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

I have $56,000 left on my mortgage, of which I’m paying an additional $500 a month towards principal and planning to repay inside 5 years. I have about $150,000 fairness in my rental and about $22,000 in financial savings.

Dealership appraised my present car, which I paid money for, at $6,500, however I could find yourself maintaining it as there are some actions I don’t/can’t do in the GT-R (e.g., parking in town, transporting a motorcycle, shifting semi-large or soiled gadgets, and so on.).

1. Can I afford my dream car?

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

Any help you possibly can present could be significantly appreciated.

Thanks in advance for studying this.

Would-Be Dream Car Owner

You can e mail The Moneyist with any monetary and moral questions associated to coronavirus at qfottrell@marketwatch.com, and comply with Quentin Fottrell on Twitter.

Dear Dreamer,

I don’t need to squash your purpose of proudly owning the car of your goals. (Like I did with this guy.)

But your circumstances are totally different from that good fellow: Namely, you might be financially impartial and in a really comfy place for retirement, however any unexpected circumstances. You have labored arduous to have the car you need.

Should you spend $80,000?

Yes, you possibly can afford your dream car. But do you have to get it? I’m much less certain. Used automobiles are costly to finance, and $80,00 money could be a tough proposition for you to justify.

I will say this: It will make you content (for about 5 minutes). But that feeling usually depreciates together with the worth of the car.

I don’t know what this explicit mannequin means to you. Everything that catches our eye, that we dream and, sure, obsess about strikes some delicate chord. But from what you say about your present funds, you don’t give in to impulses on the expense of your monetary safety.

Automobiles serve each capabilities: They get you from A to B and they offer you that Christmas morning feeling if you get the keys. It’s an costly toy and an expensive piece of equipment.

Keep that in thoughts earlier than shopping for this, or any, car. I am conscious of the couple who loved the swagger of their old jalopies (they shared a monetary adviser with their neighbors, and that was the top of their friendship.)

Alternatively, take into account leasing the car first to see if it’s an eternal love.

How do you have to pay for it?

People ought to typically not purchase a car with money when the value exceeds their very own liquid financial savings, and/or throughout a time when rates of interest are so low.

Given your $22,000 in money, shopping for a car of this worth with a low price of financing would make extra sense.

But the money vs. financing query relies upon closely on the value. If I had been you, would I purchase it? No, for the entire above causes.

What do the readers say?

I am not a car proprietor, so I offer you these two responses to your letter from readers: one in favor of shopping for the car, and one who regrets doing what you might be contemplating doing now.

One reader emailed me to say purchase 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 instructed me. “Others, like myself, consider some cars to be a work of art that can also be driven from point A to point B.”

“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 mentioned.

“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 phrase from The Moneyist:

I suppose in the event you actually knew it was the precise transfer, proper now, you wouldn’t search a second opinion from The Moneyist. I will say that it’s a comparatively modest dream for a not-so-modest worth.

Here’s a secret that shouldn’t be a secret: The greatest and finest goals don’t price $80,000. Just keep in mind, in the event you do purchase it, that there could come a day if you owe extra on the car than it’s price.

All too typically in America, that’s the stuff that goals are fabricated from.

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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