Am I on the right track?

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Am I on the right track?

Postby CityOfAngels » Tue May 28, 2013 5:42 pm

Disclaimer - I"m not trying to show off or anything, just want honest advice :)

Hi guys, its' been a little while since I last posted here but thought it would be beneficial to get a quick assessment at my current standings. I'm 23 and about 1.5-2 years into my professional career. I make ~$100k/year + ~$30k in company stock (top 5 tech company) as an engineer.

I crashed my car a few months ago and received a total loss check from my insurance so I'm thinking of getting a new car soon. Driving and cars are basically my biggest hobbies ands something I really enjoying doing (has nothing to do with being flashy, it's purely an enjoyment for me to drive alone a few hours along PCH on a saturday morning).

After maxing my employer's 401(k) (~12%) match, maxing my ESPP (10%), paying health insurance, and tax, I take home ~$4k/month. I spend $1,400 on rent, and the rest is disposable income. I also contribute $200 every two weeks to my Roth IRA so I can max the $5k annual limit.

I received about $27k from insurance for my car and am looking to put that plus another $5-10k down for a used car that for a total of ~$50k. I know this is a lot (for a used car and my age) but I work really hard and I want to be able to enjoy the time I have to myself as much as I can. I don't have any outstanding loans or debt.

I currently have around $56k in investments ($16k in 401(k), $30k in company stock, $11k in Roth IRA), and ~$15k in cash. I will also be getting around $10-20k worth of stock in a few months (I get this every six months basically).

I know I should have a bigger emergency fund but I work in the heart of the tech industry so I will be able to find a job within days (if not hours) if absolutely necessary (in the short term, if there's a tech bubble and everything goes under, that's a whole different story), plus I have some expensive toys I can unload in these situations (such as a $7k watch that is keeping its value, high end electronics, etc.)
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Re: Am I on the right track?

Postby fatlittlepig » Tue May 28, 2013 6:01 pm

CityOfAngels wrote:Disclaimer - I"m not trying to show off or anything, just want honest advice :)

Hi guys, its' been a little while since I last posted here but thought it would be beneficial to get a quick assessment at my current standings. I'm 23 and about 1.5-2 years into my professional career. I make ~$100k/year + ~$30k in company stock (top 5 tech company) as an engineer.

I crashed my car a few months ago and received a total loss check from my insurance so I'm thinking of getting a new car soon. Driving and cars are basically my biggest hobbies ands something I really enjoying doing (has nothing to do with being flashy, it's purely an enjoyment for me to drive alone a few hours along PCH on a saturday morning).

After maxing my employer's 401(k) (~12%) match, maxing my ESPP (10%), paying health insurance, and tax, I take home ~$4k/month. I spend $1,400 on rent, and the rest is disposable income. I also contribute $200 every two weeks to my Roth IRA so I can max the $5k annual limit.

I received about $27k from insurance for my car and am looking to put that plus another $5-10k down for a used car that for a total of ~$50k. I know this is a lot (for a used car and my age) but I work really hard and I want to be able to enjoy the time I have to myself as much as I can. I don't have any outstanding loans or debt.

I currently have around $56k in investments ($16k in 401(k), $30k in company stock, $11k in Roth IRA), and ~$15k in cash. I will also be getting around $10-20k worth of stock in a few months (I get this every six months basically).

I know I should have a bigger emergency fund but I work in the heart of the tech industry so I will be able to find a job within days (if not hours) if absolutely necessary (in the short term, if there's a tech bubble and everything goes under, that's a whole different story), plus I have some expensive toys I can unload in these situations (such as a $7k watch that is keeping its value, high end electronics, etc.)


50K used car
7K watch

you, my friend, will never be a accumulator of wealth with these habits.

FLP
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Re: Am I on the right track?

Postby Twins Fan » Tue May 28, 2013 6:05 pm

Well, you're young and make good money. So, I'd say your right on track for being...... young and dumb. :D

I'm kidding!! Nothing wrong with enjoying life a little when you're young, in my opinion.

But, $50K for a USED CAR??!! I don't know if I can justify that one for you. There has got to be a car out there that you would enjoy driving for the $27K you got from insurance? You're doing great being debt free for now. Why take on a car payment... plus whatever insurance would be for a 23 year old driving a $50K used car??

I've never had the option of buying stock in anyplace I have worked, so maybe I shouldn't comment there. But, the majority of your investments (looks like that will only increase) is invested in the company you work for. That's risky!! So, you can find another job quickly if your company tanks... great. But, if the company you work for tanks, so does the majority of your investment portfolio.
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Re: Am I on the right track?

Postby ddunca1944 » Tue May 28, 2013 6:06 pm

CityOfAngels wrote:Disclaimer - I"m not trying to show off or anything, just want honest advice :)
I know I should have a bigger emergency fund but I work in the heart of the tech industry so I will be able to find a job within days (if not hours) if absolutely necessary (in the short term, if there's a tech bubble and everything goes under, that's a whole different story), plus I have some expensive toys I can unload in these situations (such as a $7k watch that is keeping its value, high end electronics, etc.)


Well, you asked for advice. Here's my .02. When times are really difficult, economically, high end expensive toys are not all that much in demand, so your "$7K" watch is not likely to bring you anything close to that.

Besides, the lack of an adequate emergency fund on a salary as high as yours, suggests that saving is not that high a priority.
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Re: Am I on the right track?

Postby dimdum » Tue May 28, 2013 6:23 pm

How long you have been working and have 100k salary ? If you are working for past 2 years, have no debt with 56K in saving that impressive.
You need to diversify from company stock to broader index, sell RSU as soon as you get and invest in index.

That bring another question, do you know your desired AA ? Why can't you buy older used car for ~30K. High end car tend to lose value faster and are expensive to insure and maintain but again its your choice as YOLO.
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Re: Am I on the right track?

Postby CityOfAngels » Tue May 28, 2013 6:39 pm

dimdum wrote:How long you have been working and have 100k salary ? If you are working for past 2 years, have no debt with 56K in saving that impressive.
You need to diversify from company stock to broader index, sell RSU as soon as you get and invest in index.

That bring another question, do you know your desired AA ? Why can't you buy older used car for ~30K. High end car tend to lose value faster and are expensive to insure and maintain but again its your choice as YOLO.


Hi Dimdum, my AA right now is about 80/20 stock to bonds. I need to actually readjust this in the near future as it may be out of sync since the last adjustment. I've been working for 1.5 years, I was in college prior to that. My Roth IRA and 401(k) are all invested in index funds, etc.
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Re: Am I on the right track?

Postby Spades » Tue May 28, 2013 6:56 pm

I would build a dedicated emergency fund that'll last you six months. You can afford that luxury! Also, what about a future home? I think the next step is to start saving in your taxable for a 20% down payment. You might want to wait to buy the actual home until you are married, but you can begin building your portfolio for it. With your level of income you should be shooting to hit a big portfolio and retiring early, unless you don't like driving on the PCH.....

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Re: Am I on the right track?

Postby txdsl » Tue May 28, 2013 6:57 pm

Why not rent a car on the weekends you get to go drive and buy a modest, reliable car for day to day? You will not be burdened by debt, you have freedom if your tastes change, and you can use that money for an emergency fund.
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Re: Am I on the right track?

Postby playtothebeat » Tue May 28, 2013 8:40 pm

I don't understand the question.

"Am I on the right track?" For what exactly?
Retirement? You seem to be putting away quite a bit into your investment accounts, so that seems pretty good.
Sounds like you're in a good career (at least for now), so that's good.

Are you on the right track to buy a 50k used car? For me personally it's very difficult to relate to that, since I never understood the idea of a fast car - especially in LA where the roads are terrible and you just blend in with everyone else who drives a flashy car (although in your case it sounds like you can actually afford it).

Does your family rely on you for your income at all?

What does your future hold - relationships, marriage, kids? Something to think about (I know you're only 23; I'm 27 and getting married with a kid on the way; when I was 23, I thought i was as far as it gets from either of these things, but now I can't imagine myself being in any other stage of my life).

If you do end up cashing out those RSUs at some point , make sure you understand tax implications.
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Re: Am I on the right track?

Postby Grt2bOutdoors » Tue May 28, 2013 9:06 pm

Yes, you're on the Escalade track of depreciating wealth. :o Let's see, the left half of the balance sheet holds 56K of financial assets, the right side of the balance sheet holds a 50K depreciating vehicle that oh, in about 7 years will be worth may $10K, if that. The watch doesn't count as an asset, since a $5 watch purchased on the local street corners out of a suitcase will tell time just as well.

Nope, you continue this train of thought "I deserve it", "I work hard" yada.yada...it is like justification for "retail therapy". You will never be able to retire, if the very next time you get your hands on some cash you use the quotes above to justify the purchase. Retail therapy is an addiction. On the other hand, you are a marketer's dream candidate, the one they make those snazzy ads for. :oops:
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Re: Am I on the right track?

Postby awval999 » Tue May 28, 2013 9:09 pm

Tell us the car you are considering....

Only then can we determine if you can afford it :)

:sharebeer
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Re: Am I on the right track?

Postby fatlittlepig » Tue May 28, 2013 9:12 pm

sorry man, hate to be a jerk which I am, it's pretty stupid for someone in your financial situation to buy a 50k used car. you want to spend the equivalent amount that you have in investments on a car? sounds like you aren't the best driver either, just sayin'

buy a civic or a corolla, save and invest the difference.

FLP


CityOfAngels wrote:Disclaimer - I"m not trying to show off or anything, just want honest advice :)

Hi guys, its' been a little while since I last posted here but thought it would be beneficial to get a quick assessment at my current standings. I'm 23 and about 1.5-2 years into my professional career. I make ~$100k/year + ~$30k in company stock (top 5 tech company) as an engineer.

I crashed my car a few months ago and received a total loss check from my insurance so I'm thinking of getting a new car soon. Driving and cars are basically my biggest hobbies ands something I really enjoying doing (has nothing to do with being flashy, it's purely an enjoyment for me to drive alone a few hours along PCH on a saturday morning).

After maxing my employer's 401(k) (~12%) match, maxing my ESPP (10%), paying health insurance, and tax, I take home ~$4k/month. I spend $1,400 on rent, and the rest is disposable income. I also contribute $200 every two weeks to my Roth IRA so I can max the $5k annual limit.

I received about $27k from insurance for my car and am looking to put that plus another $5-10k down for a used car that for a total of ~$50k. I know this is a lot (for a used car and my age) but I work really hard and I want to be able to enjoy the time I have to myself as much as I can. I don't have any outstanding loans or debt.

I currently have around $56k in investments ($16k in 401(k), $30k in company stock, $11k in Roth IRA), and ~$15k in cash. I will also be getting around $10-20k worth of stock in a few months (I get this every six months basically).

I know I should have a bigger emergency fund but I work in the heart of the tech industry so I will be able to find a job within days (if not hours) if absolutely necessary (in the short term, if there's a tech bubble and everything goes under, that's a whole different story), plus I have some expensive toys I can unload in these situations (such as a $7k watch that is keeping its value, high end electronics, etc.)
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Re: Am I on the right track?

Postby Calm Man » Tue May 28, 2013 9:35 pm

This has got to be a troll post. Starting with: I don't want to show off. Show off what?
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Re: Am I on the right track?

Postby playtothebeat » Tue May 28, 2013 9:47 pm

fatlittlepig wrote:
buy a civic or a corolla, save and invest the difference.


that's a little extreme, I'd say. We all have our hobbies and things we like, whether it's traveling, music instruments, electronics, books, etc.
If you like nice cars, nothing wrong with that, but not sure you should be buying (or, frankly have "earned") a Porsche (or whatever you're looking at) quite yet.
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Re: Am I on the right track?

Postby fatlittlepig » Tue May 28, 2013 10:33 pm

playtothebeat wrote:
fatlittlepig wrote:
buy a civic or a corolla, save and invest the difference.


that's a little extreme, I'd say. We all have our hobbies and things we like, whether it's traveling, music instruments, electronics, books, etc.
If you like nice cars, nothing wrong with that, but not sure you should be buying (or, frankly have "earned") a Porsche (or whatever you're looking at) quite yet.


it's extreme for a guy who's just starting out to buy a quality car that will provide many many many years of hassle free use? nope not extreme just smart.

FLP
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Re: Am I on the right track?

Postby investingdad » Tue May 28, 2013 10:52 pm

so our friend is renting.

He didn't mention where he lives...

...where does one store a car that costs 50k used if you're in a rental situation?

I don't think anyone thinks you're showing off, most people here have a much, much higher net worth with far less car. I doubt they're easily spotted on the highway.
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Re: Am I on the right track?

Postby quanuec » Tue May 28, 2013 11:32 pm

Lets not be too harsh on the kid.

(1) - In terms of career, I think you are doing good. The most important thing you need to do is - "invest in your career and in your skill set". I am assuming you work as an engineer in a big tech firm. Do note - with every level you climb, the stocks portion of your bonuses will increase exponentially. You could literally make a killing by simply rising up the ladder in your firm, and then later switching ships to a competitor.

(2) - You are on the right path with maxing your 401k, roth, and the fact that you are boglehead, you would pick the right set of funds for your investments as well.

(3) - 50k for a used car is where you are a bit off. You are better off buying a Honda and investing the difference. Save an invest as much as you can now!

Good luck :)
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Re: Am I on the right track?

Postby sambb » Tue May 28, 2013 11:42 pm

In my opinion, I would buy a cheaper used car - like 35k, and not buy expenive watches or other things.
Save as much as you possibly can for 5 years, and you may just be set for life. Yes, do the math. it will work.
Blow 3-5k, not 50k, for entertainment.
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Re: Am I on the right track?

Postby harrychan » Tue May 28, 2013 11:44 pm

If you really want a nice car and want to build an emergency fund, get one off of a lease trader website. You get to avoid the down payment, keep your money which you have saved and basically pay for the depreciation which you would do anyways. Good luck.
This is not legal or certified financial advice but you know that already.
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Re: Am I on the right track?

Postby Watty » Wed May 29, 2013 12:38 am

A lot of decisions on the spending are really choices about how you want spend your “extra” cash so there is not one really one right or wrong answer.

But, there are always buts.

1) Having to take out a car loan to buy an expensive car is a red flag that you are spending too much. Wait until you can pay cash to buy your toys.


2) Several studies have show that over the long term splurging on “stuff” is a lot less memorable than spending the same money on experiences. Think back when you were in high school. You likely got a number of birthday and holiday presents but how many of them can you just still remember? How about just last year? Think back on the parties and things that you did and how well you can remember them compared to the “stuff”. I have found it much better to mostly spend my free money on “buying” experiences instead of stuff.


3) You are apparently on the cutting edge if your field now but in technology that quickly gets dated and a significant percentage of people don’t make the transition to the next generation of technology and stagnate or they get burned out and leave technology. I work in the computer field and I have seen this happen a LOT. Even by the time you are 40 finding a better job if you need to will likely be much harder becasue you will be getting paid as a senior person on the current generation of technology but much of your experiecne will not be very valuable for the next generation of technology.
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Re: Am I on the right track?

Postby Grt2bOutdoors » Wed May 29, 2013 8:32 am

investingdad wrote:so our friend is renting.

He didn't mention where he lives...

...where does one store a car that costs 50k used if you're in a rental situation?

I don't think anyone thinks you're showing off, most people here have a much, much higher net worth with far less car. I doubt they're easily spotted on the highway.


There are some neighborhoods in my state where the "vehicle" is the home, they literally stay in the vehicle most hours of the day - you know, the Escalades, Navigators, Yukons - that have been tricked out with those silly spinning wheel covers over the alloy wheels, you can hear their "boombox" effect coming down the road at a ear-popping 300 decibels, the windows have been tinted dark, fluorescent lights around the license plates, the wings placed at the top of the trunk (as if they could really fly). The ultimate "I deserve it" status mobile to pick up a certain impressable age and gender with. :oops:
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Re: Am I on the right track?

Postby stevewolfe » Wed May 29, 2013 8:53 am

CityOfAngels wrote:I know I should have a bigger emergency fund but I work in the heart of the tech industry so I will be able to find a job within days (if not hours) if absolutely necessary (in the short term, if there's a tech bubble and everything goes under, that's a whole different story), plus I have some expensive toys I can unload in these situations (such as a $7k watch that is keeping its value, high end electronics, etc.)


It's the line '... if there's a tech bubble and everything goes under, that's a whole different story" that strikes me the most about your post. You outline the criticism of the low emergency fund and then kind of dismiss it along with the aforementioned caveat. I have a very good friend who is a very good tech person who lives in the heart of NoCal tech country and he could no more see a crash coming than you can. SO - since we don't know when the crash is coming, how can we put such a big caveat as that in place and assume we're OK?

Here's a story he told me - it was so bad after the tech bubble crashed, he applied - along with 700+ other people - and interviewed - for a ONE WEEK temporary position. He got the position. However, the Friday before he was supposed to start, they called and said they couldn't get the funding and didn't need him for the WEEK. For the WEEK. In that kind of environment, what do you think your high end electronics will bring? Or your watch? How will you feel about your $50k used car vs. a new reliable, fun to drive car for 1/2 that amount (like a Volkswagon Jetta TDI for example - let alone a more practical, less expensive to maintain car)?

It's when things are going well that you should be mindful of the fact that things might not always be too great. When I was younger (I'm 41 now), I used to have these conversations with my wife about getting X or Y or Z or planning on things being this way forever and when the tech bubble started to crash (I'm a software developer) combined with the outsourcing wave it became front of mind that my peak earning years might be right then. And we've been cautious to build up an adequate emergency fund, etc to account for that. Heck for years we maintained a re-education fund so we could go back to school, learn another profession and not have to borrow funds.

You are saving at a fine rate, however, I'd just recommend you give pause and really think about what could happen if things went badly and honestly evaluate if the things you could hock are really worth what you think they are - which has nothing at all to do with what you paid for them in good times.
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Re: Am I on the right track?

Postby Hikes_With_Dogs » Wed May 29, 2013 11:32 am

I don't know. I have to disagree with most of the posts.

I've always been a fan of the philosophy that goes something along the lines of "save what you're supposed to, blow the rest." So I think you COULD spend 50k and you'd be fine, because you are diligently putting away money. It sounds like other than your EF, you are pretty much doing that. So kudos to you on that.

BUT-

Here's something to think about though. Your 56k you have in retirement, that will turn to ~520k in 30 years assuming a mere 8% return. If instead of spending 50k on a used car, and spend 30k instead, investing that 20k will give you 708k in 30 years! This is never contributing an extra dime! You are young and now is really the time to sock money away if at all possible (which it is).

So my suggestion is to figure out what kind of car you WANT first, rather than your budget. Is there something in the 30k range that can suit your needs? You could get a very nice used miata for that price. Not sure what type of car you are interested in, but there are a lot of choices in that range. I would stick that extra 20k into a tax advantaged account and let it grow. Meanwhile I would work on bumping up my EF. I would save for a little while longer and THEN buy a snazzy car when I'm a little older (like when your insurance rates go down at 25!).
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Re: Am I on the right track?

Postby StormShadow » Wed May 29, 2013 12:09 pm

txdsl wrote:Why not rent a car on the weekends you get to go drive and buy a modest, reliable car for day to day? You will not be burdened by debt, you have freedom if your tastes change, and you can use that money for an emergency fund.

I'm guessing you've never rented a car in California. I've rented an Infiniti G37 and a BMW 3 series while visiting Cali... it is not cheap.

CityOfAngels wrote:I crashed my car a few months ago and received a total loss check from my insurance so I'm thinking of getting a new car soon. Driving and cars are basically my biggest hobbies ands something I really enjoying doing (has nothing to do with being flashy, it's purely an enjoyment for me to drive alone a few hours along PCH on a saturday morning).
...
I received about $27k from insurance for my car and am looking to put that plus another $5-10k down for a used car that for a total of ~$50k. I know this is a lot (for a used car and my age) but I work really hard and I want to be able to enjoy the time I have to myself as much as I can.

What kind of used car are you looking at for $50k? For pre-owned, thats Porsche 911 money (circa 2009-2010).

For half that, you could get a similarly performing Subaru Impreza WRX STI . You're certainly young enough to be seen driving it around town. I think it'd impress most real car enthusiasts. Shop around and you can find an '09 BMW M3. Shucks, for pure muscle, how about a Ford Mustang GT?

Just curious... what were the circumstances of the accident?
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Re: Am I on the right track?

Postby og15F1 » Wed May 29, 2013 12:59 pm

awval999 wrote:Tell us the car you are considering....

Only then can we determine if you can afford it :)

:sharebeer


I signed in just to say the same thing

It depends on what kind of a used car you're getting for $50k

Blown out Maserati/Jaguar/Boxster and it's thumbs down

On the other hand if we are talking about an M5...

However that's $50k that won't be compounding over the next ~40 years until retirement. If you could drop it in a brokerage account today and get 5% real return on it over those 40 years then it would be worth $351k in today-dollars.

http://www.moneychimp.com/calculator/co ... ulator.htm

So...would you pay $351k for the same used car? That would be like giving away a brand new Ferrari 458+++ to get ... whatever
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Re: Am I on the right track?

Postby 325e » Wed May 29, 2013 1:27 pm

The one benefit of buying a car like that is that it will come free with a set of gold handcuffs that will match your watch. Just kidding! :D

It's great that you are making solid money just out of college. But you are about to fall into the high income trap.

It's ok to feel entitled. You obviously work hard and make good money. But instead of feeling entitled to a status symbol car, why not feel entitled to be able to leave your job at any time, take stress free months off if/when the economy goes down, take a riskier position that could pay off bigger, etc. It is possible that you will become the only person in history that has truly loved their corporate job from start to finish. But more likely, in about 10-15 years, you might be questioning a few things and want a change. Expensive taste is one reason middle aged folks that hate their jobs can't do anything about it. And it only takes one bad boss, a faltering economy, etc, to put you there.

A $50k car is going to be very expensive to maintain. The auto shops will light up with joy when they see you pull in.

Since you like driving, I'm thinking find something in the $20k-$30k range and start saving the rest. You will be happy in a few years when no car can get you out of an undesirable job situation. You may also start to enjoy the feeling of stealth wealth.
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Re: Am I on the right track?

Postby CityOfAngels » Wed May 29, 2013 2:00 pm

Hi guys, sorry I haven't replied to all posts. The car I was looking into was a 2009-2011 BMW M3 Coupe. I'm now thinking perhaps getting a 2012 BMW 328i Sedan for ~$35-$40k instead.
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Re: Am I on the right track?

Postby Hector » Wed May 29, 2013 2:44 pm

I agree with others and would say that $7k watch and the $50k used cars are very expensive and is not the wise choice for most of the people. But you are only 23. IMO 23 year old with no debt and the amount of net worth you already have for a 23 year is amazing. It wouldn't bother me to spend $50k on the car in your situation!
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Re: Am I on the right track?

Postby Toons » Wed May 29, 2013 2:48 pm

Half on an index fund,half on a car :happy
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Re: Am I on the right track?

Postby StormShadow » Wed May 29, 2013 3:02 pm

CityOfAngels wrote:Hi guys, sorry I haven't replied to all posts. The car I was looking into was a 2009-2011 BMW M3 Coupe. I'm now thinking perhaps getting a 2012 BMW 328i Sedan for ~$35-$40k instead.

I'm not a fan of the current F30 model 3-series. Frankly, I think its a little ugly. But to each his own.

I'd rather get an 2011 E90 model 3-series with the same engine. Or look for an M3. Current model has been out since 2007.
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Re: Am I on the right track?

Postby CityOfAngels » Wed May 29, 2013 4:40 pm

StormShadow wrote:
CityOfAngels wrote:Hi guys, sorry I haven't replied to all posts. The car I was looking into was a 2009-2011 BMW M3 Coupe. I'm now thinking perhaps getting a 2012 BMW 328i Sedan for ~$35-$40k instead.

I'm not a fan of the current F30 model 3-series. Frankly, I think its a little ugly. But to each his own.

I'd rather get an 2011 E90 model 3-series with the same engine. Or look for an M3. Current model has been out since 2007.


I was looking for the M3. My #1 choice right now is the 2009-2011 E92 M3 Coupe. They're $45-55k right now. I figure I can get a decent 2012 328i sedan for $35-40k, but I might as well spend $5k more to have something I'll enjoy more.
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Re: Am I on the right track?

Postby StormShadow » Wed May 29, 2013 5:45 pm

CityOfAngels wrote:
StormShadow wrote:
CityOfAngels wrote:Hi guys, sorry I haven't replied to all posts. The car I was looking into was a 2009-2011 BMW M3 Coupe. I'm now thinking perhaps getting a 2012 BMW 328i Sedan for ~$35-$40k instead.

I'm not a fan of the current F30 model 3-series. Frankly, I think its a little ugly. But to each his own.

I'd rather get an 2011 E90 model 3-series with the same engine. Or look for an M3. Current model has been out since 2007.


I was looking for the M3. My #1 choice right now is the 2009-2011 E92 M3 Coupe. They're $45-55k right now. I figure I can get a decent 2012 328i sedan for $35-40k, but I might as well spend $5k more to have something I'll enjoy more.

You know what... I'd wait a year or two. Those prices will drop sharply once the next model M3 comes out (2014). How about a preowned Infiniti G or Lexus? G37 is a sweet ride and really luxurious interior. Way nicer than the BMW's.

Maybe lease a less expensive car until then. Plenty of decent rides out there that'll put a smile on your face without killing the bank. Personally, I would never shell out $30k+ for a used car. They depreciate too quickly.
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Re: Am I on the right track?

Postby og15F1 » Fri May 31, 2013 11:16 am

CityOfAngels wrote:I was looking for the M3. My #1 choice right now is the 2009-2011 E92 M3 Coupe. They're $45-55k right now. I figure I can get a decent 2012 328i sedan for $35-40k, but I might as well spend $5k more to have something I'll enjoy more.


Being as you're talking about an M3, to me personally, that is something different. I think a 3 series gets you 80% of the way towards the financial commitment you're talking about making with about 20% of the soul of an M3.

My advice here is probably different than most all other Bogleheads but I'd suggest you get a 24 month lease on a brand new M3. Yes you'll be out $25-30k with no piece of equipment to show for it. But you will be driving the brand new car that you want and you can make it go away - along with the financial commitment - at the end of the lease. You'll get a taste of the costs for gas and tires and will likely be able to avoid all maintenance costs under warranty. I think this is a good move at your age - it's quite possible that the expense of the taste test will change your future outlook on cars / saving for retirement. I think you'll net out well at the end.

Start making calls to dealerships and find the sales person you like. They will work for you to source the M3 that's closest to what you want. Since you won't be specifying the options yourself you'll have to choose, or wait to choose, from what's available. Wait until you get the colors and transmission options you want. You'll have to take what you can get on the other options. It will probably cost ~$750 to get the car to your dealership from wherever it lives now.

I've had a G37 and after awhile it gets old. The M3 is probably the same way but get what you want. If you're the type of person that appreciates an M3 I think you'll regret the 3 series...

Let us know what you end up doing
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Re: Am I on the right track?

Postby BuckyBadger » Fri May 31, 2013 11:32 am

I don't often agree with Calm Man (especially on the matter of health insurance :D ) but I also find myself wondering what the OP thought we might think he was showing off about...

You're doing just fine for your age. I think you should make sure that you sell that company stock the absolute SECOND that you're able to, because you will be FAR too heavily invested in it. I think you shouldn't buy a car that is that expensive. And I think that you should top up that 401k.
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Re: Am I on the right track?

Postby fatlittlepig » Fri May 31, 2013 11:42 am

haha I laughed out loud at this post


og15F1 wrote:
CityOfAngels wrote:I was looking for the M3. My #1 choice right now is the 2009-2011 E92 M3 Coupe. They're $45-55k right now. I figure I can get a decent 2012 328i sedan for $35-40k, but I might as well spend $5k more to have something I'll enjoy more.


Being as you're talking about an M3, to me personally, that is something different. I think a 3 series gets you 80% of the way towards the financial commitment you're talking about making with about 20% of the soul of an M3.

My advice here is probably different than most all other Bogleheads but I'd suggest you get a 24 month lease on a brand new M3. Yes you'll be out $25-30k with no piece of equipment to show for it. But you will be driving the brand new car that you want and you can make it go away - along with the financial commitment - at the end of the lease. You'll get a taste of the costs for gas and tires and will likely be able to avoid all maintenance costs under warranty. I think this is a good move at your age - it's quite possible that the expense of the taste test will change your future outlook on cars / saving for retirement. I think you'll net out well at the end.

Start making calls to dealerships and find the sales person you like. They will work for you to source the M3 that's closest to what you want. Since you won't be specifying the options yourself you'll have to choose, or wait to choose, from what's available. Wait until you get the colors and transmission options you want. You'll have to take what you can get on the other options. It will probably cost ~$750 to get the car to your dealership from wherever it lives now.

I've had a G37 and after awhile it gets old. The M3 is probably the same way but get what you want. If you're the type of person that appreciates an M3 I think you'll regret the 3 series...

Let us know what you end up doing
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Re: Am I on the right track?

Postby StormShadow » Fri May 31, 2013 12:11 pm

Fatlittlepig... You're suggesting a civic or a corolla to a guy who says he likes to drive and is looking at an M3.

Maybe a used Honda S2000 or maybe even a Scion tC makes sense. No offense, but I refused to let my wife consider getting either of the cars you recommended.
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Re: Am I on the right track?

Postby fatlittlepig » Fri May 31, 2013 12:36 pm

you refused to let your wife consider two great and affordable, reliable cars? makes sense to me


StormShadow wrote:Fatlittlepig... You're suggesting a civic or a corolla to a guy who says he likes to drive and is looking at an M3.

Maybe a used Honda S2000 or maybe even a Scion tC makes sense. No offense, but I refused to let my wife consider getting either of the cars you recommended.
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Re: Am I on the right track?

Postby playtothebeat » Fri May 31, 2013 12:59 pm

fatlittlepig:
While I don't argue that someone who's 23 should have a safe, reliable, and affordable car, I'm also of the believe that you can't just sacrifice everything for the sake of saving for your retirement. (by the way, the civic coupe only got 4 stars in safety tests; just saying...)

For someone who is clearly interested in cars, I don't think buying a honda civic is sound advice - he simply won't enjoy it. I do think buying a $50k car is outrageous for someone his age; having said that, there's a middle ground between a civic and a an M3.

I'm sure there are things you like - perhaps you like to take play guitar and have a really nice Gibson sitting in your studio; think of how silly it would sound if I told you to sell that gibson and buy a $100 guitar at Guitar Center.
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Re: Am I on the right track?

Postby feh » Fri May 31, 2013 1:11 pm

CityOfAngels wrote:Hi guys, sorry I haven't replied to all posts. The car I was looking into was a 2009-2011 BMW M3 Coupe. I'm now thinking perhaps getting a 2012 BMW 328i Sedan for ~$35-$40k instead.


That's still much, much more than you should be spending on a vehicle.

You have a choice to make - live well within your means and retire early and wealthy, or spend money now on things you don't need.
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Re: Am I on the right track?

Postby Hector » Fri May 31, 2013 1:22 pm

feh wrote:
CityOfAngels wrote:Hi guys, sorry I haven't replied to all posts. The car I was looking into was a 2009-2011 BMW M3 Coupe. I'm now thinking perhaps getting a 2012 BMW 328i Sedan for ~$35-$40k instead.


That's still much, much more than you should be spending on a vehicle.

You have a choice to make - live well within your means and retire early and wealthy, or spend money now on things you don't need.


Give kid a break. I bet that he will still be in top 5% for his age even after buying this car as far as net worth is concerned
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Re: Am I on the right track?

Postby fatlittlepig » Fri May 31, 2013 1:25 pm

The whole point is that this guy posted with a tone of voice that he was doing well etc. I'm just offering some perspective that he may not be doing as well as he thinks. My salary may or may not be 3-4x higher but yet I drive a old Camry, actually it's a pretty fun car to drive. Feels like a luxury car.


playtothebeat wrote:fatlittlepig:
While I don't argue that someone who's 23 should have a safe, reliable, and affordable car, I'm also of the believe that you can't just sacrifice everything for the sake of saving for your retirement. (by the way, the civic coupe only got 4 stars in safety tests; just saying...)

For someone who is clearly interested in cars, I don't think buying a honda civic is sound advice - he simply won't enjoy it. I do think buying a $50k car is outrageous for someone his age; having said that, there's a middle ground between a civic and a an M3.

I'm sure there are things you like - perhaps you like to take play guitar and have a really nice Gibson sitting in your studio; think of how silly it would sound if I told you to sell that gibson and buy a $100 guitar at Guitar Center.
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Re: Am I on the right track?

Postby MindBogler » Fri May 31, 2013 1:26 pm

fatlittlepig wrote:you refused to let your wife consider two great and affordable, reliable cars? makes sense to me


[personal attack removed by Mod]
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Re: Am I on the right track?

Postby feh » Fri May 31, 2013 1:28 pm

Hector wrote:
Give kid a break. I bet that he will still be in top 5% for his age even after buying this car as far as net worth is concerned


He asked for advice. I offered mine.

Twenty three years old and ready to spend $50K on a car? That's not only a bad idea, but I fear an indication of his approach toward money management. Best to get in the groove when young, rather than trying to catch up later.
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Re: Am I on the right track?

Postby fatlittlepig » Fri May 31, 2013 2:41 pm

the beauty of the internet is the ability to offer unvarnished, anonymous advice to those who ask for it. i'm a petulant dude what can i say.

MindBogler wrote:
fatlittlepig wrote:you refused to let your wife consider two great and affordable, reliable cars? makes sense to me

[Personal attack removed by Mod].
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Re: Am I on the right track?

Postby Bacchus01 » Fri May 31, 2013 2:58 pm

I make about 4 X what you make.

I drive a 12-year old BMW that has 110K miles on the odometer.

No way would I buy a $50K depreciating asset if I were you. A very nice, sporty car can be had for less than $30K. Look for a low-mileage Porsche 911 (non-turbo) in the 2000-2004 range. You'll find them for $25K and they'll hold their value well. They look modern enough and are a blast to drive.

As for a $7K watch. Seriously? You think that was a good investment? I don't even wear a watch. If you are in the valley, I'm amazed anyone wears a watch.

You're making good money for your age, and are saving some of it (that's good) but you are also spending at an alarming rate. If you want to be an accumulator of wealth, step back and do a little more research. You could be a millionaire by 30. Or you could end up with a nice car, great watch, a lot of debt, and $100K in investments. You decide.
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Re: Am I on the right track?

Postby Bacchus01 » Fri May 31, 2013 3:03 pm

CityOfAngels wrote:
StormShadow wrote:
CityOfAngels wrote:Hi guys, sorry I haven't replied to all posts. The car I was looking into was a 2009-2011 BMW M3 Coupe. I'm now thinking perhaps getting a 2012 BMW 328i Sedan for ~$35-$40k instead.

I'm not a fan of the current F30 model 3-series. Frankly, I think its a little ugly. But to each his own.

I'd rather get an 2011 E90 model 3-series with the same engine. Or look for an M3. Current model has been out since 2007.


I was looking for the M3. My #1 choice right now is the 2009-2011 E92 M3 Coupe. They're $45-55k right now. I figure I can get a decent 2012 328i sedan for $35-40k, but I might as well spend $5k more to have something I'll enjoy more.



You should be able to get a very nice 2010-2011 3-series with low mileage (sub 25K) with lots of options for under $30K.
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Re: Am I on the right track?

Postby Mel Lindauer » Fri May 31, 2013 3:56 pm

This thread has run it's course and we're getting snarly responses. This thread is locked.
Best Regards - Mel | | Semper Fi
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