Mo money, mo (first world) problems

posted 1 month ago in Finances
  • poll: Should I buy a nearly 60k Tesla under these circumstances?
    you're crazy, buy the car! : (14 votes)
    18 %
    I get what you're saying, but buy the car anyway! : (25 votes)
    33 %
    I get what you're saying, don't buy that car! : (20 votes)
    26 %
    don't buy that car, but for reasons other than these (comment?) : (17 votes)
    22 %
  • Post # 31
    Member
    9811 posts
    Buzzing Beekeeper
    • Wedding: September 2013

    I would get a new car but not a Tesla.  Maybe a prius or some other hybrid?  What do your retirement accounts look like?  

    Post # 32
    Member
    1570 posts
    Bumble bee
    • Wedding: August 2018 - Location

    Forget the optics, I’m gonna be pragmatic here.

    1.5 mil is barely enough to pay off your mortgage and fund your retirement (my pension plan is valued at over 2mil but that’s indexed over time). 

    Keep living your current lifestyle, maybe buy a new hybrid vehicle that’s like 30-40k but no more than that. 

    Your job doesn’t sound stable with funding changing so drastically in a year. I wouldn’t count on that salary forever.

    Post # 33
    Member
    2569 posts
    Sugar bee
    • Wedding: December 2017 - Courthouse

    I feel bad that you have to justify your purchase. That’s awesome you’ve worked hard and you’ve been lucky enough to be getting money from a grandparent. I never got a cent from my grandparents and I think it’s great when they do have something left to share with their families after. 

    I don’t know a ton about Tesla’s, however, I think electric cars are so smart! The way gas is in Southern California, if you drive a decent amount, the car pays for itself! I’d much rather pay for a nice car than a ton of gas. 

    I say go for it! I’m driving a 2008 and my next car will be a hybrid plug in. We already have the plug in station in our garage. I can’t wait to save money on gas and driving a more eco friendly car! 

    Post # 34
    Member
    1253 posts
    Bumble bee
    • Wedding: June 2016

    I’m fairly image and money conscious, despite SO and I having very comfortable salaries. We live well within our means to the extent that I think very few people who know us/our lifestyle realize what we earn as a household. 

    That being said….buy the Tesla. If you were buying it for brand I’d say don’t do it. But if you’re buying it for environmental reasons, having done market research on your other options, and recognize that this is the right investment for you — then it’s a good decision to buy.

    My sister and Brother-In-Law are similar to SO and I (if not more frugal). They also are very environmentally aware. They also both have engineering backgrounds and are VERY thorough in any decision making process but especially about mechanical/technical purchases. 

    They spent months researching the electric vehicle market and landed on the Tesla as the best option. Given the range, expected maintenance (it can be $$), infrastructure access in our local area and other places they frequent on a regular basis, storage needs, etc — the Tesla was the best of the options available. 

    They love the car and are happy with their choice. It does feel “off-brand” for them as it’s quite a luxury vehicle, but it’s also the Model 3….I think the S or the X would get way more side-eye/stares.

    People have no right to question your purchases, but if you feel you need to justify just be honest. A peresonal priority of yours is the environment and you worked hard to financially afford a Tesla so that you can feel that you’re staying true to your environmental priority of reducing your own carbon footprint. No mention needs to be made of raises or inheritance.

    Also you can see if any of the model 3’s are coming off the first roll out of leases. You may be able to pick one up in great condition below the normal 60k pricetag.

    My sister and Brother-In-Law opted not to pay upfront for the self-driving as my understanding is that this is merely a software update that can be purchased later once the feature is more developed/tested. Might be worth checking?

    Post # 35
    Member
    923 posts
    Busy bee
    • Wedding: City, State

    Party pooper here!

    1- Find out the after-tax value of your inheritance.  That’s what you’ll have to work with.
    2- Figure out how much you’ll need to have put away by now to live a comfortable retirement life.  Like a PP noted, 14 years of paycheck to paycheck sounds like it’s unlikely that you and your husband have both funded your retirements well.  Figure out your strategy for putting a BIG chunk of that nest egg away for a rainy day, so that you won’t need to pull out more than 4% in retirement to live on.  Unfortunately, the number might be most of your post-tax inheritance. 
    3- Pay off your mortgage.
    4- Create (or top off) a college and graduate school fund for children (if you want/ have them).
    5- All done?  How much do you have left?  Divide that amount by 20.  THAT’s how much “extra” money you have to spend each year.  If you don’t divide that post-savings inheritance into 15-20, your upgraded lifestyle is not going to be sustainable in the long term.   If you have 500k left over after taxes and saving, you really only have $25k extra to spend on a new car.   

    Sorry to be a party pooper, but it’s extremely common for people who inherit money to see it all disappear in a few years.  

     

    Post # 36
    Member
    1116 posts
    Bumble bee
    • Wedding: April 2019 - USA

    anonymoosegoose :  First of all, congratulations on your pay raise, that is a HUGE increase and you should be super proud of that! Please don’t feel bad about wanting to upgrade- it’s obvious you need a new car if it’s constantly having issues. However you do need to be reasonable about it- so many people blow through inheritances or lottery winnings without saving or investing it, so it’s important to be discerning with how you approach this. 1.5 mil is really not a whole lot of money these days. You can turn that into 15 mil by the time you retire if you save & invest wisely.

    I would treat the inheritance differently from your own income-based savings. Perhaps set a portion of the inheritance aside as your “starter” savings if you need it (probably about 20%) and then put the rest aside in a “no touchy” fund for saving, retirement, & investing. But if you already have savings, then I wouldn’t even touch the inheritance if at all possible.

    With that chunk of savings, if you have any debts, first write a check and pay them off. Then put 3-6 months of living expenses in a “rainy day” fund for emergencies. Then if you have more savings after that, aside from the inheritance- use some of it of it to get a new car. Again, aim for about 20% of the remaining savings. The 20% rule is usually pretty good. If you don’t have your own personal savings, just save up and pay cash. Without any debt you should be able to save $20,000 pretty quickly, and you can get a very nice car for that. 

    Post # 37
    Member
    2504 posts
    Sugar bee

    First off, please meet with a fiduciary financial advisor and figure out what your longterm financial goals are before you spend/earmark any of the inheritance. Depending on how you use it, 1.5 million might set you up to be financially independent and retire early if invested properly (yielding 60k a year at a safe 4% withdrawal rate), or it could disappear quickly if you get used to lifestyle inflation. I wouldn’t make any major decisions until you’ve had more time to consider how you want to allocate it. 

    Whatever you do, I’d certainly replace your car if you don’t feel safe in it. If you wanted the most rational financial advice, buying a new car is always a bad idea. It’s always going to save you thousands to buy a pre-owned vehicle. But you’re certainly in a position where you could buy the new car and it might be worth it to you to do so. If you really want the Tesla, it is okay to buy the Tesla. 

    For reference, the Tesla OP mentioned, the Model 3, starts at 35k; compare to the Nissan Leaf (electric) at 30k or the Toyota Prius (hybrid) at 24k (all for base models). Yes, a Tesla is more expensive than other eco cars, but for this particular model, only by a few grand. It is actually pretty affordable compared to other mid-range new cars. I think some posters might be confusing it with the pricier models based on the reactions here. That said, given the brand associations, you might get fewer raised eyebrows from coworkers if you chose to buy a Nissan Leaf instead of a Model 3, so that might be a happy medium to consider. 

    Post # 38
    Member
    829 posts
    Busy bee

    browneyedgirl24 :  I was under the impression that the Tesla costs much more. I was wondering why so many people in my city could afford it :/. In that case it, is not super expensive compared to the inexpensive cars on the market. Ten years ago, the least priced vehicle I could find on the USED car lot was 15k, only about 1/2 the price quoted for the Tesla.

    Post # 39
    Member
    2504 posts
    Sugar bee

    Relat :  Yes, they have a huge price range depending on the model (going into the six figures), so you’re not wrong! Before they introduced the Model 3 a few years ago I think they were marketed more exclusively as a luxury brand, but the Model 3 was introduced with the idea of being a more affordable mass market version of their product. I only happen to know about it because I had a friend who really wanted one when they first came out and wouldn’t shut up about it. Anyway, the reactions here definitely seem to imply she’s talking about a luxury car vs. a fairly average priced mid-range new car.

    Post # 40
    Member
    41 posts
    Newbee
    • Wedding: City, State

    katebluestone :  My same thought, really made my stomach turn.  Also,in that sector, funding can go as quickly, if not quicker, than it comes and unfortunately is sometimes not spent well.

     

    Post # 41
    Member
    806 posts
    Busy bee
    • Wedding: October 2016 - Wedgewood Las Vegas

    If I were you, once I received the inheritance I would make sure that I was set for the future before buying any ‘wants’.

    I would make sure I had a home that was paid off and reasonable, so that I could afford it in my later, retirement years. I would also pay off any debts, and invest/save/manage some of the money for my retirement. If I had a child, I’d put some aside for an educational fund.

    However, if all of these above things are taken care of, I would splurge and buy a ‘want’, which in the OP’s case is a particular type of car.

    Post # 42
    Member
    530 posts
    Busy bee
    • Wedding: January 2019

    I am a social worker and I know I couldn’t roll up to my clients’ homes in an expensive vehicle without most of them losing trust that I am able to empathize with them. When I was in school our professors even talked about things like expensive cars, clothes, rings, and how it can be off-putting to clients to look like you’ve got a lot of money. Or depending on who your client is, it can potentially be dangerous as well. So because of that I’d be wary of it. I’d also be concerned that the funding might not last and your salary may drop – however I could be totally wrong on that as I’ve never even heard of getting such a huge raise through any type of funding. 

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