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I would ditch this kind of thinking. Cars are transporation. Don't buy into all the hype. The are an expensive pain in the butt more than anything. I'd buy a 2-4 year old used Honda or Toyota.
As someone who lives only a block away from his job, I think it's good to live as close to work as possible, so I would live in Palo Alto or Mountain View. Mountain View is a little cheaper, I think. If you can live on a transit line and delay buying a car until you can pay cash, that would be ideal.
If you really want to save for a house, get a studio apartment and save the difference.
Be very careful about adopting the American spendthrift lifestyle. It's very easy to fall into that way of living, especially in high cost California. There are a surprising number of people who earn what you will be earning who are living payday to payday or who are in debt over their eyeballs. You won't get much social reinforcement to save in America, and there is a lot of social pressure to spend, spend, spend!
Also, the other thing you'll need to learn about is the 401K plan. You should contribute at least 10% of your gross salary to the plan, although I think more than that is preferable, especially at your salary level.
I can appreciate having a passion for cars - if you enjoy driving, you should have a car that's fun to drive - however, you absolutely don't need a luxury car for that.
A Mazdaspeed3, a Honda S2000, etc, etc... These days luxury cars really don't provide a premium in performance (or luxury) that they may have at one point...
Wow, I'm quite surprised at how many replies are made for this thread -- and I appreciate it so much!
Yes, I'm going into tech industry. The industry seems to be doing quite well at the moment, but then who knows what will happen in 5 years time.
About mysticaltyger's comment: I totally agree. Buying luxury items that one cannot afford would be just plain stupid. I learned that long ago (after all, I lived off of grad student's salary for the past 6.5 years -- that's around 25k pre-tax salary in a city where a studio apartment costs $900 -- so I know how to be conservative). On the other hand, would you be making a 200k salary while being single, and still be driving a Pontiac Aveo? Being frugal is one thing, and being overly scrooge is another.
I guess what I'm trying to say is, I'm hoping to see some concrete figures. For example, one shouldn't spent >10% of take home monthly salary on car payments, etc. Because in the end, anybody can say "save your ass off, and you'll be well off later", but it's never easy to figure out if you're doing 1 or 2 SD better than the average engineer working in SV. So I'm trying to build a consensus.
I'm not insisting on getting a luxurious car -- that's not my point at all. The point is, where does the average stand, and if the average household in US is doing ridiculously, where is the line where it's neither seen as plain stupid, nor becoming a total scrooge. I'm sure all of us are trying to figure out *everyday* the balance between happiness for the present and happiness for the future.
I'll probably end up getting something like accord or altima or golf (please don't say toyota, i despise all their vehicles with passion ). Still, I honestly appreciate all your inputs; it really helps me put things into perspective. :-)
About mysticaltyger's comment: I totally agree. Buying luxury items that one cannot afford would be just plain stupid. I learned that long ago (after all, I lived off of grad student's salary for the past 6.5 years -- that's around 25k pre-tax salary in a city where a studio apartment costs $900 -- so I know how to be conservative).
It's somewhat more complicated than just passing on luxury goods. The Bay Area is a trendy metro area with lots of things to do on weekends in the region (skiiing, wine tasting, restaurants & bars, concerts, plays, sports games, outdoor activities). These things tend to require a fair amount of cash, not just for the event, but for gas & parking as these events are spread out over a large area, so you end up driving a lot. So there are lots of ways to blow money here on the smaller as well as the bigger things.
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Originally Posted by notabene
On the other hand, would you be making a 200k salary while being single, and still be driving a Pontiac Aveo? Being frugal is one thing, and being overly scrooge is another
I don't pay attention to cars, so I don't even know what an Aveo is...but assuming the car was reliable and was in decent shape....I would continue to drive it until it wasn't worth fixing. There are some billionaires who drive old pickup trucks. They don't care about what other people think.
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Originally Posted by notabene
Because in the end, anybody can say "save your ass off, and you'll be well off later", but it's never easy to figure out if you're doing 1 or 2 SD better than the average engineer working in SV. So I'm trying to build a consensus.
And what I'm trying to say is that comparing yourself to what other people are doing is a prescription for dissatisfaction with life. It's better to have goals in life based on internal things (What do I value? What is important to ME?) as opposed to goals based on externals (What will other people think?)
And by the way, I'm not just passing off my opinion as fact. What I've said is pretty much confirmed by psychologists who study happiness.
So take some time to figure out what's really important to you. Once you have enough money and the basic stuff (a decent roof over your head, a reliable car) the rest doesn't matter all that much.
Quote:
Originally Posted by notabene
I'm not insisting on getting a luxurious car -- that's not my point at all. The point is, where does the average stand, and if the average household in US is doing ridiculously, where is the line where it's neither seen as plain stupid, nor becoming a total scrooge. I'm sure all of us are trying to figure out *everyday* the balance between happiness for the present and happiness for the future.
Yes, I understand you don't have "luxury fever" but it seems to me you care a little too much about what the "consensus" thinks. You will be making enough to easily save 25% of your income (or more) and still have a nice lifestyle. I've never made 6 figures, but there were times when I saved 1/3 of my much more modest gross income. I'm not saying you should do what I did (I don't save that much any more). But I am saying the focus should be less on what kind of car you drive, what stuff you have, and what other people think of the stuff you have; and more on things like relationships, having work you like (at least most of the time), health, your personal values, etc.
Quote:
Originally Posted by notabene
I'll probably end up getting something like accord or altima or golf (please don't say toyota, i despise all their vehicles with passion ). Still, I honestly appreciate all your inputs; it really helps me put things into perspective. :-)
An Accord or Altima might be fine, although even those are sort of big for just a single person. I don't know what you have against Toyota, but there are certainly other good cars besides just Toyota.
I may have misled the entire discussion in the wrong way, so let me adjust where I'm coming from.
Quote:
Originally Posted by mysticaltyger
It's somewhat more complicated than just passing on luxury goods. The Bay Area is a trendy metro area with lots of things to do on weekends in the region (skiiing, wine tasting, restaurants & bars, concerts, plays, sports games, outdoor activities). These things tend to require a fair amount of cash, not just for the event, but for gas & parking as these events are spread out over a large area, so you end up driving a lot. So there are lots of ways to blow money here on the smaller as well as the bigger things.
Yes, and I can only do these things so much - with 9 to 6 work life, and more often than not overtime almost each day, I probably won't get to do these things. Consequently, I regard these things much as luxurious activities simply because I won't have time to do these things(Or maybe I just spend too much time at work - it's 5am on saturday morning, and I'm still at my lab ). Am I not enjoying my life? Hardly. I play for an orchestra, try to run 4 days a week, go skiing at least twice every winter. I just don't have expensive habits. And trust me, bay area is not a trendy metro area -- there's a reason why most younger workers choose to commute 2 hours back and forth from the city.
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Yes, I understand you don't have "luxury fever" but it seems to me you care a little too much about what the "consensus" thinks. You will be making enough to easily save 25% of your income (or more) and still have a nice lifestyle. I've never made 6 figures, but there were times when I saved 1/3 of my much more modest gross income. I'm not saying you should do what I did (I don't save that much any more). But I am saying the focus should be less on what kind of car you drive, what stuff you have, and what other people think of the stuff you have; and more on things like relationships, having work you like (at least most of the time), health, your personal values, etc.
I ask for the "consensus" not because I care for how others view, but because I don't want to be left behind. It's a purely monetary thing, and as indicated in the original post, I'm asking for financial planning tips, not how to dress up with cars and clothes.
To give a concrete example, suppose my take home monthly pay is 6000. 1700 on rent, 800 on car payment, 500 on gas/insurance(*very* conservative estimate), so that's 3000 (I know, it's crazy, but bear with me). I'm still left with 3000, and I highly doubt that I'll spend more than 1000 on the rest of living expenses with my work schedule (I lived in manhattan for 6 years, I'm just not that person). So that leaves me 1/3 of my take home into savings account. Plus end of year bonus, it can easily add up to ~40k a year. 2 or 3 yrs down the road (5 yrs tops), I'll be making 20% down payment for 500k house/condo/townhome/shack/whatever, which would work out with 30yrs mortgage that's cheaper than 2bedroom apt rents. And, by anyone's standard, I don't think I'd be living a paycheck to paycheck life.
This is the kind of stuff I'm after. What do people do in that salary range. Maybe different people have different priorities, and some people like to spend more money on audio equipment than cars, but in *general*, housing and car are two most significant fraction of your expenses.
I could've easily asked "what fraction of income do people save?", but that question will be answered with "as much as you can", and we would've given each other absolutely no information back and forth. So I've listed out 2 most large fraction of expenses, cuz as someone pointed out above, the rest are marginal (to me anyways).
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An Accord or Altima might be fine, although even those are sort of big for just a single person. I don't know what you have against Toyota, but there are certainly other good cars besides just Toyota.
See, I initially put down 'coupe' after accord and altima, but I was scared you'd say "what's the point if you can get 4 doors models cheaper with lower insurance premium", so I removed that specification -- but now I guess the car is too large. argh..
Uggh. I don't know why anyone would advise this...or were you being sarcastic?
Well, kind of yes, kind of no. He definitely would fit in with a BMW or Lexus, there's so many people around here with those.
To me, a useful car in the Bay Area is a commuter car that's good on gas. Maybe even a hybrid or electric, but I've never had one of those and I don't know anything about them. But anything that's a nice handling commuter car.
Wow, I'm quite surprised at how many replies are made for this thread -- and I appreciate it so much!
Yes, I'm going into tech industry. The industry seems to be doing quite well at the moment, but then who knows what will happen in 5 years time.
Dude, who knows what will happen next year. 5-year timeframe is too long.
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I guess what I'm trying to say is, I'm hoping to see some concrete figures. For example, one shouldn't spent >10% of take home monthly salary on car payments, etc.
Let's say your take home pay is $7,000/month.
Here's the figures you need to work with:
That Savings figure is what you can play with for your car.
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I'm not insisting on getting a luxurious car -- that's not my point at all.
The majority of high-tech people around here drive either a BMW, Lexus or Mercedes. I suspect most of them take on some sort of loan for a portion of it, and some of them may be leasing instead of buying. But yes, the simple fact is that most high tech folks are driving pretty nice cars. so much that these cars are probably not considered "luxury" cars here, at least the lower end models. The luxury cars are the ones that are in the $100k+ range: the Tesla, high end mercedes, the Italian cars, etc. (And yes you do see these as well, but these are unusual cases: executives, people who hit the jackpot with their stock options, etc) Just the other day I was driving my Spaniard friend on the 101 to San Francisco, and he looked over to the other lane and excitedly remarked "wow, that's a $300,000 Mercedes next to us".
My own personal approach (which has absolutely no bearing on anybody else nor should it) is that I think spending 5-10% of your cash on a vehicle is appropriate. Let's say I have $100,000 in the bank. Then I'm looking at laying out $7k or $10k to buy a vehicle outright. I usually don't take out loans, but with such low interest rates these days it's almost like cash, so why not?
I don't know where in this thread someone said a 9 - 6 workday... they don't exist for professionals and managers. 8 - 7, even overnighters, would not be unusual.
The choice of a car is personal, and there are so many makes and models. I remember when my daughter (who is in tec in SV) purchased hers she was stunned at the cost. Again, use Consumer Reports online to narrow down the universe (they do have prices). Don't buy on emotion. I fear that car dealers will see a young guy with lots of money and sell-sell-sell. Oh, yes.. most of those high end cars are leased. Watch out for leases because a part of the contract includes assumptions on the value of the car at the end of the lease. If the value is too high you may have to pick up the difference. New car leases are full of got-yas.
For your first 6 months rent a small furnished apartment convenient to your workplace. Give yourself time to adjust to your new job and explore the community without a lot of other things going on in your life. I know a shared apartment echos of student life but if you can do that the advantage is roommates who already know the community and can introduce you to people other than your co-workers.
Congratulations in making the transition from student to professional life. Your parents must be beaming.
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). Still, I honestly appreciate all your inputs; it really helps me put things into perspective. :-)
). Am I not enjoying my life? Hardly. I play for an orchestra, try to run 4 days a week, go skiing at least twice every winter. I just don't have expensive habits. And trust me, bay area is not a trendy metro area -- there's a reason why most younger workers choose to commute 2 hours back and forth from the city.
