How do you know when you can truly "afford" a splurge item?

[ginmqi]

Somewhat NSX-related but guess its more financial topic and luxury goods opinion overall.

I'm very fortunate to be in a higher than average income profession and will be in a position to consider a car such as the 2nd gen NSX in about 3-4 years, but spending over 100k on a vehicle (or any other luxury item for that matter) just seems to me not the best financial decision when anyone else looks. And I'm certainly not a super wealthy earner where 100k is chump change.

Not to focus too much on me, but basically do you have a rule of thumb on when you decide its okay to splurge on something? (% of income, after you maximized your retirements, etc. etc.) Nice vacations? cars? computers? home theater? etc.

Thanks all!

 

[Lamchop168]

When that item/items suddenly disappears and you won't feel a dent in your wallet, then go ahead and spend whatever it is. Believe me, super rich doesn't spend like we do. They put away every penny, hence why they so rich! Just my 2 cents.............

My sister in law lives in Lanikai, Kailua, HI. They are retired and they are only 45! They do spend, but only when necessary. They just got rid of their old car and purchased a leftover 2016 Audi. They never buy anything that depreciate unless they use it till it dies, hence this old car, well, poor car. BTW, they own 2 more properties in HI and 2 more in Houston and Fort Worth.

Frankie

 

[TomCat]

My Brother puts DOUBLE the value of his discretionary spend in a no-touch "retirement" account...before he spends the discretionary $s.

 

[RSO 34]

Not to focus too much on me, but basically do you have a rule of thumb on when you decide its okay to splurge on something:

When you don’t have to come on an internet car forum and ask the question....

 

[ginmqi]

When that item/items suddenly disappears and you won't feel a dent in your wallet, then go ahead and spend whatever it is. Believe me, super rich doesn't spend like we do. They put away every penny, hence why they so rich! Just my 2 cents.............

My sister in law lives in Lanikai, Kailua, HI. They are retired and they are only 45! They do spend, but only when necessary. They just got rid of their old car and purchased a leftover 2016 Audi. They never buy anything that depreciate unless they use it till it dies, hence this old car, well, poor car. BTW, they own 2 more properties in HI and 2 more in Houston and Fort Worth.

Frankie

A certainly good way to look at it. Though it will be hard, imo, for anyone to not miss a 6-figure asset.

Awesome! Kailua is a great little community on Oahu. Certainly I'm envious that they're able to retire at 45. I think having a real estate as a passive/side income is great. I myself am thinking about getting into this side business when other financial obligations are taken care of.

For me though I'll only be in the rainbow state until end of september. Will transition back to the mainland (originally from KC) as housing cost here is quite high!

My Brother puts DOUBLE the value of his discretionary spend in a no-touch "retirement" account...before he spends the discretionary $s.

Very fair reasoning. Any idea on how he decides what the discretionary spend is in the first place?

When you don’t have to come on an internet car forum and ask the question....

I sense this may originate from a concern for troll/trollish behavior. Certainly now looking back I can understand the concern given the nature of the thread/OP and my very low post on NSXPrime. (I'm a semi-regular poster over at Acurazine and frequent r/cars on reddit as well)

My intention is certainly not just to get a rise out of this forum but a genuine curiosity as I always welcome more information from more sources. I've got friends who say to go for it and others who are much more frugal. The battle on reddit of car guys vs financially frugal guys can be quite heated at times as well.

The NSX has been a dream car for me for a long time and as such I'm now finally in a position to potentially consider this in the near future and just wanted to see what the online NSX community had to say.

Cheers.

 

[docjohn]

I'm with rso but I'll play.....so what is discretionary spend? well you need a reliable income..then subtract your fixed costs....food/clothing/ shelter ..but there is more..phone/ insurance/transportation/taxes/retirement savings...then after all your bills are paid and you have a cushion of $ in the bank, say 4 times your monthly salary..then any money left over is yours to spend on whatever you want.

 

[RYU]

No special formula... if it hurts too much when you lose it, you're betting too big. Oh wait.. or was that my rule for TSLA stock...

 

[gleibig]

I keep a year's worth of expenses in the bank. Anything over that, I spend on pinball machines and blow.

 

[furinax]

I asked this question when I first considered the gen 1 NSX. Got a lot of good wisdom but not much I already knew. You obviously have to make that decision for yourself, but it helps to know other financial factors.

Being an unmarried guy with no children and a nice cushy salary, I got into scotch and then obviously cars. Here is my wisdom:

1. Cars are the most expensive hobby next to houses. Car parts and car work is not cheap.
2. Having a carport or garage helps a lot with ownership costs. Since I don't have one, you should know a good mechanic. I personally would get a garage first.
3. Keeping the car stock will save you a ton of money. Although I do not think this applies to the gen 2, it is a heavy rule for the gen 1.
4. How secure are you financially? I had already invested a good amount in appreciating assets, and also am halfway through my 15 year mortgage with the condo. 10% of my income goes to 401k, 10% goes to religious donations. Subtract food and fixed costs (gym, internet, insurance) and I had a good number for discretionary income each month. It took me 3-4 years of single working to get to this point. If you have a stable job and no bad habits it's not hard to do.
5. Can you buy the item in cash? I was able to make the entire purchase extremely easy with the cash on hand. I would suggest you do the same with all your life purchases with the exception of house and maybe education. I recently got married and paid a hefty sum for the wedding. It would be out of the question to finance something like that though I know someone who do.

After 7 years of unlimited bachelor spending I finally got married. I am very grateful to be in the position I am in life. If you think the new car will make you happy, you are wrong. Happiness lies in contentment and gratefulness. For a long time I waited for the Fr-S to come out, and when it did I got it on day 1. I loved that car but I realized I loved the novelty more than the car itself. So when it came time to wait for the next Toyota invention (FT-1) I took a step back and got the NSX, a car which was also a splurge but which would be more impervious to depreciation. I love my NSX to death but in the end it's just a car. I gained more happiness from my wedding day (which was about the same price) than I could ever get from a car. The same is true with my education and with my future kids. So I would say if your priorities are in order and your financial situation is good, then go ahead and buy it. Just know that the excitement wears off and you can save a lot of money if you're just happy with what you have.

 

[ginmqi]

I'm with rso but I'll play.....so what is discretionary spend? well you need a reliable income..then subtract your fixed costs....food/clothing/ shelter ..but there is more..phone/ insurance/transportation/taxes/retirement savings...then after all your bills are paid and you have a cushion of $ in the bank, say 4 times your monthly salary..then any money left over is yours to spend on whatever you want.

I keep a year's worth of expenses in the bank. Anything over that, I spend on pinball machines and blow.

^^^Good rules for both of the above. After all expenses, I have 6mo emergency fund but definitely I can try to stretch it to 12mo as well. And any left over can be fun money.

I asked this question when I first considered the gen 1 NSX. Got a lot of good wisdom but not much I already knew. You obviously have to make that decision for yourself, but it helps to know other financial factors.

Being an unmarried guy with no children and a nice cushy salary, I got into scotch and then obviously cars. Here is my wisdom:

1. Cars are the most expensive hobby next to houses. Car parts and car work is not cheap.
2. Having a carport or garage helps a lot with ownership costs. Since I don't have one, you should know a good mechanic. I personally would get a garage first.
3. Keeping the car stock will save you a ton of money. Although I do not think this applies to the gen 2, it is a heavy rule for the gen 1.
4. How secure are you financially? I had already invested a good amount in appreciating assets, and also am halfway through my 15 year mortgage with the condo. 10% of my income goes to 401k, 10% goes to religious donations. Subtract food and fixed costs (gym, internet, insurance) and I had a good number for discretionary income each month. It took me 3-4 years of single working to get to this point. If you have a stable job and no bad habits it's not hard to do.
5. Can you buy the item in cash? I was able to make the entire purchase extremely easy with the cash on hand. I would suggest you do the same with all your life purchases with the exception of house and maybe education. I recently got married and paid a hefty sum for the wedding. It would be out of the question to finance something like that though I know someone who do.

After 7 years of unlimited bachelor spending I finally got married. I am very grateful to be in the position I am in life. If you think the new car will make you happy, you are wrong. Happiness lies in contentment and gratefulness. For a long time I waited for the Fr-S to come out, and when it did I got it on day 1. I loved that car but I realized I loved the novelty more than the car itself. So when it came time to wait for the next Toyota invention (FT-1) I took a step back and got the NSX, a car which was also a splurge but which would be more impervious to depreciation. I love my NSX to death but in the end it's just a car. I gained more happiness from my wedding day (which was about the same price) than I could ever get from a car. The same is true with my education and with my future kids. So I would say if your priorities are in order and your financial situation is good, then go ahead and buy it. Just know that the excitement wears off and you can save a lot of money if you're just happy with what you have.

furinax,

Thanks alot for your post! Definitely agreed with the novelty part. My current job has me in a long term rental car contract (I switch out to try diff cars with Nationals' emerald club) and I can definitely tell the new car aroma/feeling can wear off somewhat quickly. So definitely need to ensure I don't over-spend thinking buying that thing will make all the difference.

Personally, I am in a very fortunate position to be able to earn a higher than average income so I am definitely already maxing out all my retirement vehicles, but I do have to contend with a large student loan that I hope to pay off in 3-4 years' time. After that time frame is when I will start to potentially look at an upgrade from my current 2006 Acura TL daily. Hopefully gen 2 NSX will have depreciated reasonably amount by that time! Another avenue is to also look at investing in assets that can generate a steady passive income/cash flow...so as to further help fund certain expensive hobbies (ie real estate, etc.). Another potential avenue would be to look at Turo as well as another potential income generator.

Congrats on the marriage!