Hi Money Minder,
I’ve got a serious itch for a sports car (thinking around $50,000), but I’m feeling all sorts of guilty vibes. My inner voice keeps nagging, “Dude, your current ride is fine. Why blow 50k? Invest that money instead!” So, when’s the right moment to splurge on something big just for the fun of it?
Our family whip is a 2019 Subaru Forester—fully paid off, no loans.
Here’s a quick look at our money situation:
Family net take-home pay (after taxes, maxed out 401k, health insurance) – $17,400
Mortgage (inc. property tax and insurance) – $3,000
Monthly credit card (covers groceries, dining out, gas, entertainment, car insurance) – $4,000
Monthly savings – Anywhere between $9,000 and $11,000
Assets:
Cash (80k in Money Market) – $100,000
Certificates of Deposit and Treasury I Bonds – $100,000
Taxable brokerage – $135,000
My 401k – $125,000
Wife’s 401k – $90,000
Money Minder, would love some guidance on this!
Cheers, Indecisive Dad
Response from THE MONEY MINDER:
"Hello There,"
Hello and thank you for providing such a detailed snapshot of your finances. It’s clear that you have been meticulous in planning and managing your financial situation, which is commendable. Given your strong position, let’s discuss the decision to purchase a sports car.
Firstly, congratulations on your growing family and the level of financial stability you have achieved. It’s understandable to have a desire for a rewarding purchase like a sports car, especially when you’ve worked hard and managed your finances so well. However, it’s wise to weigh the benefits and potential drawbacks to ensure that your decision aligns with both your immediate happiness and long-term financial goals.
Given your monthly net cash savings of between $9k and $11k, and considering that you have no current loans on your family car, financially, you are in a robust position to consider a splurge like this. Your diversified assets, including cash, CDs, bonds, and taxable brokerage accounts reflect a healthy balance that can accommodate a significant purchase without jeopardizing your financial security.
However, as you already feel an inner conflict about this decision, it’s important to consider a few practical aspects:
1. Assess Long-Term Goals: Reflect on your long-term financial goals. How does this purchase align with goals like future education costs for your child, retirement plans, or potential home upgrades? Ensuring these are prioritized might help you assess the impact of a large purchase more clearly.
2. Budget Adjustment: Consider if your current savings rate would be sustainable post-purchase. Given that a new sports car will add extra costs such as insurance, maintenance, and possible depreciation, ensure these are factored into your calculations.
3. Emotional Fulfillment vs. Practical Needs: While the current car is functional, the desire for a sports car seems to be more about emotional fulfillment. Weigh this against practical needs. If it’s a lifelong dream or something you’ve been yearning for, setting apart a specific portion of your savings for this ‘dream fund’ could help realign your perspective and reduce guilt associated with the purchase.
4. Opportunities for Compromise: If the guilt persists, consider exploring options like buying a gently used sports car instead of brand new, which could offer significant savings while still providing enjoyment. Alternatively, leasing could be an option that balances a desire for new experiences without a long-term financial commitment.
Ultimately, it’s about striking a balance between enjoying the fruits of your labor and maintaining a secure financial foundation for your family. Given your sound financial health, treating yourself to a large purchase is not imprudent as long as it is done thoughtfully and in alignment with your broader financial goals.
Thank you for sharing your situation. Here’s wishing you the best of luck with your decision.
Sincerely,
THE MONEY MINDER
