Johnny's Thoughts On Cars: 2017

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Aside from going to Auto Shows, I even got a job as a valet parker while in college just so I could drive awesome cars, even if it was just for a block or two while I parked them. It was during that year that I drove everything from lifted monster trucks to Rolls Royces, Dodge Vipers, Porsches, and every BMW and Mercedes Benz imaginable. But my dream car was always to own a red Ferrari. So now that I actually have enough money in the bank to own pretty much any car in the world, even the Ferrari I've always dreamed about, guess which cars are my favorite, which one I've actually preordered on the waiting list, and which one I would buy tomorrow if I had to.

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My Car History

I got my driver's permit when I was 15 and a half, and it was a nightmare. It didn't come naturally to me and my instructor wasn't very good either when it came to teaching. I think I actually failed my first time around, as no one had ever taught me how to parallel park and the second time around, I barely made it through after having a terrible morning having my mom scream at me for pulling out of the garage incorrectly. In my life, I've managed to scrape two different cars coming out of a garage, and both times was because I listened to the passenger instead of trusting my mirrors and my own gut. It's a big life lesson learned that even if someone is older or more experienced than you, if they're not in the driver seat, whether it's with business, or otherwise, don't trust them 100%. Use their guidance, but ultimately, be responsible for yourself.

After that I've owned my dad's old hand me down 1988 GM, a 1987 Nissan 200SX a 1997 Toyota Celica, 1992 Mazda Miata, 1995 Lexus LS400 and a 1997 Porsche Boxster. All of them were stick shift or manual except for the Lexus. Out of all of those cars my favorite was probably the Toyota Celica as it was comfortable, reliable, good on gas, had a useful hatchback, and still looked sporty. The car that was the most fun to drive was definitely the Mazda Miata and looking back, the only reasons I got the Lexus and Porsche was because I wanted to look cool and to try way too hard to impress girls when I was going through my douchebag phase living in LA. Here's my 97' Boxster that I bought for $10,000 and made to look like a 2004 by installing cleared out tail lights. I even went as far as going to the Beverly Hill's Porsche dealership just to ask for a licence plate frame and changed the badging so it didn't say Boxster on the back anymore. But aside from all of that It was actually a really nice car to drive, but when the transmission had an issue just a few months after I bought it, I had to flip it on Ebay as I couldn't afford nor want to pay for the $4,000 service. Big lesson learned, when you own a German sports car, expect to pay a ton of money in maintenance and to fix any problems that come up.

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My Current Car

Believe it or not, but I haven't actually owned a car since 2008 when I first sold all of my stuff and moved to Thailand. I had both the Miata and the LS400 when I decided to make the move and had to sell both of them within two weeks for a big loss. But the money I've now saved by simply not own a car has been incredible if you add it up. Most people never bother to really add up the actual yearly costs of Gas, Interest, Depreciation, Insurance, Maintenance, Registration, Tires, Oil Changes, Car Washes, Parking, Tickets, etc. and when you do, you'll quickly realize that the average cost is around $6,000-$9,000 a year just for a basic car like a Honda Accord.

When you start having sports cars, or German luxury cars, that amount can easily double. That means in the past eight years since been traveling, I've managed to save close to $65,000 by simply not own a car. If you think about that, it's more than paid for all of my air fare, ubers, scooter rentals, buses, boats, trains and taxis. It has even paid for my occasional splurge of renting a Ferrari or Lamborghini to race on the track just for fun. Whenever I'm based back in the U.S. for a few weeks or a month I either use a car sharing service like Car2Go, Zipcar, DriveNow, rent a car for a month, or just services like Lyft and Uber to get around. Even though it may seem expensive to spend $600 a month on rentals, it ends up actually being a lot less since I don't use them every month. But either way it gives me a lot more flexibility and a lot more freedom. Thinking back, I haven't had to wash a car, deal with tickets, or get an oil change in over 8 years which has saved me hundreds of hours of headaches. But even then, I still regularly keep up to date with the latest cars that come out every year, and go to as many auto shows as possible, simply because I'm fascinated. Here's a video of me at the 2017 Autoshow in Barcelona where I show you around, explain my favorites, and tell you which car I'd buy tomorrow if I had to.

My Preordered Car

So technically, even though I haven't owned a car since 2008, last year I actually put a deposit down on a 2018 Tesla Model 3. I did it partly because I am fascinated with Teslas and want to support Elon Musk's mission, but I mainly did it just to have the option to be first in line when they finally come out. I honestly have no idea where I'll be next year and if I'll want to own a car or not, but putting down a refundable deposit to have the option was an easy financial decision so I did it during the initial launch without over thinking it too much. The reasons why I might not take delivery of the Model 3 is the fact that I may continue traveling and living aboard, or if I go back to the U.S. I might just buy something like a 2013 Hyundai Elantra or lease a new one or even a new Miata as a business car. Even though it would be nice to have an electric car, any car that gets over 30mpg will be cheaper to own when you factor in the higher cost of buying the $35,000 model 3 which will most likely be closer to $40K when you actually buy it. The only reason why I'd buy the Tesla is the same reason I'd buy a 3-Series BMW over an Elantra. Logically the Elantra is the best choice, but emotionally, I'd still want something with a bit more luxury, fun to drive factor and style.  >

My Red Ferrari

My dream car however has always been and is still a red Ferrari. As a kid it used to be the 360 Modena and now would either be an F430, 458, or 488.  But to be honest, I'd be happy driving any of them as they're all beautiful, fast, and built extremely well. If I had to buy one today, I'd buy a second hand manual transmission F430 as it's the last Ferrari's to come in stick shift and because of that will hold their value well. But even though I can now afford to buy any of the Ferrari's I mentioned as I earned $325,785.19 online last year and have enough of it still in my bank to be able to buy one of these today in cash, I now have the option and a clear mind to think if actually want one or not.

I think the best thing anyone can do is to write down a goal of a big purchase and how much it'll cost. Day dream about it, window shop them every weekend for motivation and work your ass off till you can actually buy it. But then at that point, knowing that you can have it, take a step back and really ask yourself if that's what you actually want. Chances are, once you can actually have it, you'll realize that you don't actually need it. But if you're like me and still want to enjoy taking them out once in awhile, you can own a Lamborghini for a day like I did in Las Vegas or rent one to drive around the streets of Barcelona like I did in the video below. 

Thoughts on Car Finances

Cars are a depreciating asset, actually it's not really an asset at all but more of a liability as instead of increasing in value or making you money, they do the exact opposite. 90% of people buy cars, houses, and other big ticket purchases that they can't actually afford. The fact that almost everyone takes a mortgage when buying a house or a payment when buying a car is ridiculous and it's getting worse. When I first looked into buying a car, the longest term was 60 months which is how much time it takes your car to lose almost all of it's value. The fact that 72 month and 84 month Auto Loans are even a thing now, and the fact that they are getting more and more popular every year shows how terrible people are with finances. Most people don't even care what the interest or terms are, they just want to know if they can afford the monthly payment. I know how stupid people can be, because I was one of them. In 2007, I walked into a Corvette dealership and said to them, if you can get my payments down to $800 a month, I'll take it. Luckily, they couldn't get it below $900 or I would have been stuck with a 5-7 year loan on a car that would have prevented me from ever moving to Thailand and starting this journey. That being said, as much as I appercaite and enjoy beautiful sports and luxury cars, I know I don't need them to be happy. I think the absolutely maximum anyone should ever spend on their car is 10% of their net worth, and even that sounds ridiculously high once I put it into words. Ideally you would only spend 5% of your net worth on depreciating assets like cars, which means in my situation, having a total net worth of around $500,000, I should spend around  $25,000 - $50,000 on vehicles. The crazy thing is, most Americans I know spend that exact same amount on cars even though their total net worth is between $0 - $70,000 on average. I even know people who are $15k+ in debt that still drive $40,000+ cars which to me is insane! That being said, unless you have far more than half a million in net worth, minus your debt, and not including any equity in the home you actually live in, you shouldn't be buying a car for more than $30,000.  >

Cars I'd Want to Buy

The best value for your money for new cars are the ones around the around the $20,000 range new. Anything less than $15K and you car manufactures really have to cut corners to, and anything over doesn't give you more reliability, safety, fuel economy, or functionality. You pay more for luxury, horsepower, prestige, and "nice to have" features that aren't actually required. Most things that you actually need such as A/C, power windows, decent engines, safety, and either bluetooth or aux-in now come standard in most cars. The only reason why I most likely wouldn't buy a used car is because even though they are better value, they require more time to find then maintain and my life is designed around as little responsibility and headache as possible as time really does equal money. I'd consider buying a manufacture certified pre-owned vehicle through even it was a bit more expensive.

The only situation I'd buy an actual expensive luxury car would be if I leased it under an LLC and was able to write off most or all of it as a business expensive. But even then, remember that doing so doesn't make the car free, it just allows you to lease it using pre-tax money, which means you're essentially getting 40% of so off, so leasing something like a Porsche which may cost the business $1,500 a month means that you're still paying something like $900 a month for the pleasure of driving the car. In some cases it could be worth it so don't be too shocked if you see me in a new 718 Porsche Cayman if and when I finally move back to the U.S. 

That being said, aside from leasing under an business/LLC, when it comes to new cars that I'd happy buy with out of pocket cash are the Honda Fit, HR-V, the Toyota Yaris, the Hyundai Elantra,  Tucson, or if I wanted something sporty, the Mazda MX-5 Miata or a Toyota 86. If you've ever driven a manual transmission, lightweight, front engine, rear wheel drive car like one of these, you're really missing out, as they are way more fun to drive on the street and through windy mountain roads than high horsepower, heavy cars. Plus they are great value for the money, super reliable, easy to maintain, and all around great cars. 

Final Thoughts on Cars

I hope everyone enjoyed this post. I know that tastes in cars and personal finance are sensitive subjects, but I'm pretty sure that the majority of people would benefit from following my advice and recommendations on what cars to buy and to avoid. It's a bit sad that our cars define us, and we are judged on what we drive. But if you've read, The Millionaire Next Door you'll know that most millionaires don't waste their money on brands or prestige. Out of the people who do, 86% of people who drive BMWs and Mercedes shouldn't be as they would be better off saving their money so they could get out of debt, or become actual net worth millionaires instead of just living the lifestyle.

I haven't owned a car since 2008 when I sold all of my stuff and moved to Thailand. You can read about that journey in 12 Weeks in Thailand: The Good Life on the Cheap as that's what started this whole mindset change and financial awakening. I honestly think that the only reason why I'm not as into cars as much as I used to be is because I no longer tie my identity and self worth to the car I have or the things I own. It's a much freer experience than most people realize.

Comments? Questions? Feel free to leave a message below! I'd love to hear your thoughts on car ownership, what your dreams car is and what you'd actually buy.

Warm Regards,

Johnny FD

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