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Rethink 6-figure purchases
$140,000. That’s how much this custom Tesla cost.
How much does the owner drive it?
Not much considering they rarely leave their house.
The car payment is roughly $1500 a month.
The savings they have is less than 100k.
They also dropped several G on the downpayment but don’t have an emergency fund.
No, they aren’t broke, but maybe they are because their net worth is now negative since they bought a car worth almost 200k.
Do the math. Does this sound like a good financial situation?
Rethink Luxury Purchases If You’ll Rarely Use It
This story is more common than we like to think. Many people drive luxury cars that they don’t end up driving or can’t afford.
So why do they buy the car?
Everyone has their reasons, but often the reason is insignificant or for ego/image-related purposes.
I’ve seen too many people emphasize the fact they own a Tesla, but at what cost is that Tesla to their net worth?
Let me tell you the cost:
They are no longer sitting at a positive net worth.
Their car payment is abnormal – as much as a house payment.
They’re decreasing the potential of their monthly investments.
There is nothing wrong with buying a Tesla – if you can afford it, but the question is, can most people afford it?
The answer to this question is a confident “no.” Most people can’t even afford to cover a $500 emergency expense.
But people who earn x amount of dollars are able to afford a ticket into the luxury vehicle space and frequently end up buying more car than they require and can afford.
High Income Is A Buffer From Financial Mistakes
Many people who can afford to buy luxury vehicles on paper can do so because they consistently bring in high income.
The danger with this is that their financial habits often eventually catch up to them. A person with a high net worth (multi-millionaire) recently got their car repossessed. The average person might think, how is that possible? They have so much cash flow coming in.
Easy. When you consistently live above your means, you keep poking holes in the water bottle, and eventually, the water runs out.
Live below your means.
Buy vehicles when you can afford to pay cash for them.
If you’re not going to drive a lot, don’t overinvest in a car unless you have the cash to burn. Because that’s what cars are – cash burners.
This content is for informational purposes only — not professional advice. Consult a qualified professional before making any major decisions.