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      04-13-2013, 01:24 PM   #1
Skiptomylou37
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Financial Responsibility 101: How much is too much for a car payment?

I am a young guy, mid 20's, who works in medical sales. No wife, no kids, no serious relationship, I make good money, have a retirement plan + full benefits through work and also have a side job coaching hockey privately that I make about 1k from a month. I have a company car and currently have an Evo X MR for a fun/weekend car and am thinking of stepping it up a bit. I had an e90 M3 before the Evo and am considering getting another M3 but for only a little bit more a month I could get a new or almost new M3, get a couple year old M3 and supercharge it, 911 turbo, GTR, etc. I guess my question is is it stupid of me financially to consider having a $600-$700/month car payment instead of my $400/month payment now to drive something newer that has more flare? Two things before you answer. This car payment money is all disposable income. Like I said before, I have a retirement plan, 401k, mutual funds, the works, plus money I put away every month to eventually buy a house. Also, my dad passed way unexpectedly at 50 and always wanted a Porsche 911 but never got one and because of that, I don't want to say I am a "I want it now" person, but I definitely think you really have to go after what you want in life and get it. That all being said, I would appreciate some wise advice.
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      04-13-2013, 01:29 PM   #2
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      04-13-2013, 01:30 PM   #3
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P.S. I should add that I don't have any debt besides some very minor credit card debt, all my college loans have been paid.
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      04-13-2013, 01:32 PM   #4
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whats your living situation? house rental, apartment, parking. I wouldnt consider anything too nice without my own garage.
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      04-13-2013, 01:34 PM   #5
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I rent and have a garage so having a nice, safe place to keep the car isn't a problem.
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      04-13-2013, 01:37 PM   #6
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Originally Posted by Frostbite View Post
My papi always said, "If you gotta ask, you can't afford it!"
Your papi must be rich as hell haha. Most people who have money still have to budget.
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      04-13-2013, 01:48 PM   #7
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get a slightly used one then supercharge it
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      04-13-2013, 01:49 PM   #8
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Quote:
Originally Posted by Skiptomylou37 View Post
I am a young guy, mid 20's, who works in medical sales. No wife, no kids, no serious relationship, I make good money, have a retirement plan + full benefits through work and also have a side job coaching hockey privately that I make about 1k from a month. I have a company car and currently have an Evo X MR for a fun/weekend car and am thinking of stepping it up a bit. I had an e90 M3 before the Evo and am considering getting another M3 but for only a little bit more a month I could get a new or almost new M3, get a couple year old M3 and supercharge it, 911 turbo, GTR, etc. I guess my question is is it stupid of me financially to consider having a $600-$700/month car payment instead of my $400/month payment now to drive something newer that has more flare? Two things before you answer. This car payment money is all disposable income. Like I said before, I have a retirement plan, 401k, mutual funds, the works, plus money I put away every month to eventually buy a house. Also, my dad passed way unexpectedly at 50 and always wanted a Porsche 911 but never got one and because of that, I don't want to say I am a "I want it now" person, but I definitely think you really have to go after what you want in life and get it. That all being said, I would appreciate some wise advice.

Personally, I'd get the house before the car.

If you have to ask, then your gut is telling you that it's not right. It shouldn't be a complicated decision. Nothing worse than being car poor.
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      04-13-2013, 01:50 PM   #9
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Quote:
Originally Posted by robotk View Post
Personally, I'd get the house before the car.

If you have to ask, then your gut is telling you that it's not right. It shouldn't be a complicated decision. Nothing worse than being car poor.
Thats true, maybe get a property first?
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      04-13-2013, 01:51 PM   #10
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To me, everything is in percentages.

If you're making $2k/month, then 700/month is too large of a percentage.

If you're making 7k/month, then 700/month isn't an issue considering you have no other responsibilities or real liabilities/debts/etc

if you're making 14k/month, even better.

and so worth.

I wouldn't s/c it though. Too much of a liability as well as an upfront cost. New/newer= longer warranty as well so less headaches.

All depends on what % of your income it'll take away and how much it'll impact your ability to save/invest/enjoy elsewhere (since a car isn't everything)
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      04-13-2013, 01:52 PM   #11
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you got to take into consideration other aspects such as insurance, gas and maintenance on an older car. If your able to put aside around 1000, for the car every month including your payments you might be able to make it happen.
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      04-13-2013, 01:52 PM   #12
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Quote:
Originally Posted by Skiptomylou37 View Post
I rent and have a garage so having a nice, safe place to keep the car isn't a problem.
whats the reason for renting now? is it because you cant afford a house? dont want a house until later? plan on moving? if your reasoning is sound for why you dont own first then the car i can see doing it but most situations the house should be first then start upgrading your cars, watches and rest of your life after.
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      04-13-2013, 01:54 PM   #13
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On a side note... how's the Evo X MR?

I kind of want to lease one as a fun, cheap, I don't care much about track car.... they're ~300/month with a couple grand down.


Quote:
Originally Posted by 1MOREMOD View Post
whats the reason for renting now? is it because you cant afford a house? dont want a house until later? plan on moving? if your reasoning is sound for why you dont own first then the car i can see doing it but most situations the house should be first then start upgrading your cars, watches and rest of your life after.
I can't speak for the op, but I know many around my age (I am also mid 20s, actually.. not at the "mid" point yet...) don't buy a home because we really don't know where we want to live.

Buying a home = large down (we are young, so usually need at least 20, if not 30+ % down).
if you don't like it.. yes you can rent it out, but, at least to me, I want to enjoy my first home and live in for a decent period.

Buying investment properties are different... 2 of mine I would never live in myself, but they provide a fair residual income. But I don't know many in their mid 20s who want to buy a home

So to all who say buying a home... what if the op doesn't know where he wants to live, thus buying isn't so wise?
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      04-13-2013, 01:56 PM   #14
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my 2 cents.

Sell the MR. Remove CC debt. Buy house. Then get car.
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      04-13-2013, 01:58 PM   #15
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Quote:
Originally Posted by 1MOREMOD View Post
whats the reason for renting now? is it because you cant afford a house? dont want a house until later? plan on moving? if your reasoning is sound for why you dont own first then the car i can see doing it but most situations the house should be first then start upgrading your cars, watches and rest of your life after.
I could be asked to relocate for work which is why I haven't looked into buying a house yet. Totally agree with your logic though about the house before the car and watches. Fortunately I already have a Rolex GMT that I'm happy with
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      04-13-2013, 02:00 PM   #16
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Quote:
Originally Posted by persian54 View Post
On a side note... how's the Evo X MR?

I kind of want to lease one as a fun, cheap, I don't care much about track car.... they're ~300/month with a couple grand down.




I can't speak for the op, but I know many around my age (I am also mid 20s, actually.. not at the "mid" point yet...) don't buy a home because we really don't know where we want to live.

Buying a home = large down (we are young, so usually need at least 20, if not 30+ % down).
if you don't like it.. yes you can rent it out, but, at least to me, I want to enjoy my first home and live in for a decent period.

Buying investment properties are different... 2 of mine I would never live in myself, but they provide a fair residual income. But I don't know many in their mid 20s who want to buy a home

So to all who say buying a home... what if the op doesn't know where he wants to live, thus buying isn't so wise?
Evo X MR is pretty dope. I like it a lot more than the 335xi I had a few years ago, just don't like the Paul Walker/Brian Spilner image it portrays. Also, I recently got my company car too so now I don't need something that can go in the snow. Definitely agree with you that it's hard to pick a location when you are young on where to buy a home. That mixed with the above mentioned possibility I could have to relocate for work make me think purchasing a home will happen later on.
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      04-13-2013, 02:02 PM   #17
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Quote:
Originally Posted by Skiptomylou37 View Post
Evo X MR is pretty dope. I like it a lot more than the 335xi I had a few years ago, just don't like the Paul Walker/Brian Spilner image it portrays. Also, I recently got my company car too so now I don't need something that can go in the snow too.
ah snow... yeah I have absolutely no idea what that's like.

Today is a bit chilly (60s), but yesterday was 80s and sunny here... lol
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      04-13-2013, 02:09 PM   #18
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Quote:
Originally Posted by persian54 View Post
To me, everything is in percentages.

If you're making $2k/month, then 700/month is too large of a percentage.

If you're making 7k/month, then 700/month isn't an issue considering you have no other responsibilities or real liabilities/debts/etc

if you're making 14k/month, even better.

and so worth.

I wouldn't s/c it though. Too much of a liability as well as an upfront cost. New/newer= longer warranty as well so less headaches.

All depends on what % of your income it'll take away and how much it'll impact your ability to save/invest/enjoy elsewhere (since a car isn't everything)
I really can't give an exact number because my commission varies from month to month, but AFTER taxes I would say I usually make 5-6k a month, thats including the 1k/month I make from my side job.
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      04-13-2013, 02:22 PM   #19
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I say pay down debt, buy property, then buy your dream car. No offense but owning a house, having kids, and having a nice car you need to make like double what your making now. Be smart. Make money with your money before you think about toys.
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      04-13-2013, 02:22 PM   #20
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Quote:
Originally Posted by Skiptomylou37 View Post
I really can't give an exact number because my commission varies from month to month, but AFTER taxes I would say I usually make 5-6k a month, thats including the 1k/month I make from my side job.
Then the majority of people on here would probably tell you to not do it, but we're only young once :P

You may consider lease transfer to limit liability and debt; don't want to buy a new car now only to have it drop in value significantly in only a couple years.
IMO, E9X M3s will really lose value once the new F8X comes out... similar to how you can get E46s for dirt cheap now.

I'm also personally against buying used cars that are close to finishing their warranty (thus 09s would be out)

If I were in your position, I would look for a lease transfer, or possible a new lease depending on what they are.
I do know you can get a loaded $76k M3 for 5k OTD 840/month tax inc 15k mi/year.
Reduce miles to 10k and you can do it for considerable less (.146 saved per mile + higher residual, giving you a better overall lease)

Quote:
Originally Posted by S65 View Post
I say pay down debt, buy property, then buy your dream car. No offense but owning a house, having kids, and having a nice car you need to make like double what your making now. Be smart. Make money with your money before you think about toys.
I don't see how the having kids part is relevant, since he did say no kids (and no serious relationship, so, as long as he's smart, he won't be having kids for a bit).

I agree with the first 2 100%. "little" CC debt can be a lot depending on your definition of 'little'
But he mentioned he may be relocated for work, so buying a home wouldn't be smart. investment property can work, but he would need to hire a manger/company to take care of it in case he's relocated
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      04-13-2013, 02:28 PM   #21
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I'll just put it out there- personally I think you need to be making at least $200k to get an m3. I'm sure others have different opinions on this. Where you live and having kids/wife obviously factor into this as well.
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      04-13-2013, 02:28 PM   #22
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Quote:
Originally Posted by persian54 View Post
Then the majority of people on here would probably tell you to not do it, but we're only young once :P

You may consider lease transfer to limit liability and debt; don't want to buy a new car now only to have it drop in value significantly in only a couple years.
IMO, E9X M3s will really lose value once the new F8X comes out... similar to how you can get E46s for dirt cheap now.

I'm also personally against buying used cars that are close to finishing their warranty (thus 09s would be out)

If I were in your position, I would look for a lease transfer, or possible a new lease depending on what they are.
I do know you can get a loaded $76k M3 for 5k OTD 840/month tax inc 15k mi/year.
Reduce miles to 10k and you can do it for considerable less (.146 saved per mile + higher residual, giving you a better overall lease)



I don't see how the having kids part is relevant, since he did say no kids (and no serious relationship, so, as long as he's smart, he won't be having kids for a bit).

I agree with the first 2 100%. "little" CC debt can be a lot depending on your definition of 'little'
But he mentioned he may be relocated for work, so buying a home wouldn't be smart. investment property can work, but he would need to hire a manger/company to take care of it in case he's relocated
A little credit card debt is around 1k with a much higher limit. I originally was thinking of buying an 08 M3 with low miles. No warranty doesn't scare me because I am a USAA member and they offer bumper to bumper warranties I could get up to a 3yr/36k mile warranty for 3k.
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