The 1/10th Rule For Car Buying

[Allch Chcar]

Originally Posted by Model Citizen

First rule of being a good jew.

Money pissed away always hurts, no matter how much of it you have.

Same idea as having a house where the property tax is equal to a 20k car every year.

Wait, isn't that normal!?

[Model Citizen]

Originally Posted by Allch Chcar

Wait, isn't that normal!?

you must've missed the "whats the smallest coin you'll bend to pick up" thread

[ayau]

Here's an updated rule.

5% of net worth.

http://www.financialsamurai.com/net-...ing-guideline/

[cfusionpm]

That's weird. I make less than 30K a year, yet I own my own condo, have an FRS, and plenty still left in savings. There are plenty of ways to make money and plenty of smart ways to spend it. I lived at home till 27, which let me save up about 32k for my condo down payment by putting the money I would have been spending on rent into a savings account. Additionally, I bought my place at rock bottom price and excellent mortgage rate back in October 2012. Then after getting the insurance check from my last car, I put that plus my entire tax return down on the FRS. All of this means that my mortgage and car payments COMBINED are around $875/mo. I also live with two roommates in my place until my girlfriend moves in at the end of summer (at which point they will leave), so my mortgage/HOA/utilities are all split 2 or 3 ways.

There is no magic trick to making or having money. It's about being smart with when and how you spend it.

[serialk11r]

On the topic of money again, I think it is totally okay to spend more than 5% of your net worth or 10% or whatever of your income if you're young and anticipate increased future earnings. For example I want to go to grad school when I am done with college, where I'll get close to what a minimum wage worker makes for stipend/teaching, but I would gladly spend a good chunk of that up because I don't anticipate making <25k a year forever. I mean, with my 4 digit net worth there aren't many purchases that don't amount to 1% of net worth lol.

Though, when the bank account only has 4 to barely 5 digits in it, it's a little hard to watch that money go, and for me the shitty feeling when I see the numbers drop noticably is enough to keep me frugal.

[suaveflooder]

Originally Posted by serialk11r

On the topic of money again, I think it is totally okay to spend more than 5% of your net worth or 10% or whatever of your income if you're young and anticipate increased future earnings. For example I want to go to grad school when I am done with college, where I'll get close to what a minimum wage worker makes for stipend/teaching, but I would gladly spend a good chunk of that up because I don't anticipate making <25k a year forever. I mean, with my 4 digit net worth there aren't many purchases that don't amount to 1% of net worth lol.

Though, when the bank account only has 4 to barely 5 digits in it, it's a little hard to watch that money go, and for me the shitty feeling when I see the numbers drop noticably is enough to keep me frugal.

Dangerous thought process here. I have a couple nurses, some engineers and some biology degree friends who still have not found a job. One of them in particular thought EXACTLY like you do. She's hurting pretty badly right now. Even with a full time job (not nursing yet), she has put herself WELL above her means, and is literally using credit cards to live.

@Shutter made some good points. You don't have to have a lot of money coming in to do well. It's all knowing and being educated as to when and where to spend. Set yourself up early, there is no reason you can't start playing in your 30's

[serialk11r]

Originally Posted by suaveflooder

Dangerous thought process here. I have a couple nurses, some engineers and some biology degree friends who still have not found a job. One of them in particular thought EXACTLY like you do. She's hurting pretty badly right now. Even with a full time job (not nursing yet), she has put herself WELL above her means, and is literally using credit cards to live.

Obviously you have to have the correct expectations right? There are people who can reasonably expect a few hundred k increase in income in a few years. On the other hand, someone who is struggling to find a job probably isn't well advised to expect a lot more money to come their way quickly.

The reason I say what I say is because I have pretty modest spending habits so I know that even with a job that only pays okay I won't be in trouble, I'm just willing to moderately spend a few years in advance given my own situation. If you're like some people I know (cough female) who like to go on shopping sprees and impulse buy everything they see on the rack, then yes you'll run into trouble spending money in advance.

[suaveflooder]

Originally Posted by serialk11r

Obviously you have to have the correct expectations right? There are people who can reasonably expect a few hundred k increase in income in a few years. On the other hand, someone who is struggling to find a job probably isn't well advised to expect a lot more money to come their way quickly.

The reason I say what I say is because I have pretty modest spending habits so I know that even with a job that only pays okay I won't be in trouble, I'm just willing to moderately spend a few years in advance given my own situation. If you're like some people I know (cough female) who like to go on shopping sprees and impulse buy everything they see on the rack, then yes you'll run into trouble spending money in advance.

I don't count on any money that is not in my hand. I have to be little more strict as I am commission only, but you never know if you will have a job tomorrow (need for an "emergency fund") and if you keep your habits modest and increase your earnings you have the potential to maka A LOT of money in even pretty safe investments (I'm assuming you are young by the way to talk about future potential. The ability to get a better income eventually).

I get where people are ragging on the article, but I ABSOLUTLY get where the author is coming from. A cheap car doesn't cause paranoia. I'm scared everytime I park the car I will get a door ding. That every time I back out, someone will hit me (look at my threads, this actually happened). Now, in those cases, what would I do? I would drop EVERYTHING and spend as much money as needed (within reason) to get it fixed. I have proven that I would. I dropped $1500 in a day to make sure the car got fixed quickly. I got reimbursed some, but not all of that money.

Now if you had a $2000 civic, would you be so cautious? Would you get every ding pulled out (it's about $40-80 a pop usually, unless you know someone), would you fix that scratched bumper when there is no frame damage? The answer is probably not. Now, I've done all these things because I love my car and it looks good!

I have an 07 civic that is paid for. It has a scratch on the lower bumper, a ripped shifter boot, scratch accross the rear quarter panel, curbed wheels, bubbled tint, ect. That car was in my means to buy (we paid it off in two years) and I don't worry about it a bit. Car runs like a champ, looks decent, great mileage.

Hopefully you see what I'm getting at. New is GREAT! Expensive is fun. Luxury is nice! They all come at a price. Your comfort for your family and your future is not worth a car. You can get it later. Like I mentioned, I plan on having a USED $100k car by the time I'm 40. I'll have my investments set up, and i MIGHT finance a bit of it to keep my credit high, but most of it will be paid in cash and not at the expense of my investments, daily living, and family needs.

[serialk11r]

That absolutely makes sense. I have a car I paid 5k for in cash, I got pissed when someone hit it but the paint wasn't so good in the first place and the car had been bumped a few times before, I don't sweat over it. I pulled the dings out with my bare hands at no cost, I fill the thing with conventional oil and change slightly more frequently, and I don't drive it much.

However I know that the amount of money I spend on myself is pretty small, and so I wouldn't feel bad purchasing a nicer car (though I'd go slightly used unless I had a lot of net worth since the depreciation is hard to stomach) if I had a good job. If I can drive a nice car for a couple extra years that still allows me to save some good money up, why not.

Sent from my SAMSUNG-SGH-I337 using Tapatalk

[suaveflooder]

Originally Posted by serialk11r

That absolutely makes sense. I have a car I paid 5k for in cash, I got pissed when someone hit it but the paint wasn't so good in the first place and the car had been bumped a few times before, I don't sweat over it. I pulled the dings out with my bare hands at no cost, I fill the thing with conventional oil and change slightly more frequently, and I don't drive it much.

However I know that the amount of money I spend on myself is pretty small, and so I wouldn't feel bad purchasing a nicer car (though I'd go slightly used unless I had a lot of net worth since the depreciation is hard to stomach) if I had a good job. If I can drive a nice car for a couple extra years that still allows me to save some good money up, why not.

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Sounds like you are on the right track, good sir! Keep it up!

[Davey]

Originally Posted by ayau

Thoughts?

[n2oinferno]

Originally Posted by suaveflooder

I dropped $1500 in a day to make sure the car got fixed quickly. I got reimbursed some, but not all of that money.

Haha get used to that. Yearly Aston Martin oil change and maintenance costs that much alone!

I disagree about not really caring about a car because it's cheap though. If it's already beat to hell when I bought it, that's one thing. But I wouldn't put myself in a situation where I buy something beat to hell anyway. My mindset though is that I care about my vehicles, and even though the Camry is a boring appliance, I treat it almost as well as my fun toys, since it in actuality is more important than my Abarth as it carries tike-hauling duties. When some asshole flung their door open and hit the Camry, I was still pissed about it, and I still just as quickly busted out the polisher to fix the paint scuffs.

Knowing me though.. I'd be like "well, I've got another dent.." Then I'd go over the whole car, decide enough is enough, and realize that it's time to just repaint the whole damn thing.

[suaveflooder]

Originally Posted by n2oinferno

Haha get used to that. Yearly Aston Martin oil change and maintenance costs that much alone!

I disagree about not really caring about a car because it's cheap though. If it's already beat to hell when I bought it, that's one thing. But I wouldn't put myself in a situation where I buy something beat to hell anyway. My mindset though is that I care about my vehicles, and even though the Camry is a boring appliance, I treat it almost as well as my fun toys, since it in actuality is more important than my Abarth as it carries tike-hauling duties. When some asshole flung their door open and hit the Camry, I was still pissed about it, and I still just as quickly busted out the polisher to fix the paint scuffs.

Knowing me though.. I'd be like "well, I've got another dent.." Then I'd go over the whole car, decide enough is enough, and realize that it's time to just repaint the whole damn thing.

lol!!! AMEN to the Aston comment! I know that it won't be a cheap car to own. I'm just hoping the DBS's have come down that much by the time I'm ready to buy

You would be surprised. I said the same thing. I am shocked at how I "let things go" when it comes to the civic. We didn't pay a ton for it, and it's a civic. The FRS, I freaked out when the rear bumper was hit. I just recently repainted the rear bumper on the civic as well (100k mile deal with the wife), and I didn't look at it twice. Don't get me wrong, the car looks nice….i just don't stress about it the same as the FRS.

[86-tundra]

All of this is moot.

Car = hobby, for all of us.