How much car can one afford?

[Dadhawk]

Originally Posted by OrbitalEllipses

That too. Taxes only go up!

Originally Posted by Purdue FR-S

aaaaaaaaaaaaannnnddd this thread got a lot more depressing

Yep, sorry about that. Of course that wouldn't happen if folks had to write that check every week. It'd be a whole different world.

[Captain Insano]

Originally Posted by Dave-ROR

It's a strange thing but it happens. When I made 20K a year I thought "man if I could make an extra 10K I could do all these other things" then at 30k it was "How'd I live with just 20k? geez I need another 10k/yr to do those things" and the cycle repeats over and over. Besides wasting money racing I don't have too vastly different spending habits now than I did when I made half the money, and yet, I still don't feel like I have plenty of extra cash to do whatever I want.

Well I guess investing and 401k has taken up a fair enough chuck of that money too.

Exactly. If you are responsible, the more you make the more you should be throwing into retirement investments or you will have a pretty damn harsh reality check around 55-60 years of age... So while oftentimes people make more as they become older and wiser, if they are good with money they are responsibly saving and not blowing money left and right. You always have to live on a budget. Applies to people making $20K a year. Applies to people making $2mil a year.

A car like a Porsche GT3 or Lambo or Ferrari... I think in reality, maybe about 1 in a couple million people can REALLY affort a vehicle like that if they are responsible with their money. Sure lots of people have them, but many of those people are living way beyond their means.

Just out of college, I think it would be crazy to dump that much $$ into a vehicle. Even if you are lucky enough to enter the market making $100K+ a year.

Good luck with your money decisions.

[rhoyle]

Originally Posted by Dadhawk

I think you may be leaving out the "more I earn, the less I get to keep" portion of this. That has a much bigger impact than people realize.

There is never a point where making another dollar means you take home less than prior to making that dollar. Marginally you will take home less of the earnings, but your overall take home will always increase.

[Dave-ROR]

Originally Posted by rhoyle

There is never a point where making another dollar means you take home less than prior to making that dollar. Marginally you will take home less of the earnings, but your overall take home will always increase.

I think he understands that.. I figured he meant as you pass into new tax brackets that additional money is taxed higher so you see less of it. Yes, your take home will still increase but you might get less of that 10k raise than the last 10k raise if you were at the edge of one bracket before, etc.

[Dadhawk]

Originally Posted by rhoyle

There is never a point where making another dollar means you take home less than prior to making that dollar. Marginally you will take home less of the earnings, but your overall take home will always increase.

Originally Posted by Dave-ROR

I think he understands that.. I figured he meant as you pass into new tax brackets that additional money is taxed higher so you see less of it. Yes, your take home will still increase but you might get less of that 10k raise than the last 10k raise if you were at the edge of one bracket before, etc.

Yep, exactly what I meant. In general as your income increases the overall percentage you see of it in your checking account decreases. That's why when you "double your salary" you don't really.

Also, @rhoyle your statement above isn't 100% accurate thanks to the unearned tax credit. There is a point below where you get back more as a "tax refund" than you pay in. So, technically once you pass that point you do see less overall money in a single year. That said, I certainly wouldn't want to live at that level just to avoid it.

[whaap]

Originally Posted by rhoyle

There is never a point where making another dollar means you take home less than prior to making that dollar. Marginally you will take home less of the earnings, but your overall take home will always increase.

Exactly. Over the years I've made a comment a number of times and that is I wished I had to pay twice the amount in taxes that I presently do. It would always bring a puzzled look on peoples faces till I explain it to them.

[DarkSunrise]

You might like this article (or not, haha), which recommends spending no more than 10% of your annual income on your car.

http://www.financialsamurai.com/2012...e-must-follow/

That's pretty conservative though. Here's some interesting information as well, showing what typical owners of various brands spend on cars as a percentage of annual income:

Avg. Annual HOUSEHOLD Income Of Owners and APPX. Avg. Transaction Costs
- Ferrari - $570k (avg. net worth of $4m) - $230k (40% annual income)
- Porsche - $240k - $65k (27% annual income)
- Audi - $185k - $46k (24% annual income)
- Merc - $174k - $51k (29% annual income)
- BMW - $168k - $48k (29% annual income)
- Lexus - $142k - $46k (32% annual income)
- Infiniti - $120k - $43k (36% annual income)
- Corvette - $115k - $52k (45% annual income) - just used to show the type of person that buys Corvettes...
- VW - $78k - $26k (33% annual income)
- Honda/Toyota - $62k - $26k (42% annual income)
- Ford/Chevy - $52k - $24k (46% annual income)

First number is annual household income, second number is average vehicle cost, and third is percentage.

[serialk11r]

Originally Posted by Captain Insano

A car like a Porsche GT3 or Lambo or Ferrari... I think in reality, maybe about 1 in a couple million people can REALLY affort a vehicle like that if they are responsible with their money. Sure lots of people have them, but many of those people are living way beyond their means.

Just out of college, I think it would be crazy to dump that much $$ into a vehicle. Even if you are lucky enough to enter the market making $100K+ a year.

Good luck with your money decisions.

1 in a couple million? There are several hundred billionaires in this country, and to them a new Lambo is like a new pair of shoes. To take the nitpicking to the end, I'd say maybe 1/200 people (that's like high 6 figures income?) can afford a 200k car. I think most people in this country don't care that much though. If you go to Asia where people are more social status conscious, you'll see a crapton of Merc S-classes rolling around (they pay 200k for those because of import taxes) and such, even if per capita income isn't much higher than it is here.

Anyways, 10% of your income on your car is 10k if you bring home 100k after taxes, and a mid level European luxury car is easily that much in payments (or payment singular amortized over the lifespan of the car) and running costs, seems like a good guideline?

[carbonBLUE]

im just going to leave this here lol

[ame="http://www.youtube.com/watch?v=8xBaKmqFQsc"]Lamborghini Gallardo - Dealership commercial - YouTube[/ame]

[Captain Insano]

Originally Posted by serialk11r

1 in a couple million? There are several hundred billionaires in this country, and to them a new Lambo is like a new pair of shoes. To take the nitpicking to the end, I'd say maybe 1/200 people (that's like high 6 figures income?) can afford a 200k car. I think most people in this country don't care that much though. If you go to Asia where people are more social status conscious, you'll see a crapton of Merc S-classes rolling around (they pay 200k for those because of import taxes) and such, even if per capita income isn't much higher than it is here.

Anyways, 10% of your income on your car is 10k if you bring home 100k after taxes, and a mid level European luxury car is easily that much in payments (or payment singular amortized over the lifespan of the car) and running costs, seems like a good guideline?

[ame="http://en.wikipedia.org/wiki/Billionaire"]Billionaire - Wikipedia, the free encyclopedia[/ame]
A whopping grand total of 425 US billionaires out of how many people total in the USA?? That's a pretty tiny number of people overall in the US. A billionaire can buy those cars easy. No question, but that is barely anybody.

All the crap you read about millionaires (maybe 1% of the population or so) most of them have "net worth" of a million or more. That is not the same as having a million or more of disposable income to spend on cars and other crap. I may have exaggerated a little, but I don't think I'm that far off of the number of people that can that easily throw around money. Now granted lots of people like other people to think they have money and live beyond their means and buy cars like that new for hundreds of thousands of dollars. But that doesn't mean you should model your lifestyle off them.

[serialk11r]

Originally Posted by Captain Insano

Billionaire - Wikipedia, the free encyclopedia
A whopping grand total of 425 US billionaires out of how many people total in the USA?? That's a pretty tiny number of people overall in the US. A billionaire can buy those cars easy. No question, but that is barely anybody.

lol yup, you said one in a couple million, there are ~300 million people in the US. So more than 1 billionaire per 1 million people.

[wbradley]

Umm you can also be a millionaire with a net worth of exactly $1 million, and still not have a dime of liquid assets to your name. And assets like real estate drain your liquid cash for taxes, maintenance, utilities, etc.

Bottom line is whatever your worth, there is always another hurdle that is "better".


My parents have a friend whose son is a billionaire (really). Apparently, he never spends a dime on his elderly sick dad, despite the fact that the dad worked for him for many years and is a decent guy. If anyone is curious, the son used to own Direct Energy and sold it a few years ago for an astronomical figure.

[Turbowned]

Originally Posted by LSxJunkie

How well do you want to live?

This will be me someday. Except I'll have a massive garage attached to my little fort-hut.

[bestwheelbase]

Originally Posted by Dave-ROR

I love paying my taxes after all :happy0180:

Cheers. :happy0180: