[SheaButter]

Originally Posted by MightyMouseTech

Personally, I would not think of buying a $50k car until retirement savings were well, WELL into the 6 figures.

Personally I think the trick is to find a happy middle-ground with enjoying your hard earned money while also prepping for a future. Quite honestly I have found that the $80k-$90k marker allows you to "have it all" on a budgeted level. You won't be in a Lamborghini and a $10mm house. But you can afford an M3 (or another equal sports car), mod it while also, traveling, owning a home, saving money, and prepping for retirement.

^^(Based on being single). Anything past the 80-90 marker I have found that I just end up investing more or saving more. Even dipping into the mid 100's it doesn't change much beyond the 80-90 range besides being able to do the same stuff on less of a budget. I'd imagine in the low-mid 200's is where you have freedom to lease/buy an exotic, $2mm plus house, etc. Obviously none of this is solid economics, just my personal experience.

[MrPrena]

you guys are in much better shape than I. I am bleeding!


Scenario 6:
-Age:38
-Income: -$8,000 (8,000) on year 2015 YTD, (yes negative)
-Savings: enough but need more, Retirement: enough but need way more.
-Monthly Bills: $2300-2700 including mortgage.
-$380,000 house in Denver suburb city, CO and actively looking to move/upgrade house.)
-Married
-Loves sports, but in Physical thearpy
-Very short (3minute drive) commute for wife. There is no commute for me, unless there is auction or sales I gotta do.
-Likes cars.
-Have 3 vehicles. 1 sedan, 1 force induction performance vehicle, 1 naturally aspirated high revving V8.

Bonus Question:
In order to afford slightly used McLaren MP4/12C, 458 Speciale, or GT3/RS at late 30s, what should your finances look like?

Have fun with this one. Interesting to see what you would do in these situations.

I will evolve this thread as I see responses and what the conversation will look like.

[tony20009]

Originally Posted by BayMoWe335

...I would say none of them should be driving a brand new car.

...

I mostly agree. People need transportation, not $50K cars. With the following revisions, I fully agree.

I would say none of them should be paying for any car costing anything close to $50K.

All the best.

[csu87]

Originally Posted by MightyMouseTech

Personally, I would not think of buying a $50k car until retirement savings were well, WELL into the 6 figures.

Id say 6 figures is a little excessive, as long as the new car does not cut into the amount you are contributing yearly. There arent many 25-30yos with a 6 figure + 401k.

[MightyMouseTech]

Originally Posted by csu87

Id say 6 figures is a little excessive, as long as the new car does not cut into the amount you are contributing yearly. There arent many 25-30yos with a 6 figure + 401k.

Then they should not be buying a new $50k car.

Some of his scenarios were people in their forties. If you have $40k saved up when you are 40. Don't plan on retiring.

Admittedly, I am not familiar with the US 401k plan. What exactly is that? Does it shield you from taxes while in one? Do you pay tax on withdrawl, or do you get tax relief when you deposit the funds?

In Canada, we have two different types of retirement savings vehicles, RRSP's and TFSA's.

(Sorry for the sidetrack)

[csu87]

Originally Posted by MrPrena

you guys are in much better shape than I. I am bleeding!


Scenario 6:
-Age:38
-Income: -$8,000 (8,000) on year 2015 YTD, (yes negative)
-Savings: enough but need more, Retirement: enough but need way more.
-Monthly Bills: $2300-2700 including mortgage.
-$380,000 house in Denver suburb city, CO and actively looking to move/upgrade house.)
-Married
-Loves sports, but in Physical thearpy
-Very short (3minute drive) commute for wife. There is no commute for me, unless there is auction or sales I gotta do.
-Likes cars.
-Have 3 vehicles. 1 sedan, 1 force induction performance vehicle, 1 naturally aspirated high revving V8.

Bonus Question:
In order to afford slightly used McLaren MP4/12C, 458 Speciale, or GT3/RS at late 30s, what should your finances look like?

Have fun with this one. Interesting to see what you would do in these situations.

I will evolve this thread as I see responses and what the conversation will look like.

in your situation, with -8k, Id invest in a glock and head to cherry hills. Wait behind a bush in some of those nice neighborhoods until one of those cars comes by, jump out and steal the car.

[P1]

I have friend who drive #yolo cars and it's mind boggling to see the kind of money they have thrown away over the years, and will have nothing left to show for it at the end of it all.

I'm getting close to just buying a CPO Lexus LS and just being done with it.

[DJKapeesh]

Originally Posted by SheaButter

I actually appreciate the attempted effort on scenarios, but it's just too generic to provide any real data on.

For example: "what car should each person drive?" are they tall, fat, short, do they like sports cars, luxury cars, brands?...

The economics relating to geographical location also comes into play. Are they living in Detroit? Or are they in Laguna Beach? This is actually important because IMO you shouldn't be driving a Lamborghini if you live in a 1BR apartment and haven't bought a house yet (that JUST MY opinion, I understand that's the bachelor dream for some)

Does gas mileage to them matter? If this is just a funzies scenario then I cant play since I am a data guy. If you're looking for a real scenario answer, there are a lot of intelligent people on this board, and I bet if if you give REAL data, you'd get some great feedback.

Cheers bro!

Pretend these are all you and have your interest in cars ect

[P1]

Let me throw everyone for a loop here. I was 24, had just gotten married and had a good quarter at work. I was stupid, and spent $34K cash on a brand new 2004 Dodge Ram 2500. It was my dream truck. I was living in a one-bedroom apartment with my wife, I think we spent $1,100 a month on rent. I drove that truck for 10 years and sold it for $24K cash to a guy from Indiana. Not once did I have to pay for big repairs beyond just regular maintenance. Many times I was tempted to buy something else, but never did. When you break down per month how much that truck cost me in the end, I think it was around $130 or so. Not bad eh! And yes, she looked like the pic below until the day I sold it.

[csu87]

Originally Posted by MightyMouseTech

Then they should not be buying a new $50k car.

Some of his scenarios were people in their forties. If you have $40k saved up when you are 40. Don't plan on retiring.

Admittedly, I am not familiar with the US 401k plan. What exactly is that? Does it shield you from taxes while in one? Do you pay tax on withdrawl, or do you get tax relief when you deposit the funds?

Lots of different scenarios with taxes and 401s.

There is also a limit on how much you can contribute to your 401k per year. You could be a 25yo, who has only been in the workforce for a year or 2, have a 6 figure salary and a nice chunk of change saved up, and only have 30-40k in your 401k. Hell, Ive been putting in 6% + 6% matched by my employer since i graduated, averaging 80-90k/yr since graduation for the last 5 years, and i dont have 6 figures in my 401k, but have 6 figures in my savings accounts, and can comfortably afford a 50k car along with a house with my current salary. Add in my wifes salary and its just gravy.

[MrPrena]

Originally Posted by csu87

in your situation, with -8k, Id invest in a glock and head to cherry hills. Wait behind a bush in some of those nice neighborhoods until one of those cars comes by, jump out and steal the car.

The statement with bold letter you mentioned will be probably best advice during and after election. Bought new for 418 and sold it as used for 730 right after election.

[DJKapeesh]

Originally Posted by BayMoWe335

If you have any student loans after about age 28, unless you are an MD or something, you failed finance and life.

What about when you think of it like this?

fixed rate of $230 month for ever. owe 35k but its a 20yr payment. 20 years * 2% inflation means that the $230 monthly payment and 35k 20 years later will essentially be very cheap and not nearly as much debt as it was by pay off time no?

[BayMoWe335]

Originally Posted by csu87

Id say 6 figures is a little excessive, as long as the new car does not cut into the amount you are contributing yearly. There arent many 25-30yos with a 6 figure + 401k.

Unless you have some crazy higher education degree, there is no reason to not have at least $100k in your 401k at 30. $17,500/yr for 8 years (age 22-30) is $136,000 without any market returns.

[csu87]

Originally Posted by BayMoWe335

Unless you have some crazy higher education degree, there is no reason to not have at least $100k in your 401k at 30. $17,500/yr for 8 years (age 22-30) is $136,000 without any market returns.

by 30 sure, but not by 25 which was the lower of the age range.

[BayMoWe335]

Originally Posted by DJKapeesh

What about when you think of it like this?

fixed rate of $230 month for ever. owe 35k but its a 20yr payment. 20 years * 2% inflation means that the $230 monthly payment and 35k 20 years later will essentially be very cheap and not nearly as much debt as it was by pay off time no?

No scenario really makes carrying the debt, especially an amount that small and completely in the past, makes a lot of sense.

You could say, "Oh, I'd be better off investing and earning X return bc my interest is only 4%, blah blah."

It's just something that needs to be taken care of because life always gets more expensive and plans go awry. Get rid of any debt, especially debt that on something that doesn't appreciate in value.

[DJKapeesh]

Originally Posted by csu87

in your situation, with -8k, Id invest in a glock and head to cherry hills. Wait behind a bush in some of those nice neighborhoods until one of those cars comes by, jump out and steal the car.

I'm literally crying reading this at work...

Originally Posted by BayMoWe335

No scenario really makes carrying the debt, especially an amount that small and completely in the past, makes a lot of sense.

You could say, "Oh, I'd be better off investing and earning X return bc my interest is only 4%, blah blah."

It's just something that needs to be taken care of because life always gets more expensive and plans go awry. Get rid of any debt, especially debt that on something that doesn't appreciate in value.

depreciation in debt = appreciation?

[MightyMouseTech]

Originally Posted by csu87

Lots of different scenarios with taxes and 401s.

There is also a limit on how much you can contribute to your 401k per year. You could be a 25yo, who has only been in the workforce for a year or 2, have a 6 figure salary and a nice chunk of change saved up, and only have 30-40k in your 401k. Hell, Ive been putting in 6% + 6% matched by my employer since i graduated, averaging 80-90k/yr since graduation for the last 5 years, and i dont have 6 figures in my 401k, but have 6 figures in my savings accounts, and can comfortably afford a 50k car along with a house with my current salary. Add in my wifes salary and its just gravy.

OK, thanks. 401 sounds like our RRSP. Your deposit limit is essentially 18% of previous years income (or $24,930, whichever is lower) and can be carried forward from year to year, and it is pretax. So, if you deposit the funds with aftertax income, you get the tax portion back when you do your taxes.

You do pay tax on the withdrawals after you retire as if they were income. So it is just tax deferral until you retire and in a lower tax bracket.

[BayMoWe335]

Originally Posted by csu87

by 30 sure, but not by 25 which was the lower of the age range.

Even at 25, you should have about $60k, plus about $20k in an IRA.

[BayMoWe335]

Originally Posted by Whostheboss

i'm over 28 and i still have student loans

Get that cleaned up.

[BayMoWe335]

Originally Posted by DJKapeesh

I'm literally crying reading this at work...



depreciation in debt = appreciation?

Less debt = good.

Debt on a house, not as bad because you can always sell the house assuming you aren't under water and in a terrible market.

You can't sell your education if you owe student loan debt or a jalopy car you owe more than it's worth.

[csu87]

Originally Posted by BayMoWe335

Even at 25, you should have about $60k, plus about $20k in an IRA.

i graduated at 23 with only a 55k salary . no way would I have had 60k by 25. Most people I know would not have 60k by 25, even if they graduated at 22. I think the national average starting salary for a college grad is around 50k. At 27, Im just now crossing over 75k, but my salary has increased significantly since then.

My wife graduated at 22, had a year of unpaid internship, then had to get certified and registered to begin working in her field. At 25, she got her first career job.

[DJKapeesh]

Originally Posted by BayMoWe335

Even at 25, you should have about $60k, plus about $20k in an IRA.

If only... someone like me graduated 2013 and started working after a cert in 2014 and I am just now about to be 26. No way this would be do able from my perspective.