Financial Advice (or point me in the right direction)

[Tejs]

Hey guys,

I'm looking at buying an Exige in 6 months time. I have some questions though about some financial decisions and I'd appreciate either some answers, or some directions to local financial advisors that are trusted here in the Dallas area.

Information of Interest:

• 23,000 in savings
• Current Car loan balance of 11,000 remaining.
  (234 Min / Month, Currently Paying 500 / Month)
  6.7% Interest Rate
  Car is in Excellent Condition, Blue Book value estimated at 17K, Have Maintenance Records for ownership
• Current Student Loan balance of 11,000 remaining
  (147 Min / Month, Currently Paying 500 / Month)
  4% Interest Rate, Variable (if I remember correctly)
• 23 Years of Age, Excellent Credit Rating

Consider that the average price for a used 2007 Exige is 45K (from my research anyways). Now, I just recently read an article that has set me back on some ideas I've been holding and I'm needing advice.

1) Should I stop paying more than the minimum on the student loan? Since the interest paid is tax deductible, paying it off sooner wouldnt make a difference?
2) I'd be offering my current car in addition to down payment as a trade on the exige. Should I pay off the car loan even though I will be trading it in 6 months?

[Wareal]

Your credit score is a small portion of the equation. What is your high credit? Two years minimum job/residence is a plus. Do you have job stability? What is your DTI (debt to income ratio)? You do yourself a disservice by trading your current vehicle. Selling it outright would be better. What Blue Book value are you using? Trade, private party, or retail? Since you are under 25, you will have a stiff insurance premium. I'd get a quote or two. If your loans are simple interest you benefit by paying them off early by paying less interest. However, I don't know if that is advisable since I would suggest being in a strong equity position in the Exige (your lender may require it). Hope this gives you something to think about. Free advice is worth exactly what you pay for it. Personally, I wouldn't waste money on a planner.

[Chris Mackey]

Not enough information here. We don't know your income, expenses, anything about your family, your driving record, why you want it or anything else.

If you must get a Lotus, and it isn't drop-dead easy...

...get an '05 Elise, instead. Pay it off with your trade in and cash.

Unless you've had a bunch of track time, you won't know the difference. If you just want a cool car, the Elise fits the bill.

[Gizmo]

Presumably a planner would give more trustworthy advice than we random strangers on the interwebs.
But, that being said, make sure you get one with some reasonable certifications and check them out first.
Anybody is allowed to CALL themselves a financial planner, and
many of them will give advice even worse than you might get here.
But good ones can set you on the right track.

Couple points to remember, 'tax deductible' doesn't equal 'free'.
The higher your tax bracket the more you "save" and the lower your bracket,
the less the deductibility is worth to you.

The way I see it, you have a net worth of $18,000 (assets minus liabilities) and are contemplating
purchasing a depreciating asset which will lose $15,000 in value over
the next 5 years. Plus paying interest on it over that time period.

That doesn't mean "don't do it" necessarily. But think about what it's worth to
you to stretch for it now. If your job is solid, or you have the option of moving
back in with the parents if things head south, or you don't get too stressed out
over financial matters, then you're only young once, go for it.

But if you would be totally hosed if some jackass in an SUV backed over your
car and you had to put it in the shop for 6 weeks, then also take that into account.

Only you can answer where this fits in your priority list.
But don't leap into it and then regret.
If you decide to buy, buy it, drive the hell out of it, maintain it, enjoy it.
Just totally think through what you're getting into first.

It's not very liquid. And if you need to sell it fast, then you'll need to sell it cheap.

P.S. What the hell am I doing on Lotustalk telling someone to think twice?
Bet you never expected that!
Some people wouldn't buy one of these unless it was easily within their financial grasp.
Other people would be willing to live in it and eat out of dumpsters to make the payments.
You're probably somewhere in between.
Just figure out where you sit along that continuum.

[...m...]

...any debt on a car will cost you more in interest than your student loan - pay the minimum until your cars are paid off first...

[swede]

Don't get financial advice form a bunch of people on the internet you never meet.

[Tejs]

I agree - but seeing as the Lotus guys are seem to be a more experienced set of guys, do you have a recommendation for a trusted financial advisor here in Dallas?

[Tejs]

Originally Posted by Wareal

Your credit score is a small portion of the equation. What is your high credit? Two years minimum job/residence is a plus. Do you have job stability? What is your DTI (debt to income ratio)? You do yourself a disservice by trading your current vehicle. Selling it outright would be better. What Blue Book value are you using? Trade, private party, or retail? Since you are under 25, you will have a stiff insurance premium. I'd get a quote or two. If your loans are simple interest you benefit by paying them off early by paying less interest. However, I don't know if that is advisable since I would suggest being in a strong equity position in the Exige (your lender may require it). Hope this gives you something to think about. Free advice is worth exactly what you pay for it. Personally, I wouldn't waste money on a planner.

Using New Car Prices, Used Car Prices, Blue Book Value, Car Reviews - Official Kelley Blue Book Site and their "Trade-In Value".

I will probably be staying with Nationwide as Geico and Progressive both quoted me rediculous rates.

I'm expecting an exige to lose 15K of value from depreciation. Being used and 2007 already, it has already lost some value from new MSRP. At 20K down, I should always be right side up.

[Aedo]

As has been mentioned good "Financial Planners" are hard to come by and it is even harder to know before hand if they will be any good

What you should do is arm yourself with as much information as possible - use the internet to research both financial strategy as well as potential financial planners. You Should be able to learn enough to better understand your own position and therefore either make a decision or be better prepared when toaking to a financial planner.


As for my own free advice - - I agree with Gizmo on strategy! My personal view on a car purchase is that if you cannot afford to pay cash you cannot afford it (this doesn't mean you have to use cash) and should set your sights lower.

All the best which ever way you go

[Stormy320]

If you are asking us this question on the internet, I would say you have already answered the question - No.

Wait a few years when you get established in a nice job. You will be able to get a 240S for $40k.

At 23 you will look like a poser driving an exotic car your not sure you can afford.

[IamBatman]

if you can't afford to pay cash for a toy like this, don't do it.

[macdady2424]

Isn't the true question "can you afford the payments for the car"? Figure out what you want to put down and how much you're gonna finance for the car. Then you'll know what your payments will be and if you can afford it with everything else you have to manage.

[Abe]

Originally Posted by Tejs

Car is in Excellent Condition, Blue Book value estimated at 17K, Have Maintenance Records for ownership

Forget about blue book value on your car, dealers all around the country are either not interested in trade-ins or will take it way back of blue book value as the current market conditions dictate.

If you're not upside down on your trade, my recommendation is to sell privately for what you think is fair and have more capitol to put down on the Exige...easier to get financed that way.

As others have said, what you make and how long on the job will also play a factor.

[drstvk]

Originally Posted by swede

Don't get financial advice form a bunch of people on the internet you never meet.

Off topic but it needs to be said: I don't know about you, but I trust all of you folks on LotusTalk more than I trust a lot of others. The folks her are really pretty great and really helpful. I think this is the perfect place to ask for advice from "the internet".

Steve

[DNA Doc]

Originally Posted by IamBatman

if you can't afford to pay cash for a toy like this, don't do it.

+1

[EliseSC]

Don’t ask other people what to do. Step up to the responsibility of making your own decisions. Use your head and not your emotions and you’ll know what to do; no one knows your situation as well as you do.

You should have a firm grasp of your income and expenses before making a move like this – if you add up all of your expenses (including the new insurance rate, gas, entertainment, clothes, rent, etc.) and consider your income, will you be adding to or subtracting from your savings? Will you still be able to contribute to your 401(k)? Do you want to buy a house? What is your long-term financial plan?

We are in the middle of a severe economic downturn. Anyone can lose their employment in these times. You need to have at least six months of living expenses (including all rent, food, utilities, loan payments, etc.) in an emergency fund in the bank. Do you have that now?

I suspect that you are shopping around until you find someone who gives you permission to do something you know you shouldn’t do, given your current financial situation. Ask yourself if you can afford the Exige and then answer yourself honestly.

When it comes to money - behave like a man, not a boy.

[Bane]

Originally Posted by Aedo

As has been mentioned good "Financial Planners" are hard to come by and it is even harder to know before hand if they will be any good

What you should do is arm yourself with as much information as possible - use the internet to research both financial strategy as well as potential financial planners. You Should be able to learn enough to better understand your own position and therefore either make a decision or be better prepared when toaking to a financial planner.

+1

I asked for advice quite a bit a long time ago when the community was much smaller. There are generally a few trains of thought here:

1. OMG BUY IT NOW. You only live once and who cares if you end up living your life on credit!!!!1one

2. You're a punk kid. You don't deserve it and I don't want to be associated with you if you end up listening to the guy pitching option #1.

3. Balanced advice... use your head and buy what you can afford.

Try to weed out people spouting #1-2 I ended up buying my 05 Elise when I was 23 (I'm 26 now) after much deliberation and help from forum members here. It's been a fun decision and I wouldn't change it if I had to do it over again... but honestly I had to sacrifice some things for the car. I was making $70k/yr in AZ when I bought mine just as point of reference.

[MavsFan]

This is a little off subject but are you planning to trade in your daily driver for a Lotus. Will the Lotus become your daily driver? Dont think because this car has a toyota under the boot that it is a great daily driver. Just some quick things to think about. Hope this info is useful.

Oil Change: $280 unless you have an afternoon to do it yourself (PITA) If you put a lot of miles on this thing expect to shell out some serious coin.

The car is extremely hard to get in and out of. Not a car to go run daily erands in. Not to mention you barely have enough space to put 2 or 3 grocery bags in the back.

In the summer you will sweat your A$$ off if you plan to drive a Lotus when it is over 90 degrees. The side sills heat up and the AC is fairly non existant. (Keep in mind that this is a race car not a luxury sports sedan)

Things WILL break and it WILL take the Lotus dealership 2 weeks to get a part to fix your car. This means expensive rental or again, you should have a spare car.

Not so fun to drive in bad weather.

If you have to drive over 1 hour at a time (long straight and the same speed), I would say that most Lotus owners would be worn out. I cant stand long road trips in the lotus and would rather drive my SUV. There is also no cruise control. Driving on small curvy roads for an hour ...no problem ;-)

Maybe I missed a mention of you keeping a spare car or a daily driver but incase that you plan not to, my suggestion would be to downgrade to an Elise and spend the money you save on a daily driver to keep the miles off the Lotus and allow for repair/maintenance etc. Dont get me wrong, this car is an absolute blast to drive and will turn heads everywhere you go, but it IS a race car and only a race car. There is a small percentage of guys on here that drive their Loti more than 10K miles per year and I would have to say they are much tougher than I am.

Just my 2 pennies for what its worth. I am sure there are other oppinions out there.

[...m...]

Originally Posted by EliseSC

You should have a firm grasp of your income and expenses before making a move like this – if you add up all of your expenses (including the new insurance rate, gas, entertainment, clothes, rent, etc.) and consider your income, will you be adding to or subtracting from your savings?

++

...these are critical items, particularly a new wardrobe to go with your exige - i recommend tuxedos and wetsuits...some drivers prefer to wear their tuxedos over their wetsuits, for example, if your mission parameters require that you infiltrate a secure site through a formal dinner party before diving off a secluded balcony to plant explosives, but alternatively you'll find that some of the drivers here instead wear their wetsuits over their tuxedos, which is very useful in covert submarine intrusions, where you plan on escaping through the formal dinner party after planting timed explosives first...in the former situation it's best to slightly oversize your tuxedo to prevent the wetsuit bunching up awkwardly underneath, while in the latter situation you're really better off using a drysuit instead, as a soaking-wet tuxedo tends to attract attention in formal settings...i recommend planning to purchase both for maximum flexibility under changing mission parameters: two sizes of tuxedo, a wetsuit, and a drysuit...also don't forget to budget for drycleaning, as tuxedos tend to get sweaty after a hard workout, and for a chauffeur escort as well, to have your car waiting for a graceful departure - nothing's more embarrassing than having to hitchhike back to the park-and-ride after an explosion because you forgot to have someone shuttle in your exige...

...for entertainment, i suggest season passes to the opera and symphony both...if your dossier is very active at all, you'll find that season passes save money in the long run, and with a little shopping around, i think that both can be had for the six thousand dollars you're ahead on your current car, provided you're not too picky about seats...remember, a field-assembled carbine works just as well from the back row as it does from a private balcony, and my experiences have been that so few people enjoy sitting amongst the peasantry in the nosebleed section that discrete getaways are nearly as easily-manageable...also, don't neglect to budget something for casino expenses as well, particularly if your banco skills aren't yet developed enough to cover costs...

...finally, rent is somewhat a matter of personal discretion...often in the busy seasons you'll be overseas on assignment so frequently that keeping a permanent residence seems terribly wasteful, that said, a luxury penthouse apartment is very nice to have on-hand during the occasional week's leave we all get from time to time after a particularly grueling mission: perpetual hotels really don't cut it amongst exotic companions...i recommend looking into time-shares; many of us make a practice of partnering with fellow field agents to have one set up at several ports-of-call, which can prove quite versatile with proper scheduling, and brings the added bonus of being more difficult to trace...

...whichever way you choose to go, plan properly and you'll love your new exige!..

[Tejs]

Originally Posted by EliseSC

Don’t ask other people what to do. Step up to the responsibility of making your own decisions. Use your head and not your emotions and you’ll know what to do; no one knows your situation as well as you do.

You should have a firm grasp of your income and expenses before making a move like this – if you add up all of your expenses (including the new insurance rate, gas, entertainment, clothes, rent, etc.) and consider your income, will you be adding to or subtracting from your savings? Will you still be able to contribute to your 401(k)? Do you want to buy a house? What is your long-term financial plan?

We are in the middle of a severe economic downturn. Anyone can lose their employment in these times. You need to have at least six months of living expenses (including all rent, food, utilities, loan payments, etc.) in an emergency fund in the bank. Do you have that now?

I suspect that you are shopping around until you find someone who gives you permission to do something you know you shouldn’t do, given your current financial situation. Ask yourself if you can afford the Exige and then answer yourself honestly.

When it comes to money - behave like a man, not a boy.

I think I am being unfairly judged here - my question was never "Can I afford the Exige or not", but some basic questions about finances. I know I can afford a Lotus and daily beater if for some reason I need to (used Ford Rangers are pretty nice right now and fill the hauling capacity the Lotus does not), all without impacting my monthly living, at all.

In reference to MavsFan - yes, I would be using the Lotus as a DD. I drive about 14 miles per day round trip, 80% highway. That's 84 Miles per week +/- some shenaniganry, which seems to be a lot less than some members place on their car every weekend.

However, getting some information about better financial practices was what I was going for. My method is obviously inefficient, and I was hoping more wise men than I could help me get on the right track.