Dear Quentin,

I’m looking to purchase a used Nissan GTR and spend about $80,000.

I’m 41, single, no kids, and have always been a big saver. I currently make $128,000 a year, and have a combined $1.1 million in my 401(k), Roth IRA, and brokerage accounts. I’m saving 15% of my pre-tax income with 4% contribution from my employer.

Can I afford my dream car?

I have $56,000 left on my mortgage of which I’m paying an extra $500/month towards principle and planning to pay off within 5 years. I have about $150,000 equity in my condo and about $22,000 in savings.

Dealership appraised my current car, which I paid cash for, at $6,500, but I may end up keeping it as there are some activities I don’t/can’t do in the GTR (e.g. parking in the city, transporting bike, moving semi-large / dirty items, etc.).

1. Can I afford my dream car?

2. If I can, how should I go about financing it? Should I pay it off? Loan?

Any assistance you can provide would be greatly appreciated.

Thanks in advance for reading this.

Would-Be Dream Car Owner

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com, and follow Quentin Fottrell on Twitter.

Dear Dreamer,

I don’t want to quash your dreams of owning the car of your dreams. (Like I did with this guy.) But your circumstances are different to that good fellow: namely, you are financially independent, and you are in a very comfortable position for retirement, notwithstanding any unforeseen circumstances. You have worked hard to have the car you want. Bravo, my friend!

But should you get it? Think on this: It’s more than 62% of your gross salary, and it will make you happy (for about five minutes). Yes, that feeling typically depreciates along with the value of the car. I don’t know what this model means to you, but I do know that — from what you say about your finances — you are not the type to give in to your impulses at the expense of your financial security.

The biggest and best dreams don’t cost $80,000.

It’s an expensive toy and it’s a pricey piece of machinery. Automobiles serve both functions: They get you from A to B, and they give you that Christmas-Morning feeling when you get the keys. Keep that in mind before buying. Alternatively, consider leasing the car first to see if it’s an everlasting love.

I haven’t said you should buy it, and I haven’t said you should not buy it, mostly because I think if you really knew it was the right move, right now, you would not seek a second opinion from The Moneyist. I will say this: It’s a relatively modest dream for a not-so modest price. Here’s a secret that should not be a secret: The biggest and best dreams don’t cost $80,000.

People should generally not buy a car with cash when the price exceeds their own liquid savings, and/or during a time when interest rates are so low. Given your $22,000 in cash, buying a car of this price with a low rate of financing would make more sense. But the cash vs. financing question depends heavily on the price. If I were you, would I buy it? No. For all of the above reasons.

And if you did buy it with financing? Even though you would still enjoy driving it, there may come a day when you owe more on this car than it’s worth.

All too often in America, that’s the stuff that dreams are made of.

The Moneyist: I’m a farmer in my late 30s, live a frugal lifestyle, and my son has a disability. Should I pay extra on my mortgage — or save for retirement?

Hello there, MarketWatchers. Check out the Moneyist private Facebook
 group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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