The Moneyist: I saved $1.1M for retirement, earn $128K and have $22K in cash. Can I afford my dream car — an $80K Nissan GT-R?

United States

Dear Quentin,

I’m looking to purchase a used Nissan GT-R and spend about $ 80,000.

I’m 41 and single with no kids, and have always been a big saver. I currently make $ 128,000 a year, and have a combined $ 1.1 million in my 401(k), Roth IRA and brokerage accounts. I’m saving 15% of my pre-tax income with a 4% contribution from my employer.

‘I have $ 56,000 left on my mortgage, of which I’m paying an extra $ 500 a month toward principal and planning to pay off within five years.’

I have $ 56,000 left on my mortgage, of which I’m paying an extra $ 500 a month toward principal and planning to pay off within five years. I have about $ 150,000 equity in my condo and about $ 22,000 in savings.

Dealership appraised my current car, which I paid cash for, at $ 6,500, but I may end up keeping it as there are some activities I don’t/can’t do in the GT-R (e.g., parking in the city, transporting a bike, moving semi-large or dirty items, etc.).

1. Can I afford my dream car?

2. If I can, how should I go about financing it? Should I pay it off? Loan?

Any assistance you can provide would be greatly appreciated.

Thanks in advance for reading this.

Would-Be Dream Car Owner

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Dear Dreamer,

I don’t want to squash your goal of owning the car of your dreams. (Like I did with this guy.)

But your circumstances are different from that good fellow: Namely, you are financially independent and in a very comfortable position for retirement, notwithstanding any unforeseen circumstances. You have worked hard to have the car you want.

Should you spend $ 80,000?

Yes, you can afford your dream car. But should you get it? I’m less sure. Used cars are expensive to finance, and $ 80,00 cash would be a hard proposition for you to justify.

I will say this: It will make you happy (for about five minutes). But that feeling typically depreciates along with the value of the car.

I don’t know what this particular model means to you. Everything that catches our eye, that we dream and, yes, obsess about strikes some delicate chord. But from what you say about your current finances, you don’t give in to impulses at the expense of your financial security.

Automobiles serve both functions: They get you from A to B and they give you that Christmas morning feeling when you get the keys. It’s an expensive toy and a pricey piece of machinery.

Keep that in mind before buying this, or any, car. I am mindful of the couple who loved the swagger of their old jalopies (they shared a financial adviser with their neighbors, and that was the end of their friendship.)

Alternatively, consider leasing the car first to see if it’s an everlasting love.

How should you pay for it?

People should generally not buy a car with cash when the price exceeds their own liquid savings, and/or during a time when interest rates are so low.

Given your $ 22,000 in cash, buying a car of this price with a low rate of financing would make more sense.

But the cash vs. financing question depends heavily on the price. If I were you, would I buy it? No, for all of the above reasons.

What do the readers say?

I am not a car owner, so I give you these two responses to your letter from readers: one in favor of buying the car, and one who regrets doing what you are considering doing now.

One reader emailed me to say buy it: “I bought my dream car, a 2010 Ford Shelby GT500, 10 years ago for $ 41,000 and I continue to get goosebumps whenever I take it for a drive,” Jeff wrote.

“The 10 years of enjoyment I’ve had it is, of course, is a lot longer than the five minutes you mention in your article. It also represents years of working hard to become financially secure enough to be able to afford it,” he added.

“Most people think of a car as a way to get from point A to point B,” Jeff told me. “Others, like myself, consider some cars to be a work of art that can also be driven from point A to point B.”

‘It’s a relatively modest dream for a not-so-modest price.’

— The Moneyist

“I’ve had people rain on my parade for owning the car; sometimes I get accused of having a midlife crisis. But they fail to understand I’ve been involved with sports cars in one way or the other my whole life.”

“I guess my ultimate point is everyone’s passions are different and should be respected. I get a bit of judgment for having a somewhat pricey toy others do not understand,” Jeff wrote.

And now for the naysayer: “I bought my dream car — a very expensive European sports car — almost 19 years ago when I was 33 and in really good financial shape, like the letter writer. Looking back now, it was an absolutely terrible financial decision,” he wrote.

“I had invested the money spent on that car (over and above the money spent on a ‘normal’ car) that I could have used to retire about three years earlier,” he said.

“Being able to retire and spend more time with my family and friends means a lot more to me now than the feeling of driving a rare/fast/exotic sports car ever did,” he added. “If he can’t pay cash, then he can’t afford it, period. That said, I did meet a couple of friends that I never would have met if I didn’t have that car, and it’s impossible to try to put a value on that.”

Final word from The Moneyist:

I think if you really knew it was the right move, right now, you would not seek a second opinion from The Moneyist. I will say that it’s a relatively modest dream for a not-so-modest price.

Here’s a secret that should not be a secret: The biggest and best dreams don’t cost $ 80,000. Just remember, if you do buy it, that there may come a day when you owe more on the car than it’s worth.

All too often in America, that’s the stuff that dreams are made of.

The Moneyist: I’m a farmer in my late 30s, live a frugal lifestyle, and my son has a disability. Should I pay extra on my mortgage — or save for retirement?

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