Was this car a good financial purchase?

Seeking Advice Forum
1

I recently bought a 2021 Tesla Model 3 RWD with 37k miles. The final check to the dealership came out to just under 19k, which I paid in cash. I had long been planning to buy a Tesla as my next car, but I expected to wait until I needed a new one. However, this seemed like too good of a deal to pass up. I want to see if others thought this was a good purchase or if I acted too soon.

I’m 22, make ~$67.5k a year.

Net Worth before the purchase: $75k
High-Yield Checking Account: $8k
Stocks: $45k
Retirement accounts: $22k
Monthly expenses: $1.5k
No debt

I had a 2009 Subaru Forester AWD with 97k miles. It has a lot of life left, but I felt like I was at the point financially where I could upgrade and still achieve my other financial goals (buying a house, getting a dog, saving for retirement). I also found out about tax credits, which made the purchase even more attractive. What are your thoughts on this decision?

2

I think it’s a bad idea, but what’s done is done. So many people graduate and immediately start buying new toys, it’s a little insane. And pretty much never a good idea. You didn’t need a new car for probably another 5-7 years considering the Subaru’s mileage. That money would’ve served you better if you’d kept it in stocks.

3

What’s your net worth after the purchase? And how much will you be paying for insurance? It’s good you paid in cash and have some retirement savings. But putting 30% of your net worth into a depreciating asset might not be the best idea.

4

Screw everyone saying it was a bad choice. A $19k car isn’t terrible, especially since you paid cash. Could you have kept the Subaru? Sure. But it’s 15 years old. What’s the point in saving money if you can’t enjoy it? As far as car purchases go, it seems pretty reasonable.

5

@Kavi
The $19k came out of stocks, so now my net worth is $61k. I’ll have $66k once I sell the Forester for $5k. Insurance is about $200/month, and charging costs are around $50/month. I used to spend $200/month on gas, so it balances out.

6

@Jessie
That’s good. I was worried you took it from your retirement savings or emergency fund. You seem to have thought it through, and it’s better than most at your age. Keep educating yourself financially, though.

7

It’s hard to tell. Did you get the battery checked by a verified Tesla mechanic? Battery condition is crucial in these cars.

8

How much were you putting into the Subaru? Why did you feel the need to upgrade now?

9

Was this a good financial purchase? No. You should’ve driven the Forester for another 10 years and invested that money. But as long as you don’t go into debt, it’s your choice how to spend it.