Paging BH Gearheads: Reasonable Net Worth for Exotic

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
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ClevrChico
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by ClevrChico »

BJJ nerd wrote: Fri Mar 16, 2018 9:53 pm I don' think I would feel comfortable spending that kind of money until maybe the 3-4m mark.

I'm well aware that there is a huge number of factors that would be at play. Just wanted to get the discussion started and get your thoughts and opinions. :sharebeer
Agree. This 2006 article quotes the average Ferrari owner having an annual income of at least $1 million.

https://www.sfgate.com/cars/article/RED ... 532601.php

In the early 2000's the typical Porsche buyer had an income of $300k+.

With sufficient savings though, you could just buy it. A school classmate spent their trust fund on a car when they turned 18.
Zombies
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Zombies »

Exotics have come a long way in terms of maintenance — Ferrari offers 7 years free maintenance now (along with a 3 year warranty). They basically wanted people to stop saving a few bucks at independent shops and wanted to maintain relationships for future car purchases.

Ferraris, McLarens, and Lamborghinis can be purchased with very few games — Ferraris used to be a mess but outside of the special editions you can just walk into most dealers and get a 488 now. They upped production significantly since going public.

Porsche still has ridiculous ADMs (Adjusted Dealer Markup) for the GT3/RS and GT2, but who knows if that’ll still be the case a few years from now. These markets change fast.

Since this is a Boglehead forum I’d suggest only buy the car when you can afford to buy it outright. Leasing this kind of car (because you can’t afford it) seems really unnecessary — the only good reason to lease is if you get an early allocation and plan to flip (so you save on taxes), but that’s super uncool so just don’t do that.

You have to decide how much of your net worth you want to tie up with this, but I agree with the advice to consider this a zero to your NW after purchase, and thus only buy if you’re okay with that. Depreciation will hit hard, and don’t assume cars that held up well in the past will do so in the future. Only buy these cars if you don’t mind parking it at the grocery store, and won’t overly sweat some door dings or valet-ing it.

It’s just a car.

Insurance won’t be bad — just scale up comprehensive, and heavily discount since it’ll be a third car with low mileage. I think my 488 is like $2200 a year or so.

I spend pretty much every weekend going for a long drive on back roads, and love every minute. I don’t go much above the speed limit, but everything about the Engineering and craftsmanship sings to me, even at safe speeds in the twisties. I drive early, come home, and spend time with my kiddo — it doesn’t feel like a misplaced priority, but rather a luxury that I’m blessed and lucky enough to afford. I use a regular car if I’m going to work or will run into coworkers somewhere, never post to social media, and so on. Buying this car is for you and the friends you want to let drive and experience it, not for anyone’s perception of you.

If I had bought this earlier I would have stressed about damage, cost, embarrassment at being seen driving it, etc. Wait until the time is right. When you can afford it and are in the right mental state, it’ll be worth every penny.
msk
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by msk »

Save and invest 30% of after tax income. Blow the rest on anything you fancy. YOLO!
Danger only comes in when you are attracted to purchasing an exotic (car, painting, wine, etc.) and justifying it as an "investment". Only the "investor"can judge that sensibly. But if it is considered as a mere toy or a utility, then as long you still save and invest 30% of after tax income, go ahead and spend the 70% on a home theater under a railway bridge. You'll still retire comfortably :moneybag
10YearPlan
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by 10YearPlan »

SeaToTheBay wrote: Mon Mar 19, 2018 4:18 pm
10YearPlan wrote: Mon Mar 19, 2018 3:30 pm Not a car person myself, but I like the Livesoft Rule for Extravagant Purchases heuristic. It makes good sense to me as a way to measure the true impact to one's financial situation.

That said, I think it is important, in my opinion, to take into consideration the optics of such extravagant purchases, whether they're in the form of cars, watches, jewelry, or anything other people in your orbit would notice.

One optic to consider is that of your house. I always chuckle inwardly when I see a super expensive sports car outside of a house that could use some tlc. It's judgy of me, I know, but I cannot help it. Or when one spouse has a spendy car and the other has a hoopty. Another optic to consider is the people you work with/for and what they will say if you were to roll up in the car at work. Or how it looks compared to the rest of your life/style. None of these are reasons NOT to purchase, mind you, but just some food for thought. People can/will have thoughts about it, so might as well get comfortable with that in advance.
While I generally don't care that much about what random people may think (I would like my car just as much if it had a Hyundai badge instead of a BMW one), this is one thing that makes me hesitate in buying my dream car. People will look at a $20k used Porsche Boxster and think/say, "Oooh he drives a Porsche! Must be rich/paid too much/reckless with money." Meanwhile a co-worker will show up in a new loaded F-150 pickup that cost $60k and will depreciate more than the Porsche's value in 2-3 years, and no one will bat an eye. It's frustrating.

I feel like if I do buy a used Ferrari in a few years, I will have to keep it a secret from all but my very closest friends/family (certainly no co-workers or Facebook posts). People don't stop to consider people's passions in life (many car enthusiasts don't spend much on anything else) or that certain expensive cars can actually be decently responsible financial decisions (the case of say a Porsche 911 GT3 retaining virtually all of its value or even appreciating).
I only bring it up because it's human nature to make judgments about these things, good and bad. It's one of the reasons I don't buy super expensive handbags...because the rest of my wardrobe would not "match" and people, myself included, might judge that. I also might find it to be a slippery slope--when you have a really, really nice handbag, shouldn't the shoes be really, really nice,too? Can I afford both? What about my other accessories, like jewelry. This exercise has kept some of my spending in check, actually, so I find it kind of helpful, even if it is a buzzkill.

All that said, if I could EASILY afford the car, was in fact a car person, and had other financial ducks in a row, then yeah, buy the car.
Serie1926
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Serie1926 »

BJJ nerd, if you'd entertain a gorgeous 675LT Spider, Roy just posted one thats inbound.

https://www.ferrarichat.com/forum/threa ... er.571971/

Yummy!
2tall4economy
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by 2tall4economy »

Just picked up an exotic I’ve been working toward for about 25 years.

Details aren’t too important, but for anyone looking for guidance, this is what I did.

Waited until I had more than enough net worth to surpass the “never have to eat dog food again”. Can see the light at the end of the tunnel to retirement at “almost current lifestyle”

Funny thing about exotics - they stop losing money after a while and actually go up at about the cost of inflation. Buy them used right as they are about to hit that part of the depreciation curve. Never buy new until you’re good with tossing $200k on the fire. Which you should never be, honestly.

Annual bonus after tax can buy the car outright.

Net worth I think long term for cars is going to be 5% to 10%. The “average rich guy” has between 10% and 20% of net worth in alternatives such as wine art homes.... and cars. Works for me. Might not for you. I’m not quite there yet.
You can do anything you want in life. The rub is that there are consequences.
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ginmqi
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by ginmqi »

2tall4economy wrote: Tue Oct 06, 2020 11:46 pm unny thing about exotics - they stop losing money after a while and actually go up at about the cost of inflation. Buy them used right as they are about to hit that part of the depreciation curve. Never buy new until you’re good with tossing $200k on the fire. Which you should never be, honestly.
Depends on how much you're making and your NW.

I was talking with an acquiantance who earns 7-figures annually with a networth close to 8-figure range...he just felt comfortable enough to buy a brand new Acura NSX (MSRP can be close to 200k with options...but many can be had closer to 150k due to cooler demand for this supercar vs others).

To me, a 250k-300k+ car is for the VERY wealthy and you do NOT worry about having routine service bills in the several thousands AND repair bills in the tens of thousands (yes warranty covers some things...but not ALL and companies are notorious for fighting certain warranty claims).

I would have to be earning close to 7 figures to even consider a 200k car.
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Harry Livermore
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Harry Livermore »

Great thread. Different strokes for different folks.
I have always mostly been car-agnostic; my only concession to fun was when I was 21, fresh out of college, I owned a first-gen Acura Integra (Rio Red!) A really fun car to toss around, but being a Honda, incredibly reliable, cheap, and practical. Since then I have owned a succession of Ford Explorers and Honda Pilots. Yawn. My wife has gone through a couple of Honda Odysseys and now has a CR-V. Yawn. Most of them have been purchased used. We are very practical. Although I did restore a '66 Mustang coupe when I was in college (Candy Apple Red)
I'm way older than the OP, and our youngest is a freshman in high school. College is almost fully funded for him, as well as the older two (both currently in college) Prior to COVID, I made twice (or more) the income of the OP, and probably will again. Our net worth is far in excess of OP. And we're close to being done with mortgages... but, having said that...
I would never dream of spending $200K on a car. But I'm not into shaming the OP, nor is he wrong to want to scratch the itch. But I would say that his garage is already pretty darn impressive already.
OP, maybe wait just another couple years and see how the economy shakes out? You'll still be young, and the fallout from COVID may or may not wreck the economy. If it does so, and recovers, there will be bargains aplenty.
Practical as ever, I have suggested to my wife that maybe, just maybe, when we are done with the mortgage on our rental, and our youngest is done with high school, we should consider a USED Boxster. They are cheap, fun, and for a Porsche, practical. She likes to drive fast too.
But anyway, OP, lots of good advice. The BH forum continues to amaze.
Cheers
2tall4economy
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by 2tall4economy »

ginmqi wrote: Wed Oct 07, 2020 12:39 pm
2tall4economy wrote: Tue Oct 06, 2020 11:46 pm unny thing about exotics - they stop losing money after a while and actually go up at about the cost of inflation. Buy them used right as they are about to hit that part of the depreciation curve. Never buy new until you’re good with tossing $200k on the fire. Which you should never be, honestly.
Depends on how much you're making and your NW.

I was talking with an acquiantance who earns 7-figures annually with a networth close to 8-figure range...he just felt comfortable enough to buy a brand new Acura NSX (MSRP can be close to 200k with options...but many can be had closer to 150k due to cooler demand for this supercar vs others).

To me, a 250k-300k+ car is for the VERY wealthy and you do NOT worry about having routine service bills in the several thousands AND repair bills in the tens of thousands (yes warranty covers some things...but not ALL and companies are notorious for fighting certain warranty claims).

I would have to be earning close to 7 figures to even consider a 200k car.
As someone who has earned 7 figures in a year gross (not reliably, unfortunately), I'm still not comfortable dropping $200k on a car. If I had 8 figures in net worth, different story.
You can do anything you want in life. The rub is that there are consequences.
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ginmqi
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by ginmqi »

2tall4economy wrote: Mon Jan 18, 2021 2:10 am
ginmqi wrote: Wed Oct 07, 2020 12:39 pm
2tall4economy wrote: Tue Oct 06, 2020 11:46 pm unny thing about exotics - they stop losing money after a while and actually go up at about the cost of inflation. Buy them used right as they are about to hit that part of the depreciation curve. Never buy new until you’re good with tossing $200k on the fire. Which you should never be, honestly.
Depends on how much you're making and your NW.

I was talking with an acquiantance who earns 7-figures annually with a networth close to 8-figure range...he just felt comfortable enough to buy a brand new Acura NSX (MSRP can be close to 200k with options...but many can be had closer to 150k due to cooler demand for this supercar vs others).

To me, a 250k-300k+ car is for the VERY wealthy and you do NOT worry about having routine service bills in the several thousands AND repair bills in the tens of thousands (yes warranty covers some things...but not ALL and companies are notorious for fighting certain warranty claims).

I would have to be earning close to 7 figures to even consider a 200k car.
As someone who has earned 7 figures in a year gross (not reliably, unfortunately), I'm still not comfortable dropping $200k on a car. If I had 8 figures in net worth, different story.
I hear you.

I would have to say I might only consider a 200k+ car if I were to reliably and yearly earn 1M+. If I just had a crazy good year but then not sure my next year...nope....I'd have to be in a situation where 1M/yr is pretty much the set floor for the forseeable future.

But even then I can see how some people would not feel comfortable dropping that much on a car.

This really puts in to perspective how expensive "normal" cars are relative to the avg US household income.
Pandemic Bangs
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Pandemic Bangs »

Imo, it's not income; it's net worth.

I would think eight figures for sure. Even then, it would bug me to spend $20K annually on maintenance.

Apart from the maintenance issue, I don't think that it even matters whether it's a car or a pink diamond or a...
Wait 'til I get my money right | Then you can't tell me nothing, right?
finite_difference
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by finite_difference »

To own an exotic, I’d want to be able to drive it, not be afraid of getting it scratched, and have it meticulously maintained (tires, oil changes, repaint, fix everything that breaks.)

Let’s say the car costs $250,000.

I’ll assume annual maintenance of 10%, so $25k/yr, to keep the car in peak condition. Maybe an overestimate, but that’s fine since we want to keep things comfortable.

I want to be financially independent, so let’s say I can live on 3.5% of my portfolio. Let’s say 1/6 of that is my car expense. So $25k*6=$150k per year. That doesn’t include tax, so let’s say $200k/year.

That suggests a portfolio of about $5.7m.
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stoptothink
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by stoptothink »

ginmqi wrote: Mon Jan 18, 2021 3:15 pm
2tall4economy wrote: Mon Jan 18, 2021 2:10 am
ginmqi wrote: Wed Oct 07, 2020 12:39 pm
2tall4economy wrote: Tue Oct 06, 2020 11:46 pm unny thing about exotics - they stop losing money after a while and actually go up at about the cost of inflation. Buy them used right as they are about to hit that part of the depreciation curve. Never buy new until you’re good with tossing $200k on the fire. Which you should never be, honestly.
Depends on how much you're making and your NW.

I was talking with an acquiantance who earns 7-figures annually with a networth close to 8-figure range...he just felt comfortable enough to buy a brand new Acura NSX (MSRP can be close to 200k with options...but many can be had closer to 150k due to cooler demand for this supercar vs others).

To me, a 250k-300k+ car is for the VERY wealthy and you do NOT worry about having routine service bills in the several thousands AND repair bills in the tens of thousands (yes warranty covers some things...but not ALL and companies are notorious for fighting certain warranty claims).

I would have to be earning close to 7 figures to even consider a 200k car.
As someone who has earned 7 figures in a year gross (not reliably, unfortunately), I'm still not comfortable dropping $200k on a car. If I had 8 figures in net worth, different story.
I hear you.

I would have to say I might only consider a 200k+ car if I were to reliably and yearly earn 1M+. If I just had a crazy good year but then not sure my next year...nope....I'd have to be in a situation where 1M/yr is pretty much the set floor for the forseeable future.

But even then I can see how some people would not feel comfortable dropping that much on a car.

This really puts in to perspective how expensive "normal" cars are relative to the avg US household income.
I have a sibling, current HHI ~$50k and with a networth probably close to zero at 41, that is currently driving a '20 Porsche Turbos S. To be fair, he previously made pretty good money (oil and gas, laid-off last February, hasn't worked a day since and pretty sure career is done), but I would have thought that after having not worked in a year (wife is a nurse) and having literally no financial assets that they might consider getting rid of the $150k+ of debt they have parked in front of their rental condo (after they got out of the McMansion they were previously renting). It was quite "interesting" to hear him brag to my 5yr son that his car costs more than some people's houses.
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ginmqi
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by ginmqi »

stoptothink wrote: Mon Jan 18, 2021 4:07 pm
ginmqi wrote: Mon Jan 18, 2021 3:15 pm
2tall4economy wrote: Mon Jan 18, 2021 2:10 am
ginmqi wrote: Wed Oct 07, 2020 12:39 pm
2tall4economy wrote: Tue Oct 06, 2020 11:46 pm unny thing about exotics - they stop losing money after a while and actually go up at about the cost of inflation. Buy them used right as they are about to hit that part of the depreciation curve. Never buy new until you’re good with tossing $200k on the fire. Which you should never be, honestly.
Depends on how much you're making and your NW.

I was talking with an acquiantance who earns 7-figures annually with a networth close to 8-figure range...he just felt comfortable enough to buy a brand new Acura NSX (MSRP can be close to 200k with options...but many can be had closer to 150k due to cooler demand for this supercar vs others).

To me, a 250k-300k+ car is for the VERY wealthy and you do NOT worry about having routine service bills in the several thousands AND repair bills in the tens of thousands (yes warranty covers some things...but not ALL and companies are notorious for fighting certain warranty claims).

I would have to be earning close to 7 figures to even consider a 200k car.
As someone who has earned 7 figures in a year gross (not reliably, unfortunately), I'm still not comfortable dropping $200k on a car. If I had 8 figures in net worth, different story.
I hear you.

I would have to say I might only consider a 200k+ car if I were to reliably and yearly earn 1M+. If I just had a crazy good year but then not sure my next year...nope....I'd have to be in a situation where 1M/yr is pretty much the set floor for the forseeable future.

But even then I can see how some people would not feel comfortable dropping that much on a car.

This really puts in to perspective how expensive "normal" cars are relative to the avg US household income.
I have a sibling, current HHI ~$50k and with a networth probably close to zero at 41, that is currently driving a '20 Porsche Turbos S. To be fair, he previously made pretty good money (oil and gas, laid-off last February, hasn't worked a day since and pretty sure career is done), but I would have thought that after having not worked in a year (wife is a nurse) and having literally no financial assets that they might consider getting rid of the $150k+ of debt they have parked in front of their rental condo (after they got out of the McMansion they were previously renting). It was quite "interesting" to hear him brag to my 5yr son that his car costs more than some people's houses.
WOW. That's incredible to hear. A brand new 992 Turbo S is easily 200k+ with taxes and insurance.

I'm surprised a bank would even finance him...did he get like a 10-12 year loan or something? lol.
hi_there
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by hi_there »

For me, it is not a matter of net worth. Why would I own such a thing? You could spend a disproportionate amount of money on any item - for example, everyone here can probably afford a $2000 coffee machine, which if we were being honest, would probably provide more utility than a sports car, but why would you buy this?
Wanderingwheelz
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Wanderingwheelz »

stoptothink wrote: Mon Jan 18, 2021 4:07 pm
ginmqi wrote: Mon Jan 18, 2021 3:15 pm
2tall4economy wrote: Mon Jan 18, 2021 2:10 am
ginmqi wrote: Wed Oct 07, 2020 12:39 pm
2tall4economy wrote: Tue Oct 06, 2020 11:46 pm unny thing about exotics - they stop losing money after a while and actually go up at about the cost of inflation. Buy them used right as they are about to hit that part of the depreciation curve. Never buy new until you’re good with tossing $200k on the fire. Which you should never be, honestly.
Depends on how much you're making and your NW.

I was talking with an acquiantance who earns 7-figures annually with a networth close to 8-figure range...he just felt comfortable enough to buy a brand new Acura NSX (MSRP can be close to 200k with options...but many can be had closer to 150k due to cooler demand for this supercar vs others).

To me, a 250k-300k+ car is for the VERY wealthy and you do NOT worry about having routine service bills in the several thousands AND repair bills in the tens of thousands (yes warranty covers some things...but not ALL and companies are notorious for fighting certain warranty claims).

I would have to be earning close to 7 figures to even consider a 200k car.
As someone who has earned 7 figures in a year gross (not reliably, unfortunately), I'm still not comfortable dropping $200k on a car. If I had 8 figures in net worth, different story.
I hear you.

I would have to say I might only consider a 200k+ car if I were to reliably and yearly earn 1M+. If I just had a crazy good year but then not sure my next year...nope....I'd have to be in a situation where 1M/yr is pretty much the set floor for the forseeable future.

But even then I can see how some people would not feel comfortable dropping that much on a car.

This really puts in to perspective how expensive "normal" cars are relative to the avg US household income.
I have a sibling, current HHI ~$50k and with a networth probably close to zero at 41, that is currently driving a '20 Porsche Turbos S. To be fair, he previously made pretty good money (oil and gas, laid-off last February, hasn't worked a day since and pretty sure career is done), but I would have thought that after having not worked in a year (wife is a nurse) and having literally no financial assets that they might consider getting rid of the $150k+ of debt they have parked in front of their rental condo (after they got out of the McMansion they were previously renting). It was quite "interesting" to hear him brag to my 5yr son that his car costs more than some people's houses.
Nurses are well knows to wind up in situations like the one she’s in. I don’t know her but I feel like I do.
3 Fund Portfolio. 70%/30% AA. No mortgage. Simple.
stoptothink
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by stoptothink »

Wanderingwheelz wrote: Mon Jan 18, 2021 4:34 pm
stoptothink wrote: Mon Jan 18, 2021 4:07 pm
ginmqi wrote: Mon Jan 18, 2021 3:15 pm
2tall4economy wrote: Mon Jan 18, 2021 2:10 am
ginmqi wrote: Wed Oct 07, 2020 12:39 pm

Depends on how much you're making and your NW.

I was talking with an acquiantance who earns 7-figures annually with a networth close to 8-figure range...he just felt comfortable enough to buy a brand new Acura NSX (MSRP can be close to 200k with options...but many can be had closer to 150k due to cooler demand for this supercar vs others).

To me, a 250k-300k+ car is for the VERY wealthy and you do NOT worry about having routine service bills in the several thousands AND repair bills in the tens of thousands (yes warranty covers some things...but not ALL and companies are notorious for fighting certain warranty claims).

I would have to be earning close to 7 figures to even consider a 200k car.
As someone who has earned 7 figures in a year gross (not reliably, unfortunately), I'm still not comfortable dropping $200k on a car. If I had 8 figures in net worth, different story.
I hear you.

I would have to say I might only consider a 200k+ car if I were to reliably and yearly earn 1M+. If I just had a crazy good year but then not sure my next year...nope....I'd have to be in a situation where 1M/yr is pretty much the set floor for the forseeable future.

But even then I can see how some people would not feel comfortable dropping that much on a car.

This really puts in to perspective how expensive "normal" cars are relative to the avg US household income.
I have a sibling, current HHI ~$50k and with a networth probably close to zero at 41, that is currently driving a '20 Porsche Turbos S. To be fair, he previously made pretty good money (oil and gas, laid-off last February, hasn't worked a day since and pretty sure career is done), but I would have thought that after having not worked in a year (wife is a nurse) and having literally no financial assets that they might consider getting rid of the $150k+ of debt they have parked in front of their rental condo (after they got out of the McMansion they were previously renting). It was quite "interesting" to hear him brag to my 5yr son that his car costs more than some people's houses.
Nurses are well knows to wind up in situations like the one she’s in. I don’t know her but I feel like I do.
Pretty sure my brother was the one leading the charge for the Porsche, which they traded in their E63 AMG wagon (which I assume they were underwater on) to buy. Their other car is a late model Volvo, that I think is my SIL's daily driver (as she's the only one that leaves the house) and I would assume they are making payments on as well.

I am always curious how they continue to qualify for loans on their series of 6-figure+ European vehicles because I know their credit is bad and they have next to no assets. But, their HHI previously was $200k+. Different priorities.
smitcat
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by smitcat »

hi_there wrote: Mon Jan 18, 2021 4:28 pm For me, it is not a matter of net worth. Why would I own such a thing? You could spend a disproportionate amount of money on any item - for example, everyone here can probably afford a $2000 coffee machine, which if we were being honest, would probably provide more utility than a sports car, but why would you buy this?
"Why would I own such a thing? You could spend a disproportionate amount of money on any item"
Different folks get enjoyment in different ways - and it does not always need to cost what you might think. Usually it might, but not always...
gator15
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by gator15 »

I love exotic cars, but I don’t want those problems. Can’t deal with the anxiety of a possible scratch or dent in the car. It’s the reason why I’ve decided not to pursue a high priced car. I don’t think I would ever purchase an exotic, but would love to have a new Audi RS6 Avant. Went to my local dealership a few weeks ago and saw one on the showroom floor and loved it. The price tag was around $130k. That’s a non-starter for me. At that price I will continue to look and enjoy the purchases of others.
hi_there
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by hi_there »

smitcat wrote: Mon Jan 18, 2021 5:00 pm
hi_there wrote: Mon Jan 18, 2021 4:28 pm For me, it is not a matter of net worth. Why would I own such a thing? You could spend a disproportionate amount of money on any item - for example, everyone here can probably afford a $2000 coffee machine, which if we were being honest, would probably provide more utility than a sports car, but why would you buy this?
"Why would I own such a thing? You could spend a disproportionate amount of money on any item"
Different folks get enjoyment in different ways - and it does not always need to cost what you might think. Usually it might, but not always...
I am not trying to judge people who want to own expensive cars. However, one should question why so many people decide that cars are something worth spending so much money on, often to the point of likely financial ruin (example the guy above with the 911 Turbo). For some reason, more than any other thing to own, we have decided that fancy cars are a metric of personal success. If you own $250k car that mostly sits in the garage, you are probably a successful person; if you own $250k of Beanie Babies, you are insane. This is something that I understand less the more I think about it.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Starfish »

For his kid of NW this a question of happiness per $ spent.
Is the amount of money worth the happiness obtained? Don't you have any other ways to derive happiness with better ratio happiness/$? If the answers are yes and no, respectively, it should be an ok purchase. You have to do things while still young.
But this is very hard to believe. How is it possible to have no other things to enjoy in life? Even if we focus strictly on cars, I find to believe that a 300k car obtains more than 2X the happiness of a 150k car, 4X from 75X and 8X from 37.5k.
What about the happiness obtained by safety of a larger NW, or possibility to RE? Is this car worth years of work instead of freedom? If the answer is yes for now, will it be the same at 45?
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Notsobad »

Starfish wrote: Mon Jan 18, 2021 7:04 pm For his kid of NW this a question of happiness per $ spent.
Is the amount of money worth the happiness obtained? Don't you have any other ways to derive happiness with better ratio happiness/$? If the answers are yes and no, respectively, it should be an ok purchase. You have to do things while still young.
But this is very hard to believe. How is it possible to have no other things to enjoy in life? Even if we focus strictly on cars, I find to believe that a 300k car obtains more than 2X the happiness of a 150k car, 4X from 75X and 8X from 37.5k.
What about the happiness obtained by safety of a larger NW, or possibility to RE? Is this car worth years of work instead of freedom? If the answer is yes for now, will it be the same at 45?
Exactly. At some point there are diminishing returns from increasingly expensive luxury items. For example, many here put a used Camry at the top of the “worth it” pile, but I am willing to spend quite a bit more. But an exotic will not give me that kind of multiple of satisfaction. Of course, We have other things that are worth it to us splurge on.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by stoptothink »

gator15 wrote: Mon Jan 18, 2021 5:10 pm I love exotic cars, but I don’t want those problems. Can’t deal with the anxiety of a possible scratch or dent in the car. It’s the reason why I’ve decided not to pursue a high priced car. I don’t think I would ever purchase an exotic, but would love to have a new Audi RS6 Avant. Went to my local dealership a few weeks ago and saw one on the showroom floor and loved it. The price tag was around $130k. That’s a non-starter for me. At that price I will continue to look and enjoy the purchases of others.
One of my best friends just picked one up in white, to park right next to his heavily modded R8. While it's not what I'd do, at least he can 'reasonably" afford his car (well, vehicle, also has a boat, jet skis, 2-wheelers, and a side-by-side) addiction. I'm way more of a gearhead than him (or my brother with his P-turbo S), but the opportunity cost for anything above an economy car is just too much for me to stomach.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by smitcat »

hi_there wrote: Mon Jan 18, 2021 6:24 pm
smitcat wrote: Mon Jan 18, 2021 5:00 pm
hi_there wrote: Mon Jan 18, 2021 4:28 pm For me, it is not a matter of net worth. Why would I own such a thing? You could spend a disproportionate amount of money on any item - for example, everyone here can probably afford a $2000 coffee machine, which if we were being honest, would probably provide more utility than a sports car, but why would you buy this?
"Why would I own such a thing? You could spend a disproportionate amount of money on any item"
Different folks get enjoyment in different ways - and it does not always need to cost what you might think. Usually it might, but not always...
I am not trying to judge people who want to own expensive cars. However, one should question why so many people decide that cars are something worth spending so much money on, often to the point of likely financial ruin (example the guy above with the 911 Turbo). For some reason, more than any other thing to own, we have decided that fancy cars are a metric of personal success. If you own $250k car that mostly sits in the garage, you are probably a successful person; if you own $250k of Beanie Babies, you are insane. This is something that I understand less the more I think about it.
"However, one should question why so many people decide that cars are something worth spending so much money on,"
When folks have money problems its certianly not just limited to cars.

"we have decided that fancy cars are a metric of personal success"
I have never decided that , perhaps others do though. Neither did or do I use a persons suits, watch, home or college as a metric.

"if you own $250k of Beanie Babies, you are insane."
Would your opinion change if they paid $125K for them?
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by smitcat »

stoptothink wrote: Mon Jan 18, 2021 7:24 pm
gator15 wrote: Mon Jan 18, 2021 5:10 pm I love exotic cars, but I don’t want those problems. Can’t deal with the anxiety of a possible scratch or dent in the car. It’s the reason why I’ve decided not to pursue a high priced car. I don’t think I would ever purchase an exotic, but would love to have a new Audi RS6 Avant. Went to my local dealership a few weeks ago and saw one on the showroom floor and loved it. The price tag was around $130k. That’s a non-starter for me. At that price I will continue to look and enjoy the purchases of others.
One of my best friends just picked one up in white, to park right next to his heavily modded R8. While it's not what I'd do, at least he can 'reasonably" afford his car (well, vehicle, also has a boat, jet skis, 2-wheelers, and a side-by-side) addiction. I'm way more of a gearhead than him (or my brother with his P-turbo S), but the opportunity cost for anything above an economy car is just too much for me to stomach.
"I'm way more of a gearhead than him"
In what way are you more of a "gearhead"? Do you wrench much on cars/trucks/boats etc? Enjoy modifications to them? Driving them or going to shows?
Enjoy how they work and perform?
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ginmqi
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by ginmqi »

hi_there wrote: Mon Jan 18, 2021 4:28 pmI am not trying to judge people who want to own expensive cars. However, one should question why so many people decide that cars are something worth spending so much money on, often to the point of likely financial ruin (example the guy above with the 911 Turbo). For some reason, more than any other thing to own, we have decided that fancy cars are a metric of personal success. If you own $250k car that mostly sits in the garage, you are probably a successful person; if you own $250k of Beanie Babies, you are insane. This is something that I understand less the more I think about it.
This is another way I calculate the utility/enjoyment of a material item. How much $$/hr does it cost?

A car is nice, but unless you literally want to spend lot of your free time driving...most of the time a car simply just sits.

versus.....say if I built a really nice computer for about $2000....I use it a LOT when I'm not at work...and so that gives me way more hours of enjoyment per dollar spent.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by stoptothink »

smitcat wrote: Mon Jan 18, 2021 7:45 pm
stoptothink wrote: Mon Jan 18, 2021 7:24 pm
gator15 wrote: Mon Jan 18, 2021 5:10 pm I love exotic cars, but I don’t want those problems. Can’t deal with the anxiety of a possible scratch or dent in the car. It’s the reason why I’ve decided not to pursue a high priced car. I don’t think I would ever purchase an exotic, but would love to have a new Audi RS6 Avant. Went to my local dealership a few weeks ago and saw one on the showroom floor and loved it. The price tag was around $130k. That’s a non-starter for me. At that price I will continue to look and enjoy the purchases of others.
One of my best friends just picked one up in white, to park right next to his heavily modded R8. While it's not what I'd do, at least he can 'reasonably" afford his car (well, vehicle, also has a boat, jet skis, 2-wheelers, and a side-by-side) addiction. I'm way more of a gearhead than him (or my brother with his P-turbo S), but the opportunity cost for anything above an economy car is just too much for me to stomach.
"I'm way more of a gearhead than him"
In what way are you more of a "gearhead"? Do you wrench much on cars/trucks/boats etc? Enjoy modifications to them? Driving them or going to shows?
Enjoy how they work and perform?
I do all the basic work on my cars, I read about them constantly, I modded (myself) and auto-crossed my first new car ('00 Civic Si) before it was stolen, I did the same with motorcycles (CBR f4i and 1000rr) before I got married, I've built and modded three RC cars with my kids, etc. Neither my friend or my brother could tell you even the most basic things about their cars, let alone work on them or actually drive them in any environment where they could get remotely close to their limits. My buddy has a twin turbo R8 and immediately dropped his new RS6 at MTM for mods, and it will never come anywhere close to a track. I don't want this to come off the wrong way because they are great dudes who I am (obviously) close to, but it sure would seem (to me) that the value of their vehicles to them is primarily in wealth signaling. For instance, you go on their social media and the majority of their presence consists of pictures of their cars or posts about how the guy changing their oil fawned over their car.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by gator15 »

stoptothink wrote: Mon Jan 18, 2021 7:24 pm
gator15 wrote: Mon Jan 18, 2021 5:10 pm I love exotic cars, but I don’t want those problems. Can’t deal with the anxiety of a possible scratch or dent in the car. It’s the reason why I’ve decided not to pursue a high priced car. I don’t think I would ever purchase an exotic, but would love to have a new Audi RS6 Avant. Went to my local dealership a few weeks ago and saw one on the showroom floor and loved it. The price tag was around $130k. That’s a non-starter for me. At that price I will continue to look and enjoy the purchases of others.
One of my best friends just picked one up in white, to park right next to his heavily modded R8. While it's not what I'd do, at least he can 'reasonably" afford his car (well, vehicle, also has a boat, jet skis, 2-wheelers, and a side-by-side) addiction. I'm way more of a gearhead than him (or my brother with his P-turbo S), but the opportunity cost for anything above an economy car is just too much for me to stomach.
I’m not much of a gearhead, but have always loved vehicles. My wife thinks we have too many and I was forced to sell one recently. Like your buddy, I have a bit of an addiction to vehicles. The garage is crammed with a couple of cars, a motorcycle and an ATV. If we had space I would likely have a side by side. Sounds like your buddy has nearly $400k in vehicles in his garage. If he can afford it, good for him.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by gonefishing01 »

Exotics are funny because if you don’t put many miles on them and don’t wreck them you can mostly get your money back when you sell. Consider it a store of value, like bitcoin :P :P :P I have close friends with various exotics and rare cars and they sometimes sell them for more than they paid for them. But they also hardly ever drive them and complain all the time what a hassle they are to maintain, or even pay other people to look after them. Not my thing anymore as I don’t like the attention they draw. And even if it were I wouldn’t do it with 1.3m saved and young kids.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Bruse213 »

What about selling your ZO6 for a C8? You’ll be under $100k with a better looking and performing car than most $200k+ exotics and under warranty. And you won’t have to wait 10+ years to enjoy it. Who knows what the future holds for your health, etc. Or start a YouTube channel/business and purchase the vehicle through your business for tax purposes. Or purchase a rental property and let the cash-flow cover the cost of the car payment ... let the tenants pay for it. Maybe best of all, ... purchase a performance Tesla as your daily driver and get the best of both worlds.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Sandtrap »

BJJ nerd wrote: Fri Mar 16, 2018 9:53 pm First off, this is a fantastic forum that I came across relatively recently. Really looking forward to picking up some wisdom on these pages!

First, a bit about me. 34yrs old, happily married with 2 awesome kids (2 & 4 yrs old). While I don't consider myself to be a materialistic person, I do have a huge soft spot for cars. Always have been into cars as long as I can remember. All this to say that my lust for sports cars / exotics is not correlated to the typical status symbol drivers.

Now to the question, for those of you that share this passion, what would seem like a reasonable level of investment assets / net worth to even entertain a purchase of an exotic (think $250-300k).

I do live below my means, and save about half of my annual income (~ $120-150k depending on bonus), however I don't think my current investments of 1.3m is even close to justify/support that level of spending.

I don' think I would feel comfortable spending that kind of money until maybe the 3-4m mark.

I'm well aware that there is a huge number of factors that would be at play. Just wanted to get the discussion started and get your thoughts and opinions. :sharebeer
At what point of net worth and income stream, and stage of life, would it make sense to purchase a second home for $300,000 without jeopardizing a retirement portfolio in any possible way?

That's the number.

$3-4 million net worth and at what net income stream and what stage of life may not be anywhere near enough or might be enough.

Real life examples that I know:
1. Retired couple. No children. Net worth, well under 1.5 mil. Pension. SS. Just bought a Lotus Elite which is the same color as his Porsche Turbo 911 which is parked beside 2 Mazda Miatas.
2. Retired couple. 2 Pensions. SS. Net worth, well under 1.5 million. Just bought a $200k bus size RV.

j :D
Wiki Bogleheads Wiki: Everything You Need to Know
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by edge »

This is not the same thing...if you have a 300k exotic you probably have a 100k SUV or two along with it. The 300k car simply cannot be driven everyday (not comfortable and maintenance is a hassle).


I would say 12-15MM is a good number. Or less than that but a large income ~1MM/yr or greater.
travellight wrote: Fri Mar 16, 2018 10:30 pm I love cars but I would need to be well north of 10 million to spend 250-300k. I do hope to get there. I have spent for a Tesla which is in the 80k range.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by EddyB »

hi_there wrote: Mon Jan 18, 2021 4:28 pm For me, it is not a matter of net worth. Why would I own such a thing? You could spend a disproportionate amount of money on any item - for example, everyone here can probably afford a $2000 coffee machine, which if we were being honest, would probably provide more utility than a sports car, but why would you buy this?
I own a $2,000 coffee machine. I got it when I started working from home full-time, about 12 years ago. I’ve probably had more coffee than I otherwise would have during that time, but even had I been in the hardly-unusual one drink/day, 5 days/week camp, I would have come out ahead long ago. My spending on cars has been pretty limited.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Kagord »

My rule of thumb is 1% of net worth on the current retail value of all cars you own, so yeah, OP can't afford it in my book.

Edit: I am actually serious here, and I don't get much enjoyment myself from vehicles. My viewpoint is a car is a depreciating asset used for utility, an expense akin driving down the road and throwing money out the window. Probably different from 99.9% of the population I guess, but an opinion
Last edited by Kagord on Tue Jan 19, 2021 8:43 am, edited 1 time in total.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by London »

Kagord wrote: Tue Jan 19, 2021 6:12 am My rule of thumb is 1% of net worth on the current retail value of all cars you own, so yeah, OP can't afford it in my book.
Not only can the OP not afford it, almost no one can afford to drive anything. Assuming this isn’t sarcasm, this is preachy internet nonsense at its best.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by edge »

This math makes no sense.

Kagord wrote: Tue Jan 19, 2021 6:12 am My rule of thumb is 1% of net worth on the current retail value of all cars you own, so yeah, OP can't afford it in my book.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by stoptothink »

gator15 wrote: Mon Jan 18, 2021 9:02 pm
stoptothink wrote: Mon Jan 18, 2021 7:24 pm
gator15 wrote: Mon Jan 18, 2021 5:10 pm I love exotic cars, but I don’t want those problems. Can’t deal with the anxiety of a possible scratch or dent in the car. It’s the reason why I’ve decided not to pursue a high priced car. I don’t think I would ever purchase an exotic, but would love to have a new Audi RS6 Avant. Went to my local dealership a few weeks ago and saw one on the showroom floor and loved it. The price tag was around $130k. That’s a non-starter for me. At that price I will continue to look and enjoy the purchases of others.
One of my best friends just picked one up in white, to park right next to his heavily modded R8. While it's not what I'd do, at least he can 'reasonably" afford his car (well, vehicle, also has a boat, jet skis, 2-wheelers, and a side-by-side) addiction. I'm way more of a gearhead than him (or my brother with his P-turbo S), but the opportunity cost for anything above an economy car is just too much for me to stomach.
I’m not much of a gearhead, but have always loved vehicles. My wife thinks we have too many and I was forced to sell one recently. Like your buddy, I have a bit of an addiction to vehicles. The garage is crammed with a couple of cars, a motorcycle and an ATV. If we had space I would likely have a side by side. Sounds like your buddy has nearly $400k in vehicles in his garage. If he can afford it, good for him.
Unlike my brother, he can afford it. Net worth, I really have no clue, but he makes high 6-figures-low 7's a year. I wondered what he was going to do with that 5-car garage when he bought the new home a few years ago...now I know
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by smitcat »

stoptothink wrote: Mon Jan 18, 2021 8:07 pm
smitcat wrote: Mon Jan 18, 2021 7:45 pm
stoptothink wrote: Mon Jan 18, 2021 7:24 pm
gator15 wrote: Mon Jan 18, 2021 5:10 pm I love exotic cars, but I don’t want those problems. Can’t deal with the anxiety of a possible scratch or dent in the car. It’s the reason why I’ve decided not to pursue a high priced car. I don’t think I would ever purchase an exotic, but would love to have a new Audi RS6 Avant. Went to my local dealership a few weeks ago and saw one on the showroom floor and loved it. The price tag was around $130k. That’s a non-starter for me. At that price I will continue to look and enjoy the purchases of others.
One of my best friends just picked one up in white, to park right next to his heavily modded R8. While it's not what I'd do, at least he can 'reasonably" afford his car (well, vehicle, also has a boat, jet skis, 2-wheelers, and a side-by-side) addiction. I'm way more of a gearhead than him (or my brother with his P-turbo S), but the opportunity cost for anything above an economy car is just too much for me to stomach.
"I'm way more of a gearhead than him"
In what way are you more of a "gearhead"? Do you wrench much on cars/trucks/boats etc? Enjoy modifications to them? Driving them or going to shows?
Enjoy how they work and perform?
I do all the basic work on my cars, I read about them constantly, I modded (myself) and auto-crossed my first new car ('00 Civic Si) before it was stolen, I did the same with motorcycles (CBR f4i and 1000rr) before I got married, I've built and modded three RC cars with my kids, etc. Neither my friend or my brother could tell you even the most basic things about their cars, let alone work on them or actually drive them in any environment where they could get remotely close to their limits. My buddy has a twin turbo R8 and immediately dropped his new RS6 at MTM for mods, and it will never come anywhere close to a track. I don't want this to come off the wrong way because they are great dudes who I am (obviously) close to, but it sure would seem (to me) that the value of their vehicles to them is primarily in wealth signaling. For instance, you go on their social media and the majority of their presence consists of pictures of their cars or posts about how the guy changing their oil fawned over their car.
Sounds like you were really into mechanics and cars for a while and now they are just not that important to you. As time goes by interests change and the best thing is to move on to the next interests/challanges/desires whatever that is.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by smitcat »

Bruse213 wrote: Mon Jan 18, 2021 9:40 pm What about selling your ZO6 for a C8? You’ll be under $100k with a better looking and performing car than most $200k+ exotics and under warranty. And you won’t have to wait 10+ years to enjoy it. Who knows what the future holds for your health, etc. Or start a YouTube channel/business and purchase the vehicle through your business for tax purposes. Or purchase a rental property and let the cash-flow cover the cost of the car payment ... let the tenants pay for it. Maybe best of all, ... purchase a performance Tesla as your daily driver and get the best of both worlds.
"What about selling your ZO6 for a C8?"
The C8 is a good thought - but its near a one year wait, 6 months if you are really lucky.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by anon3838 »

BJJ nerd wrote: Fri Mar 16, 2018 9:53 pm

Now to the question, for those of you that share this passion, what would seem like a reasonable level of investment assets / net worth to even entertain a purchase of an exotic (think $250-300k).

I do live below my means, and save about half of my annual income (~ $120-150k depending on bonus), however I don't think my current investments of 1.3m is even close to justify/support that level of spending.

I don' think I would feel comfortable spending that kind of money until maybe the 3-4m mark.
I love fast cars. Not for the status, but for the feeling of the tires gripping the road. Hearing and feeling the growl of the engine.

I would need about $40M in investable assets to buy an exotic car. At around the $10M Mark I would consider attending events where I could see them, drive them and talk about them.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by bogledogle »

alfaspider wrote: Mon Mar 19, 2018 3:23 pm
BJJ nerd wrote: Mon Mar 19, 2018 2:04 pm

To address a few points brought up by other posters, if I ever got an exotic it would absolutely be used, likely 2-3yrs old with <10k miles, to be used on weekends etc. No way in hell I'm daily driving it or tracking it - unless I win powerball, which would be unlikely since I don't play.

I suppose to each their own, but to me owning an exotic and not ever taking it to the track would be like marrying a supermodel and taking a vow of celibacy.
:D I just woke up and this comment already made my day cheerful! :sharebeer
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by illumination »

I would think $8+ million net worth for a $300k exotic. I'm into cars, but I don't know what the resale on certain exotics are, if it's something you can own for several years and not lose half the value like an ordinary car, maybe it changes things.

This shouldn't matter, but not everyone is going to be excited about your purchase. If you have a 9-5 job, I'd be careful about letting people know or taking it to work. I knew a guy that got his Porsche keyed at work on like the first day he brought it in, I'm almost certain it was just out of anger at a flashy car that he "shouldn't" be driving.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by fyre4ce »

Under normal circumstances, I gauge car budget based on income, not net worth. My guideline is <= 25% of gross annual income in total value of household cars. So, if you want a $300k car, this would say you'd need an income of >= $1.2M, assuming you don't have a spouse who has an expensive car too. This is roughly consistent with a link above that says Ferrari owners tend to have incomes >$1M.

White Coat Investor had a podcast a year or so ago where he answered a question from a listener asking about buying a Lamborghini. It was his lifelong dream, going back to his childhood, and his burning desire for a Lambo carried through to the present. I think WCI's advice was spot-on: treat it as a goal, and prioritize it along with other financial goals (buying a house, saving for kids' college, retiring, etc.). You'll have to work longer (how much longer depends on income) and it will delay and compete with other goals (ie. you'll rent for longer, and live in a not-as-nice house), but if it's a priority, treat it as such.

I also like Dave Ramsey's advice for dream purchases like this, which is not to think of it like "yes" or no", but rather "when." Look at the rest of your financial picture and decide when it makes sense to spend money on a pure enjoyment purchase. Depending on the person, it could be years or decades from now, or much sooner.

I agree with advice that a purchase like this shouldn't be financed. Save up cash in a separate fund, and invest it aggressively if you like. If you strike it rich, then it sell the investments and go buy the car with it!
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by fyre4ce »

anon3838 wrote: Tue Jan 19, 2021 9:35 am I love fast cars. Not for the status, but for the feeling of the tires gripping the road. Hearing and feeling the growl of the engine.

I would need about $40M in investable assets to buy an exotic car. At around the $10M Mark I would consider attending events where I could see them, drive them and talk about them.
I tend to be pretty hard on people for over-buying on cars. I'm convinced it's the biggest obstacle for most Americans for building wealth. But, your guidelines seem WAY too conservative to me. I usually resist net worth-to-car price ratios because I think income is a better parameter. But not buying an exotic without a *liquid* net worth of $40M seems nuts. If an exotic costs $300k, that's only 0.75% (75 basis points) of the investment balance, less than one day's moderate market fluctuation. That would be equivalent to a wealthy Boglehead with $4M (enough to supply $160k/year income + SS) buying a $30k car (eg. a new mid-trim Honda Accord). If there is a net worth threshold for buying an exotic, it's gotta be far less than $40M.

And in case you didn't know, you can "attend events where I could see them, drive them and talk about them" for pretty cheap. I'm sure you can do the first and third for free. And driving an exotic isn't that expensive. You can rent a Ferrari 488 Spider in Vegas for $1300/day. You can also drive a Ferrari on a race track at speed for <$500. You don't need a NW anywhere close to $10M to afford that.

Also, if you love the feeling of driving a fast car, you should look into the various forms of high-performance driving and amateur racing. You can get a Spec Miata or various other track-worthy cars for $50k or less, and properly prepared they'll be similar in lap time to all but the highest-end exotics. Ongoing costs are significant though (tires, brake pads, track fees, etc.) so that must be included in the budget. But, if you want to go fast on the cheap, there are lots of great options.
OldBallCoach
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by OldBallCoach »

The great Ferris Bueller said it best..."the 1961 Ferrari California...It is so choice. If you have the means, I highly recommend picking one up." I consider my GTR as a therapy. Its no where near this level of car, but it will get the job done...Reasonable and exotic should not be in the same thought...but what the hell do you work so hard for if you cant have a little fun? Listen to Ferris...
Jack FFR1846
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Jack FFR1846 »

fyre4ce wrote: Tue Jan 19, 2021 11:39 am Also, if you love the feeling of driving a fast car, you should look into the various forms of high-performance driving and amateur racing. You can get a Spec Miata or various other track-worthy cars for $50k or less, and properly prepared they'll be similar in lap time to all but the highest-end exotics.
No, I gotta disagree. In 25 years of roadracing, I've never seen an exotic on the track that I didn't first intimidate the heck out of in the corners, then get pointed by to never see them in my mirror again. This in my 90 hp CRX prepared C racecar. You see, on the track, driver experience is everything. The car doesn't really matter. A lot of the fastest guys out there are driving Miatas.

If you own a string of Ferrari dealers, then absolutely....you'll have a few Ferrari racecars. And in LMP races, in GT class, you'll have paid professional drivers piloting them. You'll take expenses as advertising deductions so the tax payers can help foot your bills.

I love cars and am an absolute gearhead (built my own car from the frame up, numerous autocross and roadrace wins, some track records, heck....I have a lift in my garage). I've not been able to justify buying an exotic. I've certainly looked. shrug.
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fyre4ce
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by fyre4ce »

Jack FFR1846 wrote: Tue Jan 19, 2021 12:44 pm
fyre4ce wrote: Tue Jan 19, 2021 11:39 am Also, if you love the feeling of driving a fast car, you should look into the various forms of high-performance driving and amateur racing. You can get a Spec Miata or various other track-worthy cars for $50k or less, and properly prepared they'll be similar in lap time to all but the highest-end exotics.
No, I gotta disagree. In 25 years of roadracing, I've never seen an exotic on the track that I didn't first intimidate the heck out of in the corners, then get pointed by to never see them in my mirror again. This in my 90 hp CRX prepared C racecar. You see, on the track, driver experience is everything. The car doesn't really matter. A lot of the fastest guys out there are driving Miatas.

If you own a string of Ferrari dealers, then absolutely....you'll have a few Ferrari racecars. And in LMP races, in GT class, you'll have paid professional drivers piloting them. You'll take expenses as advertising deductions so the tax payers can help foot your bills.

I love cars and am an absolute gearhead (built my own car from the frame up, numerous autocross and roadrace wins, some track records, heck....I have a lift in my garage). I've not been able to justify buying an exotic. I've certainly looked. shrug.

Fair enough, I should have said "similar or faster". The point is, I used to see guys all the time who spent $X00k on an exotic and show up to a BMW Club DE event expecting to dominate, only to be 20 seconds a lap slower than a prepared E36 M3.

To my mind, the niche market for exotics is someone who (a) wants the feel of a high-performance car on the street, (b) has tons of money and doesn't care about parting with a chunk of it, and (c) wants to advertise their wealth, or is at least indifferent to advertising their wealth.
alfaspider
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by alfaspider »

Jack FFR1846 wrote: Tue Jan 19, 2021 12:44 pm
No, I gotta disagree. In 25 years of roadracing, I've never seen an exotic on the track that I didn't first intimidate the heck out of in the corners, then get pointed by to never see them in my mirror again. This in my 90 hp CRX prepared C racecar. You see, on the track, driver experience is everything. The car doesn't really matter. A lot of the fastest guys out there are driving Miatas.
Maybe overstating it just a bit. You can put a muppet in a modern supercar and as long as he manages not to bin it, the muppet would almost certainly outrun Lewis Hamilton in a stock MGB. You also have the fact that a lot of supercar owners on track aren't really pushing their cars. They are just stretching the car's legs a bit rather than trying to shave another tenth off the last lap.

You are right that it is rare to find a good driver in a well-prepped supercar though. Most people who have a lot of track experience are more interested in racing, and most of the amateur racing series that don't require billionaire bucks utilize more down to earth cars. If you do have billionaire bucks, there are series like the Ferrari challenge. It attracts more than its share of people with more money than sense, but there are some quick drivers, and most of those folks are also getting much more extensive coaching than your average Spec Miata HPDE driver will ever get.
hi_there
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by hi_there »

Pretty interesting posts about the racing. I bet a lot of supercar owners are just millionaires, not billionaires. So, they are still concerned about depreciation and don't want to eventually sell the car for too much lower than what they paid for it. So, they don't want to track the car, cause a lot of wear and tear, and risk an accident. The car is more of a garage ornament and to drive around once in a while to feel special. In fact, from what I have seen, people avoid driving their Ferrari to avoid high mileage. 1 mile in the car could well be like $100 in depreciation - not worth taking it to Whole Foods. What people track are cars that are old and cheap like Miata or 2000s M3, such that the driver can push the cars hard without guilt or economic concern.

I have a friend who had a track Miata, and he also used it as a daily driver. The car looked completely ridiculous with the roll cage and some special wheels, but at least it had a purpose.
SeaToTheBay
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by SeaToTheBay »

I like the "5% of NW" metric for all cars in the household, and could maybe stretch it upward a bit as NW increases.

It really depends though. Buying a brand new $300k exotic car and trading it on another one every year or two could very easily cost you $100k incl. taxes each time you trade, and there are a LOT of people who fit that bill (including leasing). Whereas buying something that likely won't depreciate much, if at all (911 GT3 w/manual transmission for instance) might not cost you much more than the opportunity cost of investing that money.

The guy I sold my last car to (a mere BMW M3) has a Ferrari F430 w/manual trans he bought 6 years ago for just over $100k, and a virtually identical one incl. miles just sold on Bring A Trailer for more than double. If he had bought a brand new $300k McLaren at that time it would be worth $100k today, maybe.
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