A balanced lifestyle

I live in Toronto, Ontario where real estate prices are generally higher than in most other areas of the country. We purchased our first condo about a year ago for and bought a new Audi. It seems to me we have a reasonable divide between home and car, but I find the mentality of people in this city is to pour all of their money into their property and skimp on the car and other things. In the small town I come from a nice house would be cheaper than a condo in Toronto and the owner would probably have two nice cars to go with it. I find that in Toronto people think the way we spend our money is strange. Maybe I see it as normal because I come from that smaller town.

We opted for this route because we felt it was pretty balanced, we have a nice condo -- a good size we're no tripping over ourselves (no kids) -- a nice car, we eat out and we travel a little. All of this is still while paying a student loan off and saving decently. What do folks think, is it strange in a big city with high value real estate not to pour that extra car payment into a better property? To make things even stranger (accordingly to Toronto people) I'm looking to get a second car, perhaps a Porsche Cayman, as a weekender only. We don't make tons of money, but we've not in any real debt either. Maybe I'm in the wrong, maybe I should be solely focused on the property? I just feel this puts your life so far out of whack to have an amazing property only to drive a Honda Civic. Maybe because I'm into cars I value them more, but I find that no one in my situation/age range/income level places the same value on this idea of balance. I get the impression from Torontonians that only million-dollar property owners should be driving above-average cars, because you need to get that crazy property and only then you indulge if you can afford it.

Thoughts on balancing car/home/travel/shopping?

Go into as much debt as you can. And buy a lot of depreciating goods early in your careers. It's win-win bro, **** the haters.

Well, ignoring the sarcasm above, I don't really see the problem with it. I think it depends on how you project your future incomes to be. I know of couples in secure, high-paying medical professions with huge debts that went out and bought Porsches while renting instead of buying, going even deeper in debt... but I do not chastise them because frankly, they'll be above water and smooth sailing in a couple years. Buying a suburban mansion for 3 kids and a dog while driving an appliance, shopping at No-Frills and staycationing may sound great to some people, but to me it sounds like a waste of life. To each their own.

Though if you nor your partner are in a secure and high paying career trajectory, I really think it would be more prudent to invest more into real estate.

Cars are for faggots, you should leave your wife.



svelten said:

I know of couples in secure, high-paying medical professions with huge debts that went out and bought Porsches while renting instead of buying, going even deeper in debt... but I do not chastise them because frankly, they'll be above water and smooth sailing in a couple years

Click to expand...

This is exactly the type of thinking that got so many people into trouble just a few years ago. "Sure, I'll just make ****** decisions today, but it should all turn out fine sometime down the road!"

Don't live above your means. That's the only balance there is.

What is your net savings rate, after all of the costs you have, including the porsche pro forma?

A porsche might be nice to have, and I might be willing to work to age 50.5 instead of 50 to own one in my 30's (spitballing). I wouldn't dream of working to 55 instead of 50 to own one. So you have to estimate/model how this purchase will affect your overall long-term plan.

Of course, modeling so far out includes tremendous uncertainty, so you should discount your future incomes accordingly.

It sounds like the OP can afford his lifestyle so I don't get the question. Maybe some people value more expensive homes than cars. I've never been to Toronto but if the public transit is good enough, then owning a car may not b a priority for a lot of people.

Very many people, including very "successful" ones, don't understand money/planning/what they can afford, and/or don't have the will power or discipline to stick to the plan.

Joffrey, your read of the situation seems to suggest the idea that if you have the money for something, you can afford it. This is a sure way to stay poor.

Typing the preamble to the question must have felt pretty great, though. The answer was built in- we don't make much money... but we're buying lots of ****! Either that, or he was trying to humblebrag his way into saying that his family income is only like $200 000. People look at us like we're irresponsible, they just don't understand! On the road nobody gives a **** what you drive, so you really need to find other avenues for personal vindication.

There are right ways and wrong ways to put yourself out there and ask a legitimate question without looking like an asshole.

Hey guyz, I like carz, I buy carz, can I haz forumz approvalz!!??

Seems some folks didn't read the question. Anyway, the point was it seems to me in this high-value real estate market people are obsessed with getting an expensive property at any cost (nice cars, clothing, trips, etc.). In cheaper property markets it's easier to get a "nice" house so you can easily spend money on other things. Is it like this in other big cities with expensive cities, is it a Toronto thing? I suppose putting all of your money into real estate is the best thing for the long-term, that's why I raised the point about balancing life style and what people's preferences were.

Nothing here was meant to brag, this was a serious question and something I think is easy for people to share an opinion on, particularly if you also live in a big city where property is expensive.



CBrown85 said:

Typing the preamble to the question must have felt pretty great, though. The answer was built in- we don't make much money... but we're buying lots of ****! Either that, or he was trying to humblebrag his way into saying that his family income is only like $200 000. People look at us like we're irresponsible, they just don't understand! On the road nobody gives a **** what you drive, so you really need to find other avenues for personal vindication.

There are right ways and wrong ways to put yourself out there and ask a legitimate question without looking like an asshole.

Click to expand...

The question isn't about whether I care if other people like my car, it's about how people in general spend their money. This is a discussion forum, after all. Income doesn't factor in here, all things being equal, would you spend more money on just a home or would you balance it out with other things? The post was written in such away so that this wouldn't devolve into a conversation about living beyond your means, the practicality of sports cars or anything else. Go back and read the last line of the post.

There are all types in all places. Your opinion is biased toward thinking that everyone feels they need to keep up with the joneses. Some people were probably there before the RE took off, some are probably barely affording it, others don't give a **** about expensive cars and then there are people like yourself.



Recoil said:

The question isn't about whether I care if other people like my car, it's about how people in general spend their money. This is a discussion forum, after all. Income doesn't factor in here, all things being equal, would you spend more money on just a home or would you balance it out with other things? The post was written in such away so that this wouldn't devolve into a conversation about living beyond your means, the practicality of sports cars or anything else. Go back and read the last line of the post.

Click to expand...

It's already been pointed out by others, but "all things being equal" is an impossible premise: a car is a depreciating asset, while real estate (generally) grows in value. From a purely financial standpoint, it makes zero sense to "invest" a penny more into your car than is necessary for basic transportation.

That said, there is value in pursuing what you have a passion for. If you love cars and driving, then you must decide for yourself how much money you are willing to burn rather than invest. How much harder and longer are you willing to work to afford your Audi?

Which raises another question: are you sure you aren't buying these cars to impress other people? Most Audis are biased toward luxury and image over driving pleasure. If I was going to chip away at my investments and push out my retirement horizon for a car, it would be something much more interesting.



mafoofan said:

...while real estate (generally) grows in value.

Click to expand...

Going on a bit of tanget, but this is a common misconception and is something one should assume at one's peril going forward.

On an LT basis, your best estimate is that it will keep up with inflation (no real growth). Notwithstanding that individual market cycles can be very long. The updward trend we are accustomed in much of the developed world (because it has been happening for most of our lives) is a function of a long and prolific secular decline in interest rates, pro-housing policies (subsidies/tax benefits), and urbanization. Any or all of these could reverse.

NYC revitalization vs. Detroit deterioration (for example) is layered on top of these mega-macro trends, but is equally subject to change (oh hai deBlasio).

While population growth is likely to continue in the "near term," this varies by region, will level off in the long term (falling in some developed countries), and real estate development provides for the extra demand. We are no where near maximium capacity.

Interestingly the theoretical very long term value of real assets is zero as innovation supplants them or squeezes more utility per unit from them. In the mid-20th century lots of people worried the planet would starve, but we have an abundance of food due to continuing innovation.