Getting the new car itch...

[Mosaud1998]

Originally Posted by P1

Do not spend $10K cash and $670 a month on an entry-level BMW. That's just not smart.

Why don't you take a little bit of that $10K and spend it on some tasteful upgrades to the car you have? Maybe a small drop and some nicer OEM wheels? Alcantara steering wheel?

You'll appreciate the car again AND be smart with your money at the same time.

Not a bad idea. I think the thing that made the new car itch start was when I took home a 19 5.0 Mustang over the weekend

God that thing was fast compared to my 328

Ever since then, I've been looking at E46 M3s and what not. But, I myself don't like monthly payments and don't have $29k+ to cash out on a car.

[Mosaud1998]

Originally Posted by M_Six

All that said, I know the itch. I drive a GLC300 now and I hate the thing. I'd love to get into something newer, but I hate the idea of car payments and I don't want to dig into savings just for a car. So I'll keep this POS for a few more years.

Ahhh my mom's got a 18 E-300. Same motor that your GLC-300 has.

[Mosaud1998]

Originally Posted by dreamingat30fps

Depends on what they offer. If it's a 401k with some kind of match it's free money. Also typically the money invested is pre-tax so you80k don't pay tax on whatever you invest through your job until you eventually take that money out. At least that's my understanding having not had employer retirement plans in many years.

But yes you could open your own retirement investment account and put money in it yourself.

Or just go all in on SHIBA and buy a sick lambo with the fat stacks you'll make! Fuck it YOLO!!!!

We'll see. I'll be 6 months old end of November

[M_Six]

Originally Posted by Mosaud1998

Ahhh my mom's got a 18 E-300. Same motor that your GLC-300 has.

The motor is not my complaint. The fit and finish, the crappy transmission, the god-awful rain-sensing wipers, the stupid "crash avoidance" warnings, the fickle keyless locking/entry...I could go on, but you get the point. Shit just doesn't work as it should.

[Mosaud1998]

Originally Posted by M_Six

The motor is not my complaint. The fit and finish, the crappy transmission, the god-awful rain-sensing wipers, the stupid "crash avoidance" warnings, the fickle keyless locking/entry...I could go on, but you get the point. Shit just doesn't work as it should.

Tell me about it. I drove my mom's E-300 to the dealer for warranty work. She's got the Premium 3 package which comes with all the safety features like lane keep assist and what not. The thing is sensitive asl.

Good thing there's a button to turn that crap off.

[Mosaud1998]

Apparently I can open a retirement account with my job. 3% is $53 per pay period.

I've got the option of either before taxes or ROTH.

[selbyp93]

Originally Posted by wtwo3

I love cars and I love new cars. It's a matter of priorities. Lots of financial advice out there treat a car like a utility, and as such deprioritizes a car to the bare necessity rather than something that might be a passion for someone.

In my life, I've approached situations a little differently than the typical - do this OR that. I've always said to myself, if there's something I want that maybe seems to conflict with my life goals, I don't approach it with a "well I can't do that so I won't".... I've approached it with, "what do I need to do to make it happen while still maintaining my life goals".

I've got a life goal of owning a Ferrari. I don't make 7 figures, so rather than thinking it's some sort of crazy pipe dream, I asked myself, within the boundaries of my financial situation and life goals, how can I make owning a Ferrari a reality? What changes can I make today, to achieve that goal? So I came up with a long term plan to create an investment account specifically aimed at being a "toy car fund". I then had to make sure this fit within the bounds of what my life goals were in general.

How can you apply similar logic to your situation? Lay out all of your life goals. Start thinking about what you need to do TODAY to make your life goals happen 5-10-15+ years from now. Based on those changes, continue working backwards, considering each priority in your life, and allocating an amount to that. Eventually you'll end up in a situation where you've organized a plan of action, or you've identified a gap you need to fill to make something happen. If you need to fill a gap, then think about what you can do to fill that gap. If you buy an investment property now which generates a steady stream of income for you, will that fit within your financial goals and also help open up new opportunities to get that new car?

TLDR: Don't sacrifice one life goal to achieve something else. Instead ask, how can I achieve both?

Solid piece of advice

[M5Rick]

New cars? How about one that's two or three years old and taken a depreciation hit.

[zx10guy]

To add to the advice and if I were you, I would fund a Roth with as much money as allowed by IRS rules. A Roth allows you to take after tax dollars to be invested in a retirement account. The great thing about a Roth is any appreciation in the account taken out at retirement age is tax free. There are also two other good things about a Roth. If you need to take out any money that you've put in (and not any of the appreciation) prior to retirement, there is no penalty. The other good thing is there is no minimum distribution requirements at retirement. What this means is you're not forced to take out a minimum amount so you can leave the money in to allow it to continue to grow. With a 401k/IRA, you're required to take out a minimum amount per year at retirement.

What a 401k will do for you is allow you to put pre-tax money into a retirement account. The appreciation/money you put in is not taxed until you take it out. The tax on the money you take out is taxed as ordinary income. If you take the money out prior to age 59.5, you'll be subject to a 10% penalty along with I think a minimum of 20% automatically withheld for Federal taxes. There are three advantages with 401ks. The money you put in lowers your current year tax basis as your adjusted gross income will be lower. Many 401ks set up by an employer will have an employer match. If this is in play, always put in at least the minimum amount to get the full match. And the last thing which is obvious, all the money that is in it grows tax free until you take it out.

My advice would be to do a three pronged investment strategy. First, is to fund a Roth to the maximum allowed. Two, fund your 401k at least up to the amount you will get a full match by your employer. Three, open up an after tax investment account and put some money there at least into a no load index mutual fund. Having an after tax investment account gives you so much flexibility as it allows you to take money out at a (currently) low tax rate as you're only dealing with capital gains taxes. It gives you a fund source to provide flexibility on where you would draw funds out in retirement.

[Joe T]

Originally Posted by ASAP

You make 25k a month and $670 a month is a lot for a car for you?

Something doesn't sound right here lol... at all

not quite $25k a month, it's actually just under 21. But the premise is the same. And the company pays for the car... I get an additional $1000 a month for car, insurance, maintenance and cell phone, along with a credit card for gas . If I don't have a car payment they cut that to $500... so I actually make a few more buck from their fixed travel

I buy my cars 2 or 3 years old with low miles so I'm not taking the HUGE depreciation hit. My current daily driver is an '17 X6. original sticker was just under $80k... when I bought it is was,IIRC, $35k with 20K miles
trade in on my last car was around $10k (a '12 550GT with over 200k miles)

I'll drive this for 4 years, it'll be paid for and likely have $15-20K in residual value. I may keep it for my daughter, her A4 is getting tired

I love cars... but have no need for the newest models in a daily driver. My daily pulls out of the garage, drives to the office, parks for 10 hours or so and drives home to the garage. Prepandemic I was on the road and would put 50-60K miles on a car, which is why I'm driving BMW CPO.... Financially the unlimited miles warranty makes sense

My lovely wife however (she makes better money than me) drives a new Mercedes every 3-4 years. It normally when she goes in for service at the dealer and comes home with something different.

However I made the same mistake as the original poster. At 22, living with my parents got my first real job out of college and came home with a P-car. an '86 964 cab with "turbo look" body. In 1991 I was making 35k . My Parent's 900sq ft home had mom's 10 year old car, dad's 7 year old ford escort, and my younger brother's mustang 2 and my 911 were parked on the sidewalk/lawn.

[CTinline-six]

A car (even used) is probably the worst thing you can buy right now. Get some mods for yours like wheels, etc that will help you enjoy the car again.

[vreihen16]

Originally Posted by M_Six

This. I started a retirement account in my early 40's and it's grown well beyond any expectations I had. If I had the chance to back up to my mid-20's, I would have started saving then. Compound interest is a beautiful thing and when you get to the point of seriously considering retirement, you'll wonder how the years went by so quickly. Want to retire young? Start saving now and leave it alone until you retire.

I'm pretty sure that I posted the story here before about a guy where I work and his "lost" retirement account. When he was in college, he had a part-time job that made him put $750/year (for two years) into a retirement account.

When it came time to retire at the end of his long career, he contacted his retirement fund company to set up his monthly dispersement plan. They baffled him with their first question...which account he wanted to tap? He totally forgot about the first account, and it had sat idle for 40+ years. Believe it or not, that $1500 grew into $87K!!! If that isn't enough motivation to open a retirement account when you're 20, nothing is.

With that said, I was late to the game like M_Six, and am now facing a serious health issue that may force me into early retirement with a *severely* under-funded retirement account. No male in my family going back four generations ever lived past age 50, so saving for a retirement didn't seem important since I never planned to reach that point. Learn from my mistake.....

[Alfisti]

Keep the car and buy some land. I was in your situation at the same age (bit younger, closer to 20) and the decision to buy a car cost me easily $1m.

[Mosaud1998]

Originally Posted by vreihen16

I'm pretty sure that I posted the story here before about a guy where I work and his "lost" retirement account. When he was in college, he had a part-time job that made him put $750/year (for two years) into a retirement account.

When it came time to retire at the end of his long career, he contacted his retirement fund company to set up his monthly dispersement plan. They baffled him with their first question...which account he wanted to tap? He totally forgot about the first account, and it had sat idle for 40+ years. Believe it or not, that $1500 grew into $87K!!! If that isn't enough motivation to open a retirement account when you're 20, nothing is.

With that said, I was late to the game like M_Six, and am now facing a serious health issue that may force me into early retirement with a *severely* under-funded retirement account. No male in my family going back four generations ever lived past age 50, so saving for a retirement didn't seem important since I never planned to reach that point. Learn from my mistake.....

Dang, well I was able to enroll in my employer's retirement plan.

I started off by putting 3% per pay period. That's about $53 taken out of each paycheck. I'll probably increase that percentage after this year to see what my real ytd is.

I picked before taxes. Idk how I feel about ROTH. Along with the retirement account, I put $5k in the stock exchange in April 2020. That's long-term investments. Thinking about putting $600 into crypto currency and seeing how that works out. If I see it's going up, I'll put $300-$400 each paycheck into crypto.

Down the road, I'm hoping to buy some property and slap them on rent for passive income.

Here's what my potential growth looks like. The salary was roughly calculated.

[JP10]

If a 25-year-old starts investing $19,500 a year, their account would grow to $4.48 million by age 70. From CNBC, first link I clicked on. Note that this does not take into account employee match. $19,500 is the max you can put in btw (unless over 50).

[2000cs]

I’ve become a big fan of saving and learning to invest. Because of some bad medical advice when I was a teen, I didn’t expect to live past 39. That seemed an eternity then, but I can’t even remember it now. However it made me more of a grasshopper than ant, if you remember the parable.

I’ve sung the new car song so many times I’ve lost count. I know I’ve had over 30 cars, maybe over 40, including wife-mobiles. Most used but a few new. In retrospect, I could have retired 10 years earlier if I’d saved all that money instead of trying to find joy in inanimate objects. Only one or two of those cars are memorable for me, the rest have faded into the past.

I started saving late, although I’ve always put the max into a company 401(k). I gave up my first one in my divorce because I valued it at a discount (tax consequence of withdrawing) but my now ex valued it at full value. So I kept a house and she kept the 401(k). I started a new 401(k), sold the house with no tax consequence and began investing. In 11 years I was able to retire, so that is some power saving and aggressive investing (and expense reduction).

The only downside to having saved more from a young age is my ex would have received half of that, so I would have half of the money. Having spent a lot on cars, I at least got 100% of the fun of those cars, although it was fleeting.

Now I view cars not as assets, but as liabilities. Very few appreciate, fewer appreciate enough to cover the insurance, maintenance and carrying costs. The cheapest reliable car that meets my space, etc needs is the best one. If I want to get a car fix, I go to Cars-and-Coffee or somewhere that I can watch cool cars cruise by. Owning them no longer does anything for me.

Shit, I guess I’m old

[Mein11]

I spend all my money because I'm going to die one day and then it will all be for nothing. Screw the 330, get a new M3. Didn't you say you were going to live with your parents for eternity anyways?

[2000cs]

Originally Posted by Mein11

I spend all my money because I'm going to die one day and then it will all be for nothing. Screw the 330, get a new M3. Didn't you say you were going to live with your parents for eternity anyways?

That was my attitude until I hit 50, and realized I might live past 70. By 60 I no longer expected to work until I die (die in the chair in my office). Now I’m retired and have enough to enjoy life, although no private planes or rich guy stuff. This is much better than working.

[Mein11]

Originally Posted by 2000cs

That was my attitude until I hit 50, and realized I might live past 70. By 60 I no longer expected to work until I die (die in the chair in my office). Now I’m retired and have enough to enjoy life, although no private planes or rich guy stuff. This is much better than working.

I somewhat meant it sarcastically. Have always bought low mile used cars, drove them to 200k miles before trading in, only exception being the Porsche. Rest of money is spent travelling to see family through the year, eating/going out with friends, golf, and tennis. Everything else is saved or goes into 401k.

Easy, simple life, when you only have yourself to take care of.

[Mosaud1998]

Originally Posted by Mein11

I spend all my money because I'm going to die one day and then it will all be for nothing. Screw the 330, get a new M3. Didn't you say you were going to live with your parents for eternity anyways?

No

[Mosaud1998]

Originally Posted by Mein11

I somewhat meant it sarcastically. Have always bought low mile used cars, drove them to 200k miles before trading in, only exception being the Porsche. Rest of money is spent travelling to see family through the year, eating/going out with friends, golf, and tennis. Everything else is saved or goes into 401k.

Easy, simple life, when you only have yourself to take care of.

Ahhh yes the single life

[Mein11]

Originally Posted by Mosaud1998

Ahhh yes the single life

Relationships are expensive. Last one lasted about 6 years, and who knows at what total cost. Certainly wouldn't have what I do now if still in it. Now have a couple girls that spend time with now and then, but not committed. Leaves more money and free time.

Do what feels right for you. Save money and invest, spend everything you got, get a girlfriend, whatever. There's no right or wrong answer. Except crack, I'd suggest not spending money on crack.