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      02-21-2013, 02:06 PM   #1
jokergerm
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How much Debt to income do you feel is a safe amount

My wifes not thrilled on the new m5 purchase beacuse its alot of money and we dont need a new car. I just really really want a new car

So how much of your total monthly income do you think is ok to have going outward. Including everything, house pmt, cars, food, insurance, misc fun items.

I made a budget and we have to spend about 35% of our gross income to pay for all bills and general living costs, if i get the m5 it would be about 38% And some how i manange to spend another 50% on stupid crap and misc stuff

Just looking for advice.
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      02-21-2013, 02:09 PM   #2
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110%??
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      02-21-2013, 02:11 PM   #3
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110%??
Ya it feels like i spend 110% somehow
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      02-21-2013, 02:17 PM   #4
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Seriously, if we are talking about post tax income, I am at about 45% just for bills.
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      02-21-2013, 02:19 PM   #5
jokergerm
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Seriously, if we are talking about post tax income, I am at about 45% just for bills.
Ya after tax income.
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      02-21-2013, 02:32 PM   #6
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Only you can figure that out. I would tally up your total static payments each month that you have currently (ie utilities, car payments, mortgage/rent, school loans etc.) Pretty much anything that you absolutely HAVE to pay each month. Factor add in anything that can be cancelled (like cable/internet). These are extra funds that you could get back if you absolutely needed to. Anything else is spending cash. If you feel that you can live comfortably while still making payments on all of the essential stuff, then you'll be ok. If you are spending more each month, then you will have to change some spending habits. If you absolutely can't afford it, then you'll know.
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      02-21-2013, 02:35 PM   #7
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I'm dedicating about 60% of my current monthly income to paying off accumulated debt.

Granted, I probably have a relatively low salary compared to you cats because I'm young, and I'm also trying to be very aggressive with paying my debts off, which is why I'm putting such a large chunk of my income towards it.

My loan on my car is only 15% of post-tax income. Factor in insurance and it is 22%
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      02-21-2013, 02:39 PM   #8
jokergerm
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Quote:
Originally Posted by fravel View Post
I'm dedicating about 60% of my current monthly income to paying off accumulated debt.

Granted, I probably have a relatively low salary compared to you cats because I'm young, and I'm also trying to be very aggressive with paying my debts off, which is why I'm putting such a large chunk of my income towards it.

My loan on my car is only 15% of post-tax income. Factor in insurance and it is 22%
Ya i just made a budget and all my (toy) payments are 9% of my income, thats my duramax, bmw, boat, pruis, and This new M5 if i go get it tommorow as planned. Im more worried about the Gas bill and repairs then the pmt, but its got a OEM warranty for 6 more months then i could extend it
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      02-21-2013, 02:47 PM   #9
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Quote:
Originally Posted by jokergerm View Post
Ya i just made a budget and all my (toy) payments are 9% of my income, thats my duramax, bmw, boat, pruis, and This new M5 if i go get it tommorow as planned.
You seem to have money coming out your rear end... go get the M5
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      02-21-2013, 02:50 PM   #10
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I'm a financial advisor...

After taxes...

First set aside $ for all medical expenses for the year (co-pays, deductibles, premiums, etc.)

Second set aside at least 15% into long-term savings (IRA, etc.). More if you are saving for a house or to pay for kids' college.

Live off the rest (disposable income). If you want to spend more on a car than on something else, have at it.

I personally feel that my monthly capital cost for a car (depreciation or lease payment, as the case may be) should not exceed 1% of annual disposable income. ie, if I make $50k after taxes, savings and medical costs, then I would not buy a car(s) that depreciates more than $500 per month. If I need two cars, that's $500 total.
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      02-21-2013, 02:53 PM   #11
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Originally Posted by Gizm0 View Post
You seem to have money coming out your rear end... go get the M5
Ya i do ok, but yet i manage to spent it all. The more you make the more you spend, its a fact of life
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      02-21-2013, 03:08 PM   #12
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lol if i looked at an m5 payment, it would be 60% of my income if not more.
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      02-21-2013, 03:09 PM   #13
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Quote:
Originally Posted by jokergerm View Post
My wifes not thrilled on the new m5 purchase beacuse its alot of money and we dont need a new car. I just really really want a new car
Some woman just dont understand these things, a man has to have its toys. Its like telling her that her engagment ring cost too much, I am sure they will disagree.
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      02-21-2013, 03:30 PM   #14
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My car + ins makes up 18.8% of my post tax income and everything else is 34%. Luckily I'm a single guy with no kids so I like to frequently splurge on mods and going out. Ah well, you gotta enjoy life right?!
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      02-21-2013, 03:35 PM   #15
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Pay cash. Forget about debt.
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      02-21-2013, 03:54 PM   #16
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Quote:
Originally Posted by jokergerm View Post
Ya i do ok, but yet i manage to spent it all. The more you make the more you spend, its a fact of life
If you think this is true then you are in for a bleak financial future.

-Kevin
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      02-21-2013, 04:01 PM   #17
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well i dont spend it all, but a lot of it.

im young and i have just started to plan for the future. Im meeting with an advisor next week
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      02-21-2013, 04:08 PM   #18
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Quote:
Originally Posted by 335dFan View Post
Pay cash. Forget about debt.
This.

Specially because with the way the economy is now a days you never know when that income won't be there and you'll have to loose something you worked so hard for because you couldn't afford to pay it. Less bills less problems.
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      02-21-2013, 04:09 PM   #19
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Dont forget college tuition if your kids are young. My daughter's tuition (room and board) will total to $180,000. Thank god she will be done next year (4.5 yrs) and thank god my youngest will be on scholarship. That is where my M5 has gone GL.
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      02-21-2013, 04:15 PM   #20
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Quote:
Originally Posted by jokergerm View Post
well i dont spend it all, but a lot of it.

im young and i have just started to plan for the future. Im meeting with an advisor next week
Like the financial advisor said, at least 15% to tax advantaged retirement account if possible. The more you can contribute at a young age makes a huge difference. I'm not sure how old you are, but I'm 24 and save 15%. My rough calculations are your families post tax income is around $200k, so you have enough money to max out your accounts. If you are with a company that supports a 401K, contribute the max $17K to it (if it has good options).

You will get a lot of advice from the planner you are meeting with, so that is a good idea. Do some research on the fees he charges though. More than likely he is going to put you in an aggressively diversified asset allocation and rebalance every so often, all while skimming a 1-2% return off of your total return. You can easily keep up with this yourself with a quick read of a couple of books and keep that 1-2% to yourself, which can make 100s of thousands of dollars difference at retirement. If you want to dig into this more, check out this site http://www.bogleheads.org/forum/view...18bca9fddb5635
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      02-21-2013, 04:23 PM   #21
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Originally Posted by ericfox11 View Post
Like the financial advisor said, at least 15% to tax advantaged retirement account if possible. The more you can contribute at a young age makes a huge difference. I'm not sure how old you are, but I'm 24 and save 15%. My rough calculations are your families post tax income is around $200k, so you have enough money to max out your accounts. If you are with a company that supports a 401K, contribute the max $17K to it (if it has good options).

You will get a lot of advice from the planner you are meeting with, so that is a good idea. Do some research on the fees he charges though. More than likely he is going to put you in an aggressively diversified asset allocation and rebalance every so often, all while skimming a 1-2% return off of your total return. You can easily keep up with this yourself with a quick read of a couple of books and keep that 1-2% to yourself, which can make 100s of thousands of dollars difference at retirement. If you want to dig into this more, check out this site http://www.bogleheads.org/forum/view...18bca9fddb5635

Yea making that kind of money, you should be going to a financial advisor. An advisor can't do much with my 70k a year.
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      02-21-2013, 04:43 PM   #22
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I heard the last gen of m5s have some crazy (like $10k) repair bills once they get off warranty for silly little things... Yeah, you're covered for the next 9 months, but then what?...
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