Car Cost Vs. Salary

At your age, if you can't pay cash don't do it. A car is nothing but a loss if you
do it on a loan (it's bad enough with cash). What's wrong with an '01 Beemer?
Hell - my car 'right out of college' was an utter piece of crap 50% of your
salary should be your HOUSE - NOT YOUR CAR!!!!

Were I you (or your DAD!) I would NOT recommend anything in the 'exotic' range
unless you have lots of cash sitting around. Just stranger-father advice.

Good luck to you. What's your major? (PLEASE don't say Social Worker )

Jedi

 

I can certainly relate to the desire I had LOTS of POS cars out of college (and during!), and
before that even more. I finally got an 'exotic' I could afford then - a Triumph TR-7 (like in
this image just not my car). And that's when I learned the high cost of ownership - it cost
me a TON of money to keep that thing going.

All I can advise is work and save. I drive a paid-off 08 E350 daily driver, and a beautiful
328 GTS in the garage that is a 9 out of 10, with over $27,000 just in maintenance and repairs,
and own my home outright. But I'm 48, and worked MANY years saving and planning and all that
rot to get here. There are lots of 'rich' folks here, but I never was (nor am). My only point being
that I'm not 'just out of college'. It took YEARS to get to this point. I believe it was Enzo who
said "I build cars that young men should drive that only old men can afford" or words to that effect.

My advice would be think 'exotic but cheap' - Triumph TR-6 or vintage TR-3 comes to mind. And
live your life and work and save and invest and all that blather and someday.... buy an F-40

Good luck to you. It takes time....

Jedi
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I'd follow Jedi on this, wholeheartedly. And I'd add that we live in a far different world to that of just 12 months ago: Pay cash or don't buy it. Making payments on a nice car when you're just out of school is the last thing I'd reco anyone, at least until the world stabilizes (and the coming commercial real estate mess gets unwound). More stranger/father advice I guess!

But hey, driving a crappy car for 5 or 6 years is part of the post-college experience. Get the good car AFTER you get established.

 

Everyone 22 years old wants a Ferrari or the like. You will find though that even if you were to stretch and buy one today after the "high" wears off you get a hangover of payments and maintenance for something you couldn't afford. Perhaps even worse, you realize in a few months or years just how much of your income is actually tied into it and the limitations it places on your lifestyle and freedoms.

I have resolved to myself not to buy anything else nice until I am debt free and can pay cash. My current DD is not even 5% of my yearly income, much less 50%. If it takes several more years to get to a place where I could drop $100k for a 550 or 360, it will make the experience that much sweeter when it happnes. If events unfold to where I never get there, so be it.

 

Pay Cash for your cars. Don't feed the beast or become an economic slave to the system. I paid cash for my house. Debt for 9 years and it is the best thing I have ever done. You can get some cool stuff for $3k-5K. At your age don't buy a house either you will be moving several times. If you are an accountant run the numbers. We used to live in Arlington VA near the Metro for 10 years. We rented a house and got a long term lease ( 5 years). By renting I saved over $45,000 compared to if I had bought the house.

 

Proper answer.

Next question please.

 

How do you get a recent college grad to take good advice?

 

Exercise; As an Accountant, what would you advise yourself to do?

 

Recent college grad? You should have $0.00 vs. your salary.

 

50% of Salary?! WTH?! Did a car salesmans or worse yet the dealer "finance manager" who couldnt get a real job tell you this BS? Based on a 50% D/I one could get a nice car perhaps even a new 911!!! Lets see:

$100,000 Loan @7% for 7yr (yes 84months).
the payments would be ~$1,500 / mo.
so all one needs to make is $3,000/ mo!!!!

Of course the 911 requires fuel (sumpreme no doubt) + insurance (cheap for young people).

BTW the int cost would be ~$27,000.

you're an accountant figure it out.

 

Well, turning the time mashine on, back in 1990 when I finished college my wife and I had two cars totalling about $25k in cost, we bought a house for $89k (putting $15k down), and our COMBINED salaries were right around $40k per year.
Looking back the numbers are insane, but we managed to have about $800-1000 per month in discretionary income. Then we had three kids....

BT

 

I suspect he meant 50% of a year's salary. That was once a "rule of thumb", i.e. if you make $100k a year you can afford a $50k car.

Our young accountant needs to state what he means in a more clear manner if he intends to be a sucessful accountant.

 

Any way you want. Trouble is, he won't take it.

 

That's the angle that I was playing.

I'll be shocked if he ever sees the end of his current payment book, let alone avoids the next one.

 

By making mistakes and learning from them. I graduated 18 months ago and I've learned more in the past year than I have the previous 23 years combined.

 

+1 on paying cash for cars.

I also lived in Arlington near the metro (courthouse actually)

 

I learned more (and consequently, matured more) in the four years after college than the four years in college. So it sounds like you're ahead of the game, or at least ahead of me, which doesn't mean much

to the OP-drive the 3-series. as post-college beaters go, you won the lottery. save the $$, use it for CPA review classes, pass the exam, THEN buy yourself something nice.

 

I also lived in Arlington near the metro

We lived on Highland St near the Discord Records House. 89-2000

 

It really depends on your financial status.. lets say you "can" pay cash for the car but you decide to finance due to getting 4% loan rate or something like that.. than it's different..

I can tell you years ago I bought a 54k lotus elise when I was making 60k a year because I really wanted it.. fortunately I was making a lot more 2 years later so it was a non issue.. But I can see if I wasn't making a lot more it could have become a burden..

it really depends on your situation.. financial that is.. people that are self employed or have businesses that have ups and downs commonly buy exotics and sell them depending on their business cycle..

I know a guy in real estate that will blow 500k on a car.. sell it months later to free up the cash.. a few months later as soon as he has extra cash will do the same thing.. it's just the way he is.. and he is comfortable doing that..

With me personally I have part of one of my car's financed.. i have the cash to pay it off. but to me cash in the bank is more important that cash in a car so I am just going to keep it financed.. my other car (my DD) is paid in cash.. I'm fine/comfortable with that..

To each his own...

 

Yes, we all seem to learn that way.

My point was that most people ignore sound advice and learn the hard way. This thread is likely a perfect example.

 

1) All the rules have changed in the last 24 months.
2) Don't assume that real estate is in anyway safe....or sound. In many markets when you run the numbers..renting will actually cost you LESS. Assume that real estate appreciation wont return for a while...3-5 years. And there after you are looking at 3%ish per year. Like I said, run the numbers...don't assume conventional wisdom about owning a home is smart.
3) Inflation is coming. Our currency will lose significant buying power.
4) ALWAYS pay cash for cars. I used to be Mr.Lease. Yes, had the write off etc but...crap..what a friggen waste of $$.


With all that said, if getting a great car will MOTIVATE you....and you drive you to reach higher...get the car. My suggestion...get an Elise/ Exige. Seriously amazingly cool little cars. Low miles 05 Elise around $30k. Drive one...if you are a car nerd (like most of us here) you will want one.

 

Some people can work hard and save money, go without, and pay cash to get what they want.

Some people work hard when they have a reason--they get what they want and pay it off by working hard.

Most people buy what they feel like and don't work hard, regardless.


I agree (1) is best, but (2) does work for some people.

 

LOL you guys do realize this is the Dave Ramsey advice that's been slightly twisted?

Dave say's your cars should not equal to Half your yearly income in value. That's not payments, that's value... So if you buy a 300k Ferrari 599 GTB You need to be making 600k a year or more if you have multiple cars.