So... I bought a Tesla. Well, to be accurate, I put a $1,000 deposit down to reserve the right to buy a Tesla Model 3 when it finally rolls off the assembly line in 2018. Some of you read my most recent Net Worth Update and you may be wondering - this guy preaches about debt repayment and wealth building, here he is up to his neck in debt yet he puts a down payment on a $35,000 car on a $50,000 salary? What a hypocrite!? Well, let me tell you why I deserve a Tesla...
Why do I need it?
Short answer is NO, I don't need it. In fact, I would go out on a limb and claim that no one NEEDS a $35,000 car that runs only on electricity. If you absolutely hate fossil fuels, go buy yourself a Nissan Leaf, those start at only $29,010 AND you are pretty much guaranteed to get that $7,500 federal tax credit unlike the Tesla.
Why do I want it?
"Look at it! Just LOOK at it!" In all seriousness though, aside from being a pretty sharp looking ride, the Tesla Model 3 tugs at my heartstrings because of its technology. You may be into shoes, watches, golfing or collecting The Wizard of Oz memorabilia. Whatever you are into, I'm not judging. For me, it's gadgets. I love all things gadgety and frequent tech blogs to read up on the latest gadgets and gizmos. In fact, my decision to go into radiology is formed, in part, by the technological appeal of the field. The one piece of technology I can't live without is my smartphone - and the Tesla is basically a giant smartphone on wheels.
Why do I deserve it?
You may be expecting an answer like "because I'm going to make a boatload of money when I become an attending" or "because the interest rates are so low, it's like borrowing money for free." Let me offer a different perspective - I deserve it because I want it and I have a plan to pay for it - in CASH. Here's how:
- Assuming the final model I purchase costs $40,000 (anticipating some options that adds a little to the base price of $35,000) and I get my car before the complete phase-out of the $7,500 federal tax credit. Let's say I get in when the tax credit is down to $3,750.
- The total out-of-pocket cost will be $40,000 - $3,750 tax credit - $1,000 deposit = $35,250 and change.
- Assuming delivery in December 2018, that's a full 30 months to save, meaning I have to save $1,175/month in order to pay for the car outright in 2018. Can I save that much?
- Without a doubt! Factoring in moonlighting income and my salary, saving $1,175/month will be a piece of cake!
WCM is a blog about helping young medical professionals pay off debt and build meaningful wealth. A key part of that process is living within your means. For most, that translates into living frugally without spending money on unnecessary possessions. But sometimes we forget that everyone have things and activities that they are passionate about. Living within your means does not mean you need to abandon those passions, even expensive ones. What I am saying is this - it's ok to "live a little", as long as you have a plan to pay for it without putting yourself deeper in debt.