f80 M3 vs Student Loans

[GMe90]

Originally Posted by Jojipoji

Lol what? I have student loan debt from law school, a note on my GTR and my honda oddessy a home mortgage and a commercial property mortgage totaling close to 7 figures. Trust me my m3 lease is the least of my debts. I finance because my roi > then the 2-3% on my car/student loan debt. I have over 50% equity in my commercial building plus enough cash on hand to not work for a long while. I own my own business and don't expect to get fired soon.

Imagine how much better off financially you would be if you didn't have notes on your cars, the lease on the M3, and law school loans. It's good to see a fellow attorney on here.

[8600RPM]

Totally depends. I would live more in the moment. Why not. Go for the m4

[MDREDev]

Originally Posted by Falafel Combo

This is horrible horrible advice. It doesn't apply to anyone. Where do you get these numbers from?

Originally Posted by GMe90

If you have any loan other than a mortgage, you cannot afford an M3/4.

Originally Posted by GMe90

Imagine how much better off financially you would be if you didn't have notes on your cars, the lease on the M3, and law school loans. It's good to see a fellow attorney on here.

You mean how much more in taxes he'd be paying and not having the opportunity to get a 10-15% return on his money via the stock market or real estate? I shudder to think.

Sorry, but when I can use OPM for less than 5% and get a return that is at least double what I am paying in debt, I will....again and again and again.

[GMe90]

Originally Posted by MDREDev

You mean how much more in taxes he'd be paying and not having the opportunity to get a 10-15% return on his money via the stock market or real estate? I shudder to think.

Sorry, but when I can use OPM for less than 5% and get a return that is at least double what I am paying in debt, I will....again and again and again.

What kind of a financial return are you getting by not paying student loans off or buying a car that will deprecate $30k in the first three years? Pay the student loans off and then buy the car if you want.

[48Laws]

The notion that debt is inherently bad is laughable. Many people have zero financial restrictions despite their debt. And there are plenty of debt free people with 200 FICO scores and not a pot to piss in. Stop being so extreme, folks.

What strengthens a FICO score is a long, steady payment history. Do that and maintain an emergency fund. Attack debts with highest interest rates. Enjoy life.

[GMe90]

Originally Posted by 48Laws

The notion that debt is inherently bad is laughable. Many people have zero financial restrictions despite their debt. And there are plenty of debt free people with 200 FICO scores and not a pot to piss in. Stop being so extreme, folks.

What strengthens a FICO score is a long, steady payment history. Do that and maintain an emergency fund. Attack debts with highest interest rates. Enjoy life.

Not all debt is bad of course. $70k in student loans at 6.8 percent interest, however, is bad. I am not saying that the OP shouldn't buy an M4 ever. He needs to pay his student loans off first.

[48Laws]

Why does he need to pay off his loans first?

[GMe90]

Originally Posted by 48Laws

Why does he need to pay off his loans first?

Is this a serious question? If the the goal is to not be in debt and to be in a financially healthy position, then he should pay those debts off and not take on more debt. It's not like the OP is taking a $100k loan to start a business, which will in turn generate $200k in revenue. The student loans are a pure expense at this point, which increase each year at 6.8 percent interest. And the car will lose a ton of money in the first few years.

[48Laws]

The ROI on his student loans is, ideally, his career. So, why undermine his happiness? I think there is always a happy medium. He can still address his debt while driving his M to work. Yes! Seriously. If you can't stand losing money on a car...buy a horse. It's part of the game.

[GMe90]

Ok, I'll go buy a horse because that's apparently not a depreciating asset in your book. Yes, the OP's career is the ROI on his loans, which is why he should use the proceeds from his career to pay off his initial investment first. You are saying that the OP should seek instant gratification at the detriment of his financial well being. He can buy the M4 in two years. He'll be just as happy then and probably even more so because he won't have a ton of debt hanging over his head while he is driving the car he loves. Don't confuse instant gratification and lack of patience with happiness.

[Jojipoji]

Originally Posted by GMe90

Imagine how much better off financially you would be if you didn't have notes on your cars, the lease on the M3, and law school loans. It's good to see a fellow attorney on here.

Financially I would be better not to have any vehicle besides a honda civic but that could be said about everything we all own that is a non-necessity. I firmly believe the amount of utility I gain from my cars such as going to the track and road course racing my cars definitely helps me relieve stress and and gives me motivation to work harder.

No longer a practicing attorney and so much happier with my career change!

[48Laws]

Originally Posted by GMe90

Ok, I'll go buy a horse because that's apparently not a depreciating asset in your book. Yes, the OP's career is the ROI on his loans, which is why he should use the proceeds from his career to pay off his initial investment first. You are saying that the OP should seek instant gratification at the detriment of his financial well being. He can buy the M4 in two years. He'll be just as happy then and probably even more so because he won't have a ton of debt hanging over his head while he is driving the car he loves. Don't confuse instant gratification and lack of patience with happiness.

Buying a horse was a quip. Moreover, why can't he use his M as a means to get to work where he can earn money and taste the fruit of his labor ? That seems to work well together. When people are in other people's pockets...they always think what works for them works for everyone.

[WVUDrJay]

Originally Posted by Lups

I was trying to make myself write that pay up your loans, buy a house, get a wife and live long and be merry. Unfortunately that would make me the hypocrite of the century. I still have mortgage, but I'm going to have one till i hit 40, so instead of thinking this as a reasonable purchase, I'm investing in my future. this car will keep me sane in this middle aged engineer land, where I'm living now.

Go for it, live a little, don't wrap it around a tree.

First time I've disagreed with Lups.

Don't do it. Get your money right first. Life is more peaceful when you don't owe everyone else money.

[8600RPM]

The arguement totally depends on the enjoyment and benefit you extract out of a car. For me it's a hobby, stress relief, way to spend time with friends, an interest and source of happiness. That all is worth a ton to me. Opportunity cost isn't always measured in dollars folks. Clearly nobody in business here chiming in

[MKParris]

Originally Posted by Falafel Combo

This is horrible horrible advice. It doesn't apply to anyone. Where do you get these numbers from?

People should be well capitalized and in a stable situation prior to engaging in any debt related transaction of this size.

Basically the car payments equate to a percentage of net worth using 5 year loans. In the beginning it is best to keep your car payments low so you can invest in appreciating assets (house/stocks/other) before spending any money on depreciating toys (M3). If an individual can delay gratification until they have sufficient emergency funds/equity/stocks they have a better chance at truly being wealthy instead of just having a nice car and lots of debt.

The amounts i listed are minimums to have on your balance sheet prior to engaging in toys at this level of expense (unless the individual never wants to be financially independent or retire).

25K/100K=1% of NW = Car payments per year
50K/200K=5% of NW = Car payments per year
75K/300K=5% of NW = Car payments per year

[MKParris]

Originally Posted by ridin135

Wishful thinking, not sure of to many 20 year olds who can accumulate 300k of extra cash.

Start working when they are 22, get paid $55K, put $17.5 in 401K.
$140K in retirement by 30.

Save $15K after tax per year from the money after the 401K = $120K

Total = $260K assuming no raises and no investment returns by 30.

The problem is that no one can delay gratification and the second they get a job straight out of college they go YOLO and get an M3.

[guarnibl]

Originally Posted by MKParris

Start working when they are 22, get paid $55K, put $17.5 in 401K.
$140K in retirement by 30.

Save $15K after tax per year from the money after the 401K = $120K

Total = $260K assuming no raises and no investment returns by 30.

The problem is that no one can delay gratification and the second they get a job straight out of college they go YOLO and get an M3.

Agreed too many people overspend right out of school.

Your after tax numbers are impossible given the conditions you listed for the average graduate who isn't overspending (tldr; they have less than $900/month to live on for EVERYTHING) Unless they're getting outside help and don't have to pay for rent or something, probably not going to happen.

[humpday]

I just kind of skimmed through 5 pages of advice for the OP, but maybe I missed it: Did you (the OP) disclose anything else such as what your other debt obligations are, how much you have in your emergency fund, what is your current salary, how stable is your job, what are your retirement savings like, etc? This info would obviously have a huge impact on your decision. I assume that if your financial advisor told you to pull the trigger that you must be doing well for yourself. I don't think people here can simply say "do it" or "don't do it" based on just how much debt you have.

For me personally, I had 200k in student loans when I got my M4. I'm sure nearly 100% of people would have advised me to NOT get the car, but I figured, I'm in my early 30s and I want to enjoy life a little bit while I can still hold urine in my bladder on my own volition. Sure…it would be financially wiser to pay off all existing debt before buying a fun car, but a little financial sacrifice isn't a big deal if you're "well compensated" in other ways. Of course I mean stable job, high salary, excellent retirement funds, and little if any other debt. If you're fortunate enough to have that, then do it, man. You won't regret it. Again, I assume you are if your financial advisor told you to do it. Otherwise, you'd probably need to get a new advisor.

[Autotech]

I sold my limited edition Trans-Am firehawk (back when the muscle car market was stronger then it was 10ish years ago) paid off school, drove slower cars until now when i had my life paid off by 30, have a house and now the m3, im so happy i did that, i recommend doing the same! Life is easier without that student loan and it looks good on credit ratings too!

[48Laws]

Student loans can suck but they are the most passive loans one can have. Try putting your mortgage, car, or CC in forbearance! Student loans never go away even if you file for bankruptcy but there is far more recourse if you need it. I never sweat student loans but I stayed in good standing. CC rates, rules and penalties can be outrageous!

[Stevens21234]

Looks like OP went with the f80. Good for him. Hopefully this doesn't catch up to him. Especially if he has a job paying less than 100k in a high cost of living area. Interesting take on life. Partners in my selective consulting firm who earn in excess of $2 mill who went to good colleges (Harvard, Stanford, Princeton) still drive the most modest cars (Corollas, etc) to work. Some do have lavish cars, but they did not purchase them until they were cleared of all debt as many on here had advocated.

Rightly or wrongly depending on opinion, this is the approach I'm emulating. Otherwise, you're taking on unnecessary risk. Good luck having an insurance fund to find another job if you lose your existing one while saddled with 150k+ debt.

[PodDoc]

Originally Posted by ufgtrs2007

Great reasoning here. If you have a plan to payoff your loans in a timely manner and would like to allocate part of your monthly budget to paying for a car that is going to give you enjoyment, by all means do it.

You know your financial situation the best. And where is the fun in just paying down your student loans without any reward. Life is short brother, people are dying untimely from cancer, we live in an age where it's not a guarantee to live a long life anymore. And the US/World Economy is unpredictable.

ENJOY LIFE IN MODERATION

In addition to the comment above, if you waited til you paid your student loans and paid off your mortgage, then paid for kids tuition, etc.... You could never get the car. Also, the cost of the car is going to sky rocket, possibly faster than your income depending on your line of work. It wasnt too long ago when an M3 was around $40k optioned. Now they are $60's-$90k! And if you believe the press, the M3 isnt what it used to be and BMW is loosing its way so you may not even want the M3 BMW makes in the future.

You may also be in a different mind set in the future. I am just finishing my surgical residency with $230k in loans too. By the time i finish paying for everything as others are saying, I probably wont want to drive an M3 as a daily.

Bottom line, if you can make the payments comfortably while paying off your other obligations, go for it. If you have to lease to afford it, hold off a bit. Life is short, use the money you have worked so hard to make to enjoy life. It seems pretty stupid to live just so that you can work to pay bills.

Also 0.9% financing for 36 months is probably the best deal they may give for a while.