Personal finance observation, musing and decisions in a journey toward financial independence by 36 with at least $1 million.

By Topics

MONTHLY ARCHIVE

Jun 2008 (2)
May 2008 (2)
Apr 2008 (5)
Feb 2008 (3)
Jan 2008 (15)
Dec 2007 (32)
Nov 2007 (6)
Oct 2007 (8)
Sep 2007 (9)
Aug 2007 (24)
Jul 2007 (2)
Jun 2007 (1)
May 2007 (3)
Apr 2007 (4)
Mar 2007 (4)
Feb 2007 (13)
Jan 2007 (6)
Dec 2006 (3)
Nov 2006 (7)
Oct 2006 (7)
Sep 2006 (6)
Aug 2006 (4)
Jul 2006 (10)
Jun 2006 (1)
May 2006 (3)
Apr 2006 (2)
Mar 2006 (6)
Feb 2006 (6)
Jan 2006 (3)
Dec 2005 (1)
Nov 2005 (9)
Oct 2005 (8)
Sep 2005 (13)
Aug 2005 (25)
Jul 2005 (16)
Jun 2005 (17)
May 2005 (19)
Apr 2005 (20)
Mar 2005 (24)
Feb 2005 (23)
Jan 2005 (36)
Dec 2004 (40)
Nov 2004 (34)
Oct 2004 (17)
Sep 2004 (21)
Aug 2004 (59)
Jul 2004 (37)
Jun 2004 (31)
May 2004 (29)
Apr 2004 (52)
Mar 2004 (49)
Feb 2004 (49)
Jan 2004 (31)
Dec 2003 (48)
Nov 2003 (52)
Oct 2003 (29)
Sep 2003 (8)
Aug 2003 (5)
Jul 2003 (2)
Jun 2003 (2)
May 2003 (5)
Apr 2003 (2)
Mar 2003 (2)
Feb 2003 (3)
Jan 2003 (29)

HOT DEALS

Best Cashback Card:
Citi CashReturns(SM) MasterCard®
5% off EVERYTHING during introductory period. (review)

Best Sign-Up Bonus:
Citi Professional Card
$100 gift card after 1st purchase (review)

Best 0% APR Card:
Discover More Card
0% APR for purchase and balance transfer for 12 months (review)

Best Business Card:
Business Gold Rewards Card from American Express: Up to 40,000 bonus points in the 1st year (review)

Best Student Card:
Citi® mtvU™ Platinum Select® free music, gift cards and more (review)

Best Savings Account:
ING Direct Savings Account (4.30% APY)

Best Interest Checking:
Electric Orange from ING DIRECT. (Free Bill Pay. Earn up to 5.00% APY)

Free Stock Trading:
100% Free Stock Trading from Zecco.com

Free Credit Score:
Free Credit Report and Score from Experian

The BMW Story, Part III: A Leap of Faith

Contributed by mm | April 2, 2005 6:45 AM PST

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.

This Post Has Received 12 Comments. Share Your Opinions Too.

Jaloti Commented on April 2, 2005

Enjoy the car. Look, economics is all about choices--you save money on one choice, to spend it on another choice. Sure, the BMW will cost more money than a used Toyota--but if you enjoy it more, that's what it's all about. Otherwise, you wind up like that execrable "Tightwad Gazette" chick who makes it sound like it's a mortal sin to spend an extra 25 cents on the kids' cereal.

Congrats again, and thanks for your great blog.

jaloti
www.jaloti.com

MM Commented on April 2, 2005

Happiness comes from within ... . I've been through the phase of my life where I thought such things bring happiness. But initial euphoria goes away in a few weeks but the bills keep coming for years

Arbee Commented on April 2, 2005

I understand the conflicts you had regarding the BMW. Since you can afford the car and still hit your targets, I think it is a good move. I do wish I can save every penny I can. But we have to find a balance between our current wants and future needs. That balance is something that is very personal. Enjoy the ride!

Steve Mertz Commented on April 2, 2005

Funseeker! Enjoy the BMW'er-you've done a great job with your site and it's great to enloy your labor. Have fun, Steve

beemerssuck Commented on April 2, 2005

You will rue the day.

BMWs are some of the biggest pieces of shi* ever made.

You will have dreams of still owning that Kia in one year.

MarkMyWords.

Tim Commented on April 3, 2005

Can we see a picture of this "ultimate driving machine"?

Cheers...

Mrs. Money Matters Commented on April 4, 2005

You will not regret the BMW. They handle so well on the road. Once we were almost in an accident in our 328. A ruptured tire flew in to the windshield, then under the car. We were not hurt because the car is heavy and steady. If we were in another car, I think we may have had problems. Enjoy!

ken Commented on April 4, 2005

Silly move to buy the BMW - but yes I've made my silly moves too :)

Suggest you don't let this be the first trip down the slippery slope to ego purchases - of such has many a retirement plan laid low.

J Commented on May 12, 2005

Boy, next thing you'll be trading up in houses. Big mistake mm. You could speed up your retirement a lot by avoiding financial black holes like "luxury" cars. BMW = Big Money Waster

I was looking at your expenses for 2004. $1200/month for FOOD?? If I was you I'd be tightening up the budget and retiring a lot sooner.

Good luck mm.

B C Commented on June 20, 2005

Good move on the BMW. I've driven and owned a couple for over 15 years. They will cost about 30% more in general maintenance, but the payoff is a very fine motorcar. Even when they get old, if you keep them up they still fit in anywhere from valet parking to the back of the Target parking lot. Love the naysayers! They WISH they could drive a Beam. 220,000 miles, no car payment since 1991 and LOVING IT!!!!

psikeyhackr Commented on June 26, 2005

http://discussions.pbs.org/viewtopic.pbs?t=28529

Jose Anes Commented on July 6, 2005

Enjoy the car.
Everyone deserve some luxury. As long as you keep the luxuries under control, of course.

If you fund the retirement options completely, and save at least 10% of the salary, you deserve to reward yourself :)

Recommended Offers

•  Capital One® No Hassle Miles(SM) Rewards - Above Average Credit
•  New Millennium Bank Platinum Visa®/MasterCard®
•  GM Business Card
•  Discover® Student Card
•  Citi® Professional(SM) Card with ThankYou(SM) Network
•  Orchard Bank MasterCard® Secured
•  Account Now™ Vantage Debit Visa® Card
•  Advanta Platinum BusinessCard with Rewards
•  American Express® Preferred Rewards Green Card
•  Orchard Bank Silver MasterCard®

This page was last rebuilt at September 30, 2008 11:53 PM PST.

RSS FEED

Featured Sites

• Student Loans - Confused about student loans? Have a professional education finance advisor assist you with all of your federal and private student loan questions. Also find free college financing tools and resources at NextStudent.com.

• Protected.co.uk compare over 300 life insurance plans to find the best deal from their providers.

• Search 300 life insurance plans from 12 leading providers.

• With real time markets you can trade with confidence.

• Payday Loans - Avail payday advance, payday loans to fulfill your requirement with Payday.

• Bad Credit Auto Loans are loans for people who have a poor credit history and cannot qualify for an auto loan. If you are able to secure a bad credit auto loan, you should consider it to be a second chance to improve your credit rating by making all auto loan payments on time.

• Car Finance - The Uk's leading online car finance company. Buy any car from any UK dealership. Bad credit not a problem.

• Find a fast personal loan in the UK. Even if you have a bad credit history, arrears or CCJ's, Loansite's top lenders can help you compare loans and find a low APR secured loan, homeowner loan or tenant loan with fast approval in principle.

• Legal Helpers experienced bankruptcy lawyers can help you out of debt. Take advantage of our Free debt consultation. Our bankruptcy lawyers will help you understand your best option to eliminate your debt. Ask about our 100% guarantee.

• Cheap Car Insurance - Provides Cheap Car insurance. Receive an instant quote online

• Womens Car Insurance - Specialises in cheap car insurance for women

• Have a Personal Bankruptcy Lawyer assist with filing bankruptcy for a chapter 13 or chapter 7 bankruptcy case. Free bankruptcy evaluation tool.

• secured loans - Any purpose low Cost secured Loans.

• The Internet's most trusted credit card resource directory.

• Frigidaire Parts

• Fleet Dealer - Ford Fleet trucks and vans, cargo vans, cutaway vans, LCFs, work trucks, commercial trucks, ambulances, tow trucks, police squad vehicles, and other commercial vehicles like box vans, delivery vans, box trucks and dump trucks.

• Bad Credit Auto Loans - Auto loans bad credit, bad credit auto loans, guaranteed credit approval, auto financing, credit lenders, car credit, automobile lenders, bad credit auto loans seattle, auto loans bad credit seattle.

• Ford Dealer - One of the World's largest Ford Dealerships. Over 3,000 cars and trucks to choose from. Mega Volume Dealer. $1,000 price guarantee. Large Special Finance Store. Ford Dealer Seattle. Mustang, Edge, Explorer, F150, f250, fleet, build your own Ford.

• Auto Loans Bad Credit - Bad Credit Auto Loans, auto loans bad credit, guaranteed credit approval, car credit car loans, automobile financing, credit lenders, bad credit auto loans seattle, auto loans bad credit seattle. (Home | Apply | Inventory | Credit Help | Contact Us)

• PayDay Loans

• moneyeverything.com - Find the right credit card to suit you with our guide to the right card in the UK

• airaid.co.uk - Looking for credit cards in the UK? Find the right credit card to suit you with our guide to choosing the right card in the UK

• Bad Credit Loans - find out some tips about improving your credit score and choosing the best bad credit lender.

• Consolidate debt with Bad Credit Personal Loans online or Personal Loans, consolidate Bad Credit Personal Loans or apply for Credit Cards including 0% deals.

• You may also want to look at UK Bank Accounts and get a Credit Report before comparing UK Credit Cards or finding out about UK Mortgages to refinance or move house.

• We provide personal loans for debt consolidation, home improvement, bad credit loans at cheap rates in the UK.

• If you are buying a car you may want to search for UK Car Insurance to get a car insurance quote online.

• Accepted.co.uk compare over 100 secured loans to find the best deal from their lenders.

• Accepted.co.uk compare over 100 secured loans to find the best deal from their lenders.

• Sending money to family and friends has never been easy. Use iKobo, secure way to send money worldwide

• Payday loan tips at paydayloanreport.net helps you to defeat cash-checking and payday loan traps.

• MM Money is an interesting money blogthat covers many aspects of personal financial matters.

• This insurance weblog covers all major types of insurance, including health, life and car insurance

• Bestcardguide.com offers independent review of best credit cards

• Real Bankruptcy offers excellent tips of bankruptcy and how to avoid them

• Small Business Loans

• Credit Card Debt Relief

• Online Credit Card Processing

• Stock Investments

• Bad Credit Auto Loans - washington state's bad credit auto financing leader.

• fha loan - Hud approved lender, FHA Home Loan Services provides 1st time home buyer loans & fixed rate mortgage refinance options for borrowers with bad credit.

• Credit Repair
repairmycreditnow.com/Credit_Repair_Advice.htm - repair my credit now credit services offers credit repair, restoration and education through our exclusive "v" phase process ™

Want to See Your Ads Here? Claim Your Ad Space at Personal Finance Weblog by Writing to Webmaster. Starting at $49/month, see your text ads in thousands of indexed pages at PFBlog, the Best Personal Finance Blog. Full Rate Card Available Here.

By Topics

MONTHLY ARCHIVE

The BMW Story, Part III: A Leap of Faith

More PFBlog Articles You Might Find Interesting ...

This Post Has Received 12 Comments. Share Your Opinions Too.

Read More ... 21 Posts In The Same Category

Recommended Offers

RSS FEED

PREMIUM SPONSORS

SITE REVIEWS

PERSONAL FINANCE BLOGS I READ

SELECTED POSTS

Featured Sites