TikTok Exec Reveals Why She Regrets Buying a New Tesla Despite Her $400,000 Salary

Sora Lee, a 34-year-old who emigrated from South Korea to the United States, has achieved remarkable success over the past decade. As of 2023, she is the Global Head of Product Marketing at Bytedance-owned TikTok, earning an impressive $400,000 annually. However, despite her professional achievements, Lee tells CNBC that her financial journey is marked by a significant financial regret: purchasing a brand-new Tesla Model 3.

Career Progression and Financial Success

Lee's academic background is rooted in political science and economics, which she studied at the University of California, Berkeley. Her career began in 2012 with a starting salary of nearly $46,000 per annum. By 2014, she had joined Netflix's digital marketing programmatic buying division, securing a substantial pay increase to $110,000 annually. She remained with Netflix until early 2017 when she transitioned to Meta-owned WhatsApp.

Currently residing in San Mateo, California, Lee has amassed a net worth exceeding $840,000. However, as of June 2024, she is still contending with a $36,000 debt for the Tesla Model 3 she purchased in 2021 for over $70,000. At the time of this purchase, Lee earned more than $200,000 yearly while working at Meta and had recently divorced.

The Influence of Emotional Decisions

Lee's decision to buy the Tesla was driven by emotional factors rather than financial prudence. Reflecting on her purchase, she remarked, "I just really wanted a Tesla because it's something my ex wouldn't let me have, and I regret buying it at full price. It was a huge mistake." Although she could afford the estimated $1,000 monthly payments, she now wishes she had allocated those funds more wisely.

Understanding Depreciating Assets

Financial experts often caution against purchasing new cars due to their rapid depreciation. Lee's experience with her Tesla exemplifies this warning. Cars typically lose value over time, making it challenging to sell them at a profit after accounting for interest payments, maintenance, and insurance costs.

According to Kelley Blue Book, most new cars depreciate by nearly 20% of their retail value within the first year of ownership. An iSeeCars study from 2023 further revealed that electric vehicles depreciate by an average of 49% within the first five years, compared to 39% for all vehicles. Specifically, the Tesla Model 3 depreciated by 42.9% over five years.

Investor and "Shark Tank" star Kevin O'Leary emphasises the financial drawbacks of car ownership, stating that cars "cost a fortune in maintenance and insurance and just the amortisation, which means as they go down in value, you're losing money." He advocates for using public transportation and ride-hailing services like Uber, suggesting that money is better spent on improving one's financial situation, such as paying off debts, rather than purchasing unnecessary items like cars.

Navigating Financial Complexities

Despite her impressive earnings and investments, Lee's financial situation is complex. She has $755,283 invested in retirement accounts, stocks, cryptocurrencies, and a 529 savings plan for her five-year-old son, Jackson. Her liabilities include the Tesla debt, over $3,200 in student loans, and a $250,000 mortgage balance on a new home in Lake Tahoe. Notably, her ex-husband makes the mortgage payments, and they share custody of Jackson.

During her divorce, Lee earned more than her ex-husband, which resulted in her paying spousal support for a year along with substantial legal fees. This period also saw her sell two properties at a loss.

Income Diversification and Financial Anxiety

Last year, Lee boosted her income through stock sales, renting out a room, and engaging in side gigs such as brand partnerships and speaking engagements. She anticipates earning $19,000 from these side hustles in 2024. Nevertheless, her complex relationship with money and anxiety about financial security impede her ability to save more effectively.

In March 2023, Lee's expenses totalled $14,586, with $4,445 allocated to discretionary spending on items such as necklaces, a camera, gifts, and books. Despite her substantial income, she only saved $2,326 that month. Lee attributes her financial anxiety to her father's influence, noting that he often values people based on their possessions and lifestyle.

Addressing Financial Trauma

Lee is determined to instil a healthier financial mindset in her son, teaching him that owning an expensive car does not equate to financial security. According to Ed Coambs, a licensed therapist and financial advisor, children can internalise the financial anxieties they observe in their parents, impacting their financial behaviours in adulthood.

Coambs explains that traumatic childhood experiences, whether directly related to money or not, can lead to maladaptive financial habits. These habits can often be addressed through financial therapy, which helps individuals understand and process their money-related behaviours.

Alex Melkumian, a licensed marriage and family therapist, advocates for a dual approach: "Meet with someone who has a clinical background to delve into your money story and figure out why you behave the way you do. Then, when you process those experiences, you can meet with a Certified Financial Planner (CFP) to delve into the numbers."