So what happened to our BMW aspiration? After the math and the ensuing bedtime discussion, we finally pulled the trigger. Financial wise, the transaction was completed almost identical to the previous analysis, although we did negotiated another $150 break. (The BMW deal was executed at the private party price and the Kia trade-in was executed at the trade-in price -- both based on Edmunds' report. I do consider it as a favorable deal.) Of course, we have been enjoying the "ultimate driving machine" in the last two days, hence the silence at PFBlog lately.
Nevertheless, I truly appreciate every single comment you left in the "analysis" post -- this makes the post the top commented one in PFBlog history. Many comments hit the crux of the problem. That is, by the end of the day, many personal finance decisions require a delicate balance of long term financial stability with near-term happiness.
Let me wrap up this discussion by summarizing our "BMW thought journey":
First, this is an expensive upgrade for sure. As I quantified in the previous post, the BMW purchase and Kia trade-in resulted in a $3,000 immediate blow to my net worth in my book. I'm also mindful of the much higher depreciation and maintenance cost, both are a given for BMW. I am looking at adding $325/month to my cost structure on a semi-permanent basis. For the year of 2005, the financial consequence is about $6,000.
Second, I made this move because I am positive that I can still meet my annual net worth growth goal of $80,000, thanks to brighter income prospects. The upcoming March monthly review report will show that I'm still on the right track.
Third, I did have some struggle. The idea of buying a luxury car does not fully resonate with my saver's mentality. Number-wise, it is hard to quantify the great amount of satisfaction we will derive from it and compare it against the hard dollars on the cost side. But again, if I follow this path and try to be "scientific," it is as hard to justify the BMW upgrade as to justify why I didn't consider to trade down my Toyota Camry for a cheaper car, say, Toyota Echo.
Fundamentally, I feel we made this leap of faith because our finances are reaching a new stage, in which our family income is growing healthily, and we have a high level of financial security compared to other people in late 20s. The desire to save the next dollar beyond our stated goal of $80,000/year, therefore, is gradually replaced by some desire to improve our living style an inch better. All in all, this is a leap of faith on our future financial prospect, and to some extent, a leap of faith on our gained skills of balancing long term security with short-term earthy entertainment.