I would not spend money that I don't have. Buy a cheap car for now, work 6 months, and see how things are going, and then buy it. What kind of job are you starting at $65k a year? That is some good money... I'm just hoping for mid 40's as an engineer next year.
Make it work for you.
20% year over year is a good thing.
Whatever you do don't put yourself into the cycle of debt as you will be by buying this car. Do the math. Fiscally you are in a bad spot by buying this car, you're debt to income ratio is too high.
repeat after me....
"I do not earn enough nor do I have the wealth to afford a 30K luxury automobile. I now earn a lower middle class wage but yearn for a champagne lifestyle. I don't want to not work when I'm 50."
you're all set.
-edit- quick story...one of my good friends making 60K a year came to me and said "spidey it sounds like a good deal, I can do it" and I said "no you can't, don't do it"
He has his acura and he just filed bankruptcy a few months ago. Good guy, but dumber than a box of bricks.
this is a good idea, but i disagree somewhat. Yes on the no-load mutual funds.
then take a finance course or 3, learn how to read stock charts, learn to understand market cycles, and hope you don't get unlucky with your analysis. Nobody's perfect, and you should make your own decisions with your money (if you have a broker that recomends stocks and gives you advice, make sure that every purchase and sale is still your decision)
To be honest, asking this question here is not a good way to find the answer.
Only you know your monthly expenses. What you need to do is sit down, and create a budget for yourself. If you have enough disposable income floating around after calculating your expenses, then go for it. If you want a nice car and can afford it, then do it. You only live once. Why wait until you're in your 50s/60s to enjoy life?
Only you know your monthly expenses. What you need to do is sit down, and create a budget for yourself. If you have enough disposable income floating around after calculating your expenses, then go for it. If you want a nice car and can afford it, then do it. You only live once. Why wait until you're in your 50s/60s to enjoy life?
I'll just give you my opinion:
I'm 21, just outta college, but will be married in August (she's graduating & working as well) and we've purchased our first home (not a fan of renting, personally). I've always been a very frugal person, not spending lots of stuff I don't honestly need.
But I love cars, I absolutely love vehicles in general, and I felt like going for it. I bought a brand new '05 Grand Cherokee Limited loaded to the hilt in Nov. '05 when they were pushing '05s off the lot to make room for '06s and got 14k off the sticker plus $2k over KBB value for my trade-in vehicle, so I went for it. Sure, new cars aren't a smart "financial" decision, but if you make sure your other finances are in order and you're willing to sacrifice video game spending or some other hobby in favor of your vehicle hobby, GO FOR IT!
There's just something about owning and driving a brand new vehicle that nothing else can match; the pleasure you can get from driving that new car really is incredible for vehicle lovers. For those who just see cars as a mode of transport, a new car isn't smart. For someone who loves every mile they drive in a new car, it's a great hobby to spend on.
I'm 21, just outta college, but will be married in August (she's graduating & working as well) and we've purchased our first home (not a fan of renting, personally). I've always been a very frugal person, not spending lots of stuff I don't honestly need.
But I love cars, I absolutely love vehicles in general, and I felt like going for it. I bought a brand new '05 Grand Cherokee Limited loaded to the hilt in Nov. '05 when they were pushing '05s off the lot to make room for '06s and got 14k off the sticker plus $2k over KBB value for my trade-in vehicle, so I went for it. Sure, new cars aren't a smart "financial" decision, but if you make sure your other finances are in order and you're willing to sacrifice video game spending or some other hobby in favor of your vehicle hobby, GO FOR IT!
There's just something about owning and driving a brand new vehicle that nothing else can match; the pleasure you can get from driving that new car really is incredible for vehicle lovers. For those who just see cars as a mode of transport, a new car isn't smart. For someone who loves every mile they drive in a new car, it's a great hobby to spend on.
Also, how in the world can i earn 20% on my investments consistently? That doesn't seem like a realistic figure.
Anyone know what the distribution of salaries are in the united states? What percentile would 65k/yr fall in?
Wow, 20%. Not even Harvard's endowment head could earn 20% net of fees. Perhaps 1-year gains, or maybe as much as 2-3 years, but over 20 years 20% is not going to happen, unless you have access to millions of dollars and are able to get into private equity. Anybody who says otherwise is just blowing smoke.
65k is pretty good money for a 22yr old.
65k is pretty good money for a 22yr old.
Sure I do, which is why I said it would be a perfect time to start saving for purchase in 2-4 years. If nothing else, it's a much more sound financial decision than wasting money on an entry level luxury car, guaranteed to lose 25-30% of its value after the first year.
I know plenty of people who were bitten in the late 80's and early 90's by the real estate market. Guess how the ones who did not over-leverage themselves are doing today?
My point is that saving for a house/apt as well as maxing 401K matching is a much wiser financial choice than purchasing an entry level luxury car, which was the OP's question.
Considering recent record low mortgage rates, ARMs were always a significant gamble. However, this could very well help the OP in 3-5 years when he is ready to buy.
All valid but this applies in no way to the OP current situation, other than to possibly make housing more affordable for him.
Seems to me that would be the perfect spot for the OP to purchase.
We are talking about a place to live, not where to park the rest of your savings for the rest of your life. You post fails to factor this in. IMO, saving to purchase your own place to live rather than rent and to deduct mortgage interest while building equity is one of the best early steps you can take in order to become truly financially independent later in life. I know some people coming up to retirement age who still rent an apartment. It's not an envious position to be in.
Exactly.
Gunslinger08
Lifer
- Nov 18, 2001
- 13,234
- 2
- 81
Buy it. I'm 22 (21 when I purchased) and I bought a 2006 Mustang GT about 4 months ago. 4 year loan = $700 payment, but it's not really difficult to make when you have no other expenses except for lunch, gas, insurance, and cell phone.
But in my case i'll be able to max my 401k, roth, and invest an additional 10k while still paying 500/mo for the TSX. That car will easily last me 10 years.
How on earth is $65k a year lower middle class? Unless ones3k has four kids and an ex-wife or two to pay for, he is starting very well for himself. Even in Massachusetts he is making an above average salary (we have one of the highest averages in the country).
I still think you should wait a few months. By the end of summer, you should have over 10k in your bank account. You would also be able to get a last year's model (if you don't want to go used, a last year's model will give you a least a bit better deal). In which case, you'll have a better idea of how well you're doing at your job and how much you like it.
I still think you should wait a few months. By the end of summer, you should have over 10k in your bank account. You would also be able to get a last year's model (if you don't want to go used, a last year's model will give you a least a bit better deal). In which case, you'll have a better idea of how well you're doing at your job and how much you like it.
iamwiz82
Lifer
- Jan 10, 2001
- 30,772
- 13
- 81
If you enjoy the car and you want it, then get it. Many people here will tell you that you should live a life of squalor and save every penny you make. I prefer to be in the middle. I max out my 401k and also we spend our money on things we enjoy.
If you can find a happy median between living life for today and for the future, I think you will find the best mix of enjoyment now and later.
Just buy a used one. A friend of mine just got a 2004 with 30k miles on it for 22k. It looks and drives brand new...I dont' think too much has changed since then.
That's great and everything but I don't think you're going to be 30, look at your 401k and be like damn, I coulda had 30k more in here. Especially since he's probably going to be able to max out his 401k and IRA regardless making 65k a year and having 0 obligations. Like yeah, it doesn't make the most financial sense in the world but it's plenty affordable on his salary and I'd rather make good financial descisions while having fun.
If the market turns and he really needs to buy a house you can withdraw your money from an IRA penalty free for a first time home purchase.
Also, the time to enjoy this car is now. You're getting the car not only for transportation, but because it's a great looking car and a kid your age in a car that nice makes a statement. It makes a statement when you go out to the bars, it makes a statement when you take a girl on a date. Yeah, you can delay gratification until you're 30 but then you're now the weird guy at the bar and it doesn't make as much of a statement because there's lots of 30 year olds with nice cars.
My buddy, never fails, whenever we go out and meet new girls he takes his cell phone and his keys out (he drives an A4 1.8T). Inevitably he gets a girls # or a conversation gets started because of a car and they're instantly interested. The conversation then goes "how old are you", wow you bought it in cash at 20? I can't tell how many times he's met a girl and used his car keys as an icebreaker.
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