Percentage of income you would spend on a DD

Duke wrote:

Swank Force One wrote:

Duke wrote:

Swank Force One wrote:

Duke wrote:

Swank Force One wrote: E36 M3.... i couldn't even afford a new DD by those rules.

If we keep my wife's TSX another 5 years, we will have owned it for 14 years, it will have well under 100k on it, and it will likely have not needed anything other than gas, oil, tires, and brakes. And insurance, of course. We will have paid about $2700 a year complete cost of ownership, minus gas.

Oh.... i thought you meant purchase price should only be 20% of your income. I took that to mean that i will never own a brand new car in my lifetime.

Well, that is actually what I did mean. We paid about 20% of our combined annual income to buy the car new. With my car (used, 3 years old) it was more like 15%. Lifetime cost-of-ownership (minus gas) for the TSX is going to work out to roughly 1.5%-2% of our income per year over the predicted 15-year lifespan.

Oh.... Bummer. Not really any cars sold brand new for less than $8k these days.

Sorry, man, if it's any consolation, compared to Weary, you and I are the same...

Doesn't bother me a whole lot, there's precious few new cars i like anyways. I'll probably be driving 80s and 90s cars the rest of my life.

wearymicrobe wrote: When you grew up poor you hate revolving payments.

Not necessarily. I grew up well below the poverty line and have had over 100 cars that were under 2 grand each and that when sold paid for the next one. I'm well and truly done with DDs that are brokedown old POS, though. My DD is a new Volt that I'm leasing and I couldn't be happier. My wife's DD is a 2011 MINI Cooper. And I don't have a problem making payments for either.

Maybe because I'm getting too old to be working on a car in the freezing cold just to get it to work the next day again, but I like new/er cars with warranties for DD duty, leave the working on cars for the toys and project cars.

Also, as a car fan, I tend to budget more for cars than for other things. If it were just me, I'd have a 10 car garage with a lean-to to live in, but the wifey likes having at least a semi normal house. We still manage to have the house, take vacations, sock away money for savings, and the like. I'm not taking my money with me, and my kid is doing just fine on his own as a nuclear technician.

Chris_V wrote: Maybe because I'm getting too old to be working on a car in the freezing cold just to get it to work the next day again, but I like new/er cars with warranties for DD duty, leave the working on cars for the toys and project cars.

I'm rapidly reaching that point in life. The 300K timing belt change on my TDI took a lot out of me. I fear what the clutch job later this year will do.

It seems to me that 20/4/10 rule is a good one. By my rough calculations, that would equal buying a car (financed) with an MSRP of a little less than half your gross annual income, although the monthly payment seems a bit higher than I'd like.

Ian F wrote:

Chris_V wrote: Maybe because I'm getting too old to be working on a car in the freezing cold just to get it to work the next day again, but I like new/er cars with warranties for DD duty, leave the working on cars for the toys and project cars.

I'm rapidly reaching that point in life. The 300K timing belt change on my TDI took a lot out of me. I fear what the clutch job later this year will do.

Me too. I enjoy working on my fun cars but the DD isn't as fun for some reason.

93EXCivic wrote:

Ian F wrote:

Chris_V wrote: Maybe because I'm getting too old to be working on a car in the freezing cold just to get it to work the next day again, but I like new/er cars with warranties for DD duty, leave the working on cars for the toys and project cars.

I'm rapidly reaching that point in life. The 300K timing belt change on my TDI took a lot out of me. I fear what the clutch job later this year will do.

Me too. I enjoy working on my fun cars but the DD isn't as fun for some reason.

Because it HAS to get done vs wanting to get it done.

Like my Miata, it had some stuff that needed doing between last season and this season for HPDE. I could go work a few hours, not at all, all day, and it didn't matter. I could do it when I felt like it.

Alternator goes out on the car, you're fixing it that night to go to work the next day.

Chris_V wrote:

wearymicrobe wrote: When you grew up poor you hate revolving payments.

Not necessarily. I grew up well below the poverty line and have had over 100 cars that were under 2 grand each and that when sold paid for the next one. I'm well and truly done with DDs that are brokedown old POS, though. My DD is a new Volt that I'm leasing and I couldn't be happier. My wife's DD is a 2011 MINI Cooper. And I don't have a problem making payments for either. Maybe because I'm getting too old to be working on a car in the freezing cold just to get it to work the next day again, but I like new/er cars with warranties for DD duty, leave the working on cars for the toys and project cars. Also, as a car fan, I tend to budget more for cars than for other things. If it were just me, I'd have a 10 car garage with a lean-to to live in, but the wifey likes having at least a semi normal house. We still manage to have the house, take vacations, sock away money for savings, and the like. I'm not taking my money with me, and my kid is doing just fine on his own as a nuclear technician.

I should quantify, I hate large revolving payments. I piddle around in my cheap lease to work/airport/groceries. Basically pay yourself first then others. I lease because I like to defer the sales tax when possible at 8.75%.

I do still have other cars, all in about, 200K new cost replacement in it in the garage. I choose pay cash for those though and buy them slightly used and depreciated. The one I just bought yesterday if it clears inspection will bring that number way way up though.

Ian F wrote: It seems to me that 20/4/10 rule is a good one. By my rough calculations, that would equal buying a car (financed) with an MSRP of a little less than half your gross annual income, although the monthly payment seems a bit higher than I'd like.

My version of the rule is a little different: The purchase price of the car is 20% of the annual income, not the amount of payments in one year.

MadScientistMatt wrote: My version of the rule is a little different: The purchase price of the car is 20% of the annual income, not the amount of payments in one year.

Yeah, that's where I'm sitting.

In my opinion, there are just too many really good cars for little money to justify spending big bucks on one. It's hard to say what percentage of your income. It depends on your income, I'd guess.

I think you can get a darn good car for $5 or $6k. If you make $40,000 a year, you're in the 15% area. But if you keep that car for 10 years and spend, say, another $5k maintaining it (assuming you let a mechanic do the work), you're in it for $11k and you've earned $400k. That's less than 3%.

I think that's pretty reasonable. So, say a car for you, a wife, and to be safe, an "extra" that can be less reliable. A toy car, but in the same kind of price range. Do that, and even on $40k a year, you can keep that average to 10% ish. If you make more than that, a good car still only costs $5 or $6k so that percentage can go down fast. Or you can chose to get something nicer.

But you do have to save some money along the way to make it work. Pay cash for your cars and do some work on them yourself. If you can do that, you keep the cost pretty low. Of course, the other thing is depreciation. I used to have an '88 Merkur. That's a good example of weird cars I've had. I paid $2,500 for it, drove it for several years, and sold it for $2,000. My '91 MR2 was like $2,900. I bet I could get that for it today. My DD for a few years was a 2.0 '72 Capri. I sold it for more than I paid for it. So if you add the value of the car into the formula, it gets even cheaper.

Buy reliable, solid cars that are near the bottom of their depreciation curve. Do some work yourself. Always pay cash. Do that and you can have nice, if not "the nicest" cars for darn cheap. Put the money you save in a 401k.

For whatever reason.... It seems like everything I buy is within the 3k-3,600 range.

That's just where I seem to have the best luck on cars and trucks.

93EXCivic wrote:

Ian F wrote:

Chris_V wrote: Maybe because I'm getting too old to be working on a car in the freezing cold just to get it to work the next day again, but I like new/er cars with warranties for DD duty, leave the working on cars for the toys and project cars.

I'm rapidly reaching that point in life. The 300K timing belt change on my TDI took a lot out of me. I fear what the clutch job later this year will do.

Me too. I enjoy working on my fun cars but the DD isn't as fun for some reason.

I paid a mechanic to do a ton of stuff to our 4Runner. We've had it for 10 years and it almost never needs work, so it still works out pretty darn cheap over time. But at 180,000 it's still dead nuts reliable and I'd drive it anywhere.

I've never financed a car, I buy reliable junk... but I also make very little in my jobs. I'd say 20% or so.

I also have a knack for buying low and selling high. Of all the vehicles I've owned I think there have only been two on which I lost any appreciable money. Most of them I break even (not including maintenance costs or repair costs). Some of them I have made money. Overall, my vehicular costs have been very low for the last 10 years or so.

Find a bargain, drive it, wait for a sucker, sell it. This only really works with cars of some unique quality, not appliances. It won't work with a Corolla or a Cavalier since there are a million of those for sale cheap. But, then again, I wouldn't buy a 'rolla or cavvy in the first place.

Swank Force One wrote: Oh.... Bummer. Not really any cars sold brand new for less than $8k these days.

Pffft. Try $0.00.

Nursing school sucks everything out of you. Good thing my Dakota is paid for and doesn't break down often. Although this summer it is due for a bunch of work I have put off for long enough.

fast_eddie_72 wrote: In my opinion, there are just too many really good cars for little money to justify spending big bucks on one.

There are $100 cars I like, $1000 cars I like, $10,000 cars I like, $100,000 cars I like, and $1,000,000 cars I like. as an all around car guy, if I have the means, I buy what I like. The only justification a car has to have is that I like it and want it then. Be it a new Volt or a 12 year old BMW. I'm not in a competition to spend less than or more than anyone else.

I hate the reverse snobs that seem to think that spending the least is a game that they are winning compared to everyone else. I just think they are missing out on possibly good cars (like a new MINI Cooper or Mustang GT or Electric Focus) just the same as I think that manual transmission snobs are missing out on good cars, too (like my old E38 740iL or my V8 RX7 autocross car)

I usually buy cheap cars. I did the car payment thing once and hated mailing that check every month so I pay cash. My wife's last car was a $3600 Chevy Venture. We kept it 9 years, to 220K. She would still be driving it if it hadn't been wrecked. It was replaced with a $3500 Jeep Liberty. I'm driving a $1800 Super Coupe at the moment and just bought a $3200 truck. I do 75% of the work on the DD fleet and keep at least one extra car on the road for when one of them pukes so I don't have to fix one overnight. I've changed a clutch at 2:00 am to make it to work. It's not fun.

Spending $3K-4K on a car puts me in the 2.5% range though in the last year I've bought 4. It's not a case of "I spend less than you." It's a case of I rather spend the money on something else. I like having cash for whatever. Need a tool? Go buy it. Want to go to the mountains for the weekend? Do it. Want to buy a truck? Do it. I hate having a large portion of my income tied up in payments or having to budget a $200 item. BTDT and didn't enjoy it.

Swank Force One wrote: E36 M3.... i couldn't even afford a new DD by those rules.

mmmmm. My dd, if I would have bought it cash, is about 100% of my annual gross including insurance, a set of tires a year, and fluids.

Though I'm a special case because, as I told the Service Advisor Saturday, I'm a non-profit employee apparently.=] =/

If I was to spend 20% of my gross annual income on a dd I would be shopping for used Saturn Ions in a heartbeat.

In reply to corytate:

Really? Not to derail my own thread, and I've never driven one of these cars, but the Saturn Ion seemed fairly garbage. So I must be missing something. What do you like about them?

WTF is income?

My DD cost me $650.

pres589 wrote: In reply to corytate: Really? Not to derail my own thread, and I've never driven one of these cars, but the Saturn Ion seemed fairly garbage. So I must be missing something. What do you like about them?

i dunno when I worked for the Saturn/Subaru dealer they seemed to be pretty damn indestructible.
I don't really like them, was more using them to name a price range, really.
Realistically I could find a hell of a lot cooler car for $4-5 k lol
like the worst e36 m3 still running.
or the cleanest turbo brick out there=]

I was poor, and drove poor guy cars for a long time. Then I got a decent job and realized I was tired of all the effort that goes into driving a cheap car for a DD.

Sold the last heap and spent 17% of annual income on a used Scion xB. Just gas it and drive, basically. I paid cash.

Looks to me like half the folks in this thread are answering what percentage of their annual income they would be willing to allocate to car PAYMENTS, and the other half is saying they would PURCHASE a car for $xx percent of their annual income.

Big difference.

FWIW, I don't finance cars. EVER. And I never will.

So, the purchase price of the vehicle as a percentage of my annual income is a completely irrelevant number. I don't pay a purchase price that exceeds how much I have saved for a car.

I bought 2 cars this week. My current income is virtually non-existent. Paid cash for both.

$0

Chris_V wrote: I hate the reverse snobs that seem to think that spending the least is a game that they are winning compared to everyone else.

Well let me know if you run into any. That certainly isn't what I said. I don't care how much anyone spends on a car. I was simply responding to the question that was asked, and giving my opinion, as I said. Heck, if everyone thought about it the way I do, there wouldn't be anyone to buy the new cars that will one day be my used cars. I completely understand that the way I go about it isn't for everyone. I'm not in any competition to spend less than anyone. It's not a game. It's just me being totally selfish and wanting to retire someday before I'm 70.

zipty842 wrote: My DD cost me $650.

Crap. Now I have to go find one for $550.

SVreX wrote: Looks to me like half the folks in this thread are answering what percentage of their annual income they would be willing to allocate to car PAYMENTS, and the other half is saying they would PURCHASE a car for $xx percent of their annual income.

For me, here are the numbers:

• For a monthly payment, 3% of monthly income is the most we've taken on for a vehicle. Typically, we pay off vehicles we've financed in 3 years or less.
• In terms of purchase price as a % of annual income, we've spent about 13-17% of our annual income on our last two daily drivers.

We're looking to upgrade out of a car payment soon. I'd rather have to fix something every once in a while than have a car payment.