How to afford

[AgentH]

Hi Guys.

Being a Subaru WRX owner since 2005, an AutoX junkie since 2008, and most recently, and advocate of pure R(ight)WD performance cars, I can't properly express my excitement for the 818. Adding to that, I've known of and have appreciated the FF Cobra for a while, and have a whole lot of respect for people that build their own cars, even if they are from a kit. That being said, I would love to build my own 818.

Unfortunately, A: I don't have $15,000 worth of disposable income ready to drop on a toy car as cheap as that may be for a car of this potential, and B: Don't have a garage to build one in.

Item B may be the easier of the two dilemmas to handle. So I'm wondering about item A. Are there ways around simply plopping down 10k for the kit and maybe getting a car loan on a totaled WRX, which I see as being the cheapest way of going about it. I suppose I could get a personal loan, but a 10k personal loan may be hard to get and come loaded with a hefty interest rate.

Do most people on here do it the old fashioned way and save up? If I saved $277/month for 3 years, I would have the $10k necessary. However, 3 years from now, I might have a change of heart. Or 1.5 years into it, the 818 savings account could very well turn into the house savings account.

Thanks! :D

[RM1SepEx]

Only you can define and develop your priorities and add the wife too if you are married and want to stay that way! My wife of 29 years next week, is fully supportive and we both have our passions. Having 10 cars and 7 motorcycles I'm a bit away from where I was when I was younger... I did lose an engine in my beater winter Miata, just diagnosed the problem today. short nose crank failure, hoping the loctite fix is possible...

The $15,000 target is very attanable if you avoid typical project creep.

I'm guessing that for most of those that have ponied up a tiny deposit the $10,000 kit $ is ready and waiting for the projkect. If you had a house you could use a home equity loan to finance an 818 but it sounds like that isn't your situation. My house is paid for, my problem is a Junior at RIT in BioMed Engineering and a 16 year old cheerleader daughter that just came back from London's New Year Parade and wants to be a doctor.
Like you I am a Right WD proponent as well as a mid engine ****. I have been autocrossing since 1995 and right now look forward to the transition late in the 2013 season from a KM kart to the AM 818 (until properly classed in EM, possibly 2015?)

[blueoval_bowtie_guy]

For my Cobra, I used home equity (I used my credit card with FactoryFive to make the purchase, when the cc bill came in I paid it with home equity). For the 818, I'm going to save up. First, I'm going to buy a running/driving WRX. I'll drive that for a year (or two) to make sure it is mechanically sound. I won't put any money into repairs that won't benefit the 818. I'll look for one with a few dents to get a lower price but I won't fix the dents.

You won't be able to get a car loan for a wrecked car. Wrecked cars are pretty much worthless to a financial institution. You probably won't be able to get a loan for the kit (other than personal or equity). It won't be a car until the kit is completed and street legal. It MAY be possible once it is licensed, inspected and insured to get a motor vehicle loan on it or to use it as collateral to secure a personal loan. Look into joining a credit union. Their loan rates tend to be quite a bit lower than a bank. There are a lot of credit unions around. Without putting your 'location' in your profile, it is impossible for me or anyone else to recommend a credit union. They all have different requirements you have to meet before you can join.

Another thing to remember, the parts in the kit typically can't be insured. They aren't a car they are just a bunch of parts. You need to make sure you have somewhere to build it that you can lock up. Some people have been able to get insurance on Cobra kits, but when I built mine, it wasn't available.

First, buy the WRX. Pay cash or at least wait until it is paid for to take it apart. Save up for the kit. If you have a change of heart before you buy the kit you will be MUCH better off than if you went out on a limb and bought the kit with financed $$. Then you have to unload the kit to try to recoup your investment. You will never be able to sell and incomplete kit for more than you paid for it.

[metalmaker12]

I am only 31, but I got married at 27 and I have alway had a decent job. When we first got hitched we lived in a one bed small cheap apartment. I had a nasty 530whp sti and she had a low mileage Vw cabrio. We sold both and got one car and we saved for two years for a house we purchased in 2009. The money I got from my sti was like 35k and it was all free and clear. I busted my hump for like 5 years to buy that car right out three years before we got married. I used some towards the house and the 20k or so left is my 818. It takes time man, unless you make wicked good money. I started out in auto body/ automotive when I was 16, I worked during the summers and than when I graduated high school it was full time work at dealerships, private shops and college. I went to Neit, uri,and ric, got a automotive, mechanical engineering and technology education degrees. I now work for GDEB as a fabrication tech and welder, go figure lol, hey it pays the bills. I am also starting to teach tech Ed part time at a local school. It has been a long ride, but I am were I want to be. i would save as much as you can, and get a good job if you don't have one already. I do know jobs are tuff right now

[AZPete]

As a previous builder of a roadster I've seen this question several times on the forums. First, I have to say that borrowing money for a depreciating asset is not smart. Cars are depreciating assets and a home equity loan is still a loan. Don't plan on selling a kit car at a profit. The regular guys who build roadsters rarely make a profit when they sell and many have taken a loss in this mushy economy. Pro builders can carve out a profit if they are careful and even then most build on spec for a specific client. Keep the dream of building your own car because it is a great accomplishment but I suggest planning, scrimping and saving until you can afford it. You questioned that after 2 years you might lose interest, but if so, you'd still have a bucket of cash for another dream. So pass up the Starbucks $4 coffee, stop smoking, eat at fewer restaurants, or whatever you can give up and start saving little by little. BTW, I'm an old fart who built up savings, paid cash for my FFR roadster kit, sold my FFR roadster and kept the money for my 818 . . . so, once you save enough for your first FFR car you can keep it rolling over for other FFR projects. Build a small pile of cash and it can be years and years of fun and also serve as an emergency fund if things turn bad.

[Turboguy]

There is a whole history of threads of this nature on the other Factory Five forum -- most are in relation to a kit Cobra, but it's the same situation.


Many people (of which I am one) feel that a toy car like this needs to be paid for with 100% disposable SAVINGS. To me, this means money you've saved for the purpose of building/buying a car/toy after having your raining day fund topped up and your retirement savings in order. Financing a non-essential purchase like this in life WILL cost you in other areas down the line. Guaranteed.


On the positive side- many people have trouble budgeting and saving money -it's something most were never taught- so the good news is with a tweak here and a tweak there a dream like this can become reality in relatively short order.

[GUNS]

There is a whole history of threads of this nature on the other Factory Five forum -- most are in relation to a kit Cobra, but it's the same situation.


Many people (of which I am one) feel that a toy car like this needs to be paid for with 100% disposable SAVINGS. To me, this means money you've saved for the purpose of building/buying a car/toy after having your raining day fund topped up and your retirement savings in order. Financing a non-essential purchase like this in life WILL cost you in other areas down the line. Guaranteed.


On the positive side- many people have trouble budgeting and saving money -it's something most were never taught- so the good news is with a tweak here and a tweak there a dream like this can become reality in relatively short order.

Agreed. I would also venture to say that unless you are incredibly meticulous, plan on not being able to build a car for the budget you have in your mind. I think it's great to have a target budget, but you need to be able to be flexible in case of unexpected costs. It is very easy to exceed your budget in a hurry and potentially get yourself in an unrecoverable situation.

I would suggest waiting until you have the funds for a no kidding toy. If you can't afford a boat, you can't afford a kit car, IMO.

[Rasmus]

You could always wait for one of us to sell a completed 818. They'll never go for what we put in them. You'll get it for cheap!

[Jacob McCrea]

There's not much for me to add at this point, but I would say this: you want to avoid the situation where you are paying interest on the kit, and simultaneously having to buy parts, tools, etc. on credit to keep the project moving. I see how it would be very easy to put a lot of the non-kit parts, tools, supplies, etc. on credit to keep the project moving. This would get very costly in the long run if the kit is somehow financed. I can speak from experience here: while my Coupe is paid for, the project is moving slowly because I want to buy the good parts, but with other obligations can't pay cash for everything I want, when I want it. Buying a ton of parts on credit would allow prompt progress, but also be very expensive in the long run.

[RM1SepEx]

As mentioned earlier, no smoking, no bars, brew coffee at home, make and bring lunch... over time it's a great habit and you can save tons over time.
I'm 53 and have not worked since 1992 due to disability. EVERYTHING is paid off and if I don't have cash I don't buy it. My wife and I are both engineers and we designed and built our own house... I subbed out $5000 in labor (1985) to get it framed and weather tight. The rest we did ourselves, everything except the drywall mud work and sanding. Took 3 years before we got to go to a movie. Been in that same house for 28 years on April 1, 2013.

The single key to being "comfortable" in America, LIVE BELOW YOUR MEANS...

Now I have retirement money saved, college funds for the kids and toy money to play.
Back to the 91 Miata tomorrow, short nose crank key problem. I could use several more fingers to be criossed, I'd hate to lose my favorite winter beater for a while. I'm praying that the keyway isn't too bad and I can do the loctite and liquid metal fix...

[Mechie3]

I'm in the pay cash (or put in a credit card, pay it off that month, and get 1% cash back ;) ) crew. I'm only doing this because a fully paid off 06 WRX of mine was wrecked and insurance gave me a nice payout. Otherwise, it'd just be a dream.

It's too easy to want to finance this. You said you might change your mind in 3 years. If you finance it, you'll be paying that loan for more that 3 years most likely. I didn't have a fun car until I was through college. Drove hand me downs from parents and grandparents. I'm amazed at all of the college kids in my local Subaru club. Sure, they're having fun now, but come "real life" time, most of them find they have massive debt, can't afford a house or other fun things (like race tires), and don't know how others did it.

Best advice I heard about school finances in general was "live like no one else for a few years (ie, don't splurge during college years) so that you can live like no one else for the rest of your life (ie, you don't have debt, and can now afford things instead of wasting money on interest payments).

[Slatt]

+1 on all that's been said here. My summation would be "do NOT finance a toy, especially one that could be destroyed at the next intersection." But I admit I'm having fun wondering what the comprehensive insurance cost would be on a mortgaged 818!

I suggest you proceed with that plan of yours to save some fixed amount each month (that's in addition to your other dreams such as retiring some day, right?) and get whatever toy you freakin' feel like the moment 'Toy Cost' < 'Toy Savings'.

[bil1024]

SAve your pennies! Literally!, thats what I am doing

[RM1SepEx]

SAve your pennies! Literally!, thats what I am doing They are worth 2x in metal content!

[Nuul]

I'm attacking the $10K for the kit a couple of ways. First I'm selling off all the stuff I've bult up over the years. Baseball cards, comic books, figures still in the box on eBay. That will only net me a few thousand if I'm lucky so I'll probably sell off the gold I have as well. After that it's working as a 1099 on contracts on the weekends or nights to build up a the remainder of what I need. In all honesty I'll probably need more than 10K though, I'm wanting the 818C to be a daily driver so I'll be spending more on the interior than most.

[carbon fiber]

not to sound like a vulture, but there will be quite a few people that will buy the kit, and then end up having to sell for whatever reason before it is completed. be patient, save your money and wait for a deal. check out kalstar's gtm budget build. this is what he did, buy a partially built kit cheap, and search out deals afterward. patience will be the key. another advantage of these kits is the light weight, you can have a pretty quick car with a near stock driveline. (less $)

[longislandwrx]

If I were you I would start saving now for a future project, 818 or otherwise. Once you have your 10k if your tastes are still the same go with the 818... If not i'm sure you'll find another project just as cool. This story sounds alot like myself, 5 years ago. In that time I have bought a house, sold two project cars (to buy a new kitchen) paid off two new cars, and kept putting my secret man money away for a future project. I've had ideas come and go and all the while just kept socking money away. Now that the 818 is soon to be here I know what I want to do. Now things may change between now and August (unlikely) but I have the cash either way.

[Evan78]

Like LongIslandWRX and others have said, having a change of heart is nothing to be worried about. If you find something else you'd rather do with the money, great. That's a whole lot better than not having any options because you have no savings.

Regarding building your savings, something I learned years ago was that having a separate account can really help. This will probably sound obvious to most people, but it wasn't so obvious to me at the time. I just had a checking account that got bigger each month since I was making more than I was spending and that seemed adequate to me. I didn't care to have money "set aside" but someone urged me to create a dedicated account. My bank (B of A) would give a free savings account if I setup an automatic transfers from my checking account. I started with the transfers well within what I was comfortable with and then increased them over time as I still saw my checking account growing month over month after all bills were paid.

[RM1SepEx]

you need to fund retirement to the max first, married, kids? add life and disability insurance before saving for a toy... kids? college savings but NOT in their name!!! FAFSA is a witch... then toys!

[Kalstar]

Sell unneeded body parts. I hear the kidney sells well.

All kidding aside. Have you heard the statement....how do you eat an elephant?....one spoonful at time. The only way to get things you want is in small bites that grow with smart decisions. I purchase item that either need repair or are off season. Example, snowmobiles in the summer..... boats, RV, trailers, PWC in the winter. I went on Craigslist in September looking for youth ATV that weren't running. Knowing old gas and carb issues would be 90% of the issues. I went on YouTube to learn how to rebuild a carb. I then purchased 5 ATVs in 3 weeks. Within 1 week of tinkering after work with my 8 year old son I had 5 like new ATV running like a top. Profit.... $3500.... not bad 135% return on my investment. I purchased a trailer at an tax auction, old converted travel trailer for $50 bucks, $90.00 in lumber later I had an ATV trailer.... $600.00. This summer I purchased two Polaris Snowmobiles with a clamshell trailer for $2500. The package is worth $6000 all day long. I could go on and on. Its not just the money made, but the joy of knowing if I want something, I buy it at a great discount, enjoy for as long as I want, and not worry about depreciation infact in most cases I am paid to have owned it. I have over a $500,000 in toys that I have less then $200,000 invested in. If I sold all my toys tomorrow I could profit over $300,000. Just a Factory Five tidbit......Most GTM builders are north of $50k, I will be about half that and my car is a few weeks from being finished. So it can be done with the 818 too, I will have my 818 done for less then 10k, you wait and see. All I can say is.... I love "finding" money.

The best advise I can give is save up $1000.00, learn a product and turn that $1000.00 into a top of the line 818......built in a garage attached to your new house you built from that initial $1000 investment.

[bromikl]

What Kalstar said. Start small; put aside $100 - $500 as seed money. Grow it by buying, fixing and selling stuff at a profit. Keep those funds separate from your other expenses. Make the distinction between an expense and an investment. An investment, you can reasonably expect to sell an item for more than you have put into it. Be VERY choosy when you see a bargain. Remember you have to be able to sell the item when you're done with it. For example, you may be OK with driving a car with a check engine light on or body damage - but most people won't want to buy it.

Growing money is a business. You have to be ruthlessly stingy with that seed money.

One more thing - the kit will be $10,000 no matter what you do. But you can get an old 5-speed Outback or Forrester with a 2.5L for next to nothing. I don't know exactly which parts you'll have to source from another model, but I'm sure there won't be many of them. You can always upgrade to a turbo engine later (and sell the 2.5L!)

[AJ Roadster NJ]

I have a very different take on this than most. I firmly believe that putting aside a toy car fund of, say, $25k, and not jumping until you have that saved up in a "side fund" with everything else being taken care of, is an extremely poor approach to cash and asset management.

I do believe that you have to have your financial house in order to afford a toy like this, but the one measure I would use is personal net worth, regardless of where that net worth is. For example, if you want to save money for a $15k purchase from FFR, you could pay extra on your mortgage every month until you've put an extra $15k in, over and above your normal monthly mortgage payment. Then, use a home equity line to buy the kit. The interest you pay on the home equity line will be tax deductible (at least under current laws) and you will have also saved a ton of money on interest while "putting away" your money.

This is simply good cash and investment management. When someone tells you that they saved up all the money "on the side" to pay for their kit, or bought the kit with cash on hand that was otherwise uninvested, you'll know you're talking to someone who is missing fundamental money management skills. Even in a situation where a guy has no mortgage and no credit card debt and no car loans, no debt of any kind, cash-on-hand should still be invested in something. T-bills, whatever, but keeping cash in an account (beyond a 3 month emergency fund) is just poor management.

So back to the question, how to afford the kit? I built and sold a Roadster. I put $34k in all told. With good credit and a ton of home equity, I receive 0% credit card offers from time to time and I used one to buy the kit. I paid it off 12 months later with no interest. I used another to make several large parts purchases, split up between Forte, Breeze, and Summit. Other costs, like the wheels from Richard Oben at North Racecars, came out of pocket.

Bottom line, although I cannot say I didn't go into debt for the car, I can say I didn't pay a dime of interest on the Roadster or any part that went into it. Moreover, when someone says they didn't go into debt to buy their kit, I believe they're kidding themselves if they hold a mortgage. They could've put that $15k against their mortgage but bought the kit instead. It is a choice we all make. I could've reduced my mortgage by another $34k by not building the kit, but the choice I made was to build the kit. Which, in retrospect, was one of the best decisions I've ever made in my life. I am a different guy for having built that car, and I wouldn't trade the experience for anything.

JMHO

AJ

[MiniVanMan]

I have a very different take on this than most. I firmly believe that putting aside a toy car fund of, say, $25k, and not jumping until you have that saved up in a "side fund" with everything else being taken care of, is an extremely poor approach to cash and asset management.

I do believe that you have to have your financial house in order to afford a toy like this, but the one measure I would use is personal net worth, regardless of where that net worth is. For example, if you want to save money for a $15k purchase from FFR, you could pay extra on your mortgage every month until you've put an extra $15k in, over and above your normal monthly mortgage payment. Then, use a home equity line to buy the kit. The interest you pay on the home equity line will be tax deductible (at least under current laws) and you will have also saved a ton of money on interest while "putting away" your money.

This is simply good cash and investment management. When someone tells you that they saved up all the money "on the side" to pay for their kit, or bought the kit with cash on hand that was otherwise uninvested, you'll know you're talking to someone who is missing fundamental money management skills. Even in a situation where a guy has no mortgage and no credit card debt and no car loans, no debt of any kind, cash-on-hand should still be invested in something. T-bills, whatever, but keeping cash in an account (beyond a 3 month emergency fund) is just poor management.

So back to the question, how to afford the kit? I built and sold a Roadster. I put $34k in all told. With good credit and a ton of home equity, I receive 0% credit card offers from time to time and I used one to buy the kit. I paid it off 12 months later with no interest. I used another to make several large parts purchases, split up between Forte, Breeze, and Summit. Other costs, like the wheels from Richard Oben at North Racecars, came out of pocket.

Bottom line, although I cannot say I didn't go into debt for the car, I can say I didn't pay a dime of interest on the Roadster or any part that went into it. Moreover, when someone says they didn't go into debt to buy their kit, I believe they're kidding themselves if they hold a mortgage. They could've put that $15k against their mortgage but bought the kit instead. It is a choice we all make. I could've reduced my mortgage by another $34k by not building the kit, but the choice I made was to build the kit. Which, in retrospect, was one of the best decisions I've ever made in my life. I am a different guy for having built that car, and I wouldn't trade the experience for anything.

JMHO

AJ

Interest is tax deductable, but not 100% of it. I find it generally silly to pay interest on money that is yours (i.e. a home equity loan).

You don't have "money" if you have debt. Managing your debt is the key to financial stability and good cash management. Adding debt, on top of debt and borrowing against yourself is not good cash management.

Your mortgage is your mortgage. You house is your house. Your house is not your car. So, risking your house for a car is simply not smart.

Equity in your home DOES NOT exist, until you sell the home.

Back to taxes. The actual refund you get back on your interest is VERY small. It's certainly not worth maintaining the debt on the house. That kind of thinking is what gives the banking industry wet dreams.

So, the first question that really needs to be answered by anybody looking to take on a project like this. What's more important, eliminating debt, or having a toy? Most of us fall into the category of finding a happy medium.

Every piece of debt you have is giving money you could be using yourself to somebody else. My personal finances show exactly what I'm talking about.

I pay an extra $400.00 a month into my mortgage. At the current rate I'll have my house paid off in 11 years. If I used that money instead for saving for a toy, I'd add 3 years to my mortgage. If I applied another $200.00 per month, bringing the total to $600.00, I'd only take another year off the mortgage. So, I have to decide if that's worth it. Currently, to me, it's not. That $200.00 is much better utilized elsewhere, and to other long term goals.

Now, my mortgage sits at 3.5% Really nice rate. There is an argument that if I took that $400.00 and put it in an investment account, I'd earn far more than 3.5%, thus creating a surplus on that money, PLUS the money would be liquid. Currently, if I want that $400.00 back, I would need to take out a home equity loan and then pay a bank interest on money that is already mine. However, at this point, I'm guaranteed the 3.5% savings. I already own the 3.5% debt on that money, any investment hoping for more than 3.5%, after taxes would be exactly that, "hoping".

Now, I'm 42 years old, and only been in my house for 7 years. I have two children 5 and 3 years old. If I get my house paid off in 11 years, I'll be 53. Pretty respectable. I'll also be debt free going into my kid's college years. Now, if I were in my early to mid 30's, things would be very different. I'd be able to apply a bit more risk to the equation, and go for a higher gain on that $400.00 than 3.5%.

So, I have a personal slush fund. I apply a small chunk a month to that slush fund. As I get raises, I'll apply more. This is all on top managing the household debt, retirement accounts, and necessities. The only debt in this house is the mortgage. We could live a "richer" lifestyle, but only at the expense of maintaining debt.

So the question can really only be answered by the individual. What's the balance between lifestyle and debt that you want to maintain. Remember, that answer is going to change as you get older, as the older guys will attest to. My attitude at 42 is MUCH different than when I was 32.

[Simpliicity-]

All of these answers should be more than enough needed. I'm in a similar situation but different at the same time. I was waiting on a different kit car project when I found out about the 818. I have been using extra from my salary to save my emergency funds account. Now that that is where I want it I am saving towards my wedding. Whatever bonuses I get from work get split into a vacation account and a play money account. I worked in banking long enough to see people make bad judgement moves with money. I was one of them.

Just takes persistence and patience. I have also known for 3 years my next car build was a kit car so I don't own any toys right now because of this.

[metalmaker12]

You need equity in your home to get a home equity loan which is number one.
Without going into details.

A job that pays your current bills and allows you to have money to save up for the kit is all you need. Save a 100-200 a week if you can, that's 5,200-10,400 a year. You can't get a kit to well into 2014 at this point anyway so you got time. This is the safest way to do it. There are donors out there for cheap, so your a year out or more to be able to even order a kit so you can save till then, get a donor etc. Loans will cost you this plus interest, not worth it. I have gone either route, but cash money is the best way no matter what anyone says because you pay now and owe that, not anymore. Credit cards, loans etc, are designed to make that particular company rich off your payments period.

If you can't pay cash, you can't afford it

[Mechie3]

I firmly believe that putting aside a toy car fund of, say, $25k, and not jumping until you have that saved up in a "side fund" with everything else being taken care of, is an extremely poor approach to cash and asset management.

... if you want to save money for a $15k purchase from FFR, you could pay extra on your mortgage every month until you've put an extra $15k in, over and above your normal monthly mortgage payment. Then, use a home equity line to buy the kit. The interest you pay on the home equity line will be tax deductible (at least under current laws) and you will have also saved a ton of money on interest while "putting away" your money.

AJ

I agree and disagree. Length of time to save, mortgage rate, job security, peace of mind, and asset liquidity are also important to consider. My mortgage is at 3.3% right now. A home equity loan is currently priced around 5.5%. If I paid down my house, and then got a loan later, I'd be paying a higher rate than what I paid down. Plus, the $15k I'd need for the kit is only ~7months worth of my mortgage. It's likely I'd be paying back that HEL for longer than 7 months. If it wouldn'ttake me 7 months to pay it back, I wouldn't need to get a loan in the first place most likely.

I do however agree, that financing things can work to your benefit. For example, some of my wife's student loans are currently at 3%. We financed our Mini Cooper S because it was only 0.9% interest. The important part, though, is that the loan is below the average inflation rate, the monthly payment isn't an issue if one of us loses our job, and I have investements earning ~13% (semi liquid) and others earning 4.27% (liquid). We haven't paid ahead much on the low interest student loans or MCS because it would require money currently earning at a higher rate. That said, we have paid ahead somewhat in order to minimize our monthly minimum payment. It used to be ~$800 (including higher interest student loans). It's now ~$300. Before, if one of us lost our job, it would be a stretch. Now, a single wage earner in our house can afford all of our loans by themselves if someone loses their job.

If I had no investments and the monthly payment was a stretch it makes more sense to save (whether you're saving under your mattress or in liquid bonds at a low rate) than to finance it. A house isn't exactly liquid, so even if you do manage to get a HEL rate lower than your mortgage, you're not seeing the savings for another 10+ years. If your HEL rate is lower than your mortgage, you should also refinance.

I happen to have the cash only because it came from an insurance payout. Given the current interest rates of bonds and such, I won't make much over the course of the next 8 months, but if I was saving for longer, I would certainly invest it. As is, I've been using it as a bank account buffer.

[MiniVanMan]

If you can't pay cash, you can't afford it

That is a hard, ugly reality that most people don't want to admit. I have a motto myself.

"If it's worth having, it's worth saving for."

When I was in the military, I'd get these kids, brand new to the military. Still dreaming of their high school sweetheart, but they have an income, and available credit. I would sit them down immediately and challenge them to an experiment. They'd invariably always want to go out and buy a car, a new stereo, and all the stupid things we dreamed about when we were 18-19 years old. I'd tell them to save some cash. Have cash on-hand when you go into a store to purchase something like a stereo. Yeah, that $1000.00 stereo is really nice. Have $1000.00 cash in your hand when you go to buy it. Now, hand that $1000.00 over to the clerk. You'll find that what you're willing to finance is A LOT different than what you're willing to pay cash for.

Moral of the story is, the only real way to determine the value of something to you, is to hand over the time it took you to save for that item. Disregarding interest, $1000.00 in credit and $1000.00 in cash buys you the same thing. The $1000.00 in cash also has a time component in "time invested". There's real value to it, in that you've worked, made a paycheck, worked some more, made another paycheck. It's a lot harder to part with cash at that point.

The other benefit is the "impulse buy". This helps eliminate impulse buying. Which the OP is referencing. "If I save for 2 years, what if I change my mind". GOOD!!!!!! If you change your mind, saving for it has accomplished exactly what it should have. You now know how much value that product has for you.

Mechie3, good write up. Different ways to skin a cat, but ultimately, you're doing the same thing I'm doing. "Managing your debt". There's a trend in the market where the middle class is moving to this philosophy. Managing debt is a very different animal than managing "finances". It's also horrible for our economy, but that's not our problem, and a COMPLETELY different discussion. But, you and I agree. Debt for the sake of debt is pointless. Paying ANYBODY to access your money, and/or investments is borderline ludicrous, and should only be done in very special circumstances. A kit car is NOT, in my opinion, one of those special circumstances. I like how you laid out "liquid", "semi-liquid", etc. for your investments. I consider home equity to be NON-liquid. If I have to pay somebody interest on money that's technically mine, then that's a penalty, and means it's not liquid.

[mg2]

I worked 20 to 27 hours a week overtime of 6 month to get the money for my Cobra. The wife gives me s!*t about it every time have a fight. Came pretty close posting it for sale three times already .

[Mechie3]

The wife gives me s!*t about it every time have a fight.

That brings up the social side of "how do you afford it". :p

Thankfully my wife is on board, more or less. We'll see how often I get the "how long are you going to be in the garage?" talk once the kit arrives.

[Nuul]

"how long are you going to be in the garage?"

Mine already does that with work. I'll be doing a late night cut-over and she'll call wanting to when I'll be home. When I'm done, that's when.

[RM1SepEx]

There is a bright side to being disabled... I putter now, just on different projects!

[Jeff Kleiner]

Hmmmm.... Instead of asking "how long are you going to be in the garage?" mine says "don't you have something to do in the garage?" :p

Oh, as to the original question---I pay cash.

Jeff

[mrmustang]

Hi Guys.

Being a Subaru WRX owner since 2005, an AutoX junkie since 2008, and most recently, and advocate of pure R(ight)WD performance cars, I can't properly express my excitement for the 818. Adding to that, I've known of and have appreciated the FF Cobra for a while, and have a whole lot of respect for people that build their own cars, even if they are from a kit. That being said, I would love to build my own 818.

Unfortunately, A: I don't have $15,000 worth of disposable income ready to drop on a toy car as cheap as that may be for a car of this potential, and B: Don't have a garage to build one in.

Item B may be the easier of the two dilemmas to handle. So I'm wondering about item A. Are there ways around simply plopping down 10k for the kit and maybe getting a car loan on a totaled WRX, which I see as being the cheapest way of going about it. I suppose I could get a personal loan, but a 10k personal loan may be hard to get and come loaded with a hefty interest rate.

Do most people on here do it the old fashioned way and save up? If I saved $277/month for 3 years, I would have the $10k necessary. However, 3 years from now, I might have a change of heart. Or 1.5 years into it, the 818 savings account could very well turn into the house savings account.

Thanks! :D

The bottom line is debt, do you want to be in it paying interest, or do you want to own something free and clear? Personally, I am not a big fan of debt, have never N-E-V-E-R taken a loan out for the purchase of a toy or weekend vehicle. My mindset has always been, if you cannot afford it now, save until you can. Did it chap my behind watching others play with theirs, sure. However, when those people had their homes foreclosed on, due to their own excessive debt, I'm still in mine. Forget about instant gratification (you can always buy a used or unfinished kit down the road, I have ten times over in the past), take the slow road and do not go in to unnecessary debt for that instant gratification.


Just my two cents worth.


Bill S.

[mg2]

My wife was onboard at first until it hit her how much I spent on myself , now I'm selfish in her eyes.

[Mechie3]

Hmmmm.... Instead of asking "how long are you going to be in the garage?" mine says "don't you have something to do in the garage?" :p


I haven't been married long enough for that yet. :D

[skullandbones]

Hmmmm.... Instead of asking "how long are you going to be in the garage?" mine says "don't you have something to do in the garage?" :p

Oh, as to the original question---I pay cash.

Jeff

Trish has never asked me to go to the garage but it is one of the first places she looks when I'm missing! LOL.

Liquidity gives you more leverage with your money and a lot of people don't have that luxury. I started a part time business that helped "free up" my money. I'm sure there are a lot of pros and cons about that but I just know that from that period, I seemed to have more money for discretionary purposes (plus added income). But it's more than just the added income. WEK.

[Turboguy]

Mine already does that with work. I'll be doing a late night cut-over and she'll call wanting to when I'll be home. When I'm done, that's when.


This -in general- always gets me about women. So many of them are so clueless of the big picture.


They want all the good things in life, but don't understand it takes TIME and HARD WORK to get them. PLUS they want you to fix everything that breaks around the house, saving money that gets blown on more shoes or $200 haircuts.


I know SO many guys that live this life. You know it's going to end - it's just a matter of when. The worst part is when their girls mess around on them because they weren't "paying attention" to them. No honey - they were just out there working their butts off to pay for all the nice stuff you enjoy everyday, like that big screen TV you spend 30 hours a week watching, and to support your kids - never mind the Land Rover or Lexus they drive that costs twice what they make in a year.


:rolleyes:

[SStrong]

I'm kind of late to this thread. I'm a business owner, and am familiar with lines of credit. Fortunately, I had enough saved for the MkIV kit and a donor Mustang. I went to my bank (where I do my business banking) and was able to secure a personal line of credit for this build. I have used a little of it (purchasing the short block and parts), and may need to use more when I go for paint (soon, hopefully). I may have an advantage having a business with a good cash flow. But it is worth a try.
Steve

[DrAwender]

Finance the Honda, anything else pay cash. You can be creative with your finances but if you cant afford to pay cash for a toy you really cant afford it. Not now anyways. Save and if you change your mind then great, you know there is something else you eventually wanted more.

[bromikl]

This -in general- always gets me about women. So many of them are so clueless of the big picture.


They want all the good things in life, but don't understand it takes TIME and HARD WORK to get them. PLUS they want you to fix everything that breaks around the house, saving money that gets blown on more shoes or $200 haircuts.


I know SO many guys that live this life. You know it's going to end - it's just a matter of when. The worst part is when their girls mess around on them because they weren't "paying attention" to them. No honey - they were just out there working their butts off to pay for all the nice stuff you enjoy everyday, like that big screen TV you spend 30 hours a week watching, and to support your kids - never mind the Land Rover or Lexus they drive that costs twice what they make in a year.


:rolleyes:


Not that you're bitter.. ;)

LOL

[Turboguy]

Not that you're bitter.. ;)

LOL

:eek: Not to dilute the point I was making, but I just re-read what I wrote yesterday and saw that it *could* come across a bit strong.


I actually WASN'T speaking from MY OWN experience, but rather from what I've seen in my friend's lives and day-in and day-out in my job working as a financial services professional.

[Mechie3]

I'm lucky enough my wife works and (for better or worse) makes more than me. At the same time, she lets me handle the finances. She likes to shop, but is still conscious about how much she spends (usually).

[longislandwrx]

A $200 haircut is a small consolation for her having to deal with me.

[Xusia]

Don't go into debt for a toy. Period. If you don't have the money, then save up. If you change your mind, better to have cash than a car you didn't really want.

As far as a house goes, that SHOULD be a higher priority than a car (ANY car).

It seems to me what you really need is to accept the reality that it will be a several years before you can have your dream car. I've been waiting 15 years for mine, so I'm sympathetic - BELIEVE ME!! In the mean time, I got into motorcycles because they are the cheapest fast thing I know of (which actually de-railed me a bit, so don't do that!!). :)

[Mechie3]

As far as a house goes, that SHOULD be a higher priority than a car (ANY car).


Didn't you know, you can sleep in a car but you cant race in a house? :D

[Xusia]

OMG! Too funny! :)

[Turboguy]

OMG! Too funny! :)

x2!