Elon Musk, after buying a cool 1.5 billion dollars worth of Bitcoin for Tesla announced that “You can now buy a Tesla with Bitcoin.”
This doesn’t come as a shock, since he had said something about that a while ago. It’s only for the US for now, but the option will be available outside the US later this year.
Musk also disclosed more details about how Tesla is involved in the Bitcoin ecosystem, saying, “Tesla is using only internal & open source software & operates Bitcoin nodes directly.”
I think that’s a stupid thing to do. Don’t get me wrong, I’d love to own a Tesla car, I’ve been fawning over them long before they even became available in Greece.
But after all the coolness factor and the high-tech feel, it’s just a fancy car. Or, what we like to call around these parts, a liability.
A liability, no matter how awesome it is, still costs you money. And that money would have been better spent on more assets. Hopefully assets that produce cashflow and can give you the money to purchase those liabilities. And even if you had a collection of assets that paid you this much, it would still be a waste to buy a Tesla car.
A fancy car loses something like 20% of its value as soon as you drive it out of the loot. And we’re talking about a significant amount of money here, it’s 30-70.000 USD. If this amount of money isn’t significant to you, then you’re probably rich already and these arguments are pointless for. For the rest of the plebes and wannabe millionaires reading this, I hope this helps educate you in what an asset really is.
A clever entrepreneur will think of some options in wanting to buy a fancy car. For example, my father loves yachts. He actually loves sailing, but to do that in comfort you need a yacht. He knows that simply buying one as a liability is silly. Even if you had the money to begin with by taking a loan, you’d pay an exorbitant amount of money for it, then you’d pay extra luxury tax, and then you’d have to pay the upkeep costs every year.
Now, if you buy the exact same yacht for chartering it out to clients, it becomes an asset. It’s the same yacht, same hull, same sails, same everything. But now it’s under a maritime corporation (check with your own accountants for this,) and all we have to do is have a minimum amount of chartered weeks per year for it to qualify as a business. And we pretty much fill it up, ’cause how many cruises can you possibly go in a year as an owner? And the beauty in this is that the debt becomes leverage.
Same thing about a Tesla car. This guy called Mark Tilbury, a very likeable investment teacher on Youtube and Tik Tok shows his passive income plan of buying a Tesla to earn $70.000.
His videos are very informative in general, but I want to point out a specific thing here: He bought a Tesla to turn it into an asset. He got the fancy toy he wanted, he gets to drive it around some of the time, just like my dad, but he figured out a way to turn it into a business that produces money for him. Essentially making this a free purchase down the line.
That’s why you mustn’t buy a Tesla (Sorry Elon!)
It’s just a fancy liability. In The Millionaire Next Door, there’s a huge chapter about how the true millionaires (Prodigious Accumulators of Wealth, PAW) treat their car purchases. They don’t buy fancy, they don’t buy new, and they certainly don’t buy luxury. In fact, an epiphany the authors and analysts had was that the truly wealthy buy their cars per pound of weight.
The takeaway from this is that Tesla is a luxury brand, no matter how much I like them. I wanted a Tesla when I still had the poor person’s mentality.
Now I know better.