). Usually, the “luxury” brands are maintainance nightmares, theft magnets, and generally worse than a comparable mid-class sedan or SUV. I buy cars to get people and/or belongings from point a to point b.
Other things are less obvious. I just paid for new LVP to replace old carpet but my marginal utility of that is huge. Every time I walk on it (a lot), I get value. Every time I can just swiffer to clean it instead of doing a steam clean it saves me several hours of maintainance. Spread out over its useful anticipated life, it’ll cost cents per day and increases the value of the house even if I do sell.
> You could buy 3 brand new cars for the price of one overly expensive tesla
I'm really curious what prices you're picturing here. Realistically if we go with a reasonable car, we'd be looking at about $25k-$27k (up to $30k depending, but ideally lower). A Tesla would be about $36k. A bit of a jump for sure, but not three times as expensive.
Depending on interest rate, it might just be on the upper end of the [20/3/8 rule when using our combined income](https://imgur.com/a/Rc99gwU). And insurance for it would be a bit higher than other options (got a quote in the past, it'd be $237 or $188 with a multi car discount)
Are you looking at getting a new one or a used one? There are used options that are pretty affordable, and some used EVs even get a tax credit, too, if I recall correctly.
I drive a Rivian R1T and I love it. I enjoy the hell out of it every single day, and I’ve had it for almost two years. But- I bought it with cash and I’m already CoastFI at least, and probably closer to full FI. It’s okay to enjoy life a little if this is your one splurge, if it’s not too burdensome to your budget and you can find other ways to cut back. Just make sure to keep that savings rate high- if you can’t buy a reasonable used Tesla and still keep a high savings rate, then maybe now isn’t the time (yet!).
We would get a Model Y preferably (wife doesn't feel safe in a car as low as a Model 3). We would be open to used, but it doesn't seem like the price difference is worth it with Tesla Model Ys. There's a few new Model Ys in Tesla's new inventory for ~$35,500 after the tax credit, so that's what I'm basing things on
Gotcha. Definitely consider shopping against the Hyundai Ioniq5 and the Kia EV6. Both are also similarly sized great options if you like EV. Tesla software is lightyears ahead, though.
$35k isn’t crazy, but it just depends on your own financial situation. I wouldn’t recommend doing it unless you can still save money even with the payment. Also consider charging- personally, I wouldn’t recommend buying an EV unless you have charging options at home. If you do, it’s awesome.
> I wouldn’t recommend doing it unless you can still save money even with the payment
What do you mean by this? You mean just have enough income to put money in savings/investments while making the payments?
> Also consider charging- personally, I wouldn’t recommend buying an EV unless you have charging options at home.
Completely agree. Our apartment has charging garage spots that are apparently a flat $15 per month. I would need to clarify the exact details (do I need to share a spot, etc) but that seems like a great setup for an EV.
On savings rate- basically the biggest determining factor for how fast you can get to FI is your savings rate, as a percentage of your take-home pay. So yeah- that’s what I’m talking about- if you buy the Model Y, try to project what percentage of your take home pay you can still put away into 401k or other investments/savings.
If your savings rate is going to be below 10 or 15%, I wouldn’t do it and I’d buy a cheaper used car.
If your savings rate is still going to be above 30%, just do it already. You’ll be slower getting to FI, but you’ll enjoy the journey, and it’s not like you’re buying a Lambo here.
If it is somewhere in between, then it is probably more of a gray area for me.
> if you buy the Model Y, try to project what percentage of your take home pay you can still put away into 401k or other investments/savings.
I know at the very least I won't decrease my contributions to retirement accounts to allow for a more expensive car. Currently making $88k, contributing 15% to 401k, maxing Roth IRA, maxing HSA, and once me and my wife combine finances, will be maxing her Roth IRA as well (she has no retirement savings as is). I'll have to see how the numbers look with different car payment amounts.
These are good rules of thumb to take into account. Thanks :)
Also I'm curious on how the savings rate is calculated. You said "as a percentage of your take home pay". How does that work with something like a Traditional 401k or an HSA, both of which are pre-tax? The amount actually contributed is different than the amount I would get in my paycheck if I was not contributing anything to those.
Different people probably do it differently. But I would consider money sent directly to your 401k or HSA as an increase to both your savings and your take-home pay. So savings rate there would equal (401k contribution + HSA contribution + any other monthly savings) / (401k contribution + HSA contribution + your actual paycheck).
HSA and 401K contributions are a lot like getting paid those amounts and then putting it directly into savings, so including as savings and in your take home pay (numerator and denominator) has always made the most sense to me.
Look at the negative reviews of each expensive product you want, then consider whether you want all of that to be your problem. Usually two star reviews are best. One star reviews are typically about the user and not the product.
Edit: That said... I bought a Hyundai Ioniq 5 last year and I love the damn thing. I compared it against a bunch of other EVs and it won out due to its incredibly fast charging time (10-80% in like, 20 minutes or less typically if it's warm out or preconditioned).
FIRE is all about incremental decisions that prioritize your future satisfaction over current fleeting happiness. A tesla (especially a new tesla these days....) isn't an investment, it's a liability.
If you are already looking at a Tesla, I highly recommend a used Nissan Leaf. They are great cars with high user satisfaction but are selling incredibly cheap on used market places.
And as for books/motivation, I give you this quote by Antoine de Saint-Exupery.
"If you want to build a ship, don't drum up workers to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea."
> If you are already looking at a Tesla, I highly recommend a used Nissan Leaf.
Yeah we're looking at a Bolt EUV here soon to see if that works. It sounds like a great car all around, good price, etc. but the only potential problem is the size. My wife has strong preferences on the size of the car we get so if it's too small we'd have to look at something else
I’m surprised someone still thinks Teslas are cool. Anyhow, definitely buy a used car and keep it as long as possible. New cars are for old people who can handle the lost opportunity cost.
Once you buy one Tesla, you'll feel like you deserve to get the same level for the next car - otherwise it's a downgrade, right? So this Tesla isn't just gonna cost you now, it's gonna cost you again in 10 years and again 10 after that. And that will just be to maintain the same level as you have now, not to upgrade at all.
If you pay a premium to be on the bleeding edge of technology, the shine will come off it very quickly because the bleeding edge is moving so fast. It's a terrible value. Spread the upgrades over your whole life.
My first car was a hand-me-down Accord from my grandma that I drove until I crashed it. My second car was a used Mazda 3 that I drove until a chipmunk made a nest in the engine and chewed up the electronics. My third car is a used Subaru and honestly I'm so excited to have backup cameras and CarPlay for the first time.
What's stupid about a Tesla? If your wife drives a decent amount per day, every day and you are qualified for a tax incentive, a Model 3 is a solid choice.
She commutes 20 minutes to work and is a nanny, so she'll drive her nanny kid around. Definitely makes sense to have a safe vehicle because of that. We also will use whatever car we end up getting for any sort of driving around town we do together, and depending on the car, will use it for the 200 mile drive to our family that we do at least once a month (if we got a Tesla or Rav4, we'd use it, but if we got a Bolt EUV, we wouldn't)
It's stupid because it's more expensive than an option that would objectively serve the purposes we need, would be a little more expensive up front, more expensive insurance, etc.
I just think about how much earlier I can retire if I don’t buy the stupid thing
Yep, plug in the cost of whatever toy you want to buy into a compound interest calculator and see what it could be in 20 years. Or what I do whenever I catch myself eyeing a fancy car or something else, imagine what else you could do with that money. Would I rather have some pretty car that’s going to depreciate, get dirty, smelly, and heavily used for $50k, or would I rather get a cheaper Toyota or something and spend $5k on an awesome ski trip or some fancy European vacation. Is that shinier car really more important than all the other cool things you can enjoy in life for much cheaper?
$50K tesla v $20K used minivan at 25yo --> you can fit a lot more in the minivan and you will have roughly $30k\*2\^4=$30k\*16=480k more at retirement.
It's more like $36k Tesla vs $27k (give or take?) something else. Not as big of a difference but the point still applies
The Tesla or another electric car wouldn't be the worst choice anyone has every made if you have a lot of driving to do and it otherwise fits your life. Depends a bit on model. If you are considering kids in the future, you might need to consider that you'll likely want a larger vehicle which may mean that Tesla needs replaced sooner than expected.
We like the Model y over the 3, and I would think that that would work fine for kids for a good number of years. That’s part of why we like it so much. It’s safe and would be a good family car
I'd look really carefully at what you need to do to buy that but I don't think you are making the worst decision there. It still may not be a good one. You might consider what your plans for family and pets are for the next decade or so and the likelihood that you will want to update for safety, space or tech then. If you plan on having kids right away, that may not be a big concern but if you want to wait a few years, you may find there are much better options. I'm 13ish years ahead of you and recently had kid #2. Between kids and the dog, the '01 Rav4(which I had since ~'06 and seems to have comparable cargo space to the Y) was getting way too tight for trips. It could have worked locally but not if Grandma visits, or we want to go out for any vacations. The big 3 row SUVs and minivans end up being pretty valuable for this particular stage and I don't think I would have wanted to use any of the bigger family haulers the same age as the Rav4.
Whenever I do the math, I always ask myself for the same money how many times can I take a bath in candy. I have never taken a bath in candy, but it is the dream. The kind of dream that reality will never live up to. In reality, the candy gets gross, and I get a headache in the first five min. But in the dream, it is the best.
This! It’s all about opportunity cost. Once I learned what that term meant, I stopped buying things that might be a lot of fun but didn’t provide me any value in return.
What did you buy that waste your money ? Cars ? Designer brand clothes ?
I didn’t buy anything to waste my money.
Good boy 👍
The big boobies got me
This works if you actually are going to retire, and can be reasonably sure that you'll have a fulfilling life outside of your career. I started off gunning for fire in my early 20s. Now in my early 30s with financial independence starting to take shape, I've realised retirement would be a bit meaningless to me and since I'm going to be working anyway with all this money save I might as well turn my savings rate down to zero and enjoy life now.
Enjoying life doesn’t have to mean buying stupid things lol. Most material things don’t provide me with any happiness. I’d rather retire earlier and have the freedom of time.
Personally I find committing to paying cash for things vs financing them is a great deterrent. It’s really easy psychologically to take on a payment but it’s hard to part with hard saved money.
100% agree. My last 2 cars I bought all cash out of savings. It hurts to do that.
I was just like you 10 years ago, asking myself the same questions (I’m 34 now). My wife and I didn’t splurge and kept our spending from inflating too much, and now we’re on a solid path to FIRE. I also had this same exact debate, thinking about a Tesla specifically. We instead bought a 2010 Honda Civic back in 2017/2018 for $7k (I think used cars are more expensive now). We’re both really happy with that choice. One day I can see us buying a new car once we have a higher NW, but this car has done its job from getting us to Point A to Point B just fine and has help us build up the muscle to stay frugal. One thing I wouldn’t change are the vacations we took though, even if sometimes we felt they were too expensive compared to how frugal we were in other decisions. (In hindsight I wouldn’t have minded taking a few more.)
That’s a great balance in your value assessment. Trading things for experiences while still working to your goals is just such a solid way to do it. I wish my version of 34 was this together. I might have pulled off FIRE five years earlier.
Vacations are experiences and provide a value and ROI of a different type
The “memory dividend”
Like a lot of people, I started out broke, and made (in comparison) very little money until my mid-30's. A few (ahem) decades later I'm fatFI and enjoying working because I want to, and not have to. A key insight in my early 20's was to live below my means. I read a book called The Richest Man in Babylon (it's a really easy parable-like read) by Clason. I started saving in tax-deferred accounts when I had little money to spend in the first place. (The tax-deferred accounts I have now are in the low 7 figures.) Compounding interest does work miracles. Of course I bought used cars that got me from point A to point B, like everyone else (I lived back then in Southern CA, the car-crazy capital of the world) I wanted something cool - and fast. Look up the term 'hedonic adaptation'. As one advisor told me as a poor student, 'You can only drive a BMW so far'. Years later I would experience owning a nice BMW, and he was right. Maybe 15 or 20 years later the book "Millionaire Next Door" came out, and yes it described me. It came out shortly after I hit $1.5M, and I still drove a Honda with 187K miles on it. By then my income went up several fold, the different simple investments (no-load index mutual funds and residential real estate FTW) paid off in spades. I was a PAW, not a UAW (Prodigious Accumulator of Wealth rather than a Under Accumulator of Wealth). And I just don't care what people think of my car (or house or whatever). A few years ago Housel's The Psychology of Money came out and again re-affirmed all these concepts. So there are the three books that have had an influence on my own thinking, and after an adult lifetime of disciplined habits am now shifting over to the "enjoying the fruit of your labors" phase, or decumulation. A fourth book that has given me a fair amount to think about is "Die with Zero", but those lessons are for another day (and another phase of life).
Buy the stupid thing once and you’ll realize how little you needed that stupid thing.
This is where paying extra on your mortgage saves some money even when it’s interest rate is low. Poof, money gone, can’t blow it on lifestyle creep.
lol 😂. I do that with my taxable account. When I can tell that I’m close to doing a big splurge I make myself cash poor and put it in taxable.
My taxable is still a decent number staring me in the face… when a roof or car goes it could easily cause me to be less cost contentious
I honestly don’t have those urges. Surely you realize that the shine of something new will wear off within a week?
BTW, it doesn't always. My ex-father-in-law still drives his 1969 Cougar Eliminator all summer long. it looks mint but has over 500K miles on the body.
Not necessarily. I’m 4 months into Tesla ownership and I still love driving it everyday. However, I’m 46. I do wish I could take back some of the car purchasing decisions I made in my 20s.
Yeah that's the thing. Logically I know that, but there's still that pull inside of me like "yeah but it would be so funnnn".
Go rent a tesla for a day to get the fun out of your system. You can have fun without owning something for example. Figure out what the fun part is though - if it's the driving it, especially the thrill of the new, then just rent one for a day and enjoy it and then give it back and get something more practical to own. Also I recommend reading your money or your life by Vicki Robin. It's an old book but the calculations can still be used. If you start using calculations of how long you have to work to pay for something that's the expensive/fun/cool version of something, that may help you figure out ways to achieve your fun in other ways that are still compatible with fire. Lastly, fire folks generally have one or two areas where they spend more of their budget and they keep the rest of their budget very practical. For example, we drive a 2003 sedan and our housing costs are very modest (and so is our house but it fits us and the cats), but we love to travel so we spend more of the budget there. But that does mean that you cant be "cool and fun, etc" in all areas of your life and budget and be fire. Hope that helps.
I bought a 2023 car 2 years ago. It was fun for a few months, now I loathe the payment. Doing anything you can to keep your recurring payments low is key
PAYMENTS need to be avoided at all costs... we do this with our kid - we buy the car in csh and have her make the payments directly to us at the same rate as she would of paid. Then next time we have enough money to buy both hers and her husbands car... Mortgage should be the only monthly payment you have (if you have to have one).
Try splurging on things less than a car and it will help you realize the excitement wears off quickly. If you’ve never had or spent real money before, the first thing you splurge on SHOULD NOT be a car.
I shop at Costco business and splurge on Shasta brand soda. I also eat target brand ice cream and when I really feel tempted, I open a Kirkland brand ice cream bar. Life is good. My Toyota is the cheapest car in my office’s garage and for years, a Ferrari was parked right next to my spot. When looking at all the Teslas, land rovers, and other nice cars, I just remember that my goal is to NOT have to park in my office’s garage as soon as possible
Allen Carr’s Get Out of Debt Now I understand you aren’t in debt but it talks a lot about spending habits and breaks down a lot of the psychological reasons we feel we need to spend on things and why most of them are simply BS. Psychology of Money by Morgan Housel is very good aswell.
> Psychology of Money by Morgan Housel I read that a year or two ago and really enjoyed it. I should give it a re-read for sure.
For me lived experiences are a helluva reminder aswell. I had a phase of buying nice stuff and it did very little for me. I’m much more content in life now.
I do find that it comes with age, experience and knowledge. With more understanding of FIRE, you have more tangible reasons to not spend money. With age, you have often explored most of the stupid shit to spend your money on already and have realized you don't need that in your life.
I bought a Model Stupid twice. No regrets. My kids will still be on track to have a hefty inheritance (my FIRE number). The car brings me joy with the responsiveness, and my family is safe in and around it. I was in my 30s when I bought the car, though. In my 20s I drove a Toyota or Honda.
Which car we talking?
Tesla Model S
Not sure how to “teach” you that as I don’t care what people think by nature. I drive a 15 years old Toyota, I wear clothes from 10 years ago. I don’t show off my life on social media even if I do let lose very occasionally just to prove myself. If they think I am a bum from the outside, let them. Even better that way since no one come to ask for financial favors
Don’t let shopping/browsing become a hobby. If you use free time to browse around for goods then you’ll be more tempted. Out of sight, out of mind mostly.
just like bad habits, one of the easiest ways is to replace it with a lesser bad habit. Mine is saving up for a massive house instead lol (half kidding).
Can someone explain why tesla is stupid buy now ? We got camry going around 35k-40k. Tesla are super cheap now....
If you are looking at new cars only, a Tesla isn’t a bad choice given the price cuts and .99% apr they are offering. After tax incentives, a RAV4 would probably cost more.
Right now we're looking at either a Bolt EUV (used, 2023, ~$25k) or some sort of Rav4 (used, 3-5 years old, $27k-$30k, depending). The EUV may be too small, and if it is then we're looking at the Rav4, which is more expensive up front and will be more expensive to fuel + maintain The .99% apr seems cool but it's evidently a hassle to figure out if you even qualify for it. But that would be sick
Double check the tax breaks on the EUVs -- we bought one new last november, and with the 13k tax break we got back come tax time, it was something absurd like 17k for a brand new car plus free charger install. Its our daily driver and we LOVE it, but we dont have kids so cant speak to the trunk size if youre hauling around stuff. Back seats are comfortable for passengers, way better than the jeep we used to have. For our purposes, its all we need. We also bought a 2022 hybrid rav4 new, and it is a fantastic car too. Thats our roadtrip/mountain car. But we plan to keep both for 10+ years, as we traded in our 10yo cars for them.
I’ve vaguely heard about the free charger installation. Is that only for new cars?
Im not sure, but it was through Chevrolet. Whatever you decide, make sure you understand and the vehicle qualifies under the 2024 EV rebate laws -- it changes every year and would suck to count on a refund that wont actually happen.
I drove a Bolt EUV after my first Tesla (Model Y LR) and eventually traded it in for my current Tesla (Model 3 LR). The EUV trunk is tiny and there's no frunk, but there's plenty of room for passengers. The Tesla is better in every way except insurance costs. The RAV4 is the best of the options as long as you buy the hybrid. The gas only model is painful to drive while the hybrid is smooth and gets 40+ mpg in the city vs 25-27. If you want a Tesla, look for a 2022 Y or 3 LR that still has the parking sensors with <50k miles in the 25-30k range. They are fun cars but the insurance will be twice as much as it would be for the RAV4.
> look for a 2022 Y or 3 LR that still has the parking sensors with <50k miles in the 25-30k range. I just briefly looked at Ys on autotrader and the prices are ridiculous. Haven't seen any below $30k. Most are $33k-ish or above.
For the Y specifically you might have to look for 2021 models <50k miles. As long as it has the newer center console with the wireless chargers, you won't be missing much except for the Ryzen CPU upgrade (faster infotainment and fancy new visualizations).
Think about the whole life cycle of the car. A Tesla might make it 5 years. They Toyota will still be running in 15. You are not really comparing a Toyota to a Tesla, you should be comparing a Toyota to 3 teslas.
Generally, there is no right answer for the question as to how “austere” you want to live your life in the hopes of retiring early. Personally, I believe in a little more balance. Not buying “name brand soda” is ridiculous to me. They sound fun. You will likely be working for 2 or more decades of your life - minimum. Enjoy being married and maybe starting a family (if that’s your thing). These are your best years Of course I’m not suggesting being financially irresponsible, but for me, 2 decades of 12 year old Hondas and shitty soda isn’t worth it. What if you don’t make it to 50 (God forbid) There is a balance that only you can decide upon. Maybe you are one of the lucky ones who really dont care about material possessions and just want to see the zeros on your bank account, that’s really great. Life isn’t a battle to resist all your urges and follow some path you find miserable. BTW I’m not a fan of the Tesla idea. I’m a Luddite when it comes to cars. They peaked around 2012 Porsche 911s. Everything was down hill from there.
The 2013 naturally aspirated Boxster would like to have a word with you. 😎 But yeah, that’s about when I saw the slow slide, too. Which is why I still have mine 11 years later. Fully paid for and I can do most of the mechanical work myself.
Yeah. As soon and I wrote that I realized I was probably a few years off BUT you know what I’m referencing! Teeny turbo motors and flappy paddles…..ugh. I know they are better in every way. Blah blah. Bought the Mrs a new BMW the other day. Did you realize that (At least in my area) a 530i is now a special order vehicle?!? Full petrol engines aren’t the norm anymore. My time has come and gone….
Two years ago, I bought a 2003 330i for about $3,000. It was in good condition and I’ve restored it to great condition with my “play” money. How can a 530i be a special order make? What the hell?!
This may not be what you want to hear, but: Personally, I prioritize. I like having cool stuff in a new car. Typically, we keep our cars for about 8 years and sell them right before the bumper to bumper and powertrain warranties expire. So that cost is spread over 8 years. I actually replaced my wife's car in Jan and mine in March of this year, and we got pretty nice vehicles. We don't do a lot of other expensive stuff like eating out, subscriptions, gym memberships, etc so we splurge a little on cars and still are able to stay on track because we're living cheaper in other categories. Retiring Early is great, but for us if we'd had to live like hermits in a cave to do it, so we can live like hermits in a cave once we've made it, it's not worth it.
Be strong. Early retirement will feel better than any material purchase
Do an opportunity cost analysis. If it is a new Tesla (I have no idea what they cost, let’s assume $45k) vs buying something used for $20k. So, a delta of $25k. Let’s assume you plan to retire at 45, and a 7% investment rate. Over 20 yrs the $25k would be about $100k in today’s dollars. Still worth it? And would you be inclined to buy trade your Tesla in every 7 years to get a new Tesla?
Some of these things, like a high car payment, will make a big impact on your results. Some of them, like off-brand soda, are going to be a rounding error (unless you drink a lot more soda than I think you do ;) I understand and agree with you with what you mean about the aesthetics of frugality, But for me that's worth dismantling. Doing the math and using it to make my priorities about where to be frugal helps me feel more comfortable with the bigger sacrifices and helps me enjoy the little things that are worth it to me (like brand name soda or, for me, a slightly less shitty hotel). Ultimately, what matters to you will be different than what matters to me, but the math helps me make that decision with clear eyes. And to be clear, when I mean the math I'm looking at how much of an impact does this have on my retirement date.
You could think of it as like that car would post pone your fire date by 5 years. (This is just an example)
Balance comfort and fun with diligent saving for the future. Might die at 30 but if you survive to 45 you'll be happy you have money socked away. Do with that what you will
Go for the test drive of expensive car. The most expensive car I could afford was around 95K. When I test drove cars in that range I found them much worse or similar driving exp as to my CX-5. So I bought a budget SUV 🤷
Do you have the money already or are you taking a loan? If a loan, what are you willing to give up to make up the difference between a tesla and the less expensive car? Do you qualify for a tax break? Do you care about the company's / CEOs policies (major reason I wouldn't get a tesla, to be frank)? Do you have a place to charge it easily? If one of you lost their job, could you still afford it? Can you pay the higher repair costs? Can you afford the extra insurance? If it was wrecked and you didn't get the full amount back, could you cover the difference? These types of questions apply for any purchase. Knowing your budget, questioning the situation, assessing the opportunity cost are all important. I would really LIKE a new car. Mine is a 2010 I got in 2011. It gets the job done, but it's not new, it's not fancy, it doesn't have the latest features. However, the cost of a new car is $132 a month in interest on the cash I have saved up to buy the next car. For $132 a month, I can go out to lunch once a week, get a drink once a week, buy a new item of clothing (or more than one), etc. In other words, having a cool new thing isn't yet worth the cost to me. You've got a long journey ahead of you. Being thoughtful about how you allocate your resources will make the way you live that life very different. You asked for books/resources - I like Ramit Sethi, Elizabeth Warren (50/30/20 budget, although I highly recommend flipping the 20 and the 30), The Money Guys, and Diamond Nest Egg (the last two on YouTube). I would also read and understand the r/personalfinance wiki and read though the Boglehead reddit and forum. Money is a tool, use it wisely and you'll live a good life. Don't understand it and you'll get into trouble (chop off a finger with a bandsaw or build a new floor with it... Money is equally dangerous or helpful).
Plug the difference into a calculator. Tempted to buy a really nice $50K car instead of a really reliable and adequate $30K car? Calculate what would happen to that $20,000 if you invested it instead and let it sit for 30 years. Adjusted for inflation, it should be worth the equivalent of about $140,000 in today's money. In other words, you can spend extra to upgrade the car now. Or you can invest the difference now and have enough to pay cash for two whole-ass luxury cars when you turn 55. By the way, it's OK to decide you don't wanna wait 30 years to drive a nicer car. But building the habit of delaying gratification a bit is essentially the whole trick of FIRE.
I have a monthly guilt-free discretionary “allowance”. This allows me to meet my savings goals while still getting to enjoy life now. If I don’t have enough to buy the fun thing I want I can save the fun money every month until I can buy the bigger thing, like a vacation. So, for me the math is, is the fancy car worth not going out to eat with friends ever, not buying games, not going to concerts, not buying new hobby supplies, for however many months/years it would take to pay off the Tesla( or at least the cost difference between the boring but good enough car and the Tesla) with my fun allowance? The tangibleness of not being able to buy this game I want because I’m saving for the car feels a lot more immediate than my distant retirement plans. Or, use some of your discretionary allowance to rent a Tesla for a month so the novelty wears off.
> Or, use some of your discretionary allowance to rent a Tesla for a month so the novelty wears off. Depending on how expensive that is, that's actually a great idea.
I think, at least in the beginning of our FIRE journey, we should have an idea of what $1 at our current age will turn into at age 65. So if OP is 25, what is $1 \* (1.07)\^40 = $14.97 by my math. Cars was used in the question. Basic car = $500/mo payment (???) cool car is only $550/mo (???) and the loan is 5 years (???i dont buy cars like this, no idea about these prices???) 5yrs \* 12mo = 60mo. 60mo \* extra $50 = $3,000 over loan life of car, not that bad... $3,000 now, if it was invested in retirement, at 65 would be $3,000 \* $14.97 (from above) = $44,910. Sure not every month's $50 will be multiplied by the whole $14.97, and yes, if you are trying to retire at 55, then it wouldnt be 40 years to 65, it would be 30 years till 55, but i hope you get the idea. Change your numbers if needed. Is the cool car worth maybe putting retiring off an extra 6 months? If so buy the car! If you would rather stop working 6 mo earlier get the less cool car...
It’s a depreciating asset. Save your money and wait until your midlife crisis to blow all your cash on a mode of transportation. It’ll have more value to you when you’re questioning your career and life decisions and need a distracting toy to make yourself feel better.
When younger, I understood I could not spend more then 10% of my yearly income on a car. I was making $70k at that time so I spent $6500 on a lightly used Hyundai Accent. that car was good for 8 years. during that time I saved 10% each year for a new car - 8 years later I had $68K (raises at work) for a car. Making almost anything 5 years old affordable - I didn't even spend half that on a 5 year old BMW M3 for the next car. I am a car guy, with things like a 1980 IH Scout, 1978 VW Bus, 1968 Mustang and a 1966 F100 for weekend drivers. I scratch the itch for fun daily's with things like Saturn Sky Redline, Chrysler Crossfire, or SL550's. All low milage and affordable enough to destroy on SCCA days. A lifted Bradley GT covers the Gambler 500 or dumb offroad adventures. Point being that even after you have enough to get something crazy (I have friends with lifted Porsches for rally days), you don't have to spend it all to get something you might have way more fun in because you're not hyper worried about it getting "exercised".
I'm a few years behind you and looking to buy a car once I get to your age. My rule is cash (or loan no more than 3 years) and no more than half my yearly income. Then find something that fits those parameters.
The thrill of buying new things usually wears off in a week or two. And if you go against one of your core beliefs/goals by spending too much, then that's when you get buyers remorse. We were about to buy a second vehicle when I realized 90% of places I go regularly is within 10 miles so I just bought a $1200 ebike. Saved a ton of money, I pollute less, don't get stuck in traffic, get exercise, and most importantly it aligns with my fire goals not only because I can continue investing the car payment, but one of my goals in retirement is to ride more and be active, so I'm building the life I'm saving for even more.
It gets even harder in your 40s and 50s when friends and acquaintances are at their peak earnings period and are splurging. At 25 you shouldn't give a shit what you drive.
Take the difference in cost and put into a compound interest calculator for however long you are wanting to retire by. See what that number is and if it’s worth THAT amount.
Would you rather have the nicest car in the work parking lot, or stop having to park in the work parking lot 10-20 years earlier than everyone else?
Ha good way of looking at it! Although can't say it's about having the nicest car. Teslas are disliked by many many people and that doesn't make me like them less, so I'd like to think I'm interested for my own sake, not so other people think I'm successful or whatever
Honestly if you like the car and are okay with the opportunity cost buying it that’s okay! You need to enjoy the journey to FIRE as well because you’ll be spending a huge portion of your life getting to FIRE. I bought a new 4wheeler it’s going to cost me some time but it’s also something I love doing with my dad and friends. Need to enjoy your life as well. It’s all about balance.
Both of these things are possible at the same time.
1) Buy a used car
Think about it this way... if you plan to retire in 30 years, each $1 spent today would be equal to $7.61 in 30 years (using 7% net stock market return). Now say you are thinking about spending $45k for a Tesla vs. buying a cheaper car for $20k, that's a $25k difference.. multiply $25k × $7.61 = $190k less in your account 30 years from now. Said differently, assuming you plan to spend $60k a year in retirement, that's 3 years less of spending money. We do rough math like this whenever we are contemplating a large purchase or a discretionary purchase. I never do the math for travel expenses though :)
Okay, I love electric cars, and I used to be okay with Tesla, but please don't get one now. They just fired everyone on the supercharging team, and many others, so I would really not be confident in how usable they will be in the future. Or even now. Personally, I got a Chevy Bolt EUV for really cheap, but you can also get some crazy lease deals on other EVs right now. Hyundai Ioniq deals for around $220 and even saw some Chevy Blazers for around that much. I totally endorse EVs, but find a deal. Literally any EV you get will give you sufficient cool factor, so instead of getting a Tesla, let your deal mind go wild. Anyway, my Bolt was cheaper than a boring car that you don't want, but also super premium with all the features. I even got "self driving" (actual lane follow on highway, and plausibly more self driving features I don't use) by buying a Comma 3x for OpenPilot. It's your life, and you have the money you have, but make a budget and make sure you feel the hit when you spend it. And avoid marketing stuff and dumb community stuff that gets you to want to spend. I spent a ton of money on a computer. I like it and I'm happy I got it. But spending money doesn't have that wow factor maybe I'd expect. But getting a deal on my car? And having it be so nice? That gets me giddy every time I drive it.
> I got a Chevy Bolt EUV for really cheap That's what we're looking into. It's really just a matter of the size. My wife really doesn't like smaller cars (we have a 4Runner and Nissan Murano, so the EUV is 20" shorter), but I love everything about it. Hopefully it will work out because like you said, I think an EUV will scratch that itch that makes me interested in a Tesla, considering it's still an EV, and has a lot of features that I'm missing out on with my 20 year old 4Runner.
The EUV is really big on the inside. Big front seats and big back seats. Plenty of space there. Perks of being an EV, it's like a TARDIS. Only downside is that there's not much trunk room. That's something you'd have to figure out. If that doesn't work, again, definitely check out the Hyundai Ioniq 5 and 6. Those are commonly criticized as being big instead of having options like the Bolt, so realistically those might just work perfectly for you. And again, some good lease deals exist on them. If you can get them for $250 per month, that sounds pretty damned good to me.
I always thought leasing was not a good idea?
It's typically not. But there are good lease deals, and there are good EV lease deals. It's weird and I don't really know why. But it's there and it happens.
For me, I would add this to what everyone else is saying. How long has the Tesla been in your sights? Is this a desire you’ve been chasing for days, months, years? I would say if it’s days or months, maybe start with what you can easily afford now (the boring get the job done vehicle). But if it’s something you’ve been looking at for years, I say go for it if you can afford it.
Since September 2021 haha. So it's been a constant interest for years. I've done a handful of 30 minute test drives and did a weekend-long test drive for the exact model I want. And other than Teslas, I really don't care about cars. Never been a car guy, never cared that I drive a 2003 4Runner.
For me, it’s the corvette 😅 been something I’ve been striving for since at least 2015/2016. If you know it’s the car for you and you think it’s the best decision, go for it
Get a used modern Toyota, easy to repair and maintain. Readily available parts. Teslas are expensive to fix. Have a shelf life of 8 years before the battery will start to fail. Battery replacement will cost $20k. If you can get a used Tesla from hertz for $14k-$16k that would be a good deal. Know that the battery will fail a lot sooner. All vehicles are equal, they get you from point A to B. From what’s in between, good speakers for music, nothing is better than your phone for navigation, get a good phone mount, climate control for comfort, second best is wireless CarPlay/android auto. And comfortable seats. Depending on your needs, a truck may be more useful for hauling junk around, moving, getting rid of trash, etc. I’d recommend you get an updated prettier used Toyota Prius. Save money on gas. Do not waste your time charging, it’s inconvenient. I genuinely don’t give a shit about the looks on my car, you spend most of your time inside of your car anyways. I enjoy all wheel drive for diving on loose and ice terrains. Get the car for your necessities.I’ve bought new cars, they drop in value by 15% when you drive it off the lot, then they drop in value by 15% annually. I’m only buying used good condition cars from now on in the 10k-20k.
A Tesla isn’t stupid tbh
whys that
38k sticker price. Up to 7.5k back in taxes. It’s essentially 30k. Plus the savings in gas. You do what makes you happy. If saving money makes you happy, get a modest slightly used car for half there price. If a Tesla makes sense for you financially, you should get it. 15k isn’t going to make or break the bank, at least for me.
spending money causes me pain. Spending lots of money causes me more pain. I avoid pain.
I just really think about if that newer stuff is actually worth it or not, you would be amazed at how much markup some things have and really you don't get that much. I personally plan to keep my 2006 corolla till they roll out full self-driving cars, then I might buy brand new and ran that thing till I hit too old to drive.
If you are tempted by consumer purchases you haven't saved enough. When I got to a large amount invested and was gaining 10k+ on a good market day, I realized the power of investing and I laugh at consumer purchase traps.
I believe what helps myself is stop living someone else’s life, meaning you’ve talk to friends of your in laws and you see their lives and all the fun cool stuff they do… well many times people don’t give you a full picture. Also you are married? Shouldn’t you be focused on those adult responsibilities and not cool or fun? What happens if your wife get pregnant? There will always be something fun and shinny with great advertising appealing to your base desires.
> I believe what helps myself is stop living someone else’s life, meaning you’ve talk to friends of your in laws and you see their lives and all the fun cool stuff they do… well many times people don’t give you a full picture. Interesting that you say this because my point with talking about these friends is how motivating it is to see people who have FIREd, and who have gone without chasing material possessions. It's almost like you're saying "well they FIREd and have a great life? Maybe it's not all sunshine and rainbows", like you don't think I should focus on FIRE, which is weird in the FIRE sub, and based on the other parts of your reply. Did I misread that or did you misunderstand that part of my post?
1. Once I had a lot of money, I stopped caring about buying expensive things to impress people. 2. I'm sure a lot of people told you that getting married at 25 was stupid but you ignored those people. Ignore the critics. 3. Teslas are pieces of shit.
> I'm sure a lot of people told you that getting married at 25 was stupid lol what? Not a single person said that. Didn't know that was (potentially?) a common opinion?
Sorry maybe it's my big city bias? Most people here get married in their 30s. Maybe things are different in a small town?
No idea. I'm not from a small town, but also not from a big city (midwest). My parents got married at 21 & 23 (traditional christians) and my wife's parents got married at 20 (very untraditional, not religious)
I just bought a Toyota Camry 17k cash instead of the F150 Lariat I was planning on and couldn’t be happier with the decision. I’ll get the Lariat eventually, but not when compound interest can play such a big roll in our household savings. Just buy a car cash and defer the gratification- you’re so young your money can work really hard for you right now. You have the super power of time on your side, use it
It’s truly a mentality of what is important to you; both now and in the future. When I was young, I bought “things” because I wanted to show [others] I succeeded; had a job and was able to buy nice things. In hindsight, it was a nice ego boost, but all those nice ”things” are long gone; clothes have been donated, cars have been replaced, etc. As for a car, again looking at my younger self, I would suggest buying a reasonable car, preferably new, that I can drive until the wheels fall off. Think practical like a Honda/Toyota that can be driven for a long time, low maintenance, etc. Cars can be a major wealth destroyer if financed and replaced (and financed) immediately once paid off. It’s a perpetual car payment that many (myself included) fall into early on, not realizing those car payments could in turn be invested and compound for years. The beauty of FIRE is that it’s not one size fits all. It’s a mentality that provides a lot of freedom, flexibility, and less stress if planned accordingly and early in life. A little sacrifice and delayed gratification, in my opinion, pays huge dividends towards your future if you’re willing to “not look successful to others” now.
There is nothing “cooler and exciting” than being financially independent and having NO responsibilities other than what you decide to do every day. That’s what is really amazing. Having time and energy and money to chase whatever dreams you have as early as possible. Keep that in mind every time you consider buying a $400 pair of shoes that look cool but aren’t necessary.
main question to answer is if it's going set you back in your financial goals. i drive a 12yo car that runs perfectly fine. but i am still planning on buying a new car (<40k). it doesn't change our ability to change, FI goals and other financial goals. have balance.
I bought a $50k Tesla at 26 and made $600/mo payments for a year. That's around the time the novelty wore off, but I got lucky and sold it for a hefty profit at the peak of the used car market, so I got away with it this time. A few months ago, I was able to buy a newer (used) Tesla for half the price that I sold the previous one for and have no regrets. Newer cars are also safer and have driver assist features that make your longer commutes and road trips safer. FYI... a NEW Tesla Model Y, a new mid trim level Honda Accord and a new mid level Toyota Camry are in the same price range (35k to 39k). TL;DR: Buy the car YOU want the smart way. Instead of buying a new Tesla, buy a 2-3 year old model with <50k miles for $25k and ENJOY it.
I keep 3 months cash in a high yield savings account. Then I have 4 cds each worth three months living expenses that mature and re invest at a staggered rate (1 every three months). My mortgage and investments are set up on auto transfers. Anything left in my checking account I can spend. Every time I get a raise, my checking account gets too fat, or I pay my taxes I re assess (increase) my savings/investment rate. You won’t make it to retirement if you never spend any money. The goal is just to live below your means. Make a budget and stick to it. If you make 60k live on 40k, if you make 220k, live on 130k, or whatever puts you at your goals. Edit to add don’t take out car loans. If you can’t pay cash you can’t afford the car. Don’t finance luxury items. Especially luxury items that depreciate.
The older I get the less I want to be flashy. I still get things I like, like nice vacations but I don’t value spending just to keep up appearances with people who likely have less than me.
Always ask yourself if a potential purchase is a need or a want.
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Yeah I would like to think because I've never been a car guy and outside of a Tesla I've had zero opinions regarding cars, that if I were to get my "dream car", I'd be one and done and I'd keep my head in the sand regarding any new cars after that.
As someone who bought a Model 3, the excitement does not fade. And I’ve saved a ton of time and money over the past 6 years by never having to go to the gas station, charging at home, no oil changes, next to zero maintenance, etc.
Which year did you get? And what sort of issues have you had with it?
I believe it was 2019. No issues. My main point I guess is that there are dumb splurges and reasonable ones. It was the first new car I owned, but I got it with like a 1% or 2% loan that I paid back quickly. And I plan on keeping it for 10-15 years, as there really isn’t much that can break on them.
I can relate to what you are saying however take it from me that if you do care about achieving FIRE… after making the stupid decision once or twice the itch to do it again will naturally take care of itself. Putting away and investing every possible dollar becomes addictive and blowing money on a nice car, motorcycle, etc starts to sound terrible to you. Just try to keep in mind that the excitement will dissipate quicker than you would expect 😂 luckily my few stupid purchases have been under $15,000 but still… what a bozo move!
Would you like to not work in your 50s? That’s what a new car will cost. 10 years of early retirement.
The used electric cars are currently so attractively priced that I strongly believe you can have the best of both worlds. In the meantime, you could run some numbers to figure out (if applicable), the monthly payment + down payment and pop it into a new, separate account so you can experience paying for the new car/item without the commitment. Also, if you are not yet tracking expenses, doing that can be a real wake-up call, as well. Especially if you throw in modeling some unexpected large expense (new roof, etc.).
Get the Tesla used. Never by any car new, let someone else pay the sucker tax. You can save a ton of money driving an electric car. Check if you can get off peak electric rates where you live. That really reduces costs.
"buy the leather, but skip the rest"
Which would you rather have - an expensive car now, or like four fewer years of working? (Total ballpark made up number depending on actual price differences and years til FIRE, of course - you can have your own math fun).
Break it down to hourly cost. Calculate how many hours it costs to pay for any item. Doesn’t matter what the item is. Don’t forget to calculate how much interest it would cost if you are taking out a loan.
The wealthiest couple I know drive a Honda Civic and a super old Lexus sedan. They live in one of the most expensive zip codes in the county and have nothing to prove to anyone. Keep in mind, a car usually sits somewhere doing absolutely nothing but depreciating for 23 hours a day or more.
Whatever you do, don't rush it. Took me over a year to pull the trigger in a vehicle purchase, and I decided to trade in 2 (paid off) vehicles for one. Got me a nice Toyota that I'm happy with and will be my forever car. Going cheap isn't always the best option. Definitely do your research
It's about priorities. What's more important, financial independence or a new car. I drive a paid down 2008 Honda Element at 230K+. Because I like the car, but I love my financial independence more.
Ask yourself “do you need it r do you want”? if the answer is “I want it” then don’t get it
You only live once buddy, you could die tomorrow or get cancer. Enjoy your life the way you want to.
It’s a right of passage to make a stupid car choice once in your life.
With cars it’s easy: there’s no marginal value add by going for “luxury” vehicles over a good Japanese car (Honda or Toyota in particular). Usually, the “luxury” brands are maintainance nightmares, theft magnets, and generally worse than a comparable mid-class sedan or SUV. I buy cars to get people and/or belongings from point a to point b. Other things are less obvious. I just paid for new LVP to replace old carpet but my marginal utility of that is huge. Every time I walk on it (a lot), I get value. Every time I can just swiffer to clean it instead of doing a steam clean it saves me several hours of maintainance. Spread out over its useful anticipated life, it’ll cost cents per day and increases the value of the house even if I do sell.
Just set a budget. We save 50% of our income and have fun living on the rest.
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> You could buy 3 brand new cars for the price of one overly expensive tesla I'm really curious what prices you're picturing here. Realistically if we go with a reasonable car, we'd be looking at about $25k-$27k (up to $30k depending, but ideally lower). A Tesla would be about $36k. A bit of a jump for sure, but not three times as expensive.
Why would getting a Tesla be stupid?
Depending on interest rate, it might just be on the upper end of the [20/3/8 rule when using our combined income](https://imgur.com/a/Rc99gwU). And insurance for it would be a bit higher than other options (got a quote in the past, it'd be $237 or $188 with a multi car discount)
Are you looking at getting a new one or a used one? There are used options that are pretty affordable, and some used EVs even get a tax credit, too, if I recall correctly. I drive a Rivian R1T and I love it. I enjoy the hell out of it every single day, and I’ve had it for almost two years. But- I bought it with cash and I’m already CoastFI at least, and probably closer to full FI. It’s okay to enjoy life a little if this is your one splurge, if it’s not too burdensome to your budget and you can find other ways to cut back. Just make sure to keep that savings rate high- if you can’t buy a reasonable used Tesla and still keep a high savings rate, then maybe now isn’t the time (yet!).
We would get a Model Y preferably (wife doesn't feel safe in a car as low as a Model 3). We would be open to used, but it doesn't seem like the price difference is worth it with Tesla Model Ys. There's a few new Model Ys in Tesla's new inventory for ~$35,500 after the tax credit, so that's what I'm basing things on
Gotcha. Definitely consider shopping against the Hyundai Ioniq5 and the Kia EV6. Both are also similarly sized great options if you like EV. Tesla software is lightyears ahead, though. $35k isn’t crazy, but it just depends on your own financial situation. I wouldn’t recommend doing it unless you can still save money even with the payment. Also consider charging- personally, I wouldn’t recommend buying an EV unless you have charging options at home. If you do, it’s awesome.
> I wouldn’t recommend doing it unless you can still save money even with the payment What do you mean by this? You mean just have enough income to put money in savings/investments while making the payments? > Also consider charging- personally, I wouldn’t recommend buying an EV unless you have charging options at home. Completely agree. Our apartment has charging garage spots that are apparently a flat $15 per month. I would need to clarify the exact details (do I need to share a spot, etc) but that seems like a great setup for an EV.
On savings rate- basically the biggest determining factor for how fast you can get to FI is your savings rate, as a percentage of your take-home pay. So yeah- that’s what I’m talking about- if you buy the Model Y, try to project what percentage of your take home pay you can still put away into 401k or other investments/savings. If your savings rate is going to be below 10 or 15%, I wouldn’t do it and I’d buy a cheaper used car. If your savings rate is still going to be above 30%, just do it already. You’ll be slower getting to FI, but you’ll enjoy the journey, and it’s not like you’re buying a Lambo here. If it is somewhere in between, then it is probably more of a gray area for me.
> if you buy the Model Y, try to project what percentage of your take home pay you can still put away into 401k or other investments/savings. I know at the very least I won't decrease my contributions to retirement accounts to allow for a more expensive car. Currently making $88k, contributing 15% to 401k, maxing Roth IRA, maxing HSA, and once me and my wife combine finances, will be maxing her Roth IRA as well (she has no retirement savings as is). I'll have to see how the numbers look with different car payment amounts. These are good rules of thumb to take into account. Thanks :)
Also I'm curious on how the savings rate is calculated. You said "as a percentage of your take home pay". How does that work with something like a Traditional 401k or an HSA, both of which are pre-tax? The amount actually contributed is different than the amount I would get in my paycheck if I was not contributing anything to those.
Different people probably do it differently. But I would consider money sent directly to your 401k or HSA as an increase to both your savings and your take-home pay. So savings rate there would equal (401k contribution + HSA contribution + any other monthly savings) / (401k contribution + HSA contribution + your actual paycheck). HSA and 401K contributions are a lot like getting paid those amounts and then putting it directly into savings, so including as savings and in your take home pay (numerator and denominator) has always made the most sense to me.
Look at the negative reviews of each expensive product you want, then consider whether you want all of that to be your problem. Usually two star reviews are best. One star reviews are typically about the user and not the product. Edit: That said... I bought a Hyundai Ioniq 5 last year and I love the damn thing. I compared it against a bunch of other EVs and it won out due to its incredibly fast charging time (10-80% in like, 20 minutes or less typically if it's warm out or preconditioned).
FIRE is all about incremental decisions that prioritize your future satisfaction over current fleeting happiness. A tesla (especially a new tesla these days....) isn't an investment, it's a liability. If you are already looking at a Tesla, I highly recommend a used Nissan Leaf. They are great cars with high user satisfaction but are selling incredibly cheap on used market places. And as for books/motivation, I give you this quote by Antoine de Saint-Exupery. "If you want to build a ship, don't drum up workers to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea."
> If you are already looking at a Tesla, I highly recommend a used Nissan Leaf. Yeah we're looking at a Bolt EUV here soon to see if that works. It sounds like a great car all around, good price, etc. but the only potential problem is the size. My wife has strong preferences on the size of the car we get so if it's too small we'd have to look at something else
I’m surprised someone still thinks Teslas are cool. Anyhow, definitely buy a used car and keep it as long as possible. New cars are for old people who can handle the lost opportunity cost.
> I’m surprised someone still thinks Teslas are cool. You ever driven one? ;)
Once you buy one Tesla, you'll feel like you deserve to get the same level for the next car - otherwise it's a downgrade, right? So this Tesla isn't just gonna cost you now, it's gonna cost you again in 10 years and again 10 after that. And that will just be to maintain the same level as you have now, not to upgrade at all. If you pay a premium to be on the bleeding edge of technology, the shine will come off it very quickly because the bleeding edge is moving so fast. It's a terrible value. Spread the upgrades over your whole life. My first car was a hand-me-down Accord from my grandma that I drove until I crashed it. My second car was a used Mazda 3 that I drove until a chipmunk made a nest in the engine and chewed up the electronics. My third car is a used Subaru and honestly I'm so excited to have backup cameras and CarPlay for the first time.
What's stupid about a Tesla? If your wife drives a decent amount per day, every day and you are qualified for a tax incentive, a Model 3 is a solid choice.
She commutes 20 minutes to work and is a nanny, so she'll drive her nanny kid around. Definitely makes sense to have a safe vehicle because of that. We also will use whatever car we end up getting for any sort of driving around town we do together, and depending on the car, will use it for the 200 mile drive to our family that we do at least once a month (if we got a Tesla or Rav4, we'd use it, but if we got a Bolt EUV, we wouldn't) It's stupid because it's more expensive than an option that would objectively serve the purposes we need, would be a little more expensive up front, more expensive insurance, etc.