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What income to afford a Plaid?
- Thread starter mrclean90
- Start date
Watts_Up
Well-Known Member
I agree, "Don't live above your means" I mean don't spend and borrow more than what you have.
In the reality "It's not how much money you make, but how much money you save and make use of it."
But this dosen't mean that you should not take risks, as people who avoid failure also avoid success.
The straightforward answer is the car payment is $1475 per month. You add that to all your other liabilities to come up with the income needed to afford it.
If this question is because you want to buy a Model S or X, what you are asking suggests that you should be looking at something less expensive.
Could also be an aspirational question. I know I would always wonder about that sort of thing when I was younger
zoomer0056
Active Member
One or two good answers here. But they're just a start. You gotta take the ball and run your own calculations. But really, calculations don't mean a thing if all you want is some way to justify it. You're young, just find a way to buy it. Before you know it, you'll be old, own your home and retired and thinking you should've gone for the Plaid instead of the Civic.
sublimejackman
Member
$100k total purchase price (phased out of the tax credit at this income level)
-$20k down
-$80k financed for 36months @ 6.44%
-$2,450/month
-$2,450 / .08 = $30,625
-$30,625 * 12 = $367,500/yr income
But, like don't do that. Save your money and pay cash for a used one in three years. Three benefits 1. You don't give Tesla any more of your hard earned cash 2. You're buying something through the initial peak of the bathtub curve (which is severe at Tesla) and 3. The interest savings alone is 10% of the value.
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I mean, I know you are joking but for some people this might be the answer, and I always am somewhat amused at how much some people want to tell others how they should spend their money, or what makes them happy.
This is what I ment by the original question either being a bunch of naiveté or "lets get conversation going, gang!!" since these type of discussion almost always turn into finger wagging and quasi financial advice around "never finance a car, live within your means!" or some variation of that, which I find to be pretentious dribble.
sublimejackman
Member
I mean, I agree that it's not striaghtforward. This is a super messy question but I think, at least some of us, were trying to give honest advice tho. Like being out over your skiis on a car payment sucks, many of us have been there. Unless the OP was just trying to create some angergagement or trolling the community, what else can we provide?
I *was* joking, and there's already some financially prudent advice in the thread... but the idea that there's an exact formula to decide whether or not one can afford something is interesting to me.
I'd say if someone can afford to make the payments, pay all of their other bills, and have some extra for savings / emergencies, then they can afford it. Sure, this isn't the best strategy for those trying to "win the game" and have the most chips to cash in when they kick the bucket.
While the "correct" answer probably should be that a car payment should be a small portion of your income, life just isn't always so simple.
Tesla.com currently puts a Model S Plaid payment at $1550/month with $0 down, 72 months, and whatever interest rate it defaults to (6 something %). Is that a waste of money on interest? Sure... but it's also a waste of money on a car - you can buy 3 brand new cars for that price.
Minimum wage in my area is $15 / hour x 40 x 52 weeks / 12 months = $2,600 per month. Maybe Mom is *fantastic* to live with, is a great hardworking cook, plans to leave you the house and a large inheritance, and you have no intentions of ever leaving. Buy the plaid. Or spend your money on video games and Doritos.
If you don't already own your home, and are stretching yourself thin to buy a Model S Plaid, it's probably a *really* bad financial decision - like maybe the worst one you've ever made... cars are a depreciating liability that you drive for a while and then throw away.
So OP's question is really a budgetary exercise squarely in the realm of personal finance. Personal finance being exactly that; personal. Each person's answer will be different because of dozens of factors such as:
- where they are in life (in college vs in retirement)
- how much money they already have saved (in retirement and in non-retirement savings)
- what their income is today and what it will likely be in the future
- what other life goals (that require money) that person has that buying an expensive car would would negate
I think the exercise boils down to three questions for OP to answer their question for themselves assuming they are currently covering all their living expenses:
- What is the amount of money you have currently allocated for transportation? (X)
- How much free money do you have over and above covering all living expenses? (Y)
- Assuming your current transportation money (X) and your free money (Y) cover the cost of a Plaid, are you willing to sacrifice everything else you could be doing with your free money (Y)?
Paraphrased: Do you actually have the money to buy it? If yes, are you willing to forgo everything else you could do otherwise with that money?
That's it. I think its that simple.
- where they are in life (in college vs in retirement)
- how much money they already have saved (in retirement and in non-retirement savings)
- what their income is today and what it will likely be in the future
- what other life goals (that require money) that person has that buying an expensive car would would negate
I think the exercise boils down to three questions for OP to answer their question for themselves assuming they are currently covering all their living expenses:
- What is the amount of money you have currently allocated for transportation? (X)
- How much free money do you have over and above covering all living expenses? (Y)
- Assuming your current transportation money (X) and your free money (Y) cover the cost of a Plaid, are you willing to sacrifice everything else you could be doing with your free money (Y)?
Paraphrased: Do you actually have the money to buy it? If yes, are you willing to forgo everything else you could do otherwise with that money?
That's it. I think its that simple.
When you don't HAVE TO borrow anything to pay for it.
Until then you have no business buying any expensive car (from a financial perspective).
Even if you have $115,000.01 in cash sitting in your bank to pay for the Plaid outright draining your saving to one penny for a luxury car is a horrifically bad idea and I would not consider that "affording a plaid".
Isn't that the case with like 99% of all sports cars ever? They are rarely ever driven aggressively. I was talking with someone recently about his trip through the countryside in his Ferrari with a group that included a Lamborghini and a McLaren. They all had to make a special point to go out and drive their cars "for fun".
When I told him about driving my Tesla (Model Y, non-performance) aggressively he was shocked to hear the details. I assume that means I was driving more aggressively than that group did in their pretty extreme sports cars.
I can almost guarantee but cannot prove most of the buyers are making much less than the numbers spoken here. There are so many factors.
For example if you buy a car and a house around the same time it would be difficult but for example if you don't have a high house payment you can splurge on the car.
For example if you buy a car and a house around the same time it would be difficult but for example if you don't have a high house payment you can splurge on the car.
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