Originally Posted by bplewis24
How do you determine or estimate depreciation yourself? Do you use a schedule?
I'm a controller by trade so I do accounting and financial reporting for my company. I just recently made my personal 2013 budget and a 5 year savings plan. At least in theory, I plan on saving 6% of monthly income for maintenance, 6% for vacation/discretionary impulse spending, and 30% towards long-term savings (saving up for a house and/or other investments). This doesnt' count the very small amount ($50) I'm contributing pre-tax to a 401K each month. Now, I don't make a ton of money (above average), but I'm single, never married, no kids and have no debt (got through college on a football scholarship), which is why I'm able to save.
The one thing I can't get a good hold on is how to determine car depreciation. It's nothing like fixed assets, building improvements and other things. Any ideas?
I am not 100% sure, but I think he means how much you expect the car to depreciate in actual value. Probably not the depreciation an accountant would use for tax purposes. More like looking at the resale values in 1, 2, 3, ... years to determine how much money would be forfeit by reselling.
Side note, if you are forgoing any matching to your 401k, you should rethink the 30% allocation and put some towards your 401k to get the matching. If you don't get matching, some may suggest still upping your 401k portion unless you are saving all out for a house.
Originally Posted by jokergerm
Well with 3% intrest spending cash if stupid in my book. But thats just me
+1... if you have the $XXk cash to lay down on an M5, you can probably get a great interest rate on a loan, maybe <2% right now. A fairly safe bond fund from someone like PIMCO could probably safely get you 5%+ per year over 4 or 5 years (barring a monetary meltdown).
** I'm not an expert, so take it for what it's worth.