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Old 09-15-2017, 05:05 AM
 
Location: Washington State
18,633 posts, read 9,625,296 times
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So far, it looks like I'm the only person that considers my wealth as a factor in deciding how much to spend on my cars in my upcoming retirement....this surprises me but I guess this is what makes the world go round, everyone has a different opinion.
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Old 09-15-2017, 05:11 AM
 
Location: Washington State
18,633 posts, read 9,625,296 times
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Quote:
Originally Posted by MI-Roger View Post
I interpret "very exciting" to be a sports car. Don't forget the cost of registration, insurance, maintenance, etc. Since this will be a new vehicle the Vintage Car Discounts will not apply. I almost bought an old Ferrari three years ago for $35k, a low low price for a low mileage Ferrari. Registering this car in Michigan would have cost me over $1k per year, and from Ferrari forums I learned the regular maintenance these cars require averages to over $1 per mile driven!

Lots of other hidden costs when purchasing "very exciting" cars.

My exciting car is a 17 year old European performance convertible that cost me less than $7K. Even so, its insurance and registration is higher than our two daily drivers and it gets driven less than 3,000 miles each summer.
It's a fast car so insurance will likely be high, fuel expense high, tire expense high....depreciation is the biggest expense and that's an unknown but I'll likely keep it for 10 years with the first few years under new car warranty. I honestly don't think the expenses will strain our budget.
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Old 09-15-2017, 06:50 AM
 
71,803 posts, read 71,896,917 times
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Quote:
Originally Posted by Tall Traveler View Post
So far, it looks like I'm the only person that considers my wealth as a factor in deciding how much to spend on my cars in my upcoming retirement....this surprises me but I guess this is what makes the world go round, everyone has a different opinion.
it all goes in the mix. our cars , our mid 5 figures in dental work for the two of us , our travel , etc all are big expenditures . they do effect the spending somewhat but it really is nothing you can predict .

this is our 3rd year in retirement and our balance is higher today than the day we retired so spending has not been a big deal nor has it effected our income . we are so far above budget this year since we paid cash for the car plus the dental work and the trips but despite that we are 3 years in and higher than when we started .

follow why you can't look at it the way you are ?

retirement is where many of us spend down to live if we don't have pensions . wealth creation is a smaller priority vs maintaining our income ,meeting expenses and enjoying our money on the things we always wanted.

as long as we meet goal I want to enjoy and spend and I no longer strive to keep growing and growing beyond what it takes to meet goal .
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Old 09-15-2017, 07:00 AM
 
Location: Idaho
1,456 posts, read 1,158,755 times
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Quote:
Originally Posted by Tall Traveler View Post
So far, it looks like I'm the only person that considers my wealth as a factor in deciding how much to spend on my cars in my upcoming retirement.
Our criteria for buying a car did not change upon retirement. First, the car has to meet our needs, reliable with good gas mileage. Secondly, we have to like the way it drives and of course its look. Financial consideration only comes in last in the sense that the car has to give us 'best bang for the buck' and within what we are willing to spend on a car.

In a way, what we are willing to spend on a car is influenced by our asset/wealth. Over the years, we typically keep around 2% of our asset in our cash expense account and allot 1/4 or 1/3 to big purchases. This means the cost of a car is around 0.5 to 0.66% of our asset. Occasionally, we went below or about these targets. Our BMW convertible was 1% of our asset (we were thinking of getting a Madza Miata but it was so underpowered!). Our Honda Fit was only 0.28% of our asset. We could have spend more for a car but I just loved the Fit and it met all my needs.

We bought a new Subaru Outback in July. Its total cost came out to be 29% of our cash reserve and 0.58% of our asset. We were planning to pay cash but the 0% financing for 5 years was too good to pass. This means we either don't have to replenish our cash expense reserve or to use it to pay for other big items like remodeling the kitchen.

Our current plane was the biggest purchase at 3.5% of our asset. This was offset by the sale of the old plane which lowered the cash purchase to 2.5% asset. At that time, we wanted to have a dependable plane for long cross country trips so we did not mind depleting our asset a bit.

IMO, if you have dependable sources of income and can spend down some assets without any negative impacts to your financial future, just do it and spend WHATEVER IS ACCEPTABLE TO YOU. You only live once ;-)

BTW, another thing to consider is that a car or a plane is a tangible asset. The car depreciates over times (fastest rate at the moment you drive it off the lot ;0) but you still retain some of the spent asset. Sometimes, your tangible asset can even increase in values like classic cars.

Last edited by BellaDL; 09-15-2017 at 07:17 AM..
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Old 09-15-2017, 07:10 AM
 
Location: East of Seattle since 1992, originally from SF Bay Area
29,855 posts, read 54,568,102 times
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We haven't retired yet (65/64) but have 2 newer cars and a paid off truck, the other 2 will be paid off with low miles (40-50k) when we retire. The percentage of our income at that time will be only for maintenance, repairs, and insurance, so without a commute should be very little. I estimate it to be about 2-3%.
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Old 09-15-2017, 07:27 AM
 
Location: Washington State
18,633 posts, read 9,625,296 times
Reputation: 15864
Quote:
Originally Posted by BellaDL View Post
Our criteria for buying a car did not change upon retirement. First, the car has to meet our needs, reliable with good gas mileage. Secondly, we have to like the way it drives and of course its look. Financial consideration only comes in last in the sense that the car has to give us 'best bang for the buck' and within what we are willing to spend on a car.

In a way, what we are willing to spend on a car is influenced by our asset/wealth. Over the years, we typically keep around 2% of our asset in our cash expense account and allot 1/4 or 1/3 to big purchases. This means the cost of a car is around 0.5 to 0.66% of our asset. Occasionally, we went below or about these targets. Our BMW convertible was 1% of our asset (we were thinking of getting a Madza Miata but it was so underpowered!). Our Honda Fit was only 0.28% of our asset. We could have spend more for a car but I just loved the Fit and it met all my needs.

We bought a new Subaru Outback in July. Its total cost came out to be 29% of our cash reserve and 0.58% of our asset. We were planning to pay cash but the 0% financing for 5 years was too good to pass. This means we either don't have to replenish our cash expense reserve or to use it to pay for other big items like remodeling the kitchen.

Our current plane was the biggest purchase at 3.5% of our asset. This was offset by the sale of the old plane which lowered the cash purchase to 2.5% asset. At that time, we wanted to have a dependable plane for long cross country trips so we did not mind depleting our asset a bit.

IMO, if you have dependable sources of income and can spend down some assets without any negative impacts to your financial future, just do it and spend WHATEVER IS ACCEPTABLE TO YOU. You only live once ;-)

BTW, another thing to consider is that a car or a plane is a tangible asset. The car depreciates over times (fastest rate at the moment you drive it off the lot ;0) but you still retain some of the spent asset. Sometimes, your tangible asset can even increase in values like classic cars.
Much closer to how I see it....counting your plane, BMW, Fit, & Subaru, you are at about 5.9% of your wealth for your transportation toys.

I see car expense also as the depreciation of the asset is a cost of living to be compensated from our pensions and investment income.
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Old 09-15-2017, 07:56 AM
 
662 posts, read 480,635 times
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I don't look at car buying as a percent of wealth either. My rule of thumb is no more than 1/2 my income. In retirement, that's half of what I budget to spend each year. But then again, I hate that cars depreciate, so that's why I stick to that rule. There's nothing wrong with feeling otherwise, if you're a car lover. (I have some very expensive appliances that can't be considered financially prudent.)

If you don't want a vehicle under 50% of your budgeted income perhaps add a comfortable percentage to 50% to put the smile on your face.
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Old 09-15-2017, 08:24 AM
 
6,353 posts, read 5,170,148 times
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I hadn't thought of it in terms of a percentage of total capital, but I've been able to buy very nice used cars for around $30,000. I have an Acura RL and my wife has a Ford Flex with all the trimmings.
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Old 09-15-2017, 08:31 AM
 
1,079 posts, read 522,496 times
Reputation: 1840
Quote:
Originally Posted by MI-Roger View Post
I interpret "very exciting" to be a sports car. Don't forget the cost of registration, insurance, maintenance, etc. Since this will be a new vehicle the Vintage Car Discounts will not apply. I almost bought an old Ferrari three years ago for $35k, a low low price for a low mileage Ferrari. Registering this car in Michigan would have cost me over $1k per year, and from Ferrari forums I learned the regular maintenance these cars require averages to over $1 per mile driven!

Lots of other hidden costs when purchasing "very exciting" cars.

My exciting car is a 17 year old European performance convertible that cost me less than $7K. Even so, its insurance and registration is higher than our two daily drivers and it gets driven less than 3,000 miles each summer.
Oh yeah, lots of hidden costs. I just dropped 5k on maintenance on my Carrera, which has 14k miles on it. Should have been a recall, IMO. But you don't get public outcry with these cars. If this problem had happened on a Honda, no way Honda could get away with pushing the expense onto the owner like Porsche did. It would have been a recall.
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Old 09-15-2017, 08:49 AM
 
13,978 posts, read 7,446,942 times
Reputation: 25530
I pay cash for cars and buy them out of cash flow. As a retiree, I don't think I would change that mentality. If I keep a car for 8 years and it depreciates 75%, I have a pretty good handle on how that relates to my cash flow as a retiree. If I choose $3K per year out of my cash flow as my car budget, I can spend $24K plus my trade on the next car. If that depreciation assumption holds up, it's a $30K to $35K-ish car.
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