The Porsche. Boys dream about it and men want it. It is the epitome of sports cars. The Porsche Carrera has evolved for 50 years. It wins awards every year. This is the car you want. I have wanted it since the day I was given a ride in one on a race track when I was 12 years old.
Unfortunately, the cost of Porsche ownership is high. A brand new Porsche Carrera base model starts around $90,000. With upgrades, it goes well over $100,000. This leads us to the question:
Can I afford a Porsche?
How much should I be making before I can finally buy my dream car?
Do not buy a new Porsche. You don’t need a new Porsche. They are all extremely fun and reliable cars. In 2018, you can buy a 2009 Carrera 4S cabriolet model for about $65,000 with many options added. Thats basically a quicker version of the standard base model. Much better value.
Here is the great part about Porsche. They depreciate very slowly. If you keep that car for 5 years and maintain it, you should sell it back for around $40,000. This means that your actual cost to own is around $5000 per year not including insurance and gas. That is a similar number to your new Hyundai or Mazda.
Calculate your Net Income
What is your yearly income after tax? How much are your current expenses? How much money do you already have invested?
Salary – Taxes and Expenses = Net Income
If you make $80,000 per year, your after tax income is $60,000. If your expenses total $32,000 per year, you are left with $28,000. You should not be buying a Porsche on this income. You need to be investing that.
Experts say your should not be spending more than 20% of your yearly pre-tax income on a car. Based on that, you will need to earn about $350,000 per year as a family to purchase a $70,000 car.
So there you have it. To afford a Porsche. Your income needs to be at least $350,000.
. . .
Okay, I can’t “afford” a Porsche, but I’m still getting one. What would you say is the income needed to purchase one and live comfortably?
Of course it all depends on your expenses. So lets just talk about the income after taxes and bills. I would say you should be investing around $20,000 per year and you should have at least $14,000 per year to cover the Porsche finance, possible repair bills and insurance. A grand total of $34,000 extra is required to own a used Porsche. If your expenses are $32,000 (Quite low but possible) like the previous example, you should make a pre-tax income of $90,000.
The next factor to take into consideration is your age. There is a saying “youth has its own privileges”. Are you a 25-year-old making an income $90,000+ and expecting it to grow even more? Do you already own property?
I would never recommend purchasing a luxury car, or any new car without first owning property. A mortgage will teach you to be responsible with your money and once you feel the actual costs of real life, you can really determine if a Porsche is in your near future.
I have wanted a Porsche for many years and I could have easily bought one a few years ago. I knew that purchasing that car would really slow down my investment schedule so I decided to buy the condo first. The condo has already appreciated at least $80,000 within a few short years. A Porsche would have depreciated about $12,000 in that same time. Check out my other post on the only way you can get property at a young age.
Second came an investment property in the States.
I still don’t feel comfortable buying a Porsche but I don’t think I can last any longer. As a 25-year-old, even if this car becomes a great mistake, I may lose some money but I have the time/energy to recover my loss.
A Porsche is a secondary car. It is always wise to have a second larger car in your garage.
Is the second car paid off? If not, look into paying off that car before buying a toy.
If you live in a condo like me, where will you park it over the winter months? This is my current issue. Lucky for me, I have two underground spots, one for my Honda Civic, and the other for my fiance’s van. The Porsche will be parked in my spot during the summer, the remaining months I will have it parked in my moms cottage.
Parking may seem like a small issue, but living in a condo, this can be another $200 monthly expense if you need to rent.
Are you married? Planning to get engaged soon? Here is a life tip: If you buy a Porsche before buying her a ring… don’t expect an invitation to your wedding.
Do you like to Travel? I do. I have a budget of around $5,000 for me and my fiance per year for traveling. If you do too, don’t forget to add that as an expense.
Tires. Tires. Tires. You will need to replace tires more frequently and they will be more expensive. Add at least $1600 per year to your budget depending on how you drive.
What will your down payment for the Porsche be?
What interest rate will you get?
Are you including taxes into your budget? A $65,000 Carrera will actually cost $73,450 depending on where you live. That’s a huge difference.
Any car is expensive. Almost all of them depreciate, and the ones that appreciate are reserved for a very specific clientele. Porsches are very reliable, they are much cheaper than most super cars and they can be driven daily. Their depreciation is comparable to a regular new car making it a much better value. If that is your dream, work on making it happen.
Always invest into appreciating assets first. When you have a solid passive income, only then should you begin looking for a Porsche. Let the car be your motivation to invest more. It will be more fun to drive when you are confident with your finances and can actually afford it.
Downtown Money is a millennial online magazine aimed at helping our generation move forward. Follow us for the latest news worth your time.