Is this stingy or smart?

[Eug]

Not knowing anything about this guy except your biased opinion... I'd have to say he's stingy on cars. $300 per month on a car lease is nothing, even for the middle class, whereas he's in the 0.1%.

But then again, that's fine. If he wants to be stingy on cars, he'll save money. On the flip side, I have a friend who spent >$200000 on a car to use 6 months of the year and I thought that was foolish. He makes 7 figures so he can afford it, but I still think it's foolish. But because he can afford it, in the end it's fine, and it's not up to me how he spends his money.

The one area of indulgence he has is food. His weekly food budget is $700. Being the type to use coupons before I'll go to McDonald's, I can't wrap my head around how he can spend that much money on food. I sometimes think his wife must be skimming off the top of that grocery money.

If you're going to McDonald's, you're not saving that much money compared to many healthier options, unless you just eat french fries or something. In my experience it's actually cheaper to make your own food, and around here, it's also often cheaper to eat at Chinatown for much better tasting food.

I don't spend $700 on food per week either, even for my entire 4-person family, but I'd rather do that than spend half that on my car.

 

[SlitheryDee]

I'm not sure I would call him stingy. Around here people would probably call him "tight with his money", which is to say frugal to the point of being mildly annoying.

Wouldn't a car leased for work be a tax write-off anyway? Someone making that kind of money probably values those almost as much as saving money directly.

 

[Mursilis]

Very odd that your friend is reluctant to pay $300/month for a car but pays $100/day on food. How many people is he feeding?

 

[Eug]

I'm not sure I would call him stingy. Around here people would probably call him "tight with his money", which is to say frugal to the point of being mildly annoying.

Wouldn't a car leased for work be a tax write-off anyway? Someone making that kind of money probably values those almost as much as saving money directly.

Is he leasing it for work? For example, around here if you're just driving the car to and from work, you can't easily write it off in your business. You have to actually use it for work, eg. driving from your primary workplace to a client's location, or haul stuff in it, or whatever.

Furthermore, there are maximums that can be written off. Even if you use the car as a real business vehicle, under our tax laws in Canada you cannot claim the entire amount of a $70000 car. Same goes for leases over I believe $800.

So, in this guy's case, the $300/month lease cost would be OK, but under our laws here, if he's just driving back and forth to his primary workplace and going on weekend trips to the cottage, he would not be eligible to claim any of that cost.

Laws are definitely different in the US, but some similar rules apply.

 

[Kaido]

Wouldn't a car leased for work be a tax write-off anyway? Someone making that kind of money probably values those almost as much as saving money directly.

Yup. In simple terms, lease = writeoff, purchase = not so much. In more detail via TurboTax:

The standard mileage rate can also be used for a leased vehicle. If you use the standard mileage rate, you cannot switch to the actual expense method in a later year.

If you use the standard mileage rate for a leased vehicle, the lease payment amount is not deductible.

Leased vehicles are not depreciated. Instead, the business portion of the lease payment is deducted. When the value of the leased vehicle is above a certain amount, you must also subtract an "income inclusion" amount from the deductible amount. For vehicles first leased in 2015, the threshold is $18,500. This income inclusion rule is an attempt to equalize the tax benefits from leasing and owning business vehicles.

For example, a vehicle leased in 2015 that is valued at $45,500 and that is used 100% for business would require an income inclusion amount of $43 to be subtracted from the 2015 lease payments in arriving at the deductible amount for that year. In 2016, the income inclusion amount would be $93. Higher income inclusion amounts would apply for 2017 through 2019.

Slap a magnetic company sign on the side of your car, that way everywhere you go you're advertising

 

[zinfamous]

1. Well, I guess he's rich for a reason haha - he obviously watches every dollar if he has $500k in savings & won't jump on a Genesis leases for $300/mo (which is a very good deal).

2. Introduce him to FI/RE.

shit man--$500k in savings and he made $750k last year?

I would reach his $3 million goal in about 5 years, maybe less, with that salary.

 

[PricklyPete]

The one area of indulgence he has is food. His weekly food budget is $700. Being the type to use coupons before I'll go to McDonald's, I can't wrap my head around how he can spend that much money on food. I sometimes think his wife must be skimming off the top of that grocery money.

I find it funny/sad that you think spending extra money on a car is worth it, but spending extra money on food is a waste. Very screwed up priorities IMHO.

 

[NetWareHead]

This reminds me of a time when a coworker who I'm friends with (we bust balls regularly) made fun of me for almost a week once becuase he saw me pick up a penny and look for leftover change in the vending machines here at work. Started calling me cheap and even took out a handful of pocket change, chucked it behind the vending machines in front of me and asked if I was going to move the machines to get at the change.

A few months later, I'm telling him how I bought my second house, renovated it and in a year I'll be looking for house number three. He is kinda stunned at how I could afford properties when we both work at the same company. I asked him if he remembers making fun of me for grabbing the change and then explained how I am thrifty in general and dont piss away money needlessly. Its not just pocket change; I do what I can to manage/eliminate/reduce most of my expenses.

The guy does better than you financially so it sounds like your criticism is uneeded and even irrelevant.

 

[TheGardener]

In reading this I'm thinking, why hasn't the exec figured out how to get the company to lease a car for him?

 

[soulcougher73]

Sounds stingy if he came to you for advice on a lease but doesnt want to pay for a lease. $300 is about as low as you can get on a car payment expecially for a car like the Genisus.

He could die tomorrow while on his way to or from work. He needs to live a bit and stop saving for a future that many never be there.

 

[dullard]

I go by a pretty simple rule-of-thumb. Unless there is some specific reason to be different, people should save about 15% of their income. That way, if they work a typical ~40 year career, have typical investment gains, and a typical lifespan, they should be able to retire with the same lifestyle as before retirement.

Clearly, if you intend to retire early or have a good reason to need extra money (say you have a huge family to support and bad health, or maybe you know your job is not going to last, or maybe you are just really conservative in investments) then bump up that 15% a bit. But, that 15% includes social security, company 401k match, etc. So 15% really isn't out of reach for many people.

Using that rule-of-thumb, someone on a ~$750k income is probably stingy if they think they can't afford a ~$40k car.

Being stingy is a virtue and is smart, they are not mutually exclusive. But the overlap is true only to an extent. Being less happy than you would otherwise (or worse being a miserable miser) for ~40 years of working just to die shortly into retirement is not smart. And neither is having a retirement in poverty because you under-saved. It is all about balance.

I will also say he doesn't appear to be on the smart side if he is sitting on that much cash and spending $36k a year on food when he needs a car instead. At least put it into some form of conservative investment that doesn't get eaten by inflation. Also, $3M won't likely do it for most people in his situation, so he isn't as financially savvy as you think.

 

[Kaido]

Sounds stingy if he came to you for advice on a lease but doesnt want to pay for a lease. $300 is about as low as you can get on a car payment expecially for a car like the Genisus.

He could die tomorrow while on his way to or from work. He needs to live a bit and stop saving for a future that many never be there.

Considering my leased Honda Fit was $234/mo, a Genesis for $300/mo is amazing.

 

[cbrunny]

It is not something that requires judgement of any kind.

 

[Painman]

>Car lease

Fools, I drive a 16 year old VW waggy that's paid for

The rest of you are a rank ass waste of planet

 

[dullard]

Fools, I drive a 16 year old VW waggy that's paid for

The rest of you are a rank ass waste of planet

A paid off car is much more savvy than a lease. But if even the 0.1% won't buy a relatively mid-range car, our economy will crash and then we all have nothing.

 

[Schfifty Five]

Recently a friend asked me to look for a good lease for him. Thanks to those in the Garage forum, I suggested the Genesis for $300 per month, which I think is a great deal.

He responded that he'd have to save up for a few months to be able to afford it. My reaction was WTF.

He is an executive at a global company. Last year he made $750,000 and he is sitting on $500,000 in cash.

To me it's mind-blowing that he won't spend such a trivial amount of money for that car and asked why he's being so tight-fisted. From his point of view, he won't feel financially comfortable until he accumulates $3 million (so that he could retire if necessary). Since he is way more financially savvy than me, I'll give him the benefit of the doubt. But I can't help feeling that he should enjoy life more.

What do you guys think.

I think your "friend" sounds made up.

 

[Zeze]

He sounds fishy. I don't go around telling people I'm sitting on 500K cash if I did.

 

[Eug]

$3M won't likely do it for most people in his situation, so he isn't as financially savvy as you think.

Maybe he just wants that as a baseline. Yeah $3 million isn't all that great, but it sure is a great start.

I had a much more modest goal but it was the same idea. I lived almost like a cheap student for a very long time despite having an OK salary, until my main debts were all paid off, and then started to spend more after that (while keeping aside savings for retirement, etc.).

But I still have never spent a lot on cars. My last purchase was a used Plug-in Prius, which I only bought because my previous 11 year-old Prius was totalled when somebody rear-ended me. In contrast, most of my colleagues drive luxury cars.

 

[Puffnstuff]

Saving for a lease confuses me... unless of course he just doesn't want to commit that amount of money just yet.

 

[zinfamous]

In reading this I'm thinking, why hasn't the exec figured out how to get the company to lease a car for him?

This.

I thought baller cars to drive around was a typical company expense?

 

[zinfamous]

I find it funny/sad that you think spending extra money on a car is worth it, but spending extra money on food is a waste. Very screwed up priorities IMHO.

sure, but $100/day on food is still exorbitant for a foodie that really likes quality food.

This is assuming the individual is at least competent enough to use a can opener and has amateur knife skills. :hmm:

 

[Elganja]

funny how some people judge anothers vice when they most certainly have their own

as for the OP... he's gotten around without a car for some time now, right? he just doesn't value a car as much as others do, can't fault him for that. he'll get one when he determines he NEEDS one, which obv is not now

 

[Elganja]

sure, but $100/day on food is still exorbitant for a foodie that really likes quality food.

This is assuming the individual is at least competent enough to use a can opener and has amateur knife skills. :hmm:

probably indulges at restaurants over the weekend... very easy to spend lots of money if you're a foodie (i never understood it though... i'm more of the type who only eats to survive, it's more of a nuisance then anything else)

 

[piasabird]

It is easy to spend a lot of money on food if you eat out all the time. Some people just do not like to cook. Food could also include alcoholic beverages like wine, beer or scotch, etc.

 

[madoka]

Very odd that your friend is reluctant to pay $300/month for a car but pays $100/day on food. How many people is he feeding?

He is feeding a family of four.

I find it funny/sad that you think spending extra money on a car is worth it, but spending extra money on food is a waste. Very screwed up priorities IMHO.

Yeah, we are diametrically the opposite in this regard. He doesn't mind blowing his money on food but doesn't think cars are worth it and I'm the opposite.

Also, $3M won't likely do it for most people in his situation, so he isn't as financially savvy as you think.

$3 million cash is his goal. He also owns three homes, two of which are in the seven figure range in the Bay Area that he'll be renting out. He also has options, 401k, etc. I'm sure he's done all the calculations and knows exactly what he needs.