By Dr. Jim Dahle, WCI FounderHow's that for a clickbait title? I have apparently started a lighthearted “brawl” online with Tesla owners. I now get hate mail from them. To be fair, I don't really hate Teslas and it's not REALLY hate mail, but it does make me shake my head a bit and wonder what it is about this particular brand that causes people to go a little nuts.
What kicked it all off is that I often use Tesla as an example in my blog posts. When I need an expensive consumer item, or car, or individual stock, it comes to mind much more readily than a Bentley or a Porsche or a BMW. So I toss it into the post or the podcast and move on. Then Tesla owners take it as a personal assault on their lifestyle and sound off. I'm sure this post, in particular, will generate even more of these emails, personal conversations, and comments below the post. In a moment you'll see that I talk about Tesla a lot because YOU talk about Tesla a lot. Here are some fun examples of what I'm talking about from my email box:
The Mail Box
Thanks again for all that you do. My older self thanks you a lot. Had you never started a site and wrote a book, I'd probably be driving a Tesla and have $180k in student loans left.
See, it's not just me. Lots of docs view a Tesla as a colossal waste of money.
Currently, I would say we have loosened the purse strings quite a bit, but only in comparison to the way we used to live—not when compared to some of our friends and colleagues. We love eating out at nice restaurants, and we travel with our daughter as often as we possibly can. I lease a pretty sweet car for $400/month, because I decided that the peace of mind in not having to worry about expensive/time consuming repairs on an older/owned car was worth it to me. It’s no Tesla, but it’s well-appointed and it fit within the budget with which we were comfortable.
This one cracked me up because the doc seems convinced that a car lease is just fine because it isn't a Tesla being leased.
I think this reader was kidding. I think.
I am a 43 year old cardiologist [living] in San Diego (so high cost of living) and drive a Tesla (so spend some money) but also think my wife and I do an OK job of saving. I have always maxed my retirement options and have about $1.3M in retirement accounts, $250K in taxable accounts, and over $100K in each child's 529.
This doc can actually afford the Tesla, but still views it as a luxury. Now let's get into the letters from docs who want me to quit using their favorite brand as an example.
I am sending you this email because of something that irks me. Your advice: books, email letters, blog etc. are all great and have helped a lot of people do the right thing—mostly in regards to financial decisions. I am by far not as savvy as you and have to think most of your advice is really, really great, even if I sometimes disagree with your priorities.
We have decided to invest mostly in ESG funds due to how we believe there are a lot of companies that are not good for our future. A total index fund would technically invest in many of these companies. Even if our very small investments make no difference to the world as a whole, just like my bike commutes and its effect on the environment.
But you on the other hand—your views reach a lot of people and not just physicians; you have become an “influencer”. This is the reason I am taking the time to write this email. You keep bringing up “buying Tesla” as if this is the worst financial decision anyone could make. I know a few things about Teslas and I agree that Model Ss and Xs can be very expensive but I am not sure if people buying Teslas are making a poor decision.
We finally felt comfortable with the price tag and purchased a model 3 with the long range (bigger battery). We paid more than we ever have for a car, but will receive $11,000 in tax credits (Colorado); the car cost us $60,000. That puts the car in a more normal nice car price range, after tax credits. We can look forward to minimal maintenance and electricity is cheap compared to gasoline.
Maybe the Tesla website is misleading since it compares their cars to 20 mpg cars, and many Tesla purchasers owned Priuses and other types of fuel efficient vehicles previously. With the inversion and horrible air quality we see where we live, this is again one of the things we can do to make a small difference when driving in the city. When going to the mountains to have fun, we also don’t leave the same carbon-footprint behind.
I think cars that are more fitting to “bash” are Range Rovers, Bentleys, any expensive truck (Raptor?), Lamborghinis etc. I can give you more examples if you need them. If it was up to me every listener of your blog would buy a Tesla or another kind of electric vehicle.
I really like this one because not only does this doc want to justify this purchase to me, but seems to want me to convince all of my readers to buy Teslas. The next email came in after I mentioned on Twitter that I get Tesla “hate mail”.
Hello! Love the website, longtime follower. I think you probably get Tesla hate mail because your articles that mention them seem to focus on it only being a status symbol and it being unreasonable priced. I’m a first year attending (wife in residency, HPSP), paying loans back on a 5 year repayment plan. High cost of living area, maxing all retirement accounts/IRAs, and putting money into taxable index fund accounts. My first purchase as an attending was a Tesla. It’s one of the safest cars on the road, I use it every day, and it’s truly a joy to drive.
also doing all of the above. Tesla owners understand it’s not the most fiscally responsible thing to do, but they’re priced now to the point that it isn’t unreasonable. The difference between a new Model 3 (starting at 32k after tax rebates) and the 3 year old civic you would recommend (10k?) is a lot of money, but realistically 25k isn’t that much for a 6 figure income when you figure you’ll drive it for 7-10 years. And it’s WAY more fun to drive.
Hopefully this doesn’t come across as hate. But your articles tend to make it seem like Tesla owners are all dropping 100K+ on vehicles they can’t afford and are doing it just for the status. That’s just not a fair description.
This one made me laugh for two reasons. First, because the doc admitted buying his Tesla on credit in his first year out of residency while carrying student loans and second because he somehow decided a 3-year-old Civic is my recommended car for him.
How I Really Feel About Teslas (and Other Expensive Items)
I don't care if you buy a Tesla. I really don't. I also don't care if you buy another expensive car. Or a wakeboat. Or go heli-skiing each year. But you need to understand that they're all really the same thing. Luxuries. They're NOT transportation (mostly). Reliable transportation costs $5K. If you have to borrow to get reliable transportation (and as a doc this should be an exceedingly rare event that only occurs early in your career) then go ahead and borrow $5K.
What does $5K get? It gets you an 8-year-old Nissan Sentra with some scratches in it. It's not flashy, but it'll get you to work and the grocery store. It will almost surely last throughout your residency and/or the 2-5 year Live Like a Resident period that will ensure you will become a wealthy physician. It will give you plenty of time to save up to pay cash for your next car, whether it be a $10K 3 year old civic or a $120K Tesla X.
So, if $5K is reliable transportation, and you're looking at a $100K Tesla (or the “$32K Tesla” mentioned by the emailer above), then you are buying the following two items:
- $5K Basic Transportation and
- $27-95K Luxury
That's just the way it is. So quit pretending it is something else. It isn't. Yes, you have to drive something and you have to eat something. But you don't have to drive a Tesla and you don't have to eat at a Michelin 3-star restaurant. There is no financial justification to buy this item. None at all. So admit it is a luxury and let's move on.
Luxuries Are Fine…If You Can Afford Them
I don't have a problem with you buying luxuries. I really don't. I buy luxuries. I now spend tens of thousands of dollars every year on vacation. By definition, going on vacation is just pissing money away. That's why vacation insurance makes me laugh too. If you need to insure your vacation, you probably shouldn't be taking it.
My family buys luxuries all the time. My wife drives a fancy SUV with Bluetooth, leather seats, and all kinds of safety features. It costs more than some Teslas. She also has a sweet wake boat she lets me use sometimes that cost even more than that car. Sometimes we use a helicopter to go skiing just so we don't have to ski over other people's tracks through the snow. All of those things have similar annual expenses when you take depreciation into consideration.
But guess what? We can afford all of those luxuries. How do you know if you can afford something? Because you can pay cash for it. It's really very simple. As Steve Martin now knows, “Don't buy stuff you can't afford“. We can pay cash and still be on track to meet our financial goals. (In our case, we're already financially independent so technically we can afford to spend 100%+ of our income each year on luxuries.)
If you are in a similar position, go buy your Tesla and enjoy it. Enjoy how fast it goes. Enjoy how wonderful it makes your commute. Enjoy how good it makes you feel about reducing smog and saving the planet. Park it out front so the neighbors can see it if you're into that sort of thing. (Although I'm sure no car owner would ever admit that is part of their motivation for buying it even though they think it is for many other people buying the same car.)
Saving the Environment
A Tesla, unlike a Bentley or a Range Rover, is a dual-status symbol. Not only do you get to say “I have more money than you” but you get to say “I care about the environment more than you”.
Let's set this environmental argument upon the table so we can all peer at it. First, we'll assume that buying a brand new electric car and ditching your old gas-guzzling sedan is actually good for the environment, although there are some arguments out there that this may not be the case. (That sentence is really going to get you Tesla owners fired up!)
That assumption out of the way, let's examine this argument more closely. Here's the argument: “I'm buying a Tesla to save the environment”. The problem with the argument? It's a false dichotomy. Supposedly the only two options are to drive your F250 with a bad catalytic converter to work or to buy a new Tesla. There are more options:
- Move closer to work
- Ride the bus
- Carpool
- Get a bike and ride that ($500)
- Get a really nice bike ($10K)
- Buy a 5-year-old Prius ($12K)
- Buy a brand new Nissan Leaf ($29K) or Chevy Volt ($32K)
- Buy a bare bones Tesla 3 ($43K)
- Buy a Model X P100D with Ludicrous Mode ($155K)
Which one is best for the environment, your health, and your budget? There are at least 5 options on that list that are better for the environment than Ludicrous Mode. There are also 2-3 of them that are just as good for the environment and also provide similar basic automobile transportation at a fraction of the cost. Even if you don't care about the health benefits of cycling, if you are trying to save the environment AND make a smart financial decision, you probably should not find yourself at the bottom of this list.
A Few Thoughts on Tesla Stock
I also use Tesla as an example of an individual stock. Personally, I think picking stocks is stupid. It adds uncompensated risk to your portfolio (any risk that can be diversified away has no expected additional return). It's not particularly fun and when you consider how much that hobby costs, I don't think it's fun at all. Would you rather lose $10K a year in opportunity cost or take your kid heli-skiing for a week in Canada? Easy choice for me.
What do I mean the hobby costs a lot? Well, you can't pick stocks well enough to beat a boring old index fund that just buys all of the stocks at a very low cost, especially when you consider fees/commissions, additional taxes, and most importantly, the value of your time. So the difference between what you would have earned in index funds and what you did earn picking stocks is the cost of that hobby.
Oh, you think you can beat the market? Then why are you only managing your own money? If you could reliably beat the market by 1% a year over the long run, you should be managing BILLIONS of dollars, not just your own $250K portfolio, and charging “2 and 20” to do so.
Tesla stock is not somehow an exception to the rule.
This is a chart of Tesla stock (dark blue) against a Total Stock Market Index ETF (light blue) over the last five years. Not only did the overall market outperform, but it did so with dramatically less volatility. Trying to pick stocks well enough to beat the market is a fool's errand, even if “everyone knows this company is going to change the world” and even if the company outperformed the market in the past. I have no idea how TSLA will do in the next year or the next 10 years. Maybe it will beat the market. But you'd be stupid to bet a large chunk of your portfolio on that happening.
The Choice is Yours
Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood…I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less traveled by,
And that has made all the difference.
—Robert Frost
My climbing partner is on his second Tesla. Sometimes we take it to the crag. Sometimes he leaves it in my garage when we go on a climbing trip in my car. He commutes an hour to work 16 days a month, working 9-12 hour shifts at all hours of the night. He finally bought life and disability insurance about the same time that I canceled mine. Thanks to a nice physician income, he will probably have enough to have a nice retirement at traditional retirement age.
I work 8-day shifts a month at a hospital 16 minutes away by choice. I never work after 10 pm (and could make that 2 pm if I wanted). I go on vacation every month. I could buy a Tesla every day this week with cash.
Although they do not lead to the same place, we're both happy with the choices we've made. Now it's your turn. Which path will you choose? Will you use that extra $100K you made between residency graduation and Christmas to pay off your loans, or will you use it to enjoy Ludicrous Mode and speculate on Tesla stock? Choices have consequences, like two ends of a stick. You can't pick up one end without picking up the other.
But let's be very clear about Teslas. Whether you buy it because it's fun to drive, to impress your neighbors, to save the environment, or some combination of the above, you should only do so if you can afford to do it without borrowing money or impacting your important financial goals.
What do you think? How did Teslas become such an important status symbol among doctors? Which model do you drive and why? Do you think it's okay to buy an expensive car and individual stocks in order to help save the environment? Comment below!
Okay, you pulled me out of lurker status with this one. I’m a fellow skier, including heli, and Tesla owner. I mostly agree with your points, particularly about financial efficiency. I’ve purchased used cars most of my life until recently. However, I’d like to put in a plug for being an environmental influencer. Gas, coal, natural gas all need to stay in the ground. The world needs to convert to renewable energy transportation. I love my Tesla, and it has been so impressive to my family and friends, that three others have been purchased because of it. Every convert counts.
Plus my hands never smell like gas, I start every morning with a full tank of electricity, and I win every stop light drag race.
And the car steers itself on the highway.
All good stuff.
A few things. It is def a luxury. That said, we all buy luxuries all the time. You can take everything to the extreme, and have a pretty boring life. But this is a site for white coat investors, no? There is no reason you can’t spend a little and be OK.
If someone really WANTS a Tesla (I dont) there should be no reason they couldn’t save HUGE (I am a super saver, 60%/year) and get a Tesla too. Or a boat. Or an RV. Or 3-4 race quality road bikes, or a nice sports car. I save huge while shopping at whatever store I want, eating out whenever we want, and we take one major international trip a year and many (4-5) US vacations. And I don’t make nearly what the mega ballers (*cough* WCI) make.
If I make it to my grave with 30 mil in the bank, I lost the game (or rather, played it wrong). The journey is important, and I want my journey to be awesome along the way; that certainly doesn’t include eating pork/beans, driving a 5000$ beater, and having many millions in my coffers that will ruin my kids and their kids. I would rather drive to work in an R8 [used of course :)], eat lobster and steak, and retire with enough to keep doing that and giving to whatever charitable causes I like.
Obviously you are saying people can and should buy luxuries, when appropriate, WCI. Nothing against you or your article, it is right on.
Ah Tesla. I hesitate to get into this debate because of the strong feelings both the cars and the company evoke.
I can say that the two best things about my Model 3 is that it gives me access to the HOV lane in California, saving me time.
Also, Autopilot has revolutionized my commute. It’s much less stressful to be in rush hour with the car essentially driving itself. (This is done with a hand on the wheel, of course.). I feel safer when I’m tired from a long night of call to have my car in Autopilot.
So while the power and looks are great, it’s the time savings and Autopilot that make my Model 3 a winner.
Is it slowing me down on the road to financial independence? Sure. But I still love it.
— TDD
I only would electively buy a Tesla to give an FU to energy companies. So, in line with my own experience that spending money on luxuries begets spending more money, I see my only way of getting into a Tesla as follows. My house is not just net zero-energy. I’d have to be net positive-energy. So, renewables would have to power the charging of the car. So, I burn $60K – 120K to get the Tesla. I do an energy make-over on my house, which was built in 1951, to the tune of > $200K plus the cost of renting another house while we get that done. Or… I sell this house and try to build a “Green” home. Does it save the world? Maybe. Maybe not. Let’s leave aside the issues with mining for Lithium. Do I get to retire before I’m 70? Probably not—not starting from where I am right now. I’m going to be selfish on this one and drive my 4-year-old Subaru for the next 25+ years if I can. Sorry, I’m going to prioritize my sanity on this one by skipping the Tesla.
I don’t know… I’m not too worried about the environment but Tesla’s are fun to drive… I don’t have the option of a shorter commute unless I want to yank my kids from the school they/we love. Safer than an old beater when driving my kids. Makes my commute much more bearable.
“Only $32k after tax rebates.”
We’re subsidizing this bologna?!?
If a small # for an individual car purchase gets you riled up, wait’ll you hear about how many billions of dollars our government gives away to coal companies!
Amazing how this issue is so polarizing. I bought a MX last year. Performance one to boot. It was an inventory model with $30k plus discount. I received $7500 tax credit. I also did section 179 deduction for portion of business use (large portion) and am writing off huge sums over multiple years. At the end of the day, it will be mostly a free car. I love pulling up to Lambos and Ferraris at the stop light and see surprised look on their drivers’ faces when they try to race me lol. I also have free unlimited supercharging (free fuel for life), CA carpool sticker until 2023 unless extended, autopilot with futute free self driving upgrades, 3 row/7 seater, 2 trunks, etc. Love this car and I think I did pretty good on in financially 🙂
The more you know… 🙂
And Elon . . .
Amazing how this issue is so polarizing. I bought a MX last year. Performance one to boot. It was an inventory model with $30k plus discount. I received $7500 tax credit. I also did section 179 deduction for portion of business use (large portion) and am writing off huge sums over multiple years. At the end of the day, it will be mostly a free car. I love pulling up to Lambos and Ferraris at the stop light and see surprised look on their drivers’ faces when they try to race me lol. I also have free unlimited supercharging (free fuel for life), CA carpool sticker until 2023 unless extended, autopilot with futute free self driving upgrades, 3 row/7 seater, 2 trunks, etc. Love this car and I think I did pretty good on in financially 🙂
The more you know… 🙂
re: //I love pulling up to Lambos and Ferraris at the stop light and see surprised look on their drivers’ faces when they try to race me lol. //. In California //Penalties
Engaging in a speed contest in California is considered a misdemeanor. For a first penalty you may receive any or multiple penalties below:
minimum of 1 day and up to 90 days in county jail
fine of $355 to a maximum of $1000
40 hours of community service
suspension or restriction of your driver’s license from 90 days to 6 months.
When arrested for a speed contest the officer can also impound your vehicle for up to 30 days.
In case it’s not your first related conviction you may be charged with additional penalties. In case you have a previous conviction for street racing within 5 years, you’ll be looking at 4 days to 6 months in county jail, $500 – $1,000 fine, and a mandatory suspension of your driver’s license for 6 months.
In case your street racing caused an injury the penalties can increase to 30 days up to 6 months in county jail, and/or a fine between $500 and $1,000. Furthermore in case of serious bodily injury (even includes concussion or loss of consciousness) you may be looking at a sentence of 16 months to 3 years in jail, and up to $10,000 fine.//https://www.californiacarlaws.com/street-racing/
Boring 🙂
Thanks grandpa Bill. I will slow down. Promise 😉
https://www.nbcnews.com/id/19339955/ns/us_news-crime_and_courts/t/street-racers-souped-up-cars-crushed/#.XQ-Zv7zYrnE
Is it really street racing if you stop accelerating when you hit the speed limit? There’s no acceleration limit.
From https://www.wklaw.com/practice-areas/fight-traffic-ticket-california/speed-contests-exhibition-speed-vc-23109a-vc-23109c/
Prosecution for Exhibition of Speed in California
The prosecution must prove several elements beyond a reasonable doubt in order for you to be convicted of this crime. These elements include:
You were driving a motor vehicle on a highway (this includes any area publicly maintained and open to the public for vehicular travel);
You were speeding or accelerating in a dangerous or unsafe manner; and
You did so intending to show off or impress someone.
The prosecution is not required to prove that you intended to impress or show off to any particular person. Also, it is not required that you exceed the speed limit. You can be convicted of this crime even if you simply accelerate quickly from a stopped position.
Leave it to California to take the fun out of owning a Tesla.
I agree here. If you want to drive like a reckless reptile-brained d- canoe, you deserve to be prosecuted. If you think you’re some kind of “race car driver” because of a pubescent fantasy about a car that faintly resembles a Tesla in your undeveloped adolescent mind ; and you can finally afford some simulacrum of that “coming of age” dream, well, use that well-deserved cash to pay for some actual driving lessons on an actual race track. You will be humbled for sure, and you will probably learn something. Even if it’s not something you want to show off to your next Tinder date (namely, that you’re NOT a race car driver, even though you can afford an expensive car that you mistake for one.)
Are electric cars starting to show up at tracks?
I went the opposite direction. I’m a 55 y/o doc with FI 3 times over with plenty of room to spare. 3 years ago I decided to build a Factory Five Racing GTM. This is a kit car that you build from scratch and as a doc with minimal history of car building experience this was an adventure. It has a 430 HP GM LS3 Corvette engine and only weighs 2500 lbs. Its FAST and uses a lot of gas. It cost me over $80K to build it not to mention the cost in hours of labor. It was a great experience that I wouldn’t trade for anything. Every time I take her out people are taking my picture. Its a lot of fun. I also would never have done it if I didn’t have the wealth that I now have. Saving early on opens up a lot of possibilities for experiences down the road!
I’ve wanted to build a Factory Five car for some time. I am still considering trying it when I go part time in a couple of years. Problem is, I have minimal wrenching skills. I’m trying to learn a few things here and there on my non-Tesla, politically incorrect, gas guzzling V8 exotic car!
Great work, and enjoy your GTM!
I would recommend it, but it sure did have its share of headaches. There is a 600 page instruction book with the GTM but those on the building forum refer to it as the “suggestion manual”! Nothing fits as it should and there is a lot of customization required. My attitude when I started the project was “I was smart enough to become a doctor, I can figure this out too”. That proved to be true but it did take me a lot of research time and asking a lot of questions from others on the Factory Five forum.
I have an LS3. It’s just in a boat. 🙂
I didn’t know they put them in boats! You’ve got a real screamer on the water there!
Not once you load 4000 lbs of water and 16 people into it, but it does make a heck of a wave to surf on.
Yeah Baby Get some air
So, having taken delivery of my Blue Model 3 just over a month before this was posted, I worried a bit before reading this one!
But even just 3 years out of residency, my loans are gone, we’re on track to pay off our (admittedly large) home in 12ish years, and we’re saving 33-35% of our gross income. I knew it was a luxury, and accepted that. I’m not particularly interested in FIRE, so we spend a bit on the luxuries, and treat them as such.
My favorite Tesla question is different than most tho. Most people love the where is the engine type questions. Mine is “So what’s the payment like on that thing?”
“I don’t have a payment” and smiling gets a lot of really fun reactions. Almost as fun as driving.
Congratulations on your success. Enjoy the car. I agree it’s easier to enjoy without a payment!
Teslas aren’t particularly beautiful, design-wise, and their interiors are cheap-looking. The exorbitant price doesn’t justify the gas-savings—Prius makes much more sense in this regard.
Terminator 5: Rise of the Electric Car 🙂
https://www.youtube.com/watch?v=rXodSqMpuUQ
Yup! I regret buying a brand new Kia Sorento fresh out of residency. My husband thinks it was a great investment. I think we should have bought a $8-10k SUV and used the other $20k for house downpayment
My wife and I have been saving for 22 years, since we got married.
We did all the right things. Affordable home, used cars and drove them long term, etc etc.
Fast forward 22 years and we’re looking at collecting combined pensions of approximately 120k per year with 3% COLA’s.
And our Vanguard account is 50k shy of 2M. Paid off house and zero debt.
We bought a used Escalade. 58k and after beating myself up for awhile, I’ve come to terms with the purchase because I really love the car! I had a problem spending this much on a car- until I drove it.
White with the Platinum rims. It looks like art lol. And like some have said it’s pure luxury. I don’t kid myself into thinking it’s safer than a cheaper car.
I bought it for the looks, the way it drives and the kick ass sound system!
The key like WCI said, is to splurge on these luxuries when you can afford it! Not beforehand.
I’m a cop and my wife is a teacher. We have made the necessary sacrifices to achieve our net worth and decided to loosen the purse strings.
I have a relative, a two car BMW family, and i can’t stand how she justifies the BMW’s from a safety point of view (eyes rolling in the back of my head).
She’s uncomfortable for whatever reason and when she babbles about why they went to BMW’s for safety- I just want to scream I DON’T Care!
If you can afford it and your financial house in order, buy the fancy car or boat if you value said purchase but don’t fool yourself into thinking your BMW will protect you from a head on with an 18 wheeler or your Tesla will save the earth!
Gotta run now, and fill up my gas guzzling, paid for, Bose blasting SUV. Enjoy your luxuries. I am !
Wait – so buying a Tesla on loan for 7 months is a mortal sin, but accepting advertising on a blog gets a pass?
Everybody values something. And I’m not sure valuing driving a Tesla and paying $1600 in interest while paying it off is worse than earning passive income via advertising services of dubious value.
I didn’t know you drove a Tesla Scott. 🙂
And yes, I plan to continue to accept advertising dollars. I’m certainly not willing to do all this for free. I am curious however, which advertiser you don’t think I should take money from though.
I drive a Nissan Leaf $15,000 after tax credit paid cash June 2017.
But when it comes down to the nitty gritty, I think we have choices to make and I think they all involve consideration of values not binary decisions of good versus evil.
Financing a Tesla is not in my mind a categorical evil. Indeed it may be a blessing . Discounting is tricky business because each person’s values are different.
I have been offered advertising on my blog but I refuse. Financially dumb move? No. Because integrity has. value.
That does not mean advertising is evil or that those who accept advertising $$$ lack integrity. It is a question of values.
But since you’re quick to malign Tesla owners in this post I will, for the sake of devils advocacy say this: a guy who pays $5000 leasing a Tesla may have his values more in order than a guy who brags (unapologetically and perhaps deservedly) about a 7-figure income partly derived from passive advertising income from advertisers over which he exerts little control.
That’s just some food for thought.
And here’s the rub. I got financially independent much later than I could have. But I will unapologetically and perhaps deservedly say that I had a WILD time in my 20s and 30s, while single, all on borrowed money. That is what this post and many like it miss.
And what would I give to go back and do it some more? Hundreds of thousands. Cuz those years are precious.
It would be useful for everybody to disclose how they spend their younger years before they prescribe or judge others. Because if you spend them single partying, you may have different priorities and values and objectives than those who marry young and are forced into early responsibility.
The accounting at the end of life should have accounts for experiences that are not tallied in a bank balance.
And insomuch as that is true, buy the fucking Tesla, drive around some fast girls and live it up. Because your 40s and later cannot ever replace your 20s.
Your comment accurately points out that time is far more valuable than money. You can always make more money, but at a certain point, no amount of money can be traded for time.
You must be a better man than I to be willing to blog for free. I’m not willing to put in the 30-40 hours a week I am now for free. Sorry. But I’m not going to apologize for running a for profit business. That was the whole point. This thing had ads from its first week. I’m not here trying to make associate professor a something. I don’t care about a CV. I just want to help a few docs out and make a few bucks. It’s very simple, but if someone doesn’t like it, they probably should quit reading my stuff, buying my products, and supporting my advertisers. Lots of other physician financial blogs to read and although many of them have ads up, very few of them are making any money.
And I don’t actually recall maligning Tesla owners in this post or anywhere else. In fact, I’ve considered buying one myself. But I’m going to continue to point out stupid financial moves like buying cars one cannot afford and leasing cars. That’s the first purpose of this blog (the second is to make money.)
I’m not saying it’s wrong to have paid advertising. However, there is no free lunch. Perhaps some of the dudes peddling disability insurance on the front page are hucksters, how would you know unless you vetted each of them? But that’s not the point I want to make. I do think, without realizing it, you got my point. You say: “Then Tesla owners take it as a personal assault on their lifestyle and sound off.”
As you know, the rub with finance and economics is that it is ultimately about what people *value*.
When everything gets distilled do the last dollar and cent, things can get taken too far.
Which is why pediatrics residents at UCSF may feel “a personal assault on their lifestyle” when it is sharply pointed out to them that they will have a heck of a time paying off their loans.
Or that I have been financially imprudent by taking nearly a 50% pay cut to be in academics, etc.
Discounting the future gets at what people value, now and in the future. Inherent in that calculus is that youth is valued. Insomuch as financing a Tesla is a celebration of youth, a youth which represents a giant series of gratification delays, I think we should be careful mocking people who do it. It may only be irrational to finance that Tesla if winning the game means dying with the fattest bank account.
Many people think the rules of the game of life are more complex than that. If so, a couple $1000 in financing charges (and opportunity costs from other unpaid debt) for a new model 3 may actually score them more points in the game of life satisfaction than having that money in the bank when they’re on their deathbed.
Just like “losing” over $100,000 a year being in academics scores me just enough points in satisfaction, that it is a gain not a loss. And keeping my blog advertising free is not lost income, it is a gain in the integrity of what I write there.
Not trying to be a jerk, but I do think you might want to turn the tables and think a bit about how the “bottom line” can be overemphasized.
I vetted each of them. So have hundreds of white coat investors. Occasionally there is a problem. I apply pressure and the problem is fixed (or else they are no longer advertising with me.) The disability insurance agents are the least of my concerns when it comes to advertisers. But yes, with some types of advertisers, it is very hard to vet them (real estate investing companies come to mind) because it takes years to see how good they are.
I agree with you that going into pediatrics, living in San Francisco, going into academics, driving a financed Tesla etc are less than optimal moves financially. So is buying a wakeboat, cutting back to half-time, and going heli-skiing, other examples I am “guilty” of that I cite all the time. The problem is lots of docs out there aren’t quite as bright as you and haven’t figured out that being an academic pediatrician at Zuckerberg despite $600K in student loans and a $1.5M mortgage are not compatible with financial success. They literally need to be told that. It’s life-changing information for them which allows them to take their values and apply them to their finances and improve their lives.
At any rate, this blog is about the bottom line. It’s a financial blog. So of course finances are going to be emphasized. If it’s the only thing you ever read, they’ll seem overemphasized. But as you’ll see looking around the site, I’m very much about spending your money on what you value most and certainly not about dying as the richest guy in the graveyard.
No arguments with any of that!
Every word of your Tesla blog spot on
I’m a 59 year old physician, live in Malibu, and drive a Tesla. My old Tesla X burned in the Woolsey Fire, November 9th. My replacement is a P100D and was insanely expensive. I love it. I don’t hate you.
Bought a 8 year old 4runner with 110000 miles on it during 2nd year of residency for 13k. Now has 200000 miles on it with a total of 3k in repairs over the last 7 years.
Finished paying off all my student loans last year.
You can pick whatever variation of the used car option you want. Does not need to be 5k.
This blog post was spot on, and you saw it coming!!! All of these people who otherwise agree with your sound financial advice justifying to the end their right to buy a Tesla on credit! (and thus obviously save the planet) Brilliant!
Still enjoy leaving the garage in my 20 year old Ferrari V8 (bought used with cash) while my neighbors save the environment in a brand new Tesla and Prius. They must hate me!!
Kevin
When Tesla or someone else makes a 4wd truck that can be stuck in traffic for 12 hours on the way to a ski run in NCAL where there are no charging stations and the wind chill can be below zero and to run out of battery charge can be fatal because the canyons have no cell phone coverage to be found my interest will go up. In the meantime by 2008 Tundra gets the nod.
Why is cell phone coverage a matter of life or death if you’re stuck in traffic? Presumably there are plenty of other people around – after all, you’re stuck in traffic!
I was in New Orleans in 2009 during mandatory hurricane evacuation. Most people used I-5 to go east. The road/bridge from city to other side of the lake is about 20-25 miles. It took about 6 hours to cross it even all line were in one direction. Why? Some broken cars or cars ran out of gas. You figure it out.
I have owned a model X for over two years. I bought it the year before I retired because
1. I could afford it
2. I could still get the tax credit
3. I got lifetime free charging throughout the United States
4.It really is an incredible car to drive with an amazing amount of space.
5. My wife is disabled and unable to drive . I knew I was going to make many long trips from Florida to the Northeast and the self driving feature works very well on super highways so long as you understand its limitations.
6. It is important to understand that a Tesla not like a normal car; its more like driving a cell phone.
Interesting. I drive a 13 yo pickup and my wife an SUV. Have a few more years…will retire comfortably from being an MD in a self sustaining home and probably get a small electric car then, since the gas will be cheaper.
Luxury? Status symbol? Go into debt? Got to be kidding me. The need for lots of money is what chains you down.
Live free. Live under your income.
Electric cars and self driving cars are in our future. If and when Tesla is able to develop a self driving car their stock will have been a great investment. Yes individual stocks are risky but so much fun. I don’t have to go to a casino to gamble. I don’t own a Tesla but I do own the stock. I have decided to go ahead and buy one in the future. I don’t have a date for that yet. I do have a plan. I sold 1 put option contract and if the stock is put to me I will sell a covered call option against the stock and if called away sell a put and so on and so forth. After I accumulate enough money to buy the car I will do so.
Great combination- individual stocks and options. Hope it works out for you, but not an approach I recommend to my readers.
I have to agree with the writer of this post. I drive a Honda Pilot. I alternate between my 2005 and my 2012 Pilot, and I will probably buy another reliable car in a year’s time. Could I “afford” to buy a Tesla? Sure. But I went for cars that would hold my family (I have 4 children), that are reliable and long lasting, and I get great service from the dealer with no break down. Ever. I had little choice about buying a car in 2005 since the flooding that came from Katrina totaled my also very reliable Nissan. Now, I’d rather put money away for retirement and have a safety net for paying for college for the ones that still are in college or haven’t started. If I indulge in that kind of luxury, it will be when I truly no longer need to work. And only if I decide that driving a status symbol is worth it for whatever intangible reason.
Why is this even a contest between Teslas and used Priuses? It should be between Teslas and Range Rovers and Mercedes which is what most doctors looking for a nice luxury car buy. In which case Teslas ARE better for the environment as well as more fun to drive.
Fair point. I agree, that’s the appropriate comparison and why a Tesla functions as a dual status symbol.
All this energy (intended word choice) expended over Tesla vs other cars is a waste.
My wife and I own two hybrids (40-50 mpg), a 2012 Prius C that was on sale and a used Honda Accord hybrid. Also a 2018 Honda CR-V AWD with a turbo-charged 4-cylinder engine for long-distance trips (40-42 mpg), particularly Cleve-Chicago and Cleve-mid PA and back in bad weather. Our next car will be all-electric, but NOT a Tesla, something much less expensive, most likely a used model which has an established history of reliability. If you talk green, you have to walk it.
Instead of a car like a Tesla, why not buy a reliable, used hybrid car AND install a roof solar system? We just did, in northern OH no less. Currently, with two air conditioning compressors and an electric dryer running, THE ELECTRICITY METER IS RUNNING BACKWARD, AND WE ARE GETTING $ CREDIT FROM OUR ELECTRICITY COMPANY (an aside: our electricity company supplies 100% renewable energy……just another way to go GREEN).
The solar system rating is 17.5 kwH, total cost $46, 161, and this year the Feds pay 30% of the cost……you do the math. And yes, the system still generates electricity on cloudy days. Our roof is steep, and 1-2 inches of snow will slide off the panels; 3 inches and above……no power generation. Still, in our climate, the system will pay for itself in 12-14 years. Those of you in sunnier climes……just think of what a solar system could do for global warming and YOU !!!
Our solar system is not visible from the road. It doesn’t drive around town. I don’t care if any one knows we’ve installed it. To us, it’s not a status symbol. There’s no one we wish to influence other than our patients. A solar system is NOT a luxury.
PS: the company that installed our solar system is Yellow Lite, (877) 743-8757, http://www.yellowlite.com
PPS: Some years ago, my neighbor….a venture capitalist….and I turned 50 the same year. He bought a Porsche Boxter and built a separate garage for it. We bought a Steinway Studio B grand piano for ~$50,000. Minus a few scratches, it looks, plays, and sounds as it did when it was new, after two kids learned to play it and I resurrected skills learned long ago.
A new Steinway Studio B grand piano now costs ~$100,000. And the Porsche Boxter? I leave that to your imagination or web search. Some would consider a grand piano to be a luxury…….”luxury” that maintains or increases in value is one thing, luxury that loses value over time is another……just sayin’.