The REAL Pros & Cons of Having a Nice Car
In 2020—on this very website!—I extolled the virtues of forgoing the (then-average) American rite of passage of a $550 car payment for the first decade or so of your investing life:
“In 15 years, you pull a big ol’ f*** it, and you buy a Porsche Cayenne. Great. You deserve it!
In the meantime, though, you’d invested $99,000, which turned into $172,000 thanks to compound interest.
So now we’re cruising down Easy Street in our Cayenne, and our $172,000 of Responsible Decision Money is compounding in the background. We’re done being responsible.
That’s fine. Your $172,000 will become $490,000 on its own over the next 15 years. (Assumes a 7% average rate of return.)
Do you see how insane this is? You can drive fancy cars for the next 15 years or have an extra half a million when you’re literally 55 years old. These decisions matter. This is not my opinion. This is math. You can have your Cayenne and eat compound interest, too. Just give it a minute.”
The article, titled “Why You Need to Sell Your Car (Maybe),” was a characteristically sassy smackdown with a tell, namely, the mention of the Porsche Cayenne (I also offhandedly mentioned the Carrera in this post). Homegirl (me) was hellbent on being responsible, but her love of The Finer Things™ hadn’t been totally exorcised out of her by finance podcasts and compound interest charts.
The piece also happened to fit in nicely with the rest of Personal Finance Car Culture, in the sense that it tsk-tsked at the idea of prioritizing “impressing people with your possessions” over “freedom.”
In the years since, I’ve learned most financial gurus today will preach “values-based” spending—spending according to what you value. But there’s a subtext about what’s an acceptable value and what’s not: There are “right” values and “wrong” ones. Luxury vehicles almost always fall into the latter category, where the real flex is being “a millionaire who drives a Honda Accord” or something.
Reflections from 3+ years later
2023 Katie checking in, as I am now the owner of a 2022 Porsche Macan (giddy-up, girlfriend!). It only felt appropriate to write a “car purchase” breakdown post, nestled in the broader context of someone who used to generally disparage such a choice, and the ways in which 2020 Katie was wrong…and right.
First, the numbers
The purchase price of my Macan with the fancy-schmancy “Premium Package Plus” and 8,000 miles was $58,995, an eye-watering sum for a former frugal gal. There’s really no personal finance justification for buying a $60,000 car beyond, “I just really wanted it,” but it wouldn’t be a Money with Katie blog post if I didn’t try, right?
Here’s how I justified it to myself:
As a percentage of my income, this car was technically the most affordable vehicle I’ve ever purchased. This made me feel way better about an objectively expensive decision.
It’s a 2022 “Certified Pre-Owned” model, which means the warranty extends through 2028—giving me five years to decide whether or not I’m up for Porsche-level maintenance costs before they’re going to come for my checking account (though wear-and-tear things like brakes, tires, and oil changes are still on me).
Our household finances currently hover around a 70% save rate (meaning we save $7 for every $10 we take home), which made me feel like I had some room to be irresponsible.
I haven’t owned a car for more than two years, which means I’ve been payment- and insurance-less for 26 months. My former vehicle and insurance cost me around $415/month, so I’d estimate that decision saved about $10,790 before gas and maintenance.
Since I don’t keep $60,000 of extra money on hand (usually, we keep less than $40,000 in “jointly held” cash and invest everything else in the stock market), I decided to finance the purchase and then pay it off over the course of a couple of months. The rate was horrific: 7.99%. I had to buy it out of state and ship it to Colorado because there wasn’t much inventory in this region, and I was finding better deals out of DFW (a mecca of other blonde women driving white Macans, incidentally).
After taxes and registration fees, the all-in cost was $65,059, plus $1,295 to ship it. In other words: a shit ton of money.
I put the minimum amount down on a credit card to reserve the vehicle ($2,500) and financed the rest, so the resultant monthly payment is $1,100. If I were to keep it for the entire 72-month term, I would pay more than $80,000 for the car over six years. Not ideal, and the main reason I intend to pay it off in full before the end of the year using some of the cash from a deal I just signed (to be announced at a later date). *wink emoji*
But right off the bat, these numbers highlight why it’s better to wait until you can afford to buy luxury purchases in cash when interest rates are high: In this case, the total cost of ownership when financed would be 23% higher than the sticker price. Your $60,000 vehicle becomes an $80,000 vehicle. The calculus was different when you could get a 2% car note (practically free!). But at 8%? Get this thing off my balance sheet.
Surprisingly, my car insurance is only $120 per month through State Farm—a number I was pleasantly surprised by, given the value of the vehicle and the level of coverage we buy.
Second, let’s talk about the feels
The thing I didn’t realize several years ago when I talked about “impressing people with your possessions” is that sometimes the person you most want to impress is yourself. It’s not that I think any other random driver on the road gives me a second thought, and given the fact that not having a fancy car is seen as a status symbol in my profession, I figured I’d actually face more negative judgment than positive from my peers (Personal Finance World is the upside down, in that respect).
No, the joy comes every time I get in the car and am reminded of what I accomplished in order to buy it.
It’s hard to articulate how proud I felt when it rolled off the truck and into my possession. It was an indescribable moment and I’m embarrassed to admit I sat in the front seat and cried, overcome with gratitude for the opportunities I’ve been given. I’ve lusted after the Macan since Porsche introduced it in the US in the mid-2010s, but never thought seriously about buying one until a couple of years ago when I sold my business and felt like I actually could—then, it was a slow march toward a list of financial goals that would make the choice fall somewhere on the more reasonable side of indulgent.
Mushy-gushy sentimentality aside, the point is: Sometimes I think we just want to buy nice things for ourselves. They become symbols of our hard work.
I expected to feel guilty about breaking the cardinal sin of FI/RE and buying a nice car, but…I didn’t.
Now, onto the cons
So those are the pros. I can sing Cardi B’s verse in “MotorSport” (“Why would I hop in some beef / When I could just hop in the Porsche?”) and actually mean it, which is valuable enough on its own, and a goal I’ve had for years is now sitting in my driveway.
But what about the Ma-cons? (Sorry, I had to.)
Beyond the obvious (you’re going to spend way too much money), my initial assessment from years ago—that owning nice stuff means experiencing a higher level of stress about said stuff—is true.
The other night, the weather report warned of apple-sized hail, and we have a one-car garage my husband has claimed as his own for EV charging. We had to move my car down the block to a parking garage (where I spent $12 on overnight parking) so it could be covered and wouldn’t get damaged. If this had been my old car, I don’t think I would’ve thought twice about letting it get pelted.
I’ve already spent around $100 (and a lot of time!) buying all the accoutrements that Porsche owners on Reddit insist are necessary for the care ’n keeping of your fine automobile. (This one dude even installed a professional wash station in his own garage. Next level.) This means leather protectants, 303 wipes (basically, sunscreen for your dashboard), and more.
When I drive it, I’m more acutely aware of the other drivers on the road around me, eyeing anyone with dents or beat-up bumpers suspiciously—I park it farther away than necessary to minimize the chance of a rogue door-ding.
No speck of dust inside is safe from my microfiber cloth, and you should see the hammock contraption in the backseat designed to keep my German Shepherd from ruining the German engineering. (I’m only now beginning to sense this weird trend about my preferences; my Italian ancestors are rolling over in their graves.)
These feelings might wear off, but for now, I absolutely feel a heightened level of anxiety about something bad happening to it, which is—obviously—a counterintuitive feeling to get in return for spending a lot of money.
And, of course, there’s always the chance my career will go to shite in the next six months and then I’ll feel like a fool for buying a nice car. Ultimately, that became a risk I was willing to take (so…please keep reading this blog?).
The thing that surprised me most
I expected to feel the most trepidation about the money, but I think waiting until I knew I could afford the vehicle took the wind out of that guilt-ridden sail.
What’s actually been surprising? As a token millennial, I love the idea of being responsible for nothing—the inconvenience of having to take care of someone or something else always felt like an unjustifiable burden to me, a distraction from the things that actually mattered (read: my work, being able to watch at least two episodes of The Americans every night after work, and generally doing whatever I want). I had fully embraced the minimalist maxim that “you’ll own nothing and be happy.”
When my dad would tell me he loved being a homeowner because it gave him something to take care of, I scoffed—okay, old man, I thought, you’ve got HOA Stockholm Syndrome! But he insisted he took pride in maintaining his yard or engaging in a rogue audio/video project in his man cave.
I figured that was just a lie that people who own expensive homes tell themselves to feel better about the amount of work required to maintain them. But now that I own a nice car, I can see what he means: I actually like taking her (working name: Snow White) to the self-serve car wash and hand-washing her. I enjoy vacuuming her floor mats and keeping her pristine. It’s something to do, but it also gives me a sense of pride that floored me a little given my general reluctance to own anything of real value because it always seemed like a chore. As you can tell, Money with Katie is on a philosophical journey and here to report the ups and downs!
As Haley Nahman wrote in this excellent piece about “weekend plans” and the “death of the errand” in our frictionless modern life, it’s fun to care about something that doesn’t involve a screen or extreme engagement of my prefrontal cortex.
Buying a Porsche might mean my personal finance club membership is revoked, but I’ll go be sad about that in Sport mode.
