16 ms·

It's laughable to suggest splurging on a 300k Ferrari is irresponsible at $10M < assets < $100M.

by gizmo 11y ago

sk5t 11y ago
Agreed; lots of folks have enough passion for cars and driving that a Ferrari is not such a preposterous thing, weighed against its marginal utility; and, the race-inclined Ferraris have turned out to be pretty good investments.
jasode 11y ago
Everyone's appetite for risk is different. If I had $10,000,001.00 in the bank, I personally would not feel secure enough to spend $300k on a car (and also pay all the expensive maintenance that it entails.) Since the car is 3% of my available funds, I'd be constantly hyper paranoid about a stray rock being kicked up by the truck in front of me. If I had $100 million, the $300k car would feel a little more "disposable". If a runaway shopping cart dings it, I'd just shrug it off and buy another one and donate the imperfect one to my landscape gardener. On the other hand, Elon Musk bought a $1 million Mclaren F1 after the 1999 zip2 sale netted him ~$20 million. Like I said, everybody's risk profile is different and most people including me do not think he's fiscally irresponsible. I think the nuance that's getting lost in translation is my idea of "affording" to buy an exotic car. Yes in mathematical terms, $10 million subtracting $300k leaves plenty left over so one can buy without requiring a loan and still be "wealthy." However, my idea of "afford" also includes the state-of-mind after one pays for it. I'd like the luxury of not giving the super car no more thought than a Toyota Camry. If I'm paranoid about the car, I can't "afford" it no matter what my bank account says. The car is ruling over me instead of the other way around. The cost of ownership is too high (this includes "mental costs"). The threshold isn't "how much money I need to buy the car without a bank loan" but "how much money so that the car feels disposable."
- greedo 11y ago
  Correspondingly, would you feel insecure if you had 1,000,001 in the bank and spent $30k on a car? The ratios are the same, and most people spend a far higher ratio on their cars.
  - khuey 11y ago
    The difference may be that you need a car, and that you can easily cut the cost of one from 300k to 30k, but you can't easily cut the cost of one from 30k to 3k.
    - ryanwaggoner 11y ago
      Totally false if you replace $3k with $6k or so. Most people are driving around a huge pile of want, not need.
- allendoerfer 11y ago
  I get your concerns but also think you are better off without $10 million in the bank, if you are scared of spending it because you fear you could lose some and be only worth $9.7 million.
  - jasode 11y ago
    >you are better off without $10 million in the bank, if you are scared of spending it because you fear you could lose some and be only worth $9.7 million. You misunderstood what I'm saying if you think $10 million to $9.7 million is some kind of reduction in self-esteem. That's not the point. It's not the absolute $ amount. It's a subjective sense of the magnitude of payment in relation to what I get in return. The calculus includes the mental state. In my 20s, I spent $500k on a music studio thinking it would earn multiples of that. Things didn't pan out that way but I'm still young enough not to be gun shy about spending large amounts of money. I'm just a little wiser now and won't be throwing money away at such endeavors. Today, if I came across a web startup I believed in and they need $900,000 (3x the $300k of Ferrari), I'd feel compelled to reduce my bank account to $9.1 million to see if my angel investment will work. With the Ferrari, the ownership of it also includes many headaches in addition to whatever pleasures I could derive from it. The pleasures are seriously curtailed in my city where I couldn't floor it and race it above 80mph. On the other hand, with the killer web startup, I would lose sleep at night if I missed the chance to invest so in that situation, I must spend $900k just to have some piece of mind. Mathematically, I'm "poorer" at $9.1 instead of $9.7 but I feel better. Maybe the startup will crash & burn but I spent the money hoping they could change the world. Here's the crazy thing: it's very possible for someone else to think of the Ferrari as the "sure reward" and the web startup investment to be a fool's game. We all have different risk profiles.
    - allendoerfer 11y ago
      Okay, so you are just not into Ferraris. I would not buy one, either. I saw it as an example for something expensive, that you buy just for fun. A single unhedged angel investment is such a thing, too. In the first comment you argued differently. You said, that that even most millionaires can not afford to buy a sports car. I would say, that a single startup investment outside of any investment plan is an even higher luxury. It is comparable to spending thousands of dollars in Vegas. A Ferrari loses some of its value, in exchange you get fun. A startup will most likely fail completely. Additionally a Ferrari is much easier to liquidate again.
- drpgq 11y ago
  If you have $10 million you should give the Ferrari no more thought than a Camry. No if you have fifteen Ferraris that's where things become problematic.
- FLUX-YOU 11y ago
  On one hand, you're very frugal about buying a 300k car. On the other hand, that car has to be in pristine condition for you to drive it (or without hyper paranoia). What's up with that? I'd have thought frugal people would stick to their car purchases for a long time. I'm pretty sure that ferrari could be made to last 10-20 years. Yeah the maintenance is expensive, but that just means it's not really a 300k car.
walshemj 11y ago
And a good classic car does not depreciate in the same way a bmw 7 series does. And for the cost of a fully loaded BMW you can get a very nice classic. and probably buy a cheap ford for daily runabout even the gt500 super snake is fairly cheap.

It's laughable to suggest splurging on a 300k Ferrari is irresponsible at $10M < assets < $100M.

by gizmo 11y ago

It's laughable to suggest splurging on a 300k Ferrari is irresponsible at $10M < assets < $100M.

sk5t 11y ago

Agreed; lots of folks have enough passion for cars and driving that a Ferrari is not such a preposterous thing, weighed against its marginal utility; and, the race-inclined Ferraris have turned out to be pretty good investments.

jasode 11y ago

Everyone's appetite for risk is different. If I had $10,000,001.00 in the bank, I personally would not feel secure enough to spend $300k on a car (and also pay all the expensive maintenance that it entails.) Since the car is 3% of my available funds, I'd be constantly hyper paranoid about a stray rock being kicked up by the truck in front of me. If I had $100 million, the $300k car would feel a little more "disposable". If a runaway shopping cart dings it, I'd just shrug it off and buy another one and donate the imperfect one to my landscape gardener. On the other hand, Elon Musk bought a $1 million Mclaren F1 after the 1999 zip2 sale netted him ~$20 million. Like I said, everybody's risk profile is different and most people including me do not think he's fiscally irresponsible. I think the nuance that's getting lost in translation is my idea of "affording" to buy an exotic car. Yes in mathematical terms, $10 million subtracting $300k leaves plenty left over so one can buy without requiring a loan and still be "wealthy." However, my idea of "afford" also includes the state-of-mind after one pays for it. I'd like the luxury of not giving the super car no more thought than a Toyota Camry. If I'm paranoid about the car, I can't "afford" it no matter what my bank account says. The car is ruling over me instead of the other way around. The cost of ownership is too high (this includes "mental costs"). The threshold isn't "how much money I need to buy the car without a bank loan" but "how much money so that the car feels disposable."

greedo 11y ago
Correspondingly, would you feel insecure if you had 1,000,001 in the bank and spent $30k on a car? The ratios are the same, and most people spend a far higher ratio on their cars.
- khuey 11y ago
  The difference may be that you need a car, and that you can easily cut the cost of one from 300k to 30k, but you can't easily cut the cost of one from 30k to 3k.
  - ryanwaggoner 11y ago
    Totally false if you replace $3k with $6k or so. Most people are driving around a huge pile of want, not need.
allendoerfer 11y ago
I get your concerns but also think you are better off without $10 million in the bank, if you are scared of spending it because you fear you could lose some and be only worth $9.7 million.
- jasode 11y ago
  >you are better off without $10 million in the bank, if you are scared of spending it because you fear you could lose some and be only worth $9.7 million. You misunderstood what I'm saying if you think $10 million to $9.7 million is some kind of reduction in self-esteem. That's not the point. It's not the absolute $ amount. It's a subjective sense of the magnitude of payment in relation to what I get in return. The calculus includes the mental state. In my 20s, I spent $500k on a music studio thinking it would earn multiples of that. Things didn't pan out that way but I'm still young enough not to be gun shy about spending large amounts of money. I'm just a little wiser now and won't be throwing money away at such endeavors. Today, if I came across a web startup I believed in and they need $900,000 (3x the $300k of Ferrari), I'd feel compelled to reduce my bank account to $9.1 million to see if my angel investment will work. With the Ferrari, the ownership of it also includes many headaches in addition to whatever pleasures I could derive from it. The pleasures are seriously curtailed in my city where I couldn't floor it and race it above 80mph. On the other hand, with the killer web startup, I would lose sleep at night if I missed the chance to invest so in that situation, I must spend $900k just to have some piece of mind. Mathematically, I'm "poorer" at $9.1 instead of $9.7 but I feel better. Maybe the startup will crash & burn but I spent the money hoping they could change the world. Here's the crazy thing: it's very possible for someone else to think of the Ferrari as the "sure reward" and the web startup investment to be a fool's game. We all have different risk profiles.
  - allendoerfer 11y ago
    Okay, so you are just not into Ferraris. I would not buy one, either. I saw it as an example for something expensive, that you buy just for fun. A single unhedged angel investment is such a thing, too. In the first comment you argued differently. You said, that that even most millionaires can not afford to buy a sports car. I would say, that a single startup investment outside of any investment plan is an even higher luxury. It is comparable to spending thousands of dollars in Vegas. A Ferrari loses some of its value, in exchange you get fun. A startup will most likely fail completely. Additionally a Ferrari is much easier to liquidate again.
drpgq 11y ago
If you have $10 million you should give the Ferrari no more thought than a Camry. No if you have fifteen Ferraris that's where things become problematic.
FLUX-YOU 11y ago
On one hand, you're very frugal about buying a 300k car. On the other hand, that car has to be in pristine condition for you to drive it (or without hyper paranoia). What's up with that? I'd have thought frugal people would stick to their car purchases for a long time. I'm pretty sure that ferrari could be made to last 10-20 years. Yeah the maintenance is expensive, but that just means it's not really a 300k car.

walshemj 11y ago

And a good classic car does not depreciate in the same way a bmw 7 series does. And for the cost of a fully loaded BMW you can get a very nice classic. and probably buy a cheap ford for daily runabout even the gt500 super snake is fairly cheap.