Self insuring... a continuation of "an observation" (long) - 986 Forum - The Community for Porsche Boxster & Cayman Owners

Onad · 02-09-2005, 04:15 PM

This thread is somewhat of a continuation of the “an observation” thread.

There was a lot of good detail regarding what Boxster owners are spending on an annual basis for both regular maintenance and unfortunate surprises in the referenced thread. In order to mitigate the risks associated with an out of warranty Boxster some have bought extended after-market warranties, while others have “self-insured” by setting aside rainy day funds.

I’d be interested in hearing opinions on what amount of money should be put aside to self-insure. Obviously it depends on the year, condition, and mileage. With that said, let’s assume that regardless of model year, the Boxster is in good condition and has been driven 8-10 K a year.

Assuming you want to cover surprises and regular expenses (brakes, tires, and oil changes) over two years I was thinking the following:

2000 and 2001: A reserve fund of $3500
2002: A reserve fund of $2500 (8-14 months factory warranty remaining)
2003: A reserve fund of $1500 (15-24 months factory warranty remaining)

What do you think? Is this overly cautious or not cautious enough? Averages are the important thing here. Obviously putting aside 10K for an engine replacement would be great, but not practical. Discuss...

Perfectlap · 02-09-2005, 04:33 PM

it sounds like you are planning to buy the car outright without any financing.
I really don't care to ever do that. So my plan was to buy a second hander with less than 15,000 miles. I was very successful (actually only took a week) and found my 2000 S with only 10,000 miles (its litterally brand new). I'm shooting to pay it off in 3 years with an extended service contract payment schedule for that period of time.
My advice would be to find the Boxster of your dreams with the lowest amount of miles that was garage kept with newest model year possible. Once you have wittled down how much of a budget you will propose for this, the next step will be to consider your safety net of extended warranty or going it solo.

I was long searching for a vintage 911 and a friend gave me some advice that seems to be the standard for Porsche buying:
Buy the newest Porsche you can afford.

Onad · 02-09-2005, 06:06 PM

I'm just solicting opinions on several ways to view one's "Boxster purchasing options." I've heard the "buy the best Porsche you can afford" advice, but I think that's for a certain type of person. For example, even if I had $50-60K to spend, I personally wouldn't buy a brand new 987 S. There's other things I'd use the $ for. I'm personally leaning towards an 03, but a friend from work is buying an 01 even though he could afford an 05.

With that said, if members inherited a 2001, 2002, or whatever year Boxster; I'm wondering how much they would want in reserve to cover both the expected and unexpected expenses of Porsche ownership.

Thanks for your comments. Sounds like you got a great Boxster (10k!).

wetstuff · 02-10-2005, 05:17 AM

If you bought a $60k car for $30k (used vs. new) - you are already ahead $30k. IF you could have afforded a $60k car - then you can easily afford to fix the $30k, no?!

If you stretched to make the $30k - then you're upsidedown already. I'd reach a little more and bury the extended warranty in the payments, and hope you keep your job.

If the thing that makes Boxster owners quake is a $900. RMS replacement - then it seems $900 in a jar should calm your nerves...

...Then there are handwringers who will never feel safe in their skin - or the new breed of schmuck who thinks the rest of the World OWES him a problem-free life.

Maybe we can modify the old saw; "If you have to ask...." into; "If you cannot afford to fix it....."

Jim

Brucelee · 02-10-2005, 06:10 AM

ALL autos (save collectables) represent a sinking, depeciable asset with the added downside of future mechanical costs. When one buys a new car, MOST of the mechanical costs issue is dealt with for a limited period of time. In this case, the biggest cost of the car by far is the interest and depreciation that one incurs to procure the car. This cost is often overlooked but is very real indeed.

When you buy used, you diminish the interest and depreciation costs over time but are normally subjected to the risk of larger mechanical costs. One can "lay off that risk" to a warranty provider or retain it. This is the self insurance option that is mentioned above although it is not technically self insurance as the insurance industry terms it, but simply retaining the risk entirely for yourself.

Whether you "put away" money for a future repair is not a cost or risk issue but simply a funding issue. If you have the dough, it matters not if you segregate the funds or not. If you don't have the dough, well that is what loans are for.

From my perspective, this issue of warranty is always tied to one's own risk profile. If you hate to have unexpected bills, you can reduce, but not eliminate, this psychic pain by paying upfront, knowing that you MAY NOT receive any of this money back. Then again, you may receive more of it back and the peace of mind of having the protection.

So, while we may want to think there is a correct answer here, the only real answer is, it depends on your cirucumstances and your feelings.

Hey, let the good times roll!

Perfectlap · 02-10-2005, 06:52 AM

Actually not all cars depreciate. ANd I'm not referring to collectibles.
A friend and his family buy exclusively Mercedez and have been doing so for over 30 years. One member purchased a very high end model which was very hard
to get in this area (or maybe everywhere else). Some how people found out that he got this Merc and were calling him wanting to buy the car. Some offers were as high as $20,000 above what he paid, he's very wealthy and very crazy about Mercs. So he kept it. He also has a 1990 SL 500 that has about 6,000 miles! THis past year he had a bad experience at the dealer and retalliated by buying a BMW 7 series.

and driving onto the Merc lot.
(He took it back after six months because he couldn't stand the I drive)

I guess its about Supply and Demmand sometimes with cars.

Brucelee · 02-10-2005, 07:16 AM

I will stand by my statement that in the long run, all cars depreciate. Yes, you can find rare examples, such as when the original zr-1 came out and guys were paying premiums. However, for the kind of cars we are talking about here. A Box S, when you buy new and keep for say, three years, you have higher depreciation and interest than when you buy a three year old model and keep that for three years.

Then you factor in mechanical costs and do your comparison. My point simply is that as investments go, cars are not! There have been dozens of studies to support this simple fact.

Not to rain on anyone's parade but if you buy a Boxster as an "financial investment" you will be very unhappy with your return!

Quote:

Originally Posted by Perfectlap

Actually not all cars depreciate. ANd I'm not referring to collectibles.
A friend and his family buy exclusively Mercedez and have been doing so for over 30 years. One member purchased a very high end model which was very hard
to get in this area (or maybe everywhere else). Some how people found out that he got this Merc and were calling him wanting to buy the car. Some offers were as high as $20,000 above what he paid, he's very wealthy and very crazy about Mercs. So he kept it. He also has a 1990 SL 500 that has about 6,000 miles! THis past year he had a bad experience at the dealer and retalliated by buying a BMW 7 series.

and driving onto the Merc lot.
(He took it back after six months because he couldn't stand the I drive)

I guess its about Supply and Demmand sometimes with cars.

IceBox · 02-10-2005, 08:59 AM

I whole-heartedly agree with you, Mr. Lee, and not only because you're one of the worlds' most renowned martial artists, though I admit that getting my ass whooped by 'the Dragon' olds little appeal on it's own. There are always isolated abberations, like the one Perfect Lap speaks of, exceptions that prove the rule. A friend of mine bought a '91 Miata in one of the myriad blues it was available in (though officially Mariner Blue was the only colour that year...Mazda, you tricksy hobbits, you...), drove it for a year, and sold it for $1000 more than he paid. This is not the case for 99.9% of Miatas though. Nor 308 Ferraris, for that matter. Or just about any other car in the market. Just check out that 550 Boxster being sold at a 'bargain price'. 10K of MSRP. And it's a special edition. We're all enthusiast here, so what I'm about to say may seem like a form of blasephemy but "All cars are essentially tools, a mode of transport from A to B ." Would you pay 20% more for a used hammer than a new one? If so, PM me, I got what you're lookin' for!

Brucelee · 02-10-2005, 02:22 PM

I have been trying to keep my Martial Arts background a secret. What gave it away?

Onad · 02-10-2005, 05:53 PM

I totally agree with most of your comments. Cars depreciate and breakdowns occur. The goal is to minimize your exposure to both while having the best time.

Brucelee · 02-11-2005, 06:26 AM

Yes and the focus on the BEST TIME is very well put!

BuffaloBoxster · 02-11-2005, 07:10 AM

Quote:

Originally Posted by Onad

The goal is to minimize your exposure to both while having the best time.

Which is exactly why I went with the Warranty Direct coverage. For a little over two grand on a car I paid over thirty for, I can be sure that pretty much nothing is going to spoil my Boxster experience, and I'm virtually assured that my car won't become a money pit

wetstuff · 02-11-2005, 09:27 AM

.....I heard recently that Freud said; "Neurosis is the inablility to deal with ambiguity".
(to that effect, if not the exact quote...)

It's funny, outside these forums; few people seem to have heard of RMS. My sample is admittidly small, but the first three people I spoke to before buying our car had zero notable problems. I don't think there's a need to go back to them and ask specifically about RMS...

It's also interesting when the results of the TUV (correct?) extended survey results are announced, rather than a collective cheer and a Conga line dance, that WE - not any Honda - are the best. Instead, more posts about: "Should I buy one....in the face of all the problems??"

Considering the number of people on the planet who would consider a single 40w bulb a luxury, we are certainly among the most fortunate to ever walk the Earth....and have pretty much worry-free lives in context.

"Buck it up! Permagrins gentlemen!"

Cheers....

Jim

IceBox · 02-11-2005, 01:13 PM

That's just it, Wetstuff: Some folks just plain don't have enough to worry about, so they invent little concerns, then agonize about them all out of proportion to whatever circumstance the issue is. Instead odf applying the simple logic that if you can afford the car, you can probably afford to fix it, or conversely, if you can't really afford the car, buy something else, some folks need to over-reach, which almost always leads to bad times. So it's simple...do some research, figure out what you can afford, taking into consideration that cars break and need to be repaired, buy the best example you can get, put the top down, and all those worries will dissappear. And remind yourself every so often, as Wetstuff aptly points out, that we're all pretty lucky if your major concern is pulling some cash together to buy some nice bulbs for your Boxsters' headlights

P.S. Mr. Lee, I only point your skill-set out to fairly warn any contrarians what's in store if they get outta line. They way you took revenge in the Chinese Connection should insure that any comments, pro or con, will be couched respectfully. I...I just don't want to see anyone get the beat down!

Brucelee · 02-11-2005, 02:54 PM

"P.S. Mr. Lee, I only point your skill-set out to fairly warn any contrarians what's in store if they get outta line. They way you took revenge in the Chinese Connection should insure that any comments, pro or con, will be couched respectfully. I...I just don't want to see anyone get the beat down! "

You are very kind but you know, that was many years ago when I was a hot headed kid. With all of my zen meditation and such, I now see the error of my ways. I should have just gotten a gun and........POW!