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I bought a ~55k car (Tesla) when I was single and making 190k. No regrets — put 0 down, am currently saving a boatload on gas, and I could probably still sell it almost for what I bought it for. Household income is now about 450k and next car will probably be around 70k.
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Everyone has a willingness to pay for different products or services. Some will say you’re crazy for spending $60-70k on a car but they might spend the same on a wedding or luxury vacation that you would never dream of doing. The real question is in this bowl is how does it impact your FIRE journey and how do you feel about that?
Yes, pay expenses, the save enough so that at a 6 or 7% after inflation ROI you can retire and generate you current inflation adjusted salary at desired retirement age. Assume you can take 3.5% or 3% of your savings at retirement without running out of money. Any high ROI is very unlikely and takes luck!
Sir, this is the FIRE bowl
Only decade old Corollas and lentils are allowed here🫡😎🆒
Depends on how you define justify. Having several billion dollars racked up does not change the fact that the 60-70k car serves the same purpose as a 2-3k car.
When it comes to work clothes, I think that's a separate story. Would definitely be willing to spend more on clothes that I plan on wearing on the job if necessary but even that really varies on who your customers are. I used to have to cough up money for suits back when I worked in financial services as well. Working on the TMT side now though, everyone mostly wears t-shirts, hoodies, etc. - a suit would be a red flag but everyday clothes bought at a thrift store would not be out of the ordinary.
100k
This… lol.. NGL I was making 70k and was driving a 50K Mercedes. After 3 years I realized I had my fun and got what I wanted out of it so I traded it in for a 20k ford. Although I do miss the extras of the Mercedes, the extra $300 I’m saving a month is nicer.
$500k
As someone who makes 500k and drives a 2011 Subaru, this is giving me the validation I need for an upgrade.
In my head like $250k, but I’m also pretty frugal so your number might be very dofferent
25%? Where did you get that number? The payment would be like 1k a month * 12 so 12k a year, on roughly 180-200k post tax income
I purchased a $40K car in cash when my salary was about $73K. I was comfortable with this because I had saved up and I intend to keep my car until it dies. I spend a decent time in my car with the road trips I take. I don't know too much about the mechanics of a car, and didn't want to take the risk with a used car.
It depends on what you value and how else to spend and save/invest your money.
Coach
You have a 20M startup and a 300k salary, you should buy what you want. I am at 250k and have a 60k car and Believe me I don’t feel broke after paying $800 per month on car installment . With 250k , I can easily afford it
What’s your debt to income
Clayton: the value of the business is irrelevant to the servicing of the car loan. OP is smart to factor only income.
The total value of all your vehicles—things with a motor in them—should not be more than half of your annual income.
Driving a nice car *is* an experience.
I spend an hour on the road every day. That’s 300 hours per year, more time than I spend on vacations. Spending a few thousand a year more (vs a beater Honda) to be cocooned in luxury during that time is a great use of my money
Man, some of y'all really overspend on cars...
The purchase price doesn’t matter, the carrying cost does. $60-70k car costs $5k/yr on average. Calculate the necessary income from there
This is how I’ve always thought of it. I totally agree, the upfront sticker price is the least important number.
3x the price of the car
I like this. Good guideline at the very least.
I was drunk bidding on cars a lot on carsandbids this year. Definitely a fun, if not dangerous, way to live dangerously.
Advice: Wait until the car market cools down so you can get a new car for below MSRP or at the very least find a dealer that does not charge above MSRP/have a market adjustment.
I’d say you should be able to comfortably afford buying 3X your car.
You're probably fine. But I think net worth and progress towards goals is a much bigger deal than income. For instance, even with your income, I would answer way different if you're >75% to your target retirement figure than if you're only 10% there.
Short hand: If you're still rocking less than $500k net worth, you should probably focus on investments (stocks or owning your home) before flash.
This is a personal question. For me, no amount of income will justify that much price of car because I am not into cars. But if a nice car makes you happy and completes you as a human, go for it! Fire is all about how we budget so that we can spend money on what we care about (food, latte, cars, etc.)