I have been really frugal all my life but at the same time I really would like to have a BMW. I bought my first and only car so far (Mazda 2) 12 years ago for ~15K EUR with a yearly salary of ~12K EUR net after my studies. During this time I lived in 3 different countries carrying the car (3 different plates already), I got married, became a father (2 kids) and my salary increased to +100K CHF net per year and 50%-55% saving rate. I am still driving the Mazda 2, my kids and wife complain all the time, especially during the weekend short trips.
I think to change the car quite often, but at the end I just don’t do nothing because If I buy the car I like most probably I will regret after few months. But I also think I will regret if I die without pleasing me with the car I like. I don’t feel ready to buy a second hand car (maybe due to ignorance) or a Japanese/Korean car once again. And I also don’t feel ready yet for a EV because we travel once or twice a year making around 2-2.5K km for which I use to rent a car in Singen (500 EUR to 800 EUR depending on the days we took in each trip). Probably in a few years everything will be easier with the EV and I would feel ready then but not for the moment
So I asked for a BMW offer and negotiated it a bit until the point it’s not possible to reduce it more according to them…: 83K CHF cost including VAT – 15K CHF discounts (Swiss Bonus -4K, my company discount -8K and -3K personal discount) for a total final cost of 68K CHF including winter wheels. The leasing conditions are: 12.5K pay down, 48 months, 15K km/year and 28.3K CHF residual value = monthly leasing of ~600 CHF (0.9 %). The car is fully equipped with 302 HP
Majority of my close family members and friends have nice cars (Tesla, Mercedes, BMW, etc) and some others in the same period of time like me had already 3 or even 4 mid-class cars, but they are not frugal like me, like us!!
So this is why I ask you in a frugal forum what is your monthly car leasing cost, car brand and saving rate? Reading some older posts it looks some of you have Tesla and some others leasing of above 5k CHF year (Pants down: yearly spending!), so maybe your answer will help me to don’t feel guilty if I finally buy this car… I think the midlife crisis caught me
My leasing: BMW Serie 320d Mpower touring Xdrive from 12/2017.
Contract started in April 2019 with 3’000 .- upfront and a monthly cost of 465.-, 15’000 km a year, 36 months (got that leasing before I got financially educated, one of the biggest mistakes of my life)
Insurance: 2350.- yearly
Plate taxes in GE: 594
As I said in the other thread I’m swapping this for a frugal 2000’s Honda Jazz to save 630+ chf a month… will raise my saving rate from 38% to 51%.
One way to decide these big spends is to put the cost of the 2 options side by side in a spreadsheet:
Option 1) Spend 40k in this car over 4 years, after which nothing is left
Option 2) buy a reliable and comfortable car for (say) 15k and invest 25k in shares. At 7% long term return you could expect on average to have ~50k after 10 years and ~100k after 20 years.
If you have an FI figure you can calculate by how many years impact Option 1) delays your FI date, and ask yourself if you are you preapred to work x more years for this?
Think also that with option 1) after 4 years your are probably going to find it difficult to downgrade cars
This is what I think will happen to me but also if I don’t buy it I most probably will feel bad for not having a good car ever… so not sure what regret is better
@Patron I fully agree your comments. I don’t care what other have and I am frugal by nature. I just thought that talk or ask for advice to my friends and family members doesn’t make sense since they spend all what they have and better ask in a frugal forum.
I simulated the purchase in my budget and it scares me but at the same time I want it. Not sure if it will make me happy, probably the first weeks and later probably not. As you said, we live once so I am debating myself what it’s better when the day come: regret of the purchase or regret for not having done it
@Barto Yes, I should lay aside the emotional aspect and just take option 2, but I am having issues with that
Goyero, facepunch! 68k for a depreciating asset, on a retire-early forum?? Get a nice 5 year old car instead with 50k km and drive it for years.
To your question, our car is 10+ years old, but in great condition, all options, nice engine. We bought it used 6 years old and 50k km for 1/3 of the new price. Most important, we are happy with it and buying more car would not make us happier. Now worth about 15k chf, depreciating only about 2-3k per year now. Oh, and our household income is +1million chf. Saving rate over 80 pct. Actually over 100 if you add return of investments (FI, yeah!!)
I understand. I once bought a new 60k car then sold it after 18 months. I hardly used it and was constantly stressed by the worry of parking scratches. So I guess I learned the hard way.
Since then I have proudly driven moderate, 2nd hand cars. Disclaimer is that I have never needed a car to drive to work
ps 10k CHF a year invested for 30 years at 7% = 945k CHF. Just saying…
Current car: Dacia Duster dci 2018, cost new around 22K (AWD and high ground clearance needed for work).
Lease: 500.-/month (no downpayment, 48 months, 1K residual value (I’m planning to buy it when the lease ends).
Savings rate: 30% (single, no dependants).
As for the questions that were not asked (but I’m the meddling kind):
Only you (and your family) can define your goals and allocate your resources in order to reach them. Maybe driving a BMW in the short term is your main goal, maybe you could upgrade in a lower price range and still have a nice car, maybe there are other goals you are pursuing that would be worth more to you past the short term rush of finally driving your dream car and looking good in your neighbourhood.
I’d revise my IPS and set aside a “car fund” that could either:
have its funding be accounted for as expenses (that is, budgeting for the car, buying it when it fits your budget and savings goal, which might be now, later or never).
OR
give it an allocation inside my asset allocation, i.e., making it a wealth target (I can afford a Dacia Sandero at 100K NW, a Skoda Octavia at 300K NW and my dream BMW at 500K). One thing I like with that option is that it encourages me to save more in order to get there quicker, and I can watch my wealth grow while I get closer to my target.
One thing that bugs me with my current lease is the lack of freedom that comes with the lease itself. In retrospect I think I would have enjoyed a car loan more, even at a slightly higher cost.
I can understand giving in to the rush of driving a nice car but I’d keep in mind that peace of mind comes at the cost of not caring what other people have (or rather what they display, really) and how we look in their eyes (except for the people we really care for, and on a personal level rather than wealth).
Current car: Tesla Model 3, 5k downpayment, 600 CHF/month with 30k km/year leasing, 60 months, 0.9%
Only you can answer to the question… if you really want it go for it, just consider that the wow effect might (will) disappear in some months / 1 year and if you want to sell you’ll probably take a hit… iI think what is important is to take an informed decision without lying to yourself.
Had mostly anti-mustachian cars in my life (with one exception), I think it is worth it if you do long trips, otherwise for short commutes not really.
My 2 cts.
(edit) with that salary and saving rate you can afford it, it will move your RE target by a couple of years maybe. Only you know how much of an issue is that
That´s right, cannot ask it in a BMW forum and either to close family & friends because they will tell me what I want to hear. The opposite happen here.
I also asked here because I think it´s really difficult to be 100% frugal, like you for example are frugal with cars but not with the rent (4k/month) and travel (2k/month) according to previous post. Dont take me wrong, no criticism, it´s your money, you are already FI (congratulations!) and of course do what ever you want. So in the same way you are frugal with some things and not with others, I would like to know how many of us in the forum are mainly frugal with ¨weakness¨ in cars
This I like since I am almost at 500K NW= BMW
No idea about the canton tax, insurance would be 150 CHF/month with the BMW Allianz insurance
Do you really need the car to be new, knowing that a significant part of its value will be lost once you turn the key for the first time?
With your salary and saving rate, wouldn’t it make sense to wait to have the cash needed to avoid the restrictive conditions of the leasing and the interests?
I would go for your favorite car, but maybe with 5-20 kkm and pay in cash. A 10 kkm car will feel almost as new as a new car if it was taken car of.
I believe if you try them out today, you will find the current Mazdas (a bit less so Hyundais or Kias) way up there with at least mid, if not even some “premium” products of the Germans.
I am also a bit biased on the other hand (see below ).
But if you believe you will enjoy it, go for it.
(Not to show off to your social circle though, that’s a wrong reason)
Back to answer your question:
I was leasing until past February, then bought it off.
Data were:
Mazda 3 hatch, 2015 make, Revolution (highest) trim
Leasing started in 2018 @ 50k km
Initial price 16k CHF
Downpayment 3k CHF (IIRC)
Lease period 3y @ 15k km
Monthly lease rate 267 CHF (IIRC ~4.9%)
Residual value 4.8k CHF (hilarious for a great car at 6y and 100k km, now you see why I bought it off; on autoscout they run for min 11k CHF)
Savings rate during that period: ~35% pre-tax, ~45% after tax
Note: living alone, early 30s
One other option - which worked great for a friend of mine (with AMAG; and she really wanted that specific model).
Find a (big) dealer.
They have new cars with 100ish km on it (used around the showroom or whatever).
They already give you a 20-25% discount on the original price (as it’s not “brand” new).
On the other hand, regarding leasing, they treat it as “new” and apply the ultra-low leasing rate (of 0.9% or so).
That way you skip the biggest loss of initial depreciation, but reap the low lease rate.
Discount seems fair (generally between 15-20%, depending on the brand/model).
Go for it, don’t listen to the noise. There will always be people trying to spin the narrative in every possible ways but truth is that you only live once.
Give all the rest of your money to the guy who said you will average an annual 7% return over the next 30 years cuz apparently he can predict the future.
Indeed, and that means it’s all about experiences, being the best person you can be. Best, here, being left to define by each of us individually: we can be wisened old (wo)men or reckless rogues, doesn’t matter, but we should enjoy the experience and feel right within it, even the darkest parts.
Living only once isn’t about giving in to all of our desires like there’s no consequences to it (no tomorrow), it’s about being able to choose freely whether we want to or not, being the master of our own life.
Doesn’t mean that leasing the BMW isn’t the right thing to do, just that we make our choices and live with the consequences. Sometimes, there is a tomorrow.
To put it simply: don’t lease a BMW just to keep up with appearances, that’s stupid. But if you’re passionate about cars and want a better driving experience for your family and yourself, splurge! Living in the present, that’s what life and money are about (of course to the extent you can afford it, other things being equal).
What’s tomorrow? Will you be part of it? Will petrol engines still exist? Will driving still be allowed?
Being smarter about personal finances doesn’t necessarily have to mean competing to become the wealthiest zombie…
If you want honesty, if I see an expensive BMW/Porsche/Mercedes suv style car going around, i will immediately think:
the owner has a shallow personality
he is probably compensating something, not necessarily what you may think of.
And again, I’m not saying my line of thinking is correct. It’s prejudicial, and even bad thinking, but come instinctively. I don’t even think is jealousy because well I could afford it without even blinking. It’s probably because I was brought up with the idea that cars were simply machines to do something - neither a measure of wealth nor a status symbol. So anything more than transporting, makes me raise my eyebrows.
Just don’t buy it for apparences - lots of people will end up envious, you may paint a target on yourself for thiefs and burglars, and some will end up thinking you are materialistic and shallow.
I’m not sure how many will end up respecting you more or admiring you in a good way.
It would mean a bit more than a year just saving money and not investing, the 0.9% interest is quite good. For a +/-10kkm the interest is normally 2.5%-5%
Nothing against, the Mazda 2 was a great choice. 12 years old without any single issue following the Mazda revisions and changing the pieces when recommended. But after all this years I really don’t want again a Mazda or any other Japanese/Korean car, I am just tired and want something different
@Slutmachine@Wolverine@Grog Believe me I don’t care the appearance, measure of wealth or status. I just like BMW… when I travel I always try to rent them. I like how they look outside and inside, the engines, the driving experience and so on. I am sorry if I gave the impression the apparencies are important for me… I can store all my personal belongings in 3 suitcases and my clothes have an average of more than 5 years old, just as example
The problem is that I fully agree all of you, both on one side and on the other: that the cost is huge and for FIRE there are plenty of better choices and that we just live once
My saving rate would go from ~52% to ~47%, not a big deal but I am still unsure
Ermmm like the Model X? Regarding charging, have you considered just asking your landlord/management company to install power sockets in the parking area?
I can relate to your inner battle as I am also passionate about cars. My worst frugal decision ever was to buy a Porsche 911. And at the same time, one of my best spending ever was to buy this Porsche ! This car allowed me to meet people that are now my friends. I usually take part once a year to caritative days where we do “taxi rounds” to collect money while giving people goosebumps and sharing passion. I value cars, and social interactions, so I think I made an honest purchase respecting my values.
Everything is not white or black and I definitely did not buy this car to show off, or for status. I bought it because it was a dream of mine since I was a kid. It motivated me to learn in school, to stay focused during my studies, with the hope to be able one day to own one. This car is expensive of course, but what if without it I wouldn’t have had this drive to make it one day ? Maybe compared to beeing a young unmotivated kid the idea of owning this car actually allowed me to make a decent salary, save and invest today ? Would be a bargain in this case !
I can understand people considering cars just as a way to go from A to B, but to each its own story. And I guess that once we have good financial habits and a decent amount invested, then it also gives us some room to enjoy life as long as we stand true to our values.
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