Here it is. The Ferrari 360. I’ve been drooling over this car for the past 15 years… And Liz and I officially have enough cash in the bank to pay for it. BOOM! Looks like I’m buying my dream car!!
5 Reasons I’m Not Buying My Dream Car
First of all, I highly doubt that Liz would give me the thumbs up on this ride since it’s not exactly kid friendly, and then there’s the minor detail that it would entirely deplete our savings account…
Aside from these reasons, there’s yet another five that would keep me from buying my dream car (ie. crazy expensive car)… and for this, we have to diagnose the different spenders in this world.
There are really three categories of spenders:
- Those that believe going into debt is okay as long as you can afford the payments
- Those that believe it’s dumb to go into debt. But, if you have the cash, spending the money is okay.
- And then there are those that spend based on the future value of their assets. In other words, buying with cash is great, but it’s not always smart.
During my adult life, I’ve found myself in each one of these categories:
- I took out loans (from Mom and Dad) for my college education. At the time, I thought, “No big deal, I’ll earn bank with my college degree and I’ll pay it off no sweat.” Thankfully, I only borrowed $12k and didn’t get into too much trouble here.
- While I was in school, I made the discovery that I had saved $5,000 in my bank account. Woot woot! Within a matter of days I bought two flat screen TVs and a 7.1 surround sound system… Hey, I paid with cash, so it was okay right? Nope… They were stupid purchases that later forced me into debt (…refer back to point #1… 🙁 )
- And today (as you may have already guessed), I’m definitely a no-debt kind of guy. And, even if I can afford to buy something, it doesn’t at all mean that I should buy it.
A $75,000 Ferrari would be absolutely awesome…but there are 5 reasons why I probably shouldn’t buy it.
1) I’d Get Sick Thinking About the Depreciation
The exact cost of this Ferrari is $73,899. By next year, it’ll probably be worth about $65,000. And then the year after that, it’d be worth $60,000… And down and down it would tumble.
Just to keep my net worth even with the year before, I’d have to save up $8,000 the first year, and then another $5,000 the year after (and so on and so on).
Would this car really be worth this net worth battle? Well…. it is pretty sweet…. but no, probably not.
Buying an expensive car is just the beginning. There are tons of other expenses that will sneak up on you within just a matter of months:
- Insurance: this would triple. Instead of my $500 a year now, I’d have to pay $1,500 a year – and that’s with a high deductible!
- Oil change: $195
- Annual fluids: $995
- New clutch: $3,200
- Brake pads: $816
And any major service would be over $3,500.
In any given year, I’d have to shell out another $4,000 minimum just to keep the car on the road…
3) The High Would Only Last For About 2 Weeks
Let’s be real. Owning a Ferrari would. be. AWESOME.
It’d be fast, it’d be fun, and everyone would want to be my best friend. Heck, I’d probably even let everyone drive it. I’d be pretty well-known within my little city of West Michigan.
But…how long would this awesome car feeling last? Probably about 2 weeks…and then it would feel just like any other car taking me from Point A to Point B. And in fact, it might even be more of a hassle than all the other regular cars on the road…which would cause me to love it less.
4) Stupid People Would Hate Me
I really don’t care what other people think of me – especially stupid people. But, they could still really make life a lot less enjoyable.
Do you know what stupid (selfish) people do to a Ferrari 360 that’s sitting in the parking lot? They spit on it, key it, give it an intentional door ding… all because they think the owner is a no-good selfish rich person…
But what if that ‘selfish rich person’ gave away more money in a year than than the ‘stupid person’ earned? Wouldn’t that be a good thing? Wouldn’t that be much more of a help to the poor than the person that earned little and gave absolutely nothing?
Liz and I love to give to charity, and honestly, one of our goals in life is to keep earning more so that we can keep giving more.
In other words, you know that goose that lays the golden egg? Instead of giving away the goose (to appease the stupid people of this world), why not hatch and grow 10 of them? Or maybe 100? And then our geese would lay thousands of golden eggs each day – many of which we could give away and do great things with?!
If we could succeed at this and give money away to thousands of needy individuals, wouldn’t it be okay to buy a nice car for ourselves? I personally think so.
5) I’d Much Rather Have My Money Work For Me
Unfortunately…Liz and I have only one goose (our rental house) right now… so as much as I hate to admit it, we’re probably not in a position to buy a $75,000 Ferrari 360 just yet…even if we do have the cash.
Our next move is to buy another rental house so that our money can keep working for us.
So, instead of watching our Ferrari go down in value each year, we could:
- watch our rental house go up in value, and
- receive a nice rental check every month from our renters (our golden egg!)
At this point, I’d much rather feed my money back into another investment to make even more money than to take out the profits and waste them completely.
What’s Your Take?
If you had $75,000 chilling in the bank, would you buy something extravagant like a Ferrari 360? Or maybe a brand new Tesla? Or maybe you’d want to do a complete remodel of your house?
The real question is, would you:
- Use the money to load up on more debt (ie. a $500,000 dream house)
- Buy something with cash that might depreciate in value, or
- Use the cash to buy another solid investment that will product more cash later?
Be honest with yourself! Let me know in the comments below! What would you do with $75,000?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.