Quote: (02-27-2013 04:18 PM)presidentcarter Wrote:
You say the interest doesn't matter ($3k over a 60 month loan, according to your $50/month calc), but then talk about gas and tolls? Are you trying to say he should spend a lot less because it's not all worth it in the end? I'm assuming a) he has to buy a car b) he can and wants to spend up to $30k c) interest, tolls, gas don't matter because he has to pay them anyway.
He has fixed costs in running a nice car.
The carrying costs for a 30k car are not insignificant.
And they're gonna stick with him through the time that he owns the car.
This is w/o even getting into unforeseen repairs.
So it's X + Car payment.
Or rather it's
Net Monthly income - (Car Payment + Carrying Costs) = disposable income.
Which one of these variables can be tweaked the most to increase his disposable income?
His income? (Largely fixed month to month, slight upticks year to year)
His carrying costs? (Largely fixed month to month, random upticks from month to month)
or his Car Payment? (not fixed right now, but will be with his decision)
Again, OP is gonna do what he's gonna do. Maybe his overall transportation spending is less than 5% a month of his net income. If so, Kudos to him. The typical case is that the car is at least 15-25% of a persons after tax income.
He has an opportunity to increase his overall flexibility by going for a nice car @ half the price. It could just mean choosing the 2009 over the 2011, and saving the difference for the scheduled maintenance between 50 and a 100k.
In my case,I needed to buy the car in order to understand the mathematics. I needed to be in a spot where having an extra 400 bucks a month would have come in handy. But I invested that money in a depreciating yet beautiful piece of steel.
Quote: (02-27-2013 04:18 PM)presidentcarter Wrote:
You can get a NICE car within the $20k-30k range, so I think OP is on the right track there, but he could also spend on the lower range of that if he wants to. He could have a $100k budget and I'd still make recommendations, not question why he would want to spend that much.
First thing I did was give him advice on what car. Audi A4 AWD. (given him flipping over in the snow)
Second thing I did was offer my unsolicited advice on whether he should buy a 2011 for 32K, when it is not a small amount of cash, and his total monthly transportation costs would be significant.
Now I've laid out a case that says, you can buy a nice car, but keep in mind how much the nice car is really costing you. And that one should consider their monthly cost especially if they are price sensitive over the initial sticker price.
If you're making this decision based on #'s, a good tool is using the Edmund's Total Cost of Ownership tool
http://www.edmunds.com/tco.html
WIA