[Another] How much to spend on a car/what to get thread

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
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Philip_Marlowe
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[Another] How much to spend on a car/what to get thread

Post by Philip_Marlowe » Wed May 15, 2019 5:22 pm

I always find the advice I get on here useful for putting things into perspective and helping me think about what I actually care about. I'm four years out from graduating law school (actually exactly 4 years out today) and have managed to pay off my law school loans and build up a pretty nice nest egg in the last few years by being aggressively frugal. Now that loans are paid off I'm still trying to figure out the right balance between saving and enjoying my income.

My old car crapped out this week and after taking it in to the shop I found out that it needs more work than its worth. With the exception of buying a car for my wife last year I've never purchased a vehicle and since I thought I'd get a few more years out of this one I haven't put much thought into what I want/how much I should spend.

Some background/additional detail:
  • Age: Early 30s
  • Kids: None at the moment but likely in the next year or two
  • Household Income: Roughly $400k (I'm in biglaw and DW is an educator). This includes a year end bonus. Monthly take home is just over $14k after taxes, 401k, medical, etc.
  • Future income: Difficult to predict. If I stay in biglaw my salary will continue increasing significantly every year. If I leave I'd be looking at roughly $200k best case scenario. DW's income (she makes roughly $60k) is stable but we aren't sure if she will want to take time off after we have kids.
  • Assets: Roughly $500k ($250k retirement, $50k cash and $200k rental)
  • Debts: $70k on the rental (2% - intrafamily loan) and a $13k student loan (0.0%). No consumer or auto debt.
  • Fixed expenses include: $3.5k/month on the rental and $3.3k on housing (rent and utilities)
I've driven the same old car forever and now that it's finally time to get a new one I'm being really tempted by the siren song of a used or CPO low end luxury car (think 3 or 5 series BMW or a Lexus IS350). I am however very sensitive to lifestyle inflation. Talking to friends and family I'm getting recommendations that fall clearly into two camps, work friends all tell me to get a low end luxury car and friends from outside of the law all tell me to get a Subaru or another Toyota.

What is a reasonable amount to spend? Any suggestions on how to approach this/how to think through what to get?

LFS1234
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Re: [Another] How much to spend on a car/what to get thread

Post by LFS1234 » Wed May 15, 2019 5:34 pm

Depending on the nature of your current and prospective future clientele, what you drive may matter.

Suggest you give extra weight to the views of your co-workers, in particular to those who are a few years ahead of you.

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Kenkat
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Re: [Another] How much to spend on a car/what to get thread

Post by Kenkat » Wed May 15, 2019 5:41 pm

$400k in income? Get whatever you want. If you are really tempted by a low end luxury car, get that. It’s still pretty frugal for your situation.

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Cycle
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Re: [Another] How much to spend on a car/what to get thread

Post by Cycle » Wed May 15, 2019 5:50 pm

My wife and I have $300k income. Mid-30s, NW 1.5MM. We have a 2011 CRV worth $6000.

You can afford 33% more, so I'd get a 2013 CRV worth $8000.

adamthesmythe
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Re: [Another] How much to spend on a car/what to get thread

Post by adamthesmythe » Wed May 15, 2019 6:00 pm

You can afford what you want. Maybe drive a few of the options to find out if the luxury car is enough better.

Last time I drove a new 3 series BMW I decided it wasn't enough better than a Toyota.

smitcat
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Re: [Another] How much to spend on a car/what to get thread

Post by smitcat » Wed May 15, 2019 7:04 pm

Mr Marlowe,
You are doing extremely well, you've made may good decisions in the past ,you know your likes and limits like no one else>
Why ask a bunch of strange folks on the internet what is best for you?

SVT
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Re: [Another] How much to spend on a car/what to get thread

Post by SVT » Wed May 15, 2019 7:38 pm

smitcat wrote:
Wed May 15, 2019 7:04 pm
Mr Marlowe,
You are doing extremely well, you've made may good decisions in the past ,you know your likes and limits like no one else>
Why ask a bunch of strange folks on the internet what is best for you?
I guess because:
I always find the advice I get on here useful for putting things into perspective and helping me think about what I actually care about.

SVT
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Re: [Another] How much to spend on a car/what to get thread

Post by SVT » Wed May 15, 2019 7:40 pm

I agree with driving the different options you're considering and decide if a luxury car seems worth the price to you.

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Sandtrap
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Re: [Another] How much to spend on a car/what to get thread

Post by Sandtrap » Wed May 15, 2019 7:42 pm

Toyota/Lexus SUV . . . . loaded. :happy

tim1999
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Re: [Another] How much to spend on a car/what to get thread

Post by tim1999 » Wed May 15, 2019 7:46 pm

If I had the OP's income (and probably long work hours), the last thing I would want to be wasting time on is messing around with trying to keep an old clunker running enough to get me to work on time and back home daily. I would want something newer that is more likely to be problem-free. Even if you want to be frugal, just get a new base model Corolla or something.

sport
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Re: [Another] How much to spend on a car/what to get thread

Post by sport » Wed May 15, 2019 7:54 pm

If you want frugal luxury, take a look at a Camry XLE with all the options. It is a very nice car without paying for an upscale nameplate.

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Re: [Another] How much to spend on a car/what to get thread

Post by Jack FFR1846 » Wed May 15, 2019 7:57 pm

Porsche 911 GT-3. Arnie on LA Law had a 911.
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jackholloway
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Re: [Another] How much to spend on a car/what to get thread

Post by jackholloway » Wed May 15, 2019 8:20 pm

I make a fair amount, and have test driven accords, Teslas, Volvos,Lexi, and Toyotas.

For me, the Accord hit the sweet spot of comfort and zippiness. For a family member, the Camry’s living-room-on-wheels feel worked better. The Volvo has the nicest seats I have ever sat in, but the dealers annoyed me to the point where I was not willing to deal. The BMW I tried left me cold, and I did not see enough in the Lexus to be worth the differential cost.

A friend, on the other hand, found every one of those “dull dull dull oh god they are all dull”. He came down to deciding between one of the performance Teslas, the MZB, and an Audi. He spent notably more on his car than we did on our last four cars combined, but it was where he got joy. Me, I got joy out of a kitchen remodel with the money I did not spend on the car.

Try both the Honda/Toyota, their upscale badges, and a few luxury cars. You will quickly figure out what matters to you.

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Watty
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Re: [Another] How much to spend on a car/what to get thread

Post by Watty » Wed May 15, 2019 8:23 pm

Philip_Marlowe wrote:
Wed May 15, 2019 5:22 pm
Debts: $70k on the rental (2% - intrafamily loan)
I would be cautious about buying an expensive car before paying off a family loan like this.

People are funny about money.

Philip_Marlowe wrote:
Wed May 15, 2019 5:22 pm

Assets: Roughly $500k ....

Any suggestions on how to approach this....
It sounds like you have a net worth of around $500K so if you buy a $50K car you would be putting 10% of your net worth into the car.

You have great income but you are not as rich as you think.

Save the luxury car for when you have a higher net worth.
Philip_Marlowe wrote:
Wed May 15, 2019 5:22 pm
Kids: None at the moment but likely in the next year or two
Be sure to get a car that you can put car seats in.

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Nate79
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Re: [Another] How much to spend on a car/what to get thread

Post by Nate79 » Wed May 15, 2019 9:27 pm

$14k/month after tax income seems extremely low. Are you sure?

I would not buy an expensive car, maybe no more than $35k, pay cash, and then pay off your debt asap. With your income should be easy. Build up your net worth over the next few years to >$1m then upgrade if you want to a luxury car. Lifestyle creep is very dangerous and you have only been making the big bucks for a few years.

bluebolt
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Re: [Another] How much to spend on a car/what to get thread

Post by bluebolt » Thu May 16, 2019 5:31 am

Nate79 wrote:
Wed May 15, 2019 9:27 pm
$14k/month after tax income seems extremely low. Are you sure?

I would not buy an expensive car, maybe no more than $35k, pay cash, and then pay off your debt asap. With your income should be easy. Build up your net worth over the next few years to >$1m then upgrade if you want to a luxury car. Lifestyle creep is very dangerous and you have only been making the big bucks for a few years.
I'm assuming the take home seeming low is because the bonus is large and not included in that figure.

I think you're thinking about this rationally. No reason not to get a 3 year old luxury or near-luxury car if that's what you want. Appreciate the sensitivity to lifestyle inflation, but buying a $20-30K used luxury car is well within your budget. Especially if you plan on keeping it for many years. The real lifestyle creep comes in if you start feeling the need to replace your car every 2-3 years.

My guideline is that I need to be able to pay cash for any car and not impact my savings goals. As long as that's true, I still may take out a loan if the rate is good enough.

spitty
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Re: [Another] How much to spend on a car/what to get thread

Post by spitty » Thu May 16, 2019 6:45 am

OP you sound very frugal and probably want an 8-10 yr keeper which rules out the fancy German cars. They're expensive upfront and can be painful $$ out of warranty. Plus it's a lot to have tied up in a car; you'll always worry about where you park and especially the bump-head who doesn't respect your nice car at all! I've driven a 2018 Accord 2.0 Touring for a year now and it checks all the boxes: fuel efficient, peppy, handles well, great MMI and very comfortable seats. Plus it was less than $35k. You can afford new if buying in this price range so I would. I had a new Rav4 rental recently..the seats were not comfortable, it was noisy and MMI was just OK. I keep wondering when some car maker will get smart and offer a $3000 18-way seat upgrade to any buyer who wants it. Oh, and look at the Genesis brand; I sat in a new one and it was very nice.
@HelpingRhinos...1 rhino poached every 8 hours in 2017...501(c)(3)

smitcat
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Re: [Another] How much to spend on a car/what to get thread

Post by smitcat » Thu May 16, 2019 7:22 am

Nate79 wrote:
Wed May 15, 2019 9:27 pm
$14k/month after tax income seems extremely low. Are you sure?

I would not buy an expensive car, maybe no more than $35k, pay cash, and then pay off your debt asap. With your income should be easy. Build up your net worth over the next few years to >$1m then upgrade if you want to a luxury car. Lifestyle creep is very dangerous and you have only been making the big bucks for a few years.
"$14k/month after tax income seems extremely low. Are you sure?"

The OP said this...
Monthly take home is just over $14k after taxes, 401k, medical, etc.

BanquetBeer
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Re: [Another] How much to spend on a car/what to get thread

Post by BanquetBeer » Thu May 16, 2019 7:41 am

Any reason to get a lux car? (Clients as listed above) but if you never drive anyone around and it’s just on you...

Fancy cars are nice but IMO isn’t worth spending top dollar on early in career/savings. If you decide to quit big law in 5 years will probably regret the money spent. If you stay it probably won’t matter.

The fact you are asking questions tells me you aren’t a gung-ho car guy. If no work needs to impress I’d get a decent non-lux brand and keep it for 10 years. Then consider an upgrade when time value of money is less.

Many of our friends have fancy cars and a fair % of them have had significant repair costs (even a cracked windshield runs like $1k). Depends what you truly value - possessions or people. I’d rather have less things and more time with the people I love. That’s how I’m structuring my life, with high income you can afford to have a nice balance of both.

smitcat
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Re: [Another] How much to spend on a car/what to get thread

Post by smitcat » Thu May 16, 2019 7:43 am

SVT wrote:
Wed May 15, 2019 7:38 pm
smitcat wrote:
Wed May 15, 2019 7:04 pm
Mr Marlowe,
You are doing extremely well, you've made may good decisions in the past ,you know your likes and limits like no one else>
Why ask a bunch of strange folks on the internet what is best for you?
I guess because:
I always find the advice I get on here useful for putting things into perspective and helping me think about what I actually care about.
yeah - I guess that is the answer.
It just never occurred to me that someone else may be able to measurably help me with what my personal likes may or may not be.

Ed_Sandwich
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Re: [Another] How much to spend on a car/what to get thread

Post by Ed_Sandwich » Thu May 16, 2019 7:55 am

Philip_Marlowe wrote:
Wed May 15, 2019 5:22 pm
My old car crapped out this week and after taking it in to the shop I found out that it needs more work than its worth.
Just a sidebar, but just because the repairs cost more than the car is currently worth doesn't necessarily mean it is a bad deal. The cost of repairs should really be compared against the cost of a new vehicle, not the current one. Cars are financial leeches and the only concrete thing they provide the owner is miles, really. The goal should be to milk as many miles as you can out of the least expensive (yet satisfactory and safe) car you can. If your current car meets your needs, it can certainly be worth it to repair it.

As noted above, however, the car you drive might matter from a business standpoint as a lawyer. And also you can afford whatever you want, so everything above is moot in your particular case.

researcher
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Re: [Another] How much to spend on a car/what to get thread

Post by researcher » Thu May 16, 2019 7:55 am

sport wrote:
Wed May 15, 2019 7:54 pm
If you want frugal luxury, take a look at a Camry XLE with all the options. It is a very nice car without paying for an upscale nameplate.
Is this a joke?

I wouldn't touch a Camry with a 10 ft pole with such far superior alternatives like the new Mazda 6 or Honda Accord.

https://www.caranddriver.com/mazda/mazda-6


https://www.caranddriver.com/honda/accord

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Re: [Another] How much to spend on a car/what to get thread

Post by Dottie57 » Thu May 16, 2019 7:56 am

sport wrote:
Wed May 15, 2019 7:54 pm
If you want frugal luxury, take a look at a Camry XLE with all the options. It is a very nice car without paying for an upscale nameplate.
I bought one of these last year. Love it. Get compliments on it. Roomy, comfortable.


How much do you drive in minutes and hours a week? Really think about whether your daily drive needs to impress. Clothes and personal presentation yes. Car - I can’t see it.

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lthenderson
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Re: [Another] How much to spend on a car/what to get thread

Post by lthenderson » Thu May 16, 2019 7:57 am

Philip_Marlowe wrote:
Wed May 15, 2019 5:22 pm
My old car crapped out this week and after taking it in to the shop I found out that it needs more work than its worth.
Not trying to dissuade you from purchasing a new car, but just because a car needs more than its worth in repairs doesn't mean it is crapped out. One should look at it as cost of repairs compared to expected life before something else happens. If the repairs can make the nearly depreciated car road worthy for years to come, you are probably money ahead versus the depreciation of a new vehicle.

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Re: [Another] How much to spend on a car/what to get thread

Post by FI4LIFE » Thu May 16, 2019 8:05 am

bluebolt wrote:
Thu May 16, 2019 5:31 am
Nate79 wrote:
Wed May 15, 2019 9:27 pm
$14k/month after tax income seems extremely low. Are you sure?

I would not buy an expensive car, maybe no more than $35k, pay cash, and then pay off your debt asap. With your income should be easy. Build up your net worth over the next few years to >$1m then upgrade if you want to a luxury car. Lifestyle creep is very dangerous and you have only been making the big bucks for a few years.
I'm assuming the take home seeming low is because the bonus is large and not included in that figure.

I think you're thinking about this rationally. No reason not to get a 3 year old luxury or near-luxury car if that's what you want. Appreciate the sensitivity to lifestyle inflation, but buying a $20-30K used luxury car is well within your budget. Especially if you plan on keeping it for many years. The real lifestyle creep comes in if you start feeling the need to replace your car every 2-3 years.

My guideline is that I need to be able to pay cash for any car and not impact my savings goals. As long as that's true, I still may take out a loan if the rate is good enough.
+1

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Re: [Another] How much to spend on a car/what to get thread

Post by bob60014 » Thu May 16, 2019 8:13 am

You mention no kids now but possible in the next year or two. How would the luxury car fit into this?

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Re: [Another] How much to spend on a car/what to get thread

Post by mmmodem » Thu May 16, 2019 8:23 am

You, like the GM of my previous work place can afford to buy just about any vehicle. He is also extremely frugal and was not shy about preaching the value of the dollar to the rest of us.

Before he was GM, he actually bought a beater from one of the people who worked for him. Once he was promoted to GM and started driving customers and vendors to lunch, he upgraded to a CPO Acura. He now represented the company so had to make a better impression. He kept it well over 10 years and replaced it with a CPO Lexus.

I'd spend about $30k and get the CPO IS350 if I were you. It's more reliable than a BMW. It'll be the same cost as a new Camry or Subaru so it won't be much lifestyle creep. Unless colleagues ask, they won't know you didn't buy it new.

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Re: [Another] How much to spend on a car/what to get thread

Post by sport » Thu May 16, 2019 9:53 am

researcher wrote:
Thu May 16, 2019 7:55 am
sport wrote:
Wed May 15, 2019 7:54 pm
If you want frugal luxury, take a look at a Camry XLE with all the options. It is a very nice car without paying for an upscale nameplate.
Is this a joke?

I wouldn't touch a Camry with a 10 ft pole with such far superior alternatives like the new Mazda 6 or Honda Accord.

https://www.caranddriver.com/mazda/mazda-6


https://www.caranddriver.com/honda/accord
It certainly is NOT a joke. I have owned a number of Camry's and have been happy with all of them. I cannot say the same for the one Mazda I owned. The quality did not measure up to the level of a Toyota. I consider Car and Driver evaluations to be questionable. They take advertising from the manufacturers, so they have an inherent conflict of interest when evaluating cars. You may feel that a Camry is a "joke", and you are entitled to your opinion. However, the Camry has been one of the biggest selling cars in the USA for years, so there are many people who disagree with you.

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