I should probably recant that statement (but I don't think it is THAT far off), but it was meant to make a point. It's not as much as you think it is and it surely isn't enough to buy a 30K car and be fiscally sound.
That's the whole "real world" aspect. Sounds like a lot of money but after taxes/witholdings/invest/savings you're at what???
What is your net to you after all is said and done?
Think about it for one moment. You plan to purchase a car that is half your salary for a year.
Let's just say that many of my younger friends have done the same and declared bankruptcy a few years later. Wait a while. The path is really already laid - young hot shot driving spanking new luxury car and yet he complains about not making enough.
I'm just trying to warn you is all. I did the same thing as I love cars and had M3s, cobras, etc...I just wish I had listened to others.
Do the math/budget and if it fits then so be it. But the fact that you are questioning the insurance means you haven't done your homework. Plus it's always nice visiting my younger friends with their apartments and beemers. (26-29, no positive net worth whatsoever, many times negative)
I'll push you over the edge - that acura should hold it's value pretty well. At 30K today you may be able to sell it for 15K 5 years from now.
You already know the answer - it's not a good idea. The question is "is it worth it? Is it worth losing that much money by making this decision?"
I've already made my decision. My dads going to let me use his 2000 volvo s70 if i agree to pay for gas, insurance, maintenance, etc for the duration that i'm using it. Then in a year or 2 i'll consider buying a new car.
After reading this thread, i feel like investing and saving my money more. Any ideas where i should be investing other than the obvious 401k and roth IRA ?
How much of my money should i be investing (not including IRA and 401k)
I'll have around 42k take home after putting 3k into my 401k (maxes company match)
I'll have around 42k take home after putting 3k into my 401k (maxes company match)
Sorry, then your friends were either financial morons or the subjects of very bad (and costly) misfortune.
Out of college, I made 35k, spent 17k on a car. I could still afford to live alone, have nice stuff, eat well (went out every day for lunch for about three years), and still save money. I regret that I didn't match my 401(k), and that I depleted my savings in a rapid-fire gratuitous fit of materialism (computer, home-theater, bowflex, LASIK, motorcycle and a few other things in the span of just a few months). Prior to that spree, I could have walked off my job at any time and not had to worry for months.
Eventually, I got married with no savings (I was overly lavish while dating), but still got her a real nice ring (credit card), had to pay for part of the wedding (credit card), had to repair my bike when a friend wrecked it but couldn't pay (credit card), honeymoon (credit card, but worth it). Then my wife lost her job and took nearly two months to find another. Then she had some expensive dental work done. Then she got pregnant - with complications and eventually 3 surgeries (25 - 30k after insurance). Plus we bought a (too expensive) house.
In spite of all this, it wasn't until we bought a 23k car @ 10% that we started getting tight. It took a misbilling of a medical bill to collections instead of insurance (bad credit score hit) to double our Credit Card interest rates before we really started struggling.
Through all of this, what was my single best financial decision? Buying a reliable car early when I had no other obligations (financially or personally) that I could continue to drive long after it was paid off. I would think the TSX would qualify as such. And such a young guy wanting that type of car is probably not too likely to cycle through cars too much.
So here's my advice: You said you'd wait 1 - 2 years to buy the car you want: wait one year (plus a bit, get in on the end of model year closeouts). Save what your monthly payment + insurance expressly for a down-payment. Make sure you build your emergency savings, and figure out what to do for investing. That year will be plenty of time to determine how you like your job, and to settle into enough financial routine to recalculate your budget.
You might also consider certified pre-owned. Or in that time you may want a different car completely.
Basically, you're young and obligation free only once. Plan for retirement, but don't sacrifice your youth for it. If it turns out you can plan for an early retirement, power to you. If you think you might ever want a wife and/or kids, you want your toys and indulgences paid off before then....
Unless you are financially savvy, I would put your money into exchange traded funds (ETFs).
Do not invest in single companies, unless you plan on investing in 10-15 of those single companies.
Allocate something like this...
10% into a Dow-jones index fund
25% into a S&P 500 index fund (SPDR)
25% into a NASDAQ index fund
30% into an emerging markets fund (euro-asian fund)
10% into a bond fund
Of course you can adjust that for more or less risk. More risk would be to eliminate bonds and put that 10% into NASDAQ or emerging markets. Less risk would be to take NASDAQ or emerging markets and put it into DJIA or bonds.
Now, people argue that mutual funds are the way to go. Sure, short term. However, unelss you have a *VERY* good fund manager, they won't earn too much over market for a long period.
Why?
Because anybody can get lucky, it takes true skill to keep consistant results. Less than 10% of fund managers can maintain consistant winning results. There is a lot of survivorship bias (crap funds go away and only the good ones survive, so you don't see the crap funds represented in benchmarks and prospectuses)
Watch out for funds that have a measurement period of less than 5 years and I would look for ones with 10+. Also look for smaller funds, the problem with large funds is that they have % caps and the more money they get, the harder it becomes to fit within those caps and allocate money to effective stocks.
Do not trade on information you get on websites, newspapers, or anything else. More often than not, price increases (or decreases) are already baked into the price. The market is *WAY* ahead of papers or online stuff. If you really want better returns, you have to be the first one to get there, otherwise it's already priced in.
Do not invest in single companies, unless you plan on investing in 10-15 of those single companies.
Allocate something like this...
10% into a Dow-jones index fund
25% into a S&P 500 index fund (SPDR)
25% into a NASDAQ index fund
30% into an emerging markets fund (euro-asian fund)
10% into a bond fund
Of course you can adjust that for more or less risk. More risk would be to eliminate bonds and put that 10% into NASDAQ or emerging markets. Less risk would be to take NASDAQ or emerging markets and put it into DJIA or bonds.
Now, people argue that mutual funds are the way to go. Sure, short term. However, unelss you have a *VERY* good fund manager, they won't earn too much over market for a long period.
Why?
Because anybody can get lucky, it takes true skill to keep consistant results. Less than 10% of fund managers can maintain consistant winning results. There is a lot of survivorship bias (crap funds go away and only the good ones survive, so you don't see the crap funds represented in benchmarks and prospectuses)
Watch out for funds that have a measurement period of less than 5 years and I would look for ones with 10+. Also look for smaller funds, the problem with large funds is that they have % caps and the more money they get, the harder it becomes to fit within those caps and allocate money to effective stocks.
Do not trade on information you get on websites, newspapers, or anything else. More often than not, price increases (or decreases) are already baked into the price. The market is *WAY* ahead of papers or online stuff. If you really want better returns, you have to be the first one to get there, otherwise it's already priced in.
That's a great situation and decision.
Remember to use this time to be saving both for a down payment and for a liquid emergency savings account.
Buy some golf clubs and hit the links! 
See ya on the 19th!
[Edit]: This thread is making me want to pay off my current car that I owe 2 years of payments on instead of selling it / buying a new one
See ya on the 19th!
[Edit]: This thread is making me want to pay off my current car that I owe 2 years of payments on instead of selling it / buying a new one
I concur. I have this card and the cash back is awesome. I'd also recommend buying a used TSX. Buying a new car is not a sound financial decision in general. A couple years ago I bought a Certified Pre-Owned 2000 BMW 328Ci for $33k, financing ~85% of it. You get more for your money when you buy used, and if you go through Acura's certified pre-owned program, you don't have to worry about anything. Btw, when I was buying my car the other car I was considering was a brand new 2005 Acura TSX. I have not regret my purchase for one second. I definitely know I made the right one. Personally, no matter how rich I become in the future
D), I don't think I will ever buy a new car. I just can't justify the huge depreciation hit as you drive it off the lot.At your income, with few bills, you could go up to BMW or something.
Acura is fine though.
But seriously, man up and buy the car. If you're this much of a sissy maybe you should buy a prius or an insight.
Toughen up and go buy what you want.
Acura is fine though.
But seriously, man up and buy the car. If you're this much of a sissy maybe you should buy a prius or an insight.
Toughen up and go buy what you want.
buy a beater right now - and save more money for a house right now.
i bought the expensive car - now that I think about it - i should have just gotten a cheap old camry or something and put the extra 15k for the house down-payment.
i bought the expensive car - now that I think about it - i should have just gotten a cheap old camry or something and put the extra 15k for the house down-payment.
skyking
Lifer
- Nov 21, 2001
- 22,716
- 5,843
- 146
I take it you have nothing to drive right now?
I'd buy a beater, milk it for a year, and look hard at houses for the next few months. If the job looks sweet enough to keep, find a good house. If you are saddled with a car loan, you will play hell getting much of a home loan.
Now look at the opposite. You get a house loan, and then go get a car loan. That would be a comparative pice of cake
I'd buy a beater, milk it for a year, and look hard at houses for the next few months. If the job looks sweet enough to keep, find a good house. If you are saddled with a car loan, you will play hell getting much of a home loan.
Now look at the opposite. You get a house loan, and then go get a car loan. That would be a comparative pice of cake
mugs
Lifer
- Apr 29, 2003
- 48,920
- 46
- 91
If you're going to call him a sissy for wanting to make a sensible financial decision, "man up" and post your own age, financial information and what you drive. Since you suggested a BMW instead of an Acura at his salary, I'm going to go out on a limb and guess you're young and drive a more expensive car than you can really afford while saving as much as you should for retirement (of course you're going to lie now to prove me wrong).
I think the new Civic design looks much better than the old one, so I would give them a look. But I also love cars and I loved my 1st generation Integra. so if you buy the TSX and keep it forever, it may be worth it. I loved the TSX when I first read about it, but they are a little too restricted inside. I am very happy with my 02 Accord bought used, but the fact that it has a timing belt sucks big time.
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