Car Cost Vs. Salary

Another thing.

When you pay cash for a car you really look at that $1500 sunroof and that $1800 stereo upgrade in a much clearer light.

 

Cash is King. The objective is to maximize cash, and minimze everything else.

(at least until 50 y/o, at which time I quit taking my own advice )

Seriously...if it doesnt' continue to increase your net worth, stay away from it. (increasing your net worth (cash) and having fun do need not be mutually exlusive lifestyles. Makin' money should be fun )

 

Yup. (pretty scary you had to ask for clarification)

I've never bought a car with a nav sxs. $2000. are you freakin nuts...

My wifes car is a 2003 volvo...
I have a 2004 infiniti...

 

A lot of us have paid cash for a house.

But not for our first house.

Show of hands: excluding the trust fund babies and the other big inheritors, how many here paid cash for their 1st house?

I bet not many hands go up.

 

It is amazing what you can save if you try. Dual income married couple and live like college kids for 10 years can save a bunch of money and buy a house cash. Folks only recently started having credit cards, car loans and mortgages. Back in the 20-30's most mortgages were 5 year loans and the bank could foreclose any time. My grandfather paid cash for his homes and industrial buildings. We are seeing the true value of things as credit is drying up world wide.

 

Please just try to think FURTHER. I only paid cash for my house because of all the decisions I made
in all the YEARS that I COULDN'T pay cash for my house.

People who pay cash for their house in their TWENTIES on the other hand... are RICH. Unless of course
you're talking a used single-wide on a rented lot in the flyover states.

Jedi

 

I put my house on 209 credit cards. does that count?

 

I paid cash for multiple houses last weekend. Also paid cash for a few hotels. And a railroad or two...

 

and then you went directly to jail!

 

Tony says it's a cost of doing business

 

But hey - at least Madoff went directly to JAIL

 

I would only buy a car that you can pay cash for until you have bought and are settled in your first house. In this economy, you can buy a lot of car in the used market for well less than $10k...

 

I thought, credit card lambo josh left this forum.. Now I know he just changed his username to Guyincognito... LOL

 

I graduated a year ago and I have a pretty good first job. The first thing I learned is that after taxes, 401k, insurance, etc. I see about 65% of my salary. I had to have an unexpected surgery two months after I graduated and suddenly I had a pile of medical bills. My point is that stuff happens and until you get settled in and build up some kind of savings, it would be unwise to pick up another car. I would suggest holding off for at least a year or two until you really have a good understanding of what kind of expendable cash you have available. I am in the same boat as you though, I have to fight the auto-urges daily. I almost flew to California a few months ago to buy another car.

 

I wasn't going to comment, as most young guys seem to be looking for reasons to do what they're going to do and seem to ignore advice, but you encouraged me.

It's really hard to be on your own, be a car fan and not succumb to the temptations to splurge on what you've been dreaming about for up to half your life (figure early to mid-teens to starting your first job). Unless you're fixed to benefit from a trust fund or don't plan on a family and/or kids, your future wealth mostly depends on how much seed capital you can accumulate early on and how much prudent risk you take with that capital and your career. The first grows fastest by maximizing the difference between income and expenses, the second grows by maximizing the aptitude and effort you apply over time to distinguish yourself from your peers. Both categories benefit from early investment and both tend toward increasing conservatism with age (for preservation of gains). You're much more likely to end up with a very high net worth if you pursue both and if one fails you the other is your safety net.

The idea of spending half your annual income on car payments is ridiculous; spending half your annual income on car purchase price is slightly better, but mostly relevant if you're talking about lower-income and necessary transportation to fulfill job requirements. Otherwise, that rule of thumb is promoted by high-end car dealers to get young singles to buy more car than they need, feeding the volume growth of high-end cars that depreciate 50% or more in 5 years (your payments are doing nothing more than trailing the depreciation curve). Even paying with cash is marginal, if that's 50% or more of your cash. The best is paying (or being able to pay) with earnings from cash.

That last is a pretty high standard and most won't follow that as it could mean putting off desirable purchases forever; but it is the most comfortable situation to be in. OK, so let's be realistic, you're not going to put off buying something more than a Kia until you're gray-haired and bitter; so what's the financially sensible thing to do? Get a 100% reliable car that will get you to and from work and run errands for 200-300K miles that meets financial guidelines, then feed your car habit with hobby money. Enjoy the process of searching, DIY and driving; there's tons of high-quality, good performance, fun cars out there of varying ages and marques for moderate prices (say, $5-15K). It may be older, but the excitement of the latest luxury or exotic car lasts just a few months or years (until the next hot model from your marque or competing marques) and costs a ton of money.

One of my acquaintances was an EVP of Sales & Marketing for a multi-$B company, he LOVED it when a subordinate bought a high-end MB or BMW or Porsche. He figured that meant 1) their "nut" was now bigger, 2) he could raise their numbers a moderate amount and 3) they would have to work harder to make their numbers. He knew those folks living like that had put themselves on the rat-race treadmill and he had no qualms about taking advantage of that.

 

Sharp guy.

 

I have mixed feelings on this subject.

I am 40 and I would never spend half my income on a car. In fact i am now in the 'pay cash for toys' club mostly from reading the wisdom posted on this forum.

HOWEVER...when i was young i spent every dime I made frivolously. I bought cars i never should have. Took ridiculous trips to Vegas. I also had a lot of freaking fun !!! I wouldnt trade those days for anything...not even a paid off home and $10m in the bank. Some things are more valuable than money.

I feel bad for guys in their 20s that are not living their life but are waiting to get to their 40s/50s so they can live their life. The only people I have ever met that say their later years are better than their younger years are very boring people and didnt LIVE in their 20s..you only get this chance once...so take it.

That doesnt mean spend $150k on 9 credit cards to get a Lambo but if you are 23 yrs old and can swing a Ferrari for 50% of your salary....I say do it. If you are closer to 30...dont do it...you missed the chance. now you have to start thinking about real life and your future.

Just my $.02

 

+10000000000

I bought my Ferrari at 25 because I am able to right now. I may not be so lucky later in life (wife, kids, etc.). I wouldn't trade this for anything!!! My childhood dream is realized.

 

perhaps less age dependant and life situation dependant..

if you are someone that makes 400k a year clear and wants to plop 150k a year on a new toy car.. and you are left with 250k for your other expenses i'd say you are pretty secure in your purchase if you are single renting a condo and have monthly expenses at 6k or less.. you have plenty of cash...

at the same time if you are making 400k a year clear with a family, a huge house payment.. kids.. and need to save as much as possible for the future perhaps you shouldn't do it..

it's all relative there is no wise or unwise situation to be in. It's all directly relative for your precise situation.

 

I disagree. When I bought my last car it was mid-afternoon. It took a day for the wire to go through

 

Ah yes, but how long before you had to mortgage them all because you stayed at a hotel on Park Place?

 

Seriously, if you can't live comfortably with a couple of kids and a reasonable mortgage on $21k/month net, you have money management issues.