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how much should i be making to afford a $38,635 car
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BarneyFife
Diamond Member
I would stay away. Unless I was making 100k a year, spending $500 a month + $150-200 a month (at least for your age) on insurance is a waste. Save your money up for a rainy day. You don't want to end up like most Americans who "spend spend spend" and then when they get laid off they are screwed.
Freejack2
Diamond Member
My monthly car payment is about 15 - 20% of my monthly expenses. Probably closer to 20%.
I think percentages is not the best way though. What you need to do is sit down and figure your income after taxes and your expenses. A person could make $50k a year but if their expenses are high they may only be able to afford $400 a month.
Where as someone who makes $35k a year may have low expenses and be able to afford $500 a month.
I have a high expense to income ratio so for me a $16,000 car was on the edge of what I could afford.
On the other hand someone who lives at home and doesn't have much in the way of expenses could easily afford a $38.6k car.
I think percentages is not the best way though. What you need to do is sit down and figure your income after taxes and your expenses. A person could make $50k a year but if their expenses are high they may only be able to afford $400 a month.
Where as someone who makes $35k a year may have low expenses and be able to afford $500 a month.
I have a high expense to income ratio so for me a $16,000 car was on the edge of what I could afford.
On the other hand someone who lives at home and doesn't have much in the way of expenses could easily afford a $38.6k car.
Are you nuts?! You have $15k in cash that you could just dump?!?!
Buy a friggin house!
Stop throwing money away on renting! It *IS* throwing money away!
And I have news:
Buying a car is ALSO throwing money away.
But a house is likely to increase in value.
I used to have delusions about throwing away all my money on a nice car. But then I thought: Would I rather spend $200/month on a car and have a few hundred to spend on other toys or maybe even save?
Or would I rather spend all my working hours paying for my car?
My mom's advice: "You don't ever want to be house-poor or car-poor."
If your job is so stable and your so young, then why are you in such a hurry to give all your money up for something that doesn't hold its value?
Hell, I'd just as soon pay cash on a Neon or a Hyundai and invest the remaining $5000.
Actually, if you were *really* wise, you'd hit up a $0 down/0% interest deal on a low-end car, have a low payment and invest that $15k for the next 3 years.
So my opinion is hold off on the Bimmer.
*Can't wait to get a house and stop throwing $600/month in the toilet.
Buy a friggin house!
Stop throwing money away on renting! It *IS* throwing money away!
And I have news:
Buying a car is ALSO throwing money away.
But a house is likely to increase in value.
I used to have delusions about throwing away all my money on a nice car. But then I thought: Would I rather spend $200/month on a car and have a few hundred to spend on other toys or maybe even save?
Or would I rather spend all my working hours paying for my car?
My mom's advice: "You don't ever want to be house-poor or car-poor."
If your job is so stable and your so young, then why are you in such a hurry to give all your money up for something that doesn't hold its value?
Hell, I'd just as soon pay cash on a Neon or a Hyundai and invest the remaining $5000.
Actually, if you were *really* wise, you'd hit up a $0 down/0% interest deal on a low-end car, have a low payment and invest that $15k for the next 3 years.
So my opinion is hold off on the Bimmer.
*Can't wait to get a house and stop throwing $600/month in the toilet.
mithrandir2001
Diamond Member
I guess you live on Calhoun Street at that price. 😀
I really like those Edmunds True Cost To Own analyses because they really get you thinking. They say 330xi ownership costs about $45K over 5 years....that's $750 a month. After tax deductions, that's nearly how much my mortgage, property taxes and homeowner's insurance cost. The 330xi may turn heads, but it will never appreciate in value. Never.
I've looked at the costs for my Accord EX-L Coupe: $27K over 5 years. The Acccord is no Bimmer but now we are talking $450 a month. For the average middle-class person with a stable financial condition, that's very doable. But $750 a month is a MAJOR burden for an unestablished 22 year old to bear.
Amused
Elite Member
Here's a little lesson I learned in life:
Buy the nicest house you can afford, and drive a so-so car.
Logic:
*You spend far more time in your home than your car.
*Homes appreciate in value and are a good, safe investment. Cars depreciate horribly and are a very poor investment.
*Every dollar you spend on a car now, is twenty dollars or more twenty years down the road that you don't have in your portfolio. You not only lose the money from depreciation in value, but the interest and appreciation you would have made in savings and investments.
I like nice cars as much as the next guy. But they aren't worth my future wealth.
Buy the nicest house you can afford, and drive a so-so car.
Logic:
*You spend far more time in your home than your car.
*Homes appreciate in value and are a good, safe investment. Cars depreciate horribly and are a very poor investment.
*Every dollar you spend on a car now, is twenty dollars or more twenty years down the road that you don't have in your portfolio. You not only lose the money from depreciation in value, but the interest and appreciation you would have made in savings and investments.
I like nice cars as much as the next guy. But they aren't worth my future wealth.
OMG Davegod75! I was going to start almost this exact thread. How funny 🙂 Except I'm looking at the 330ci. And I'm 25. Other than that it sounds like the same boat. I am willing to bet that Davegod75 isn't considering buying a house because of where he lives. Where I live houses are VERY expensive. $10-15K down would get laughed at. I think I decided that I will wait a year and buy a 2001. I've always been a fan of letting some other sucker eat the initial depreciation for me 😀
Life is short. Get one. Have fun! 😀
Besides, I can think of a lot worse ways of throwing away 40K. Then again, I didn't even consider financing the car (the interest they offered was about 5.9%, a month ago), I already own a home, and have plenty socked away for a rainy day, for home improvements and such. Hmmm...
So, as they say in Hot Deals, YMMV. 😉
Besides, I can think of a lot worse ways of throwing away 40K. Then again, I didn't even consider financing the car (the interest they offered was about 5.9%, a month ago), I already own a home, and have plenty socked away for a rainy day, for home improvements and such. Hmmm...
So, as they say in Hot Deals, YMMV. 😉
StageLeft
No Lifer
P'shaw. buy a condo then. If indeed you "need $30k" for a house downpayment you're already half way there. Get this car and you'll be no way there.
Like others have said if you're so concerned you can't afford it. Your priorities will almost certainly change over the next several years and by then it will be too late. I'm 24 and a few years ago I would have thought the same thing: car, car, car, car. Well I'd of been locked in with a 5 year loan until I was 26. However, now I know better. Nice cars are fine and dandy but I have far bigger fish to fry like planning for future and getting a house or a house down payment. I currently drive a car worth less than 1/20 of my gross income.
Its funny how many people here tell you to buy a house just because its an investment. Of course, you have to live there for at least 5 years before you can get any return on the investment if you decide to sell it.
Seeing as you are 22, you probably haven't decided on a more permanent job (job may be stable, but it might not be the one you decide to have 3 years down the road). You also probably haven't decided on where you'd like to live.
I'm 24, and a bunch of my friends the same age have all gone thru this. They decide, its time to buy a house. Only to realize that they are locking themselves into one location for 5 years. And we have no idea if we will be anywhere near here in 5 years time.
Renting is better for the short term, which is basically no more than 4 years. Owning is better beyond that. The reason is due to all the extra costs of a house that add up.
Just something to take into account.
Seeing as you are 22, you probably haven't decided on a more permanent job (job may be stable, but it might not be the one you decide to have 3 years down the road). You also probably haven't decided on where you'd like to live.
I'm 24, and a bunch of my friends the same age have all gone thru this. They decide, its time to buy a house. Only to realize that they are locking themselves into one location for 5 years. And we have no idea if we will be anywhere near here in 5 years time.
Renting is better for the short term, which is basically no more than 4 years. Owning is better beyond that. The reason is due to all the extra costs of a house that add up.
Just something to take into account.
A couple more things.
There is a rent or own calculator that I found a while ago. You should be able to find it with a google search. It will give you a good idea on which to do given your circumstances.
Right now its a sellers market in housing (well at least where I live). So of course housing prices go up as someone has pointed out in the thread. Basic reason: people are taking money out of the stock market and into a safer market, real estate. Who knows if it will be a sellers or buyers market 3-5 years down the road?
And one thing I've seen no one acknowledge in this thread. A house can actually lose value. True, its a lot more likely to gain value, but it can lose value for any number of reasons. Goes from a sellers to a buyers market, neighborhood goes bad, nature destroys it, etc...
But you were asking about a car not about a house.
Just figure out your monthly expenses right now. Factor in the car payments and increased insurance. And see if you don't mind that for the next 5 years. Just a note on insurance: I recently went to progressive.com to see how much my insurance would go up by getting a new Audi S4, and it would be about a 75% increase on my already high insurance for my 97 Acura CL.
You're only young once and if you have the chance to afford and enjoy a nice car, why not go for it. Just make sure you can do both, afford and enjoy it without worrying about money.
There is a rent or own calculator that I found a while ago. You should be able to find it with a google search. It will give you a good idea on which to do given your circumstances.
Right now its a sellers market in housing (well at least where I live). So of course housing prices go up as someone has pointed out in the thread. Basic reason: people are taking money out of the stock market and into a safer market, real estate. Who knows if it will be a sellers or buyers market 3-5 years down the road?
And one thing I've seen no one acknowledge in this thread. A house can actually lose value. True, its a lot more likely to gain value, but it can lose value for any number of reasons. Goes from a sellers to a buyers market, neighborhood goes bad, nature destroys it, etc...
But you were asking about a car not about a house.
Just figure out your monthly expenses right now. Factor in the car payments and increased insurance. And see if you don't mind that for the next 5 years. Just a note on insurance: I recently went to progressive.com to see how much my insurance would go up by getting a new Audi S4, and it would be about a 75% increase on my already high insurance for my 97 Acura CL.
You're only young once and if you have the chance to afford and enjoy a nice car, why not go for it. Just make sure you can do both, afford and enjoy it without worrying about money.
Its funny how many people here tell you to buy a house just because its an investment. Of course, you have to live there for at least 5 years before you can get any return on the investment if you decide to sell it.
What the hell are you talking about? I bought my house in 1997 for $82,000, we had it appraised in 2000 and it was worth $110,000. right now I believe I could sell it for $130,000.
I know people that bought a house one year sold it the next for a 10,000 to 20,000 profit.
Buying real estate is probably the most sound investment one can make, homes rarely go down in value. By comparison cars are probably the worst investment. think about it if you bought a 25,000 dollar car and financed it for five years you would probably end up spending at least $30,000 depending on the interest rate. Then, after the five years the car would probably only be worth $10,000 if that. So let me think, invest 30,000 and after five years it's worth 10,000 sounds pretty bad to me. Just because you can afford a 35,000 dollar car does not mean you should get one. hold unto your money you have the rest of your life to buy nice cars save it for when your older and wiser.
What the hell are you talking about? I bought my house in 1997 for $82,000, we had it appraised in 2000 and it was worth $110,000. right now I believe I could sell it for $130,000.
I know people that bought a house one year sold it the next for a 10,000 to 20,000 profit.
Buying real estate is probably the most sound investment one can make, homes rarely go down in value. By comparison cars are probably the worst investment. think about it if you bought a 25,000 dollar car and financed it for five years you would probably end up spending at least $30,000 depending on the interest rate. Then, after the five years the car would probably only be worth $10,000 if that. So let me think, invest 30,000 and after five years it's worth 10,000 sounds pretty bad to me. Just because you can afford a 35,000 dollar car does not mean you should get one. hold unto your money you have the rest of your life to buy nice cars save it for when your older and wiser.
See above posts about "Who says you have to wait 5 years."
I guess the catch with me is this:
A car WILL lose it's value. It will be worth less the second you drive it off the lot. No brand new full-production car will gain value over 5 years.
A house, OTOH, will PROBABLY NOT lose it's value. Yes, it might, but I'd rather roll a set of dice that are heavily loaded in my favor over opting to just hand my chips to the dealer and walk away.
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