How much car can i afford

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stt816
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How much car can i afford

Post by stt816 » Sat Dec 07, 2019 5:28 pm

Hi I've had the same car since 2012. I'm 28 years old... While its a great car and never gave me problems, I want something new (to me) can be used

I've always been a "car guy" and it's what makes me happy. I'm not trying to impress others I just truly love them. I was wondering what I can afford comfortably. My car could get traded in for around 15k.

Checkings-24k
Emergency-10k
Taxable Stocks-70k
Roth IRA-9k
401k-20k

Saving around 10-12k per year into roth/401k

I also bought a multi family home (120k down) and I rent my unit. My "rent" is 700 per month. Besides that, no debt.
Last edited by stt816 on Tue Dec 17, 2019 1:38 pm, edited 2 times in total.

Gill
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Re: How much car can i afford

Post by Gill » Sat Dec 07, 2019 5:31 pm

I think the car you can afford is the one you have. Hang on to it if it's been good to you.
Gill
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Topic Author
stt816
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Re: How much car can i afford

Post by stt816 » Sat Dec 07, 2019 5:32 pm

Gill while this is the "right" answer, I was wondering what I could afford. If i was just going by reliability and bang for the buck i'd probably have a used civic

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climber2020
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Re: How much car can i afford

Post by climber2020 » Sat Dec 07, 2019 5:40 pm

Take your income and subtract all your mandatory expenses. Whatever you have left over is what you can afford.

So the 10 to 12k per year you save in your Roth and 401k, plus whatever you save each year in individual stocks and your checking account. You can take all that money and buy the most expensive car that will fit whatever monthly payment that turns out to be.

7eight9
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Re: How much car can i afford

Post by 7eight9 » Sat Dec 07, 2019 5:47 pm

You can't afford not to buy a Mercede AMG E63. Modify it, find a couple of friends to go along for the ride and go for it ...

One of the auto world’s craziest and most sought-after records, the Cannonball Run has been broken. The infamous New-York-to-Los-Angeles run that has been the obsession of a subculture of gear heads for more than 50 years now has a new record time, and it was broken by three guys — Arne Toman, Doug Tabbutt, and Berkeley Chadwick — who managed to accomplish the run while driving a heavily modified 2015 Mercedes-AMG E 63, doing so in a staggering time of 27 hours and 25 minutes. That time eclipsed the previous record of 30 hours that was set only six years ago.

https://www.topspeed.com/cars/car-news/ ... 87214.html
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RickBoglehead
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Re: How much car can i afford

Post by RickBoglehead » Sat Dec 07, 2019 5:54 pm

Why do you have $24k in checking?

You can afford debt of 35% of income. Figure out a loan payment that meets that and work backwards.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

supalong52
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Re: How much car can i afford

Post by supalong52 » Sat Dec 07, 2019 6:05 pm

Under a 10% rule, you could afford a $8,800 car. Buying it would mean almost no savings in a year, adjusted for taxes. I would just keep what you have.

runner3081
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Re: How much car can i afford

Post by runner3081 » Sat Dec 07, 2019 6:09 pm

Another vote for keeping what you have.

If you must, nothing over 10k.

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stt816
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Re: How much car can i afford

Post by stt816 » Sat Dec 07, 2019 6:12 pm

10k added on to my trade in?

student
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Re: How much car can i afford

Post by student » Sat Dec 07, 2019 6:26 pm

My rule of thumb is no more than 33% of annual salary.

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stt816
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Re: How much car can i afford

Post by stt816 » Sat Dec 07, 2019 6:27 pm

student wrote:
Sat Dec 07, 2019 6:26 pm
My rule of thumb is 33% of annual salary.
On top of trade in or just total worth of new car you’re buying

student
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Re: How much car can i afford

Post by student » Sat Dec 07, 2019 6:28 pm

stt816 wrote:
Sat Dec 07, 2019 6:27 pm
student wrote:
Sat Dec 07, 2019 6:26 pm
My rule of thumb is 33% of annual salary.
On top of trade in or just total worth of new car you’re buying
Total worth of the new car.

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Watty
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Re: How much car can i afford

Post by Watty » Sat Dec 07, 2019 6:55 pm

stt816 wrote:
Sat Dec 07, 2019 5:28 pm
I've always been a "car guy" and it's what makes me happy. I'm not trying to impress others I just truly love them. I was wondering what I can afford comfortably. My car could get traded in for around 15k.
You are asking the wrong question. You should be asking what the least amount is that you could spend for car that would satisfy your wants.

In addition you the purchase price you also need to consider the total cost of ownership since the maintenance and insurance can add up for any sort of performance car. Be sure to get a quote on car insurance before you buy any cars so you don't run into any surprises.

I am not a "car guy" by any stretch of the imagination but when threads like this come up the Mazda Miata is often mentioned as a sporty car that is affordable and fun.

It would not be the type of car that I would buy for myself but you could get a new one for less than $30K if you did not get a high end one. It would have a warranty and you could likely keep it for ten years without a lot of expensive maintenance so while it would be a splurge it would not be likely to be a money pit.

I don't know if you would save enough by buying one that was a few years old to make buying a used one worthwhile.

The Miata would of course not be like a higher end BMW or Porsche but buying an older used car with a brand like that could easily turn into a money pit. You can wait until you are older and more financially secure to buy brands like that

canadianbacon
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Re: How much car can i afford

Post by canadianbacon » Sat Dec 07, 2019 6:56 pm

I try to keep my car value to 2.5% or less of my networth... that's obviously difficult when you are younger / have less, but the goal is to limit the ability of the car (and ongoing related costs) to prevent your money from working for you.

Topic Author
stt816
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Re: How much car can i afford

Post by stt816 » Sat Dec 07, 2019 6:58 pm

I just saw that dave ramsey recommends 50% of your salary in anything that has an engine in it

so if you make 100k a year 50k in one car or 25k each for 2 cars

Am i getting that right? Does he mean before taxes or after?

Trader Joe
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Re: How much car can i afford

Post by Trader Joe » Sat Dec 07, 2019 7:12 pm

stt816 wrote:
Sat Dec 07, 2019 5:28 pm
Hi I've had the same car since 2012. I'm 28 years old... While its a great car and never gave me problems, I want something new (to me) can be used

I've always been a "car guy" and it's what makes me happy. I'm not trying to impress others I just truly love them. I was wondering what I can afford comfortably. My car could get traded in for around 15k.

Salary-88k
Checkings-24k
Emergency-10k
Individual Stocks-70k
Roth IRA-9k
401k-20k

Saving around 10-12k per year into roth/401k

I also bought a multi family home (120k down) and I rent my unit. My "rent" is 700 per month. Besides that, no debt.
I would say that the maximum that you can afford is about $9,000.

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stt816
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Re: How much car can i afford

Post by stt816 » Sat Dec 07, 2019 7:19 pm

on top of my trade in? Either way that would be 15-24k and much less than what dave ramsey suggests with the 50% rule wondering where thats coming from

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RickBoglehead
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Re: How much car can i afford

Post by RickBoglehead » Sat Dec 07, 2019 7:22 pm

If you're looking around the internet for rules to justify you doing what you want to do, save yourself the time and just do what you want. Dave Ramsey's rule, if true, is pretty ridiculous.

And any rule would ignore sunk cost, i.e. the trade in value. That's just common sense.

https://www.wellsfargo.com/goals-credit ... nding-dti/
Last edited by RickBoglehead on Sat Dec 07, 2019 8:04 pm, edited 1 time in total.
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HEDGEFUNDIE
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Re: How much car can i afford

Post by HEDGEFUNDIE » Sat Dec 07, 2019 7:24 pm

stt816 wrote:
Sat Dec 07, 2019 6:58 pm
I just saw that dave ramsey recommends 50% of your salary in anything that has an engine in it

so if you make 100k a year 50k in one car or 25k each for 2 cars

Am i getting that right? Does he mean before taxes or after?
The average new car purchase price in the US is $36k, and the median household income is $63k, so I’d say that’s a decent rule of thumb.

stoptothink
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Re: How much car can i afford

Post by stoptothink » Sat Dec 07, 2019 7:24 pm

stt816 wrote:
Sat Dec 07, 2019 7:19 pm
on top of my trade in? Either way that would be 15-24k and much less than what dave ramsey suggests with the 50% rule wondering where thats coming from
You're not going to get the answer you want. Whether you can "afford it" is irrelevant because you already have your mind made up.

sad2
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Re: How much car can i afford

Post by sad2 » Sat Dec 07, 2019 7:27 pm

This rule may not work for one early in one's career and is, I admit, overly conservative.

I use the following metrics.

.1% of net worth for a road bike
1% of net worth for a car (all-in purchase price as if paying cash)
10% of net worth for a house (all in-purchase price as if paying cash)
Last edited by sad2 on Sat Dec 07, 2019 7:31 pm, edited 1 time in total.

HEDGEFUNDIE
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Re: How much car can i afford

Post by HEDGEFUNDIE » Sat Dec 07, 2019 7:29 pm

sad2 wrote:
Sat Dec 07, 2019 7:27 pm
This rule may not work for one early in one's career and is, I admit, overly conservative.

I use the following metrics.

.1% of networth for a road bike
1% of networth for a car (all-in purchase price as if paying cash)
10% of networth for a house (all in-purchase price as if paying cash)
So if I had $1M net worth I can only afford a $10k car and a $100k house?

Bogleheads getting to the point of parody....

sad2
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Re: How much car can i afford

Post by sad2 » Sat Dec 07, 2019 7:30 pm

It appears your net worth is $133k.

So $1,330 is what you can afford.

Again, I admit it does not always work for one early in one's career.

I guess my point is that you need to keep your current car!

EnjoyIt
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Re: How much car can i afford

Post by EnjoyIt » Sat Dec 07, 2019 7:31 pm

One can always find ways to spend more for a car so when you ask what is the most you can afford, everyone’s ears perk up. The most you can afford is not stop saving for retirement and be car poor which I’m sure is not your goal.

Here is how I would answer your question and it is with a more questions.

What are your financial goals? Are you at a reasonable trajectory at nearing those goals? How would that change if you spent some extra money on a car? How much extra could you spend without severely negatively impacting those goals?

On a completely other note, but something that jumps out at me is that most of your wealth is tied up in individual stocks. Why? Why not index funds?

7eight9
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Re: How much car can i afford

Post by 7eight9 » Sat Dec 07, 2019 7:38 pm

HEDGEFUNDIE wrote:
Sat Dec 07, 2019 7:29 pm
sad2 wrote:
Sat Dec 07, 2019 7:27 pm
This rule may not work for one early in one's career and is, I admit, overly conservative.

I use the following metrics.

.1% of networth for a road bike
1% of networth for a car (all-in purchase price as if paying cash)
10% of networth for a house (all in-purchase price as if paying cash)
So if I had $1M net worth I can only afford a $10k car and a $100k house?

Bogleheads getting to the point of parody....
Beyond parody. I guess I had better start walking.

Get real. 1% for a car? I guess nobody drives until they are millionaire. And nobody buys a new car until they are a multi-millionaire. Not at all realistic. Most Americans need a car to get to work. They can't wait until they are millionaires to buy transportation.
I guess it all could be much worse. | They could be warming up my hearse.

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stt816
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Re: How much car can i afford

Post by stt816 » Sat Dec 07, 2019 7:44 pm

sad2 wrote:
Sat Dec 07, 2019 7:30 pm
It appears your net worth is $133k.

So $1,330 is what you can afford.

Again, I admit it does not always work for one early in one's career.

I guess my point is that you need to keep your current car!

133+ around 140k into house

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stt816
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Re: How much car can i afford

Post by stt816 » Sat Dec 07, 2019 7:45 pm

EnjoyIt wrote:
Sat Dec 07, 2019 7:31 pm
One can always find ways to spend more for a car so when you ask what is the most you can afford, everyone’s ears perk up. The most you can afford is not stop saving for retirement and be car poor which I’m sure is not your goal.

Here is how I would answer your question and it is with a more questions.

What are your financial goals? Are you at a reasonable trajectory at nearing those goals? How would that change if you spent some extra money on a car? How much extra could you spend without severely negatively impacting those goals?

On a completely other note, but something that jumps out at me is that most of your wealth is tied up in individual stocks. Why? Why not index funds?
sorry I didnt mean to say individual I meant to say taxable stocks, they are index

surfstar
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Re: How much car can i afford

Post by surfstar » Sat Dec 07, 2019 7:47 pm

A 2012 worth $15k as a "trade in" - that sounds like it was an expensive vehicle to purchase!
Luxury or performance car and/or low miles?

Anyways, max your tax deferred retirement accounts and Roth, then see what you can afford.

sad2
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Re: How much car can i afford

Post by sad2 » Sat Dec 07, 2019 7:49 pm

stt816 wrote:
Sat Dec 07, 2019 7:44 pm
sad2 wrote:
Sat Dec 07, 2019 7:30 pm
It appears your net worth is $133k.

So $1,330 is what you can afford.

Again, I admit it does not always work for one early in one's career.

I guess my point is that you need to keep your current car!

133+ around 140k into house
I forgot to include the equity in your house.
That would increase it to $273,000. Which is an excellent net worth at your age.
Wait a few years until you hit $500k in net worth and re-evaluate.

I understand the impulse to upgrade your car. Defer gratification for a few years. Your future self will thank you.

Ron Ronnerson
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Re: How much car can i afford

Post by Ron Ronnerson » Sat Dec 07, 2019 7:50 pm

I think you’re looking at this question in a strange way. There isn’t one correct number based on income or how much you have saved or some other benchmark. You have to take a step back and look at the big picture. If a nice(r) car is a priority to you, you can make room in your budget and your life for it. Some people like to eat out at restaurants often, others like international travel, and some prefer cars. Keeping expenses low in one category can allow greater expenditure in another. Life is about trade-offs and there is nothing wrong with prioritizing cars over other things just as long as you are making your choices with eyes wide open and are not being irresponsible with your spending.

Personally, I would keep your current car if I were you. However, I’m not you and maybe you’re willing to make certain trade-offs that I would not choose. Expensive cars can be worth it to some people.

The question I’d ask if I were you is: What are you willing to give up for a nicer car? The more expensive it is, the more you’ll need to give up in exchange for it. For example, a nice car might mean skipping vacations and eating out at restaurants for a while. A really nice car might mean no restaurants or vacations along with delaying retirement and getting a second job. A super-duper nice car might mean all that plus living in a small house with lots of roommates and not having children as they can be expensive.

Whatever the choice is, it shouldn’t be judged as good or bad by others. As long as it works for you in the life you would like to lead, it’s fine. The crucial thing is taking the trade-offs into careful consideration before making your purchase decisions. This is not only for cars but for anything.

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stt816
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Re: How much car can i afford

Post by stt816 » Sat Dec 07, 2019 7:54 pm

sad2 wrote:
Sat Dec 07, 2019 7:49 pm
stt816 wrote:
Sat Dec 07, 2019 7:44 pm
sad2 wrote:
Sat Dec 07, 2019 7:30 pm
It appears your net worth is $133k.

So $1,330 is what you can afford.

Again, I admit it does not always work for one early in one's career.

I guess my point is that you need to keep your current car!

133+ around 140k into house
I forgot to include the equity in your house.
That would increase it to $273,000. Which is an excellent net worth at your age.
Wait a few years until you hit $500k in net worth and re-evaluate.

I understand the impulse to upgrade your car. Defer gratification for a few years. Your future self will thank you.

I actually just added everything up the other day and smiled, I'm proud of myself for my age. Thank you
:sharebeer

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Brianmcg321
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Re: How much car can i afford

Post by Brianmcg321 » Sat Dec 07, 2019 7:55 pm

You can afford 24k.
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Goal33
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Re: How much car can i afford

Post by Goal33 » Sat Dec 07, 2019 7:57 pm

You might want to start with stating what you’re currently thinking about buying. You can probably “afford” a 100k car...

At 700k networth and 270k income I went for a car that was 30k max out the door. Wouldn’t feel comfortable spending more at that time. I could have easily spent 100k though.
A man with one watch always knows what time it is; a man with two watches is never sure.

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stt816
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Re: How much car can i afford

Post by stt816 » Sat Dec 07, 2019 8:01 pm

Goal33 wrote:
Sat Dec 07, 2019 7:57 pm
You might want to start with stating what you’re currently thinking about buying. You can probably “afford” a 100k car...

At 700k networth and 270k income I went for a car that was 30k max out the door. Wouldn’t feel comfortable spending more at that time. I could have easily spent 100k though.
I was thinking something in the 30-40k range,used. Under 50k miles. With a trade in of 15k, that would put me in the 15-25k id have to put into it. I'd do this with cash

mdavis6890
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Re: How much car can i afford

Post by mdavis6890 » Sat Dec 07, 2019 8:23 pm

Dave Ramsey's advice is geared generally to toward middle America folks with modest salaries and other major/minor debt problems. He also has to provide clear, blanket rules to everybody, with no nuance to it. I'm not criticizing - this is just what his market and scale (1:Millions) requires. He doesn't distinguish much in these rules between pre/post tax, but who cares. His market generally doesn't pay much/any tax anyway. And it's really about the spirit of staying out of debt entirely and sleeping well at night. This would put you at a max of 44k total for all things with engines/motors. But that's just him, and he doesn't get too much love on these Boglehead forums :-)

Bogleheads think about things differently than this and you'll get a whole lot of varied advice. You got a 1% rule in prior comments, but I think this percentage base doesn't apply well across a range of wealth. I think the range of car values is much smaller and lower than the range of incomes. FWIW, our cars add up to about 1% of our net worth, but that's pure coincidence. I only just thought about that now, it's never been part of my consideration. I have driven far less expensive cars with multiples of your income and net worth, but that doesn't mean you have to.

Based on the numbers you gave, I think owning a car worth $15k is pretty good, but really anywhere in the $10k-20k range would be fine, as long as you don't borrow any money to buy a car.

You just said you want a DIFFERENT car, not a more expensive one. Why not just go pick out an car you want in the 10-20k range and buy it with cash, then sell the car you have? Under no circumstances borrow any money to buy a car, ever.

Or hey, if you want to go up in car and spend $30k on one, that's cool too. It won't cripple you. You have the money. Just don't borrow money to buy it. That's the main thing.

Good luck!

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stt816
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Re: How much car can i afford

Post by stt816 » Sat Dec 07, 2019 8:33 pm

mdavis6890 wrote:
Sat Dec 07, 2019 8:23 pm
Dave Ramsey's advice is geared generally to toward middle America folks with modest salaries and other major/minor debt problems. He also has to provide clear, blanket rules to everybody, with no nuance to it. I'm not criticizing - this is just what his market and scale (1:Millions) requires. He doesn't distinguish much in these rules between pre/post tax, but who cares. His market generally doesn't pay much/any tax anyway. And it's really about the spirit of staying out of debt entirely and sleeping well at night. This would put you at a max of 44k total for all things with engines/motors. But that's just him, and he doesn't get too much love on these Boglehead forums :-)

Bogleheads think about things differently than this and you'll get a whole lot of varied advice. You got a 1% rule in prior comments, but I think this percentage base doesn't apply well across a range of wealth. I think the range of car values is much smaller and lower than the range of incomes. FWIW, our cars add up to about 1% of our net worth, but that's pure coincidence. I only just thought about that now, it's never been part of my consideration. I have driven far less expensive cars with multiples of your income and net worth, but that doesn't mean you have to.

Based on the numbers you gave, I think owning a car worth $15k is pretty good, but really anywhere in the $10k-20k range would be fine, as long as you don't borrow any money to buy a car.

You just said you want a DIFFERENT car, not a more expensive one. Why not just go pick out an car you want in the 10-20k range and buy it with cash, then sell the car you have? Under no circumstances borrow any money to buy a car, ever.

Or hey, if you want to go up in car and spend $30k on one, that's cool too. It won't cripple you. You have the money. Just don't borrow money to buy it. That's the main thing.

Good luck!
Thank you. Here's the thing. I have a 2012 Camaro SS, fully loaded, 6 speed manual. Bought it new. I now know buying new isn't the best thing to do. Buying lightly used is, in my opinion. As far as performance goes its a great bang for the buck. The used car would also have to be under 50k miles or under 5 years old because i would want warranty still on it

Basically as a car enthusiast, I would want something with the same performance or better. There's no 10-20k range that I like, that also have modern technology in it.

Like some people have said in here. Some people spend money on expensive trips. That's not me. This is my expensive thing I like. Cars I'd be looking at that have good looks, modern technology, same or better performance than my current car are around 30-40k.

mortfree
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Re: How much car can i afford

Post by mortfree » Sat Dec 07, 2019 8:50 pm

stt816 wrote:
Sat Dec 07, 2019 5:28 pm

Salary-88k
Checkings-24k
Emergency-10k
Individual Stocks-70k
Roth IRA-9k
401k-20k

Saving around 10-12k per year into roth/401k
I like to keep my car payment around $300/month. Why bother paying cash if you can get a loan at 2% or so for 4 or 5 years? Not very boglehead of me but I save elsewhere.

Unsolicited advice: What is the interest rate in your checking and where is your EF held and at what rate? As someone mentioned earlier that could be too much in checking.

Depending on above, I would do an online money market like Ally or CapOne paying around 1.9-2%. I would have 10k in checking and 24k in money market.


Max for Roth is 6k. Max for 401k is 19k. Are you at least maxing the Roth? Strive to get closer to the max. Your future self will be glad you did.

mdavis6890
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Re: How much car can i afford

Post by mdavis6890 » Sat Dec 07, 2019 8:51 pm

If a car you enjoy costs $40k and you pay cash for it, then I endorse that plan. It's not going to kill you.

Good on you! Post a picture later!

Jags4186
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Re: How much car can i afford

Post by Jags4186 » Sat Dec 07, 2019 9:06 pm

I mean, you must have a pretty nice car if it is a model year 2012 and still worth $15,000 as a trade in as we are going into 2020. My 2016 Honda Civic is only worth about $9k-$10k as a trade in.

I’d hold onto your car or sell it and get another $15,000 car. You probably can get a much newer car thats a “lesser” model but my experience is that relatively new cars have standard much of the optional equipment of every 7 or 8 years ago.

There are a couple of 2017 Civic SIs in my area that are going for between $15,000 and $16,000. That might be a good option for you.

retire57
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Re: How much car can i afford

Post by retire57 » Sat Dec 07, 2019 9:10 pm

Pay cash, for sure. 15K trade-in + whatever amount you can write on a check that won't make you nauseous.

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stt816
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Re: How much car can i afford

Post by stt816 » Sat Dec 07, 2019 9:10 pm

Jags4186 wrote:
Sat Dec 07, 2019 9:06 pm
I mean, you must have a pretty nice car if it is a model year 2012 and still worth $15,000 as a trade in as we are going into 2020. My 2016 Honda Civic is only worth about $9k-$10k as a trade in.

I’d hold onto your car or sell it and get another $15,000 car. You probably can get a much newer car thats a “lesser” model but my experience is that relatively new cars have standard much of the optional equipment of every 7 or 8 years ago.

There are a couple of 2017 Civic SIs in my area that are going for between $15,000 and $16,000. That might be a good option for you.
No offense but a civic si would be a huge downgrade even if it’s a 2017

Jack FFR1846
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Re: How much car can i afford

Post by Jack FFR1846 » Sat Dec 07, 2019 9:18 pm

Work up to a Lamborghini?

Ed Bolian was the Cannonball record holder (also in a Mercedes). I've sort of figured out what he makes from various things he's said and I don't think it's more than you make. His retirement fund is in his cars. As a car guy, I can imagine it would be a chore to decide whether to take the 993 or the Scud or the Murci.

His garage tour: https://www.youtube.com/watch?v=UTKdngypf-M
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Jags4186
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Re: How much car can i afford

Post by Jags4186 » Sat Dec 07, 2019 9:18 pm

stt816 wrote:
Sat Dec 07, 2019 9:10 pm
Jags4186 wrote:
Sat Dec 07, 2019 9:06 pm
I mean, you must have a pretty nice car if it is a model year 2012 and still worth $15,000 as a trade in as we are going into 2020. My 2016 Honda Civic is only worth about $9k-$10k as a trade in.

I’d hold onto your car or sell it and get another $15,000 car. You probably can get a much newer car thats a “lesser” model but my experience is that relatively new cars have standard much of the optional equipment of every 7 or 8 years ago.

There are a couple of 2017 Civic SIs in my area that are going for between $15,000 and $16,000. That might be a good option for you.
No offense but a civic si would be a huge downgrade even if it’s a 2017
I’m not offended. I’m sure whatever you drive is a “nicer car”. Nothing is stopping you from going to get a $35k loan, plus your $15k trade in and going and buying a $50k car.

You asked what you can afford. I guess technically you can afford whatever the bank is willing to lend you. On this website, most folks will say you already have too much car, or at the very least just enough car.

Then of course you have the folks that think no matter the income you should be spending $100,000s on “safety” features.

Goal33
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Re: How much car can i afford

Post by Goal33 » Sat Dec 07, 2019 9:31 pm

stt816 wrote:
Sat Dec 07, 2019 8:01 pm
Goal33 wrote:
Sat Dec 07, 2019 7:57 pm
You might want to start with stating what you’re currently thinking about buying. You can probably “afford” a 100k car...

At 700k networth and 270k income I went for a car that was 30k max out the door. Wouldn’t feel comfortable spending more at that time. I could have easily spent 100k though.
I was thinking something in the 30-40k range,used. Under 50k miles. With a trade in of 15k, that would put me in the 15-25k id have to put into it. I'd do this with cash
I think you can afford what you’re looking at... seems reasonable enough. Personally, I wouldn’t do it with your profile, but I can see how you can justify it. Ultimately this is probably the wrong board for this question lol
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Sand101
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Re: How much car can i afford

Post by Sand101 » Sat Dec 07, 2019 9:38 pm

sad2 wrote:
Sat Dec 07, 2019 7:27 pm

.1% of net worth for a road bike
So you need 2M for a decent road bike? Heresy. Heck, at this point my bike is worth more than my car.

phxjcc
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Re: How much car can i afford

Post by phxjcc » Sat Dec 07, 2019 10:56 pm

Unfortunately with your situation you can only afford a 60 year old 4 cylinder import with over 500,000 miles.

Luckily one is available.

https://bringatrailer.com/listing/1958- ... peester-9/

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willthrill81
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Re: How much car can i afford

Post by willthrill81 » Sat Dec 07, 2019 11:01 pm

I think that you're tackling this from the wrong mindset. First, determine what your long-term goals are (e.g. retirement) and when you want to achieve them. Once you're saving and investing enough to meet those goals, then you can spend the remainder of your money as you see fit.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

EnjoyIt
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Re: How much car can i afford

Post by EnjoyIt » Sat Dec 07, 2019 11:08 pm

stt816 wrote:
Sat Dec 07, 2019 8:33 pm
mdavis6890 wrote:
Sat Dec 07, 2019 8:23 pm
Dave Ramsey's advice is geared generally to toward middle America folks with modest salaries and other major/minor debt problems. He also has to provide clear, blanket rules to everybody, with no nuance to it. I'm not criticizing - this is just what his market and scale (1:Millions) requires. He doesn't distinguish much in these rules between pre/post tax, but who cares. His market generally doesn't pay much/any tax anyway. And it's really about the spirit of staying out of debt entirely and sleeping well at night. This would put you at a max of 44k total for all things with engines/motors. But that's just him, and he doesn't get too much love on these Boglehead forums :-)

Bogleheads think about things differently than this and you'll get a whole lot of varied advice. You got a 1% rule in prior comments, but I think this percentage base doesn't apply well across a range of wealth. I think the range of car values is much smaller and lower than the range of incomes. FWIW, our cars add up to about 1% of our net worth, but that's pure coincidence. I only just thought about that now, it's never been part of my consideration. I have driven far less expensive cars with multiples of your income and net worth, but that doesn't mean you have to.

Based on the numbers you gave, I think owning a car worth $15k is pretty good, but really anywhere in the $10k-20k range would be fine, as long as you don't borrow any money to buy a car.

You just said you want a DIFFERENT car, not a more expensive one. Why not just go pick out an car you want in the 10-20k range and buy it with cash, then sell the car you have? Under no circumstances borrow any money to buy a car, ever.

Or hey, if you want to go up in car and spend $30k on one, that's cool too. It won't cripple you. You have the money. Just don't borrow money to buy it. That's the main thing.

Good luck!
Thank you. Here's the thing. I have a 2012 Camaro SS, fully loaded, 6 speed manual. Bought it new. I now know buying new isn't the best thing to do. Buying lightly used is, in my opinion. As far as performance goes its a great bang for the buck. The used car would also have to be under 50k miles or under 5 years old because i would want warranty still on it

Basically as a car enthusiast, I would want something with the same performance or better. There's no 10-20k range that I like, that also have modern technology in it.

Like some people have said in here. Some people spend money on expensive trips. That's not me. This is my expensive thing I like. Cars I'd be looking at that have good looks, modern technology, same or better performance than my current car are around 30-40k.
The advice up above is right on. I am a car guy as well, so I get the desire of wanting a nice car. I drive a nice car that is a 2013 and my plans is to keep driving it until the car is not so nice anymore. I did the same thing with my last nice car. To be honest, at your income you can afford to plop an extra $30k every 5-6 years on a new car or you can spend less and become rich. You need to decide what is more important to you.

Personally if I was in your situation I would drive that Camaro until repairs start becoming too expensive. I promise you that spending an extra $25k-$30k on something newer would make you happy for a few months until you got used to that new car and then you start looking for something faster. It becomes a never ending cycle which the auto industry wants you taking full part of. Even you admitted that you can not get a civic because it is a downgrade. You can only go up from here. This attitude is setting you up for failure.

So decide what is important to you. Save the cash and then buy the car. A good rule of thumb is to never take on debt for luxuries (home excluded) and a sports car is a luxury. You start thinking a little differently when you actually have to write a check for $40k-$45k

IMO
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Re: How much car can i afford

Post by IMO » Sat Dec 07, 2019 11:08 pm

Ron Ronnerson wrote:
Sat Dec 07, 2019 7:50 pm
I think you’re looking at this question in a strange way. There isn’t one correct number based on income or how much you have saved or some other benchmark. You have to take a step back and look at the big picture. If a nice(r) car is a priority to you, you can make room in your budget and your life for it. Some people like to eat out at restaurants often, others like international travel, and some prefer cars. Keeping expenses low in one category can allow greater expenditure in another. Life is about trade-offs and there is nothing wrong with prioritizing cars over other things just as long as you are making your choices with eyes wide open and are not being irresponsible with your spending.

Personally, I would keep your current car if I were you. However, I’m not you and maybe you’re willing to make certain trade-offs that I would not choose. Expensive cars can be worth it to some people.

The question I’d ask if I were you is: What are you willing to give up for a nicer car? The more expensive it is, the more you’ll need to give up in exchange for it. For example, a nice car might mean skipping vacations and eating out at restaurants for a while. A really nice car might mean no restaurants or vacations along with delaying retirement and getting a second job. A super-duper nice car might mean all that plus living in a small house with lots of roommates and not having children as they can be expensive.

Whatever the choice is, it shouldn’t be judged as good or bad by others. As long as it works for you in the life you would like to lead, it’s fine. The crucial thing is taking the trade-offs into careful consideration before making your purchase decisions. This is not only for cars but for anything.
Agree. Well stated advice.

fyre4ce
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Re: How much car can i afford

Post by fyre4ce » Sat Dec 07, 2019 11:17 pm

Keep the value of your car under 25% of your gross income. Otherwise the cost will hinder wealth-build too much.

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