I want a Tesla Cybertruck!!!
Boys and their toys.
The three-motor model will blast from zero to 60 mph in 2.9 seconds with a top speed of 130 mph. All Cybertrucks will have adjustable air suspension that can be raised or lowered on the fly with up to 16-inches of ground clearance. It can pull a massive 14,000 lbs and can haul 3,500 lbs in the 7 ft cargo bed. AND 500 miles on a single charge.
But I have to admit it. When Tesla revealed the Cybertruck there was a pause, where I thought to myself “that thing is one UGLY hunk of metal”, and when the “bullet proof” glass broke during the presentation I couldn’t believe what a botched reveal it turned out to be.
But ... slowly... I softened on my position, and then I had a vision of myself as Mad Max with shades and a leather jacket safely sitting behind bullet proof glass in the middle of the apocalypse my opinion changed to “oh hell yes, it will be mine”.
So what is a Financial Independence guy talking about a $70,000+ purchase in a toy that will likely depreciate to $0 in 10 years?
To illustrate a point.
We’ve all heard “ The rich don’t work for money; they make money work for them”.
Somewhere along the way I adopted this mentality that each dollar I have is like an employee. I can either exchange employees for material items/services or put them to work, working for me, so that someday I will no longer need to work. So you can probably imagine that I am frugal, not cheap, and have always maximized my savings rate for the 26 years of earning a professional income. You will hear me talk about savings rate extensively but that’s for another blog post.
Question: So how does a FI guy justify throwing down 70,000 hard working employees for a liability on my balance sheet?
Answer: No self-respecting FI guy would take $70K from his cash assets, plus the future earning potential of $70k, to exchange for a depreciating material purchase like a vehicle. Come on, who does that? Financial Freedom lost.
Well, maybe you can borrow 80% at 6 or 7% interest from a credit union and pay it off in 8 years? Well, you just added $24,000 in financing charges to your Cybertruck, moving close to $100k+ in overall cost. Financial Freedom lost.
Or, you could purchase an asset that pays you monthly, maybe enough to make your entire Cybertruck payment? At the end of the vehicles depreciating schedule, and the end of payments, when it’s value becomes $0, guess what? You still have your $100,000 which is still making payments to you, plus enjoying your Cybertruck. Financial Freedom gained.
Always outsource your expenses. Here are some examples of typical household expenses you can outsource:
Expense Asset
- House Expense – Principle, Interest, Tax, Insurance Buy rentals
- Car Expense Buy vehicle stock
- Gas/Electric Buy energy stock
- Cable/Phone Buy utility stock
- Coffee Buy coffee stock
So, after the botched Cybertruck reveal I purchased Tesla stock. I told my wife that my plan was to make the Cybertruck down payment with the stock. In the first six months the stock exploded up and I pulled out my initial investment and let the profits ride. Now I have a “lazy 8”; infinite return. When this truck finally comes out, I will purchase the vehicle with minimum down, borrow as much as I can with minimum interest, and rent out my Tesla shares (sell options contracts) to make the vehicle payment and interest. After the vehicle payments have been made, I will still have my free Tesla shares that appreciated for the last 8 years, basically getting the Cybertruck for free PLUS Tesla shares worth presumably thousands.
Did that make sense? I’ve read a ton of financial books and haven’t had anyone tell me to buy assets for every expense. I’m not saying if you love Starbucks, feel mildly ashamed every time you purchase a $5 latte you should run out and buy Starbucks stock. Full disclaimer, I do own Starbucks and that stock will pay for every coffee I drink for the rest of my life. But I am saying this is a way of thinking; don’t pay for you expenses with dollars you worked for, pay for them with ROI from an asset.
That’s my plan ladies and gents. In the past, Apple paid for my wedding and a nice diamond ring for Mrs. Petersen. Whenever I’m purchasing something I’m always looking for a way to outsource the payments to the ROI from owning a new asset.
So always take your W2 income (employees) and only exchange them for assets.
W2 Income---> Assets----> Return on Investment---> Fund your lifestyle
NEVER
W2 Income--> Fund you lifestyle
Best,
Derek Petersen
Aviara Capital Investments
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