How much net worth to afford a BMW M2 comfortably? (payments, reports)
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I am not one for cars, but one day I plan to replace my wedding ring set with something as expensive as the car in question.
It will be once the kids' education costs are covered and we feel solid about having the resources necessary for our last 30 years (well, hopefully more).
Once you've got those objectives covered, what does it matter what you spend your cash on?
Trick question. Most wealthy people don't drive this type of car. This is a status car driven by people with lots of debt, not high net worth.
Alright... I have to admit. I have the look of this car though... I'm not wealthy, but I do fall into the high net worth category by society's standard. I love the BMW since I was a kid. Never had the money or the means to buy it; I don't have rich parents. But, now in my early 40's, I'm seeing a little bit of a light, I am debt free (except my mortgage), with a decent dual incomes, very affordable house payment and a cushion of investments (401k & taxable).. I don't know. I may be way off, but I'm merely sharing the fact that I have a desire to own this car. It's expensive and it's definitely not a NEED, but a WANT.
Dave Ramsey advised a guy with 1 million in net worth that he thought it was okay to buy a new car at that level. Otherwise, he usually recommended used. You can get quality from a used car.
The trap of buying a status car like a BMW is that you are cheating a bit. You cheat a little now, feels good. Got a wink from that cute young girl. Now, you need more bling. The guys at the wine and cheese party that have beemers have Rolexes. Hey, I can afford a Rolex... and so on.
Before you know it, all your cash is going to Fifth Avenue in NYC to prop up a temporary false image of yourself.
There is another risk. Start showing up at work with the status car and people might start thinking you are paid too much. Jealousy is a terrible enemy.
Avoid high status brands of everything and it will make you richer.
Yes, I totally see the point there. I am driving a Toyota to work every day. No one would think I'm ahead of the game, nor do I want them to. In reality, I'm 5 years from enough money to retire. But, I probably won't. 'Cos I actually like my job and the folks I'm working with. So, that's a plus. Also, I am not a big spender, I spend my money on my kids and their daily expenses, that's about it. I'm not keeping up with the Jonese kind-of type. I just love small sport car and cruising in one SOMEDAY. Perhaps in my dreams. My wife always says no to expensive stuff, I guess that's why we are able to save up much more than we anticipated.
The biggest live lesson I have ever learned is that things are never as they appear you need to dig deeper.
Quote:
Originally Posted by ericp501
I know plenty of "rich" people who make very good salaries but they blow allll their money and have almost nothing to show for it. Expensive cars, jewelry, homes, sure.. but at the end of the day its not making them any happier than the guy down the street shopping at target and living in the $400k home instead of the $1.4 mil home.
I'd rather make $75k a year and have a bunch of passive investments bringing in another $75k then just have a job that's paying me $200k.. I'd be married to that job, if I lost that job I'd be SOL, I could lose everything. If I have $75k in passive income I really never have to worry, that to me is being rich.
I don't want money so I can buy more things, I want money so I know my family will never have to struggle, so that I'll never be in a situation I can't walk away from, so that I can retire early and be able to spend time with the people I care about most. For those reasons you wont see me in luxury items or over spending until I've reached the point where my investments can pay for all those luxury items on their own.
One of the biggest life lessons I've learned is that it's really hard to judge how others spend their money because every single case is unique. Literally. In real life, very few people fit the stereotypes. We can generalize all we want, but when it gets down to it, money and psychology are so intertwined that unless we've lived another person's life we can't understand all the saving and spending choices they make. Childhood history, risk tolerance, confidence, skill set, spouse/family, education, heck, even geography affects how one makes the spending choices they make. Very few folks make 100% rational decisions 100% of the time.
Here's an example: I don't feel rich. My husband doesn't feel rich. We're not "rich" by the strict definitions of "rich" many of us here on the personal finance forum use. But we know we have a LOT more than most people, and we are thankful that all of problems are "first world problems." Deciding whether you can afford to buy an expensive new car and take a few expensive trips a year, doesn't cause the same stress as deciding whether to pay the rent or buy food. But decisions are made for a variety of reasons. We live in a large, million dollar house. And, yes, there are additional costs aside from the price--utilities are higher, everything costs more if it breaks, etc. But we aren't trying to impress anybody. We have a large family and wanted a large comfortable home to sprawl out in. We love it. But guess what? We HATE wasting money. We shop at Target. Half of our furnishings are probably from IKEA. We use coupons if we have them. We drive practical, family-friendly used cars. I wear very little jewelry--the same simple pieces everyday. I reuse the heck out of recyclables before I even recycle them...BUT we spend a small fortune on vacations We LOVE traveling and vacationing with our kids, and as a couple. It's a priority. It always has been. People spend on the things that are important to them.
The idea that "if you have to ask, you can't afford it" is nonsense. Just because you can afford pretty much anything you want, doesn't mean you can afford EVERYTHING you want. You still have to decide what's the best use of your time and money.
"read how the late Thomas Stanley, author of "The Millionaire Next Door" died not too long ago..."
Spoiler: he was driving the corvette he'd always wanted and finally purchased. So yes, even frugal "millionaire next door" types splurge when the time is right. Horrible how he died (other driver was completely at fault) but hopefully Mr Stanley died happy, and enjoyed driving that car he'd waited so long for.
Then you don't have to ask. Go for it, if you think it'll be worth it.
If you're not sure if it'll be worth it to you, you may want to rent something kindasorta similar for a week or two or three. Or buy something used. A former co-worker of mine owned a 7 year old Honda Accord and had been a "buy the reliable car, drive it into the ground" type of person for much of his adult life. Rather than keep the Honda for another 7+ years, he traded it in to buy a Jaguar. A used Jaguar. The car would have been 70K new, but cost him under 25K.
It was beautiful if you're into that type of car (I'd be more into an M Series BMW sedan or AMG series Mercedes sedan if I were to pay up for that sort of thing), and yes, being used it had maintenance costs that reminded you it was luxury car (insert joke about putting the mechanic's kids through college), but he got his "luxury car jones" out. As it happened, he enjoyed it more than he expected (AFAIK he still owns the thing).
Everybody has some area where they "splurge". Cars are generally not a good place to spend a bunch because they're depreciating assets and the expensive ones usually have higher maintenance/upkeep costs, but hey, dinner at a fancy restaurant is gone in a couple hours and the calories are basically the same as rotisserie chicken and a salad from Costco, but many people still go out to eat and somehow save money. If it adds enough "value" to your life to prioritize it over other things, then go ahead. People save money so they can live the way they want, not just for the sake of saving money.
Quote:
Originally Posted by AfternoonCoffee
One of the biggest life lessons I've learned is that it's really hard to judge how others spend their money because every single case is unique. Literally. In real life, very few people fit the stereotypes. We can generalize all we want, but when it gets down to it, money and psychology are so intertwined that unless we've lived another person's life we can't understand all the saving and spending choices they make. Childhood history, risk tolerance, confidence, skill set, spouse/family, education, heck, even geography affects how one makes the spending choices they make. Very few folks make 100% rational decisions 100% of the time.
Here's an example: I don't feel rich. My husband doesn't feel rich. We're not "rich" by the strict definitions of "rich" many of us here on the personal finance forum use. But we know we have a LOT more than most people, and we are thankful that all of problems are "first world problems." Deciding whether you can afford to buy an expensive new car and take a few expensive trips a year, doesn't cause the same stress as deciding whether to pay the rent or buy food. But decisions are made for a variety of reasons. We live in a large, million dollar house. And, yes, there are additional costs aside from the price--utilities are higher, everything costs more if it breaks, etc. But we aren't trying to impress anybody. We have a large family and wanted a large comfortable home to sprawl out in. We love it. But guess what? We HATE wasting money. We shop at Target. Half of our furnishings are probably from IKEA. We use coupons if we have them. We drive practical, family-friendly used cars. I wear very little jewelry--the same simple pieces everyday. I reuse the heck out of recyclables before I even recycle them...BUT we spend a small fortune on vacations We LOVE traveling and vacationing with our kids, and as a couple. It's a priority. It always has been. People spend on the things that are important to them.
The idea that "if you have to ask, you can't afford it" is nonsense. Just because you can afford pretty much anything you want, doesn't mean you can afford EVERYTHING you want. You still have to decide what's the best use of your time and money.
04-07-2016, 11:49 PM
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n/a posts
Let's see...
You've worked hard, saved lots of money for the future, and you'd like to reward yourself with a car that, while pricey, isn't exactly in the stratosphere.
I'd go for it.
Now, the M3s I see being driven by people who are two years out of college, have nothing saved for retirement, and no money saved for a house? Yeah, those people are not acting responsibly. You, however, are not those people.
Alright... I have to admit. I have the look of this car though... I'm not wealthy, but I do fall into the high net worth category by society's standard. I love the BMW since I was a kid. Never had the money or the means to buy it; I don't have rich parents. But, now in my early 40's, I'm seeing a little bit of a light, I am debt free (except my mortgage), with a decent dual incomes, very affordable house payment and a cushion of investments (401k & taxable).. I don't know. I may be way off, but I'm merely sharing the fact that I have a desire to own this car. It's expensive and it's definitely not a NEED, but a WANT.
I am in a very similar situation as yourself..... and have contemplated the exact same car! I was actually looking at the M235 last year in Estoril Blue... my favorite M color!
It was originally an E36 Estoril Blue M3 with Dove Grey interior that I lusted after in the late 90's.
But I digress.... My wife and I are 39 and have a net worth of about $1.2 MM, and no debt except for primary and rental mortgages.
We are doing pretty well for our ages, but I still hesitate in purchasing a car for $50K+, even though, as you, I could probably purchase it in cash, and still be ahead of 95% of the folks in my age group.
My hesitation is that I don't know what the future holds. I don't believe I have the job security that will allow me to maintain the same level of income for the next 15 years... which is when I would like to retire with $3 MM+.
If I lose my job, I'm very confident that I will be able to find something else that I would like to do, but probably at less than half of what I make today.... so owning a $50K+ would be a regret.
All this to ask: How confident are you that you will be able to meet your financial goals if you encountered a set back. Would this car have no effect, be a minor speedbump, or derail those goals?
If you think it would have a minimal impact, go for it! And please give me a review!
Very nice meeting you!! So glad I'm not alone on this...
Quote:
Originally Posted by seminolebound
I am in a very similar situation as yourself..... and have contemplated the exact same car! I was actually looking at the M235 last year in Estoril Blue... my favorite M color! It was originally an E36 Estoril Blue M3 with Dove Grey interior that I lusted after in the late 90's.
Long Beach Blue Metallic is what they call this Blue color for M2. I'm in love with this small sport car...
1M - I talked myself out of it
M235 - I talked myself out of it
M4 - I talked myself out of it
M2 - (here we go again...)
But I digress.... My wife and I are 39 and have a net worth of about $1.2 MM, and no debt except for primary and rental mortgages.
Congrats!! I am very happy to see other people done well also. You guys are on track to retire comfortably. Very nice!
Quote:
Originally Posted by seminolebound
We are doing pretty well for our ages, but I still hesitate in purchasing a car for $50K+, even though, as you, I could probably purchase it in cash, and still be ahead of 95% of the folks in my age group.
My hesitation is that I don't know what the future holds. I don't believe I have the job security that will allow me to maintain the same level of income for the next 15 years... which is when I would like to retire with $3 MM+.
Very much the same here. Money-wise, I can pay cash, sure. But I feel like it's taking a meaningful chuck of my portfolio, and my logic tells me it is not wise to do so. I can keep my money and let it work for me until I'm really well off before buying it. I am guessing when I am 3MM net worth, then the M2 will just be "pennies" in comparison. But then again, what good does it do when I'm old & bald driving a youngster's car at that age. I don't know. Life is about balancing choices and I'm dealt a tighter one here. That's all. 1st world problem though.
Quote:
Originally Posted by seminolebound
If I lose my job, I'm very confident that I will be able to find something else that I would like to do, but probably at less than half of what I make today.... so owning a $50K+ would be a regret.
That is very true. If there's a 20%+ chance of a layoff, then definitely a NO-GO. As for me, lucky me, my job should be pretty secured for the foreseeable future. So that one is checked in the checklist.
Quote:
Originally Posted by seminolebound
All this to ask: How confident are you that you will be able to meet your financial goals if you encountered a set back. Would this car have no effect, be a minor speedbump, or derail those goals?
For me: Minor speed bump, I'd say.
For my wife: Different story.
Quote:
Originally Posted by seminolebound
If you think it would have a minimal impact, go for it! And please give me a review!
Well, don't think I'll get an "Approved" from Suzy or D. Ramsey on this one...
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We LOVE traveling and vacationing with our kids, and as a couple. It's a priority. It always has been. People spend on the things that are important to them. 
