how much car can we afford?

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johussman
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how much car can we afford?

Post by johussman » Sun Aug 12, 2018 10:10 am

mid 30s
300k total comp
net worth ~ 1.1M
assets in taxable accounts: ~ 650k

PFInterest
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Re: how much car can we afford?

Post by PFInterest » Sun Aug 12, 2018 10:12 am

really, you dont even say what you are looking at?
why is this a serious question?

you can afford a used Civic.

H-Town
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Re: how much car can we afford?

Post by H-Town » Sun Aug 12, 2018 10:13 am

how much car do you need? maybe 15-22k for a reliable and reasonable vehicle.

how much car can you afford? maybe 10% of your annual net pay?

how much car do you want? that's the question for you.

johussman
Posts: 29
Joined: Sun Jul 29, 2018 4:18 pm

Re: how much car can we afford?

Post by johussman » Sun Aug 12, 2018 10:13 am

PFInterest wrote:
Sun Aug 12, 2018 10:12 am
really, you dont even say what you are looking at?
why is this a serious question?

you can afford a used Civic.
I'm looking at a BMW 3 series certified pre owned about 40k with 8k miles on it

Jags4186
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Re: how much car can we afford?

Post by Jags4186 » Sun Aug 12, 2018 10:15 am

Looks like you can buy pretty much anything you want. Share pictures! Although I would just say that I think the new Accords are much nicer than the current gen 3-series.

msk
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Re: how much car can we afford?

Post by msk » Sun Aug 12, 2018 10:17 am

My rule-of-thumb for the past 50 years: all the family cars together should not be worth more than 6 months family income. Leasing or paying cash is not very material. I baulked at splurging on a Rolls Royce Phantom because of the terror I would have whenever and wherever I parked it :oops:

student
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Re: how much car can we afford?

Post by student » Sun Aug 12, 2018 10:20 am

You can afford a $40,000 car on a $300,000 compensation.

The Wizard
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Location: Reading, MA

Re: how much car can we afford?

Post by The Wizard » Sun Aug 12, 2018 10:20 am

We, meaning a couple, should probably have two cars, with staggered purchase dates.
Maybe every four years buy new and keep for eight years. Depends on how many miles per year you drive.

Allocate up to 10% of income for car purchase, so $30/year x four years equals $120k in cash to buy the next new car with.
But I personally wouldn't spend that much (on a Tesla, for example) unless I was FI.
I'd try to stay with something in the $60k to $80k range, or less if you want to play the Frugal card...
Attempted new signature...

livesoft
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Re: how much car can we afford?

Post by livesoft » Sun Aug 12, 2018 10:23 am

johussman wrote:
Sun Aug 12, 2018 10:13 am
PFInterest wrote:
Sun Aug 12, 2018 10:12 am
really, you dont even say what you are looking at?
why is this a serious question?

you can afford a used Civic.
I'm looking at a BMW 3 series certified pre owned about 40k with 8k miles on it
Buying that car means that you will not be able to afford other things that you might want.
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The Wizard
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Re: how much car can we afford?

Post by The Wizard » Sun Aug 12, 2018 10:25 am

livesoft wrote:
Sun Aug 12, 2018 10:23 am
johussman wrote:
Sun Aug 12, 2018 10:13 am
PFInterest wrote:
Sun Aug 12, 2018 10:12 am
really, you dont even say what you are looking at?
why is this a serious question?

you can afford a used Civic.
I'm looking at a BMW 3 series certified pre owned about 40k with 8k miles on it
Buying that car means that you will not be able to afford other things that you might want.
"Will" is a rather strong assertion to make, methinks...
Attempted new signature...

johussman
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Re: how much car can we afford?

Post by johussman » Sun Aug 12, 2018 10:32 am

livesoft wrote:
Sun Aug 12, 2018 10:23 am
johussman wrote:
Sun Aug 12, 2018 10:13 am
PFInterest wrote:
Sun Aug 12, 2018 10:12 am
really, you dont even say what you are looking at?
why is this a serious question?

you can afford a used Civic.
I'm looking at a BMW 3 series certified pre owned about 40k with 8k miles on it
Buying that car means that you will not be able to afford other things that you might want.
sounds like you do not think i can afford this.

ResearchMed
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Re: how much car can we afford?

Post by ResearchMed » Sun Aug 12, 2018 10:34 am

livesoft wrote:
Sun Aug 12, 2018 10:23 am
johussman wrote:
Sun Aug 12, 2018 10:13 am
PFInterest wrote:
Sun Aug 12, 2018 10:12 am
really, you dont even say what you are looking at?
why is this a serious question?

you can afford a used Civic.
I'm looking at a BMW 3 series certified pre owned about 40k with 8k miles on it
Buying that car means that you will not be able to afford other things that you might want.
Buying *anything* means - for most of us*, anyway - that we can't buy "something else".
That's just the way it works.

Some people prefer to spend their money on a car/cars.
Others prefer eating out a lot.
Others prefer travel (that would be "us" :happy ).
Etc...

* OTOH, folks like Gates/Bezos/etc., would have actual difficulty spending it all.

RM
This signature is a placebo. You are in the control group.

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GoldStar
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Re: how much car can we afford?

Post by GoldStar » Sun Aug 12, 2018 10:36 am

Jags4186 wrote:
Sun Aug 12, 2018 10:15 am
Looks like you can buy pretty much anything you want. Share pictures! Although I would just say that I think the new Accords are much nicer than the current gen 3-series.
Unless maybe if he/she has 10 children and a $900K mortgage and $100K in credit card debt.

SevenBridgesRoad
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Re: how much car can we afford?

Post by SevenBridgesRoad » Sun Aug 12, 2018 10:44 am

The world seems to be divided into car people and non car people. I have friends who truly get enjoyment out of their sexier cars. I know others who insist on driving old pickups until they rust out and die (the truck, not the owner). In my case, I value high-reliability (I hate the whole car failing thing and sitting at the mechanic's shop), safety, and really I hate getting used to a new car. So I tend to buy mid-priced Japanese SUVs and hang on them them longer. We recently traded in our older, reliable Mazda CX9 and bought a new Subaru Outback because the new safety technology is significantly better. (Sensor tech and AI in late model cars has gone crazy good.) Our safety-value outweighed our hate-getting-used-to-a-new-car value.

So, within reason, it's probably not a ratio of income or net worth type of answer. It's more what you value.
There are stars in the Southern sky | And if ever you decide | You should go | There is a taste of time sweetened honey | Down the Seven Bridges Road

HEDGEFUNDIE
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Re: how much car can we afford?

Post by HEDGEFUNDIE » Sun Aug 12, 2018 10:52 am

Honestly BH should just ban these types of threads. It’s pretty much just trolling.

“I have $XM in net worth, can I afford [insert moderately priced item they can obviously afford].”

LadyGeek what do ya say?

sambb
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Re: how much car can we afford?

Post by sambb » Sun Aug 12, 2018 10:53 am

TO the OP, i would spend 30-65k on a car. Great work.

Spirit Rider
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Re: how much car can we afford?

Post by Spirit Rider » Sun Aug 12, 2018 10:53 am

The correct way to look at this is as a budget item. Your total amortized vehicle costs (amortized cash up front + financed cost - ending value) should not exceed 5% - 10% of your budget.

The actual purchase price is then dependent on how often you change vehicles. If you trade up every four years vs. every eight years then obviously you can only afford a less expensive vehicle.

The purchase price in isolation is not a good metric to use.

ResearchMed
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Re: how much car can we afford?

Post by ResearchMed » Sun Aug 12, 2018 10:59 am

Spirit Rider wrote:
Sun Aug 12, 2018 10:53 am
The correct way to look at this is as a budget item. Your total amortized vehicle costs (amortized cash up front + financed cost - ending value) should not exceed 5% - 10% of your budget.

The actual purchase price is then dependent on how often you change vehicles. If you trade up every four years vs. every eight years then obviously you can only afford a less expensive vehicle.

The purchase price in isolation is not a good metric to use.
"5-10% of budget" can mean very different things to those at different ends of the income spectrum, so "rules" like this aren't particularly helpful.

At some income levels, 5-10% wouldn't be missed (although it certainly might mean "not purchasing a few other things"), whereas at other income levels, it could mean choosing between food and rent.

RM
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KlangFool
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Re: how much car can we afford?

Post by KlangFool » Sun Aug 12, 2018 11:01 am

OP,

What is the price of your house? How much of your net worth is tied to the house?

KlangFool

Spirit Rider
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Re: how much car can we afford?

Post by Spirit Rider » Sun Aug 12, 2018 11:05 am

Quibble all you want, but the purchase price in isolation is not a good metric to determine what you can afford.

I know people who buy a new car every two years or myself who goes 10 years+. There is a big difference in affordability.

johussman
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Re: how much car can we afford?

Post by johussman » Sun Aug 12, 2018 11:19 am

KlangFool wrote:
Sun Aug 12, 2018 11:01 am
OP,

What is the price of your house? How much of your net worth is tied to the house?

KlangFool

Do you want the current market value or the price we paid for it?

ResearchMed
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Re: how much car can we afford?

Post by ResearchMed » Sun Aug 12, 2018 11:25 am

johussman wrote:
Sun Aug 12, 2018 10:10 am
mid 30s
300k total comp
net worth ~ 1.1M
assets in taxable accounts: ~ 650k
How about asking *yourself* what you think you can "afford", based upon not only your assets and income, but also on your general spending patterns and desires for other things/experiences?

Obviously you probably have (or "can have") considerably discretionary funds.

RM
This signature is a placebo. You are in the control group.

47Percent
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Re: how much car can we afford?

Post by 47Percent » Sun Aug 12, 2018 11:31 am

johussman wrote:
Sun Aug 12, 2018 10:10 am
mid 30s
300k total comp
net worth ~ 1.1M
assets in taxable accounts: ~ 650k
Wrong question -- at least in this forum.

The question ought to be ==> "What is the least car I can live with"?

KlangFool
Posts: 9917
Joined: Sat Oct 11, 2008 12:35 pm

Re: how much car can we afford?

Post by KlangFool » Sun Aug 12, 2018 11:34 am

johussman wrote:
Sun Aug 12, 2018 11:19 am
KlangFool wrote:
Sun Aug 12, 2018 11:01 am
OP,

What is the price of your house? How much of your net worth is tied to the house?

KlangFool

Do you want the current market value or the price we paid for it?
The price that you pay for and your mortgage.

KlangFool

johussman
Posts: 29
Joined: Sun Jul 29, 2018 4:18 pm

Re: how much car can we afford?

Post by johussman » Sun Aug 12, 2018 11:40 am

KlangFool wrote:
Sun Aug 12, 2018 11:34 am
johussman wrote:
Sun Aug 12, 2018 11:19 am
KlangFool wrote:
Sun Aug 12, 2018 11:01 am
OP,

What is the price of your house? How much of your net worth is tied to the house?

KlangFool

Do you want the current market value or the price we paid for it?
The price that you pay for and your mortgage.

KlangFool
we paid 880k 1.5 years ago (current value according to redfin.com 1M)
we owe 600k on it.
interest rate = 3.6% 30 year fixed

I actually didn't realize the value went up so much (just checked now first time in a long time) so our net worth is actually 1.2M using the 1M valuation of the house.

Roughly 400k of our net worth is from home equity or 33%

KlangFool
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Re: how much car can we afford?

Post by KlangFool » Sun Aug 12, 2018 12:22 pm

johussman wrote:
Sun Aug 12, 2018 11:40 am
KlangFool wrote:
Sun Aug 12, 2018 11:34 am
johussman wrote:
Sun Aug 12, 2018 11:19 am
KlangFool wrote:
Sun Aug 12, 2018 11:01 am
OP,

What is the price of your house? How much of your net worth is tied to the house?

KlangFool

Do you want the current market value or the price we paid for it?
The price that you pay for and your mortgage.

KlangFool
we paid 880k 1.5 years ago (current value according to redfin.com 1M)
we owe 600k on it.
interest rate = 3.6% 30 year fixed

I actually didn't realize the value went up so much (just checked now first time in a long time) so our net worth is actually 1.2M using the 1M valuation of the house.

Roughly 400k of our net worth is from home equity or 33%
OP,

1) So, your net worth excluding the house is 800K. It is less than the price of the house that you pay and the current value of your house.

2) Do you save enough to reach your financial goal?

3) Can you save enough to reach your financial goal after spending X on a car?

Those are the questions that only you can answer.

KlangFool

Ervin
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Re: how much car can we afford?

Post by Ervin » Sun Aug 12, 2018 12:38 pm

47Percent wrote:
Sun Aug 12, 2018 11:31 am
johussman wrote:
Sun Aug 12, 2018 10:10 am
mid 30s
300k total comp
net worth ~ 1.1M
assets in taxable accounts: ~ 650k
Wrong question -- at least in this forum. over

The question ought to be ==> "What is the least car I can live with"?
+100. A car is a liability, not an asset, hence the cheaper the better. There is a reason the IRS deducts 54 cents/mile for business expenses (i.e. $6500 over the 12,000 miles the average person drives a year), and it's not generosity.

I personally drive a car that cost less than 1% of our net worth when we bought it.
Last edited by Ervin on Sun Aug 12, 2018 12:40 pm, edited 2 times in total.

johussman
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Re: how much car can we afford?

Post by johussman » Sun Aug 12, 2018 12:39 pm

KlangFool wrote:
Sun Aug 12, 2018 12:22 pm
1) So, your net worth excluding the house is 800K. It is less than the price of the house that you pay and the current value of your house.
What point are you trying to make here?

runner3081
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Re: how much car can we afford?

Post by runner3081 » Sun Aug 12, 2018 12:40 pm

johussman wrote:
Sun Aug 12, 2018 10:13 am
PFInterest wrote:
Sun Aug 12, 2018 10:12 am
really, you dont even say what you are looking at?
why is this a serious question?

you can afford a used Civic.
I'm looking at a BMW 3 series certified pre owned about 40k with 8k miles on it
If you do that, don't buy the worthless 328i or the horrific 320i. Those are grocery getters. No need to pay a premium for a grocery getter!

KlangFool
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Joined: Sat Oct 11, 2008 12:35 pm

Re: how much car can we afford?

Post by KlangFool » Sun Aug 12, 2018 1:12 pm

johussman wrote:
Sun Aug 12, 2018 12:39 pm
KlangFool wrote:
Sun Aug 12, 2018 12:22 pm
1) So, your net worth excluding the house is 800K. It is less than the price of the house that you pay and the current value of your house.
What point are you trying to make here?
johussman,

Most of your net worth is tied to the house. The house value is 1 million. Your net worth excluding the house is 800K. If the house's value drops to 500K, you are worth only 700K. If the house value goes up to 1.5 million, you are worth 1.7 million. Most of your money is tied up with the house. It could be a good thing or a bad thing.

If you take away the house, you are not doing as well as you think.

KlangFool

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HomerJ
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Re: how much car can we afford?

Post by HomerJ » Sun Aug 12, 2018 1:21 pm

You almost never should buy all the way up to what you can afford. You should get that phrase out of your head. Salesmen LOVE to use that phrase, to get you starting at the top when making a purchase.

Start at the bottom of what you need, and maybe ease up a bit as you get older and richer.

OP, what are your expenses? How much you saving each year? You seem to be doing very well, based on your age.

You can probably justify a $40k car, if your other expenses are reasonable. Just note, that's probably your new bottom line for cars. You won't ever want to go lower than than going forward. And maybe your spouse will want something nicer too.

Note, pay cash for it. If you can't pay cash, you can't afford it.

And will it really make you happier?
Last edited by HomerJ on Sun Aug 12, 2018 1:22 pm, edited 1 time in total.
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johussman
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Re: how much car can we afford?

Post by johussman » Sun Aug 12, 2018 1:21 pm

KlangFool wrote:
Sun Aug 12, 2018 1:12 pm
johussman wrote:
Sun Aug 12, 2018 12:39 pm
KlangFool wrote:
Sun Aug 12, 2018 12:22 pm
1) So, your net worth excluding the house is 800K. It is less than the price of the house that you pay and the current value of your house.
What point are you trying to make here?
johussman,

Most of your net worth is tied to the house. The house value is 1 million. Your net worth excluding the house is 800K. If the house's value drops to 500K, you are worth only 700K. If the house value goes up to 1.5 million, you are worth 1.7 million. Most of your money is tied up with the house. It could be a good thing or a bad thing.

If you take away the house, you are not doing as well as you think.

KlangFool
A value drop in our house of 50% would be an extreme event. The fact that we will still have a 700k net worth even if this happens is pretty comforting! Was your example supposed to make me concerned?

If i took away the house, my net worth would be exactly what it is today with the house. If we sold the house we'd still have a net worth of 1.2M.

edge
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Location: Great Falls VA

Re: how much car can we afford?

Post by edge » Sun Aug 12, 2018 1:23 pm

What does net mean here? Let's say he pays 100k in taxes so his net is 200k. He can only afford a 20k car? Or are you saying he can afford 20k in lease or car payments per year?
thangngo wrote:
Sun Aug 12, 2018 10:13 am
how much car do you need? maybe 15-22k for a reliable and reasonable vehicle.

how much car can you afford? maybe 10% of your annual net pay?

how much car do you want? that's the question for you.

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Watty
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Re: how much car can we afford?

Post by Watty » Sun Aug 12, 2018 2:45 pm

If you are married then you should more or less double your car purchase numbers since your spouse will likely end up with a car that costs a similar amount.

A lot of decisions like this is really about the "opportunity cost" (Google this) on what you spend of the car. If you bought something like a new $25K Camry instead you would have $15K that you could do something else with like going on several vacations over the next few years.

From what you have said you can afford it but the big question is what you will give up if you buy the BMW.

H-Town
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Re: how much car can we afford?

Post by H-Town » Sun Aug 12, 2018 3:00 pm

edge wrote:
Sun Aug 12, 2018 1:23 pm
What does net mean here? Let's say he pays 100k in taxes so his net is 200k. He can only afford a 20k car? Or are you saying he can afford 20k in lease or car payments per year?
thangngo wrote:
Sun Aug 12, 2018 10:13 am
how much car do you need? maybe 15-22k for a reliable and reasonable vehicle.

how much car can you afford? maybe 10% of your annual net pay?

how much car do you want? that's the question for you.
That's exactly what net means. If he spends more than 10% net pay, then he'll have to dial back savings, mortgage, traveling, education, charitable givings, food & dining, etc. Something gotta gives. Don't let it be your saving rate though.

sambb
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Re: how much car can we afford?

Post by sambb » Sun Aug 12, 2018 3:28 pm

Interesting that one has to make about 300k to afford a 20k car - a midlevel civic. This board is very interesting when it comes to cars.

ResearchMed
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Re: how much car can we afford?

Post by ResearchMed » Sun Aug 12, 2018 3:31 pm

sambb wrote:
Sun Aug 12, 2018 3:28 pm
Interesting that one has to make about 300k to afford a 20k car - a midlevel civic. This board is very interesting when it comes to cars.

Indeed!

:confused

And many other things as well.

RM
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gator15
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Re: how much car can we afford?

Post by gator15 » Sun Aug 12, 2018 3:40 pm

With your income and net worth I would be comfortable spending no more than $55k. The BMW you want is certainly within that range.

T4REngineer
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Re: how much car can we afford?

Post by T4REngineer » Sun Aug 12, 2018 3:42 pm

sambb wrote:
Sun Aug 12, 2018 3:28 pm
Interesting that one has to make about 300k to afford a 20k car - a midlevel civic. This board is very interesting when it comes to cars.
X2.... but they get no value or enjoyment out of their transportation and we can not fault them for that just as they can not fault us for spending far more on a car then they would. Both sides generally agree that as along as you are saving enough to reach your other goals and you would rather spend your money on X ( car ) vs. Y, its a fine choice.

OP, FWIW I have much less income (180) a bit lower savings (550) but much lower net-worth (our home was 1/4 the cost) and the combined value of our 2 cars was 90k - worth it to us but I doubt many here have driven Top of the World in Moab, the mining roads in the San Juans or the forest trails in the Midwest so for us it has been just as much about the experiences with them then the daily drives (which are short!) .....and that 90k does not count the thousands of DIY work I have put in to make them "ours" - Money I will never get back! :D

livesoft
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Re: how much car can we afford?

Post by livesoft » Sun Aug 12, 2018 3:50 pm

I wonder what kind of cars the OP drives right now?
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randomguy
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Re: how much car can we afford?

Post by randomguy » Sun Aug 12, 2018 3:56 pm

ResearchMed wrote:
Sun Aug 12, 2018 10:34 am
livesoft wrote:
Sun Aug 12, 2018 10:23 am
johussman wrote:
Sun Aug 12, 2018 10:13 am
PFInterest wrote:
Sun Aug 12, 2018 10:12 am
really, you dont even say what you are looking at?
why is this a serious question?

you can afford a used Civic.
I'm looking at a BMW 3 series certified pre owned about 40k with 8k miles on it
Buying that car means that you will not be able to afford other things that you might want.
Buying *anything* means - for most of us*, anyway - that we can't buy "something else".
That's just the way it works.

Some people prefer to spend their money on a car/cars.
Others prefer eating out a lot.
Others prefer travel (that would be "us" :happy ).
Etc...

* OTOH, folks like Gates/Bezos/etc., would have actual difficulty spending it all.

RM
Bah it is easy to blow through 50 billion or so. Between buying the yankees, giants, and have some modest art work(you know monets, van goughs, da vincis, and the like) so that each room in my modest 20 bedroom house can be decorated, you are are alread up to like 10 billion. Sponser some vanity space programs and you can burn through cash in a heart beat.

But yes that is the basic summation of all these discussions. Pretty much everyone asking these questions can afford the item. They just have to decide if it is worth it or not and if they would rather do their consumption now or in 30 years.

blastoff
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Re: how much car can we afford?

Post by blastoff » Sun Aug 12, 2018 4:04 pm

Assuming you save a good amount per year (maybe you inherited 3 million and spend more than you make!) AND would like the car (you're not just an indifferent car person trying to fit in) then buy it.

You can easily afford.

ResearchMed
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Re: how much car can we afford?

Post by ResearchMed » Sun Aug 12, 2018 4:08 pm

randomguy wrote:
Sun Aug 12, 2018 3:56 pm
ResearchMed wrote:
Sun Aug 12, 2018 10:34 am
livesoft wrote:
Sun Aug 12, 2018 10:23 am
johussman wrote:
Sun Aug 12, 2018 10:13 am
PFInterest wrote:
Sun Aug 12, 2018 10:12 am
really, you dont even say what you are looking at?
why is this a serious question?

you can afford a used Civic.
I'm looking at a BMW 3 series certified pre owned about 40k with 8k miles on it
Buying that car means that you will not be able to afford other things that you might want.
Buying *anything* means - for most of us*, anyway - that we can't buy "something else".
That's just the way it works.

Some people prefer to spend their money on a car/cars.
Others prefer eating out a lot.
Others prefer travel (that would be "us" :happy ).
Etc...

* OTOH, folks like Gates/Bezos/etc., would have actual difficulty spending it all.

RM
Bah it is easy to blow through 50 billion or so. Between buying the yankees, giants, and have some modest art work(you know monets, van goughs, da vincis, and the like) so that each room in my modest 20 bedroom house can be decorated, you are are alread up to like 10 billion. Sponser some vanity space programs and you can burn through cash in a heart beat.

But yes that is the basic summation of all these discussions. Pretty much everyone asking these questions can afford the item. They just have to decide if it is worth it or not and if they would rather do their consumption now or in 30 years.
It's more than just that (the odd $50B aside, of course).

Many (most?) of us here DO have discretionary spending money, even with appropriate retirement/etc., savings.
It's the *choice* that matters... more spent on the house, less for cars; more spent on cars, less for vacations or furniture; etc.

However, there certainly does seem to be a sub-group of BH's that find that almost anything beyond the necessities (and the most basic of those, too) is of the "there is no reason to ..." type of expenditure.

And this seems to be the case for that subgroup even if "budget" is NOT a factor.
It sometimes seems like some Puritan ethic, like "no dancing or singing allowed".

I certainly "get it" when there is a serious concern that buying the "X" (or a certain priced "X") will indeed jeopardize other finances, current or future.

But - dare I write it - IF someone wants a luxury watch (or engagement ring?), it's a "no no", regardless of financial standing.

<donning flameproof attire>

RM
This signature is a placebo. You are in the control group.

User avatar
Toons
Posts: 12922
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: how much car can we afford?

Post by Toons » Sun Aug 12, 2018 4:10 pm

You know what you can afford.
Purchase it.
Enjoy
:mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

smitcat
Posts: 1739
Joined: Mon Nov 07, 2016 10:51 am

Re: how much car can we afford?

Post by smitcat » Sun Aug 12, 2018 4:38 pm

KlangFool wrote:
Sun Aug 12, 2018 1:12 pm
johussman wrote:
Sun Aug 12, 2018 12:39 pm
KlangFool wrote:
Sun Aug 12, 2018 12:22 pm
1) So, your net worth excluding the house is 800K. It is less than the price of the house that you pay and the current value of your house.
What point are you trying to make here?
johussman,

Most of your net worth is tied to the house. The house value is 1 million. Your net worth excluding the house is 800K. If the house's value drops to 500K, you are worth only 700K. If the house value goes up to 1.5 million, you are worth 1.7 million. Most of your money is tied up with the house. It could be a good thing or a bad thing.

If you take away the house, you are not doing as well as you think.

KlangFool
He is mid 30's - he is doing great.

smitcat
Posts: 1739
Joined: Mon Nov 07, 2016 10:51 am

Re: how much car can we afford?

Post by smitcat » Sun Aug 12, 2018 4:39 pm

Toons wrote:
Sun Aug 12, 2018 4:10 pm
You know what you can afford.
Purchase it.
Enjoy
:mrgreen:
Yes - agreed.

KlangFool
Posts: 9917
Joined: Sat Oct 11, 2008 12:35 pm

Re: how much car can we afford?

Post by KlangFool » Sun Aug 12, 2018 4:41 pm

smitcat wrote:
Sun Aug 12, 2018 4:38 pm
KlangFool wrote:
Sun Aug 12, 2018 1:12 pm
johussman wrote:
Sun Aug 12, 2018 12:39 pm
KlangFool wrote:
Sun Aug 12, 2018 12:22 pm
1) So, your net worth excluding the house is 800K. It is less than the price of the house that you pay and the current value of your house.
What point are you trying to make here?
johussman,

Most of your net worth is tied to the house. The house value is 1 million. Your net worth excluding the house is 800K. If the house's value drops to 500K, you are worth only 700K. If the house value goes up to 1.5 million, you are worth 1.7 million. Most of your money is tied up with the house. It could be a good thing or a bad thing.

If you take away the house, you are not doing as well as you think.

KlangFool
He is mid 30's - he is doing great.
smitcat,

Almost everyone in the 30s believes that they would be fully-employed all the way until retirement age. And, they will not be affected by the economic crisis, recession, change in the industry and so on. That was my belief too.

KlangFool

smitcat
Posts: 1739
Joined: Mon Nov 07, 2016 10:51 am

Re: how much car can we afford?

Post by smitcat » Sun Aug 12, 2018 4:56 pm

KlangFool wrote:
Sun Aug 12, 2018 4:41 pm
smitcat wrote:
Sun Aug 12, 2018 4:38 pm
KlangFool wrote:
Sun Aug 12, 2018 1:12 pm
johussman wrote:
Sun Aug 12, 2018 12:39 pm
KlangFool wrote:
Sun Aug 12, 2018 12:22 pm
1) So, your net worth excluding the house is 800K. It is less than the price of the house that you pay and the current value of your house.
What point are you trying to make here?
johussman,

Most of your net worth is tied to the house. The house value is 1 million. Your net worth excluding the house is 800K. If the house's value drops to 500K, you are worth only 700K. If the house value goes up to 1.5 million, you are worth 1.7 million. Most of your money is tied up with the house. It could be a good thing or a bad thing.

If you take away the house, you are not doing as well as you think.

KlangFool
He is mid 30's - he is doing great.
smitcat,

Almost everyone in the 30s believes that they would be fully-employed all the way until retirement age. And, they will not be affected by the economic crisis, recession, change in the industry and so on. That was my belief too.

KlangFool
I do not see how your thoughts are relevant…
- The OP saved over $300K for the home purchase
- OP has $650K saved in taxable
- Current income of $300K
In their mid 30's they are likely doing better that most folks on this board. They are young and flexible and in demand and they will be best served to have more of an offensive outlook on life.

ThePrince
Posts: 337
Joined: Sun Aug 20, 2017 9:15 pm
Location: U.S.A.

Re: how much car can we afford?

Post by ThePrince » Sun Aug 12, 2018 5:06 pm

Ervin wrote:
Sun Aug 12, 2018 12:38 pm
47Percent wrote:
Sun Aug 12, 2018 11:31 am
johussman wrote:
Sun Aug 12, 2018 10:10 am
mid 30s
300k total comp
net worth ~ 1.1M
assets in taxable accounts: ~ 650k
Wrong question -- at least in this forum. over

The question ought to be ==> "What is the least car I can live with"?
+100. A car is a liability, not an asset, hence the cheaper the better. There is a reason the IRS deducts 54 cents/mile for business expenses (i.e. $6500 over the 12,000 miles the average person drives a year), and it's not generosity.

I personally drive a car that cost less than 1% of our net worth when we bought it.
+1

User avatar
HomerJ
Posts: 11564
Joined: Fri Jun 06, 2008 12:50 pm

Re: how much car can we afford?

Post by HomerJ » Sun Aug 12, 2018 5:07 pm

randomguy wrote:
Sun Aug 12, 2018 3:56 pm
Bah it is easy to blow through 50 billion or so. Between buying the yankees, giants
Ugh... why would one spend money on NY teams??

Oh wait, I get it. Buy them, then disband them! Brilliant!
The J stands for Jay

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