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The OP nets $3000 and spends $2500 leaving only $500 savings each month. A new car payment of $500 is going to wipe out his monthly savings. He could be cash flow negative. This would be a terrible decision.
$500 is also a very expensive car payment. This tells me he's putting very little money down. At the very least I'd suggest he finances over a longer term than 48 months. Try to get at least 5-6 year financing even if it means paying interest. This will reduce the monthly payments.
The op has already addressed the cashflow issue to a point by moving all his 401k contributions to 100% pretax fwiw
Good God their household income is $170k a year. He can go enjoy life a little for cripes sake. What's the point in working if you don't enjoy the fruits of your labor?
I learned that personal finance forum is very sensitive about car purchases. I got grilled for buying a car that was a few hundred dollars shy of $20k (2014 Scion tC, cheap econobox sports coupe) on $35k income at the time I bought it. Fast forward 3 years later I currently make $50k and only owe $7800 on the car now and plan to pay it off in march when I get my merit bonus in March of next year.
Folks on this forum believe if you aren't saving 50% cold hard cash of your income and maxing out your 401k you are living too high on the hog. According to them I should have bought a beater car cash and saved up for a better car later. I just started my 401k last year and I am only contributing 4% but I save $600+ a month but these folks will still say I am living above my means because I am not maxing out my 401k and saving $2000 a month (half of my monthly salary)
I am a single guy and 23 years old so I didn't think I committed financial suicide financing a $20k economy car for 4 years that will be paid off a year early and will keep the car until it has 250-300k miles on the clock. It has a Camry engine so it will last 200-250k miles easy. Then I can bump my 401k contributions up to 12% after the car note is gone. I think my coworker is the crazy one who buys new cars every three years and just bought a Toyota Tacoma TRD PRO (a $44k truck ) that he financed for 6 years and claims when he was getting his old Tacoma that only had 70k miles serviced at the dealership he just had to have the truck when he saw it in the showroom. My coworker has only been working for 4 years so his salary can't be much higher than mine. He buys new guns every year and loves to go off roading (hence the exspensive truck he just bought). He goes out for lunch every single day instead of packing his own lunch at home like me. He is single and 28 years old not much younger than the OP but he is someone that is terrible with money and don't think the OP is like him.
For the OP, he can afford the $30k Subaru SUV if he has zero credit card and student loan debt dangling over his head and he is still relatively young at 30 years old and has another 32 years to work before he reaches retirement age. I think he will be fine if he is a frugal spender that doesn't spend $10 a day on lunches at work or go to fancy restaurants every weekend. If he has those spending habits then I will say no to the $30k car. But don't listen to me I am just a stupid 23 year old who is terrible with finances because I bought a $20k car on credit without saving 50% of my income and maxing out my 401k.
I learned that personal finance forum is very sensitive about car purchases. I got grilled for buying a car that was a few hundred dollars shy of $20k (2014 Scion tC, cheap econobox sports coupe) on $35k income at the time I bought it. Fast forward 3 years later I currently make $50k and only owe $7800 on the car now and plan to pay it off in march when I get my merit bonus in March of next year.
Folks on this forum believe if you aren't saving 50% cold hard cash of your income and maxing out your 401k you are living too high on the hog. According to them I should have bought a beater car cash and saved up for a better car later. I just started my 401k last year and I am only contributing 4% but I save $600+ a month but these folks will still say I am living above my means because I am not maxing out my 401k and saving $2000 a month (half of my monthly salary)
I am a single guy and 23 years old so I didn't think I committed financial suicide financing a $20k economy car for 4 years that will be paid off a year early and will keep the car until it has 250-300k miles on the clock. It has a Camry engine so it will last 200-250k miles easy. Then I can bump my 401k contributions up to 12% after the car note is gone. I think my coworker is the crazy one who buys new cars every three years and just bought a Toyota Tacoma TRD PRO (a $44k truck ) that he financed for 6 years and claims when he was getting his old Tacoma that only had 70k miles serviced at the dealership he just had to have the truck when he saw it in the showroom. My coworker has only been working for 4 years so his salary can't be much higher than mine. He buys new guns every year and loves to go off roading (hence the exspensive truck he just bought). He goes out for lunch every single day instead of packing his own lunch at home like me. He is single and 28 years old not much younger than the OP but he is someone that is terrible with money and don't think the OP is like him.
For the OP, he can afford the $30k Subaru SUV if he has zero credit card and student loan debt dangling over his head and he is still relatively young at 30 years old and has another 32 years to work before he reaches retirement age. I think he will be fine if he is a frugal spender that doesn't spend $10 a day on lunches at work or go to fancy restaurants every weekend. If he has those spending habits then I will say no to the $30k car. But don't listen to me I am just a stupid 23 year old who is terrible with finances because I bought a $20k car on credit without saving 50% of my income and maxing out my 401k.
Can't speak for the others, but I generally think it isn't so much the price of the car per se as the fact that you have to borrow money to buy it. If you need a loan to buy it, there should be a reason for doing it anyway - if you can make a payment, why couldn't you have saved up in the first place?
It's one thing to have the money and take the loan anyway either for liquidity or leverage, it's another entirely if you are getting a loan because that is the only way you could buy it. Why is someone who was unable to find any money to save suddenly able to magically have the extra cash flow to make loan payments?
I can sort-of understand it in the case of someone who didn't have good income until recently, but I am very suspicious if someone claims to have been making good money for many years and yet cannot come up with the money to buy the car they want outright. I wonder what changed so that suddenly they can find room in their budget that they couldn't find previously?
Can't speak for the others, but I generally think it isn't so much the price of the car per se as the fact that you have to borrow money to buy it. If you need a loan to buy it, there should be a reason for doing it anyway - if you can make a payment, why couldn't you have saved up in the first place?
It's one thing to have the money and take the loan anyway either for liquidity or leverage, it's another entirely if you are getting a loan because that is the only way you could buy it. Why is someone who was unable to find any money to save suddenly able to magically have the extra cash flow to make loan payments?
I can sort-of understand it in the case of someone who didn't have good income until recently, but I am very suspicious if someone claims to have been making good money for many years and yet cannot come up with the money to buy the car they want outright. I wonder what changed so that suddenly they can find room in their budget that they couldn't find previously?
The American mentality is to be in debt and yes financing a new car wasn't smart. Could of easy found a used Scion tC with less than 100k miles and paid $5-6k cash for instead of taking 3-4 years to pay off a new one.
Dave Ramsey has your mentality and everyone else's on this board mentality about debt.
I watched his video about car payments last week and it made me feel guilty about taking on a car loan when I was only making $17 per hour at the time and thought to myself if I didn't get a car payment I could have an additional $20k sitting in my savings account. One good thing I got out of this forum is that I don't need a brand new car or a fancy car to impress people and have better things to do with my money. It is always better to pay cash for cars as long as it doesn't wipe out your savings account.
The only thing I can do now is drive the car until it's dead and never buy another car on credit again.
Buying a house isn't the right call for everyone and far too many people push it when it can be a terrible financial decision, especially for younger couples.
But the larger point was that they already don't have as much financial flexibility as they should for their income level.
The American mentality is to be in debt and yes financing a new car wasn't smart. Could of easy found a used Scion tC with less than 100k miles and paid $5-6k cash for instead of taking 3-4 years to pay off a new one.
Dave Ramsey has your mentality and everyone else's on this board mentality about debt.
I watched his video about car payments last week and it made me feel guilty about taking on a car loan when I was only making $17 per hour at the time and thought to myself if I didn't get a car payment I could have an additional $20k sitting in my savings account. One good thing I got out of this forum is that I don't need a brand new car or a fancy car to impress people and have better things to do with my money. It is always better to pay cash for cars as long as it doesn't wipe out your savings account.
The only thing I can do now is drive the car until it's dead and never buy another car on credit again.
You made a good choice. You had to start somewhere after graduating college. I have bought a half dozen non-running cars from people who tried to buy cheap and couldn't afford to fix them when they broke down. I picked them up for a song, fixed the issues and resold. Every last one of the folks I bought from finally threw in the towel and bought a new car they financed to have a low monthly payment they could afford.
Keeping the car for many years negates almost all of the negatives of financing a car. At the end of the ownership period people who bought used and drove to the ground and those who bought new and drove it into the ground will spend close to the same amount of money (specific situations not withstanding).
Where you really come out ahead is buying a cheap car and fixing it yourself and keeping it on the road. After about 15 years they tend to stop depreciating and start appreciating with inflation . But not everyone has the knowledge, time, place, or the patience to fix their own stuff.
i also contribute 50% of my bonus. which gets me to the $16K.
Which is still not maxing out. OK, I know this will sound like bragging, but I make around 50k in a high cost area and I put away about 16K a year in retirement accounts....16K on your salary isn't that impressive from where I'm standing.
Good God their household income is $170k a year. He can go enjoy life a little for cripes sake. What's the point in working if you don't enjoy the fruits of your labor?
It's entirely possible to enjoy life without stuff the advertisers tell us we must have to be happy.
One can also enjoy the fruits of one's labor by buying time with savings and investments instead of buying consumer goods. Then, you aren't under so much pressure to work so hard to pay for all those "rewards" for your labor.
I was specifically addressing the home buying topic, I'm pretty sure that was clear by my post
Not to me. And IMO, we need not get fixated on the home buying topic anyway. It was just an example of a larger point that the OP doesn't have as much financial flexibility as some might think, depending on his future goals. Doesn't matter if those goals are a house, kids, a new car, etc. He can have some of what he wants, but not everything, so he needs to think carefully about what's important--and the opinion of most of us here on this thread, is he probably should spend less on a car or wait until he has more cash saved up for the car he wants--or both.
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) that he financed for 6 years and claims when he was getting his old Tacoma that only had 70k miles serviced at the dealership he just had to have the truck when he saw it in the showroom. My coworker has only been working for 4 years so his salary can't be much higher than mine. He buys new guns every year and loves to go off roading (hence the exspensive truck he just bought). He goes out for lunch every single day instead of packing his own lunch at home like me. He is single and 28 years old not much younger than the OP but he is someone that is terrible with money and don't think the OP is like him.
. But not everyone has the knowledge, time, place, or the patience to fix their own stuff.
