car poor

[dawnwes]

If the car is still reliable, it isn't a problem.

We take our 2004 on vacation now but our 2002 would do the job just fine, it is just quite small for our family of 5.

We also have 1996 that there is no way we would drive out of town.

Dawn

Originally Posted by Cassius King

I have a paid for 2000 Nissan Pathfinder and a 2010 Honda Accord. The Honda was the first car that I've ever bought new. It'll probably be the last new car I buy.

Question for the forum here. To the people who have older model/high mileage cars: What do you do for family vacations? I take my family on a couple vacations a year and the thought of getting broke down in rural South Carolina on our way to MB frightens me.

Thanks.

[glycemic]

Nice - we bought a new diesel Chevy Silverado in 06' (ouch, really expensive) but have 135k on it and its barely broke in. Heavy duty (3500) trucks used are usually contractor vehicles and beat up, so buying used on them often makes no sense at all given how they hold value.

Awesome though on not burning cash on such a depreciating asset. And diesel's -- awesome. I wish more American manufacturers of cars (not trucks) came in diesel too.

You're right though - you get judged by what you drive. Oh well - who cares. Keep your cash!

[smith121]

According to me its very risky to have second hand vehicle. But if you have no options then try to purchase the one which is not so old.

[YLTL_Dan]

Dave's Ramsey rule is that the value of your total 'toys' - cars, boats, RVs, etc - should be less than 50% of your gross income.

I took that a little more detailed to create the "Rule of 20%" when buying a car... that you shouldn't spend more than 20% of your salary on a new car purchase. One year out of college, I spent $28k on a new car when I made $45k/year... I get physically ill when I think about that today!

Cheat sheet on how much car you can afford:

$20,000 salary = $4,000 car
$40,000 salary = $8,000 car
$80,000 salary = $16,000 car
$140,000 salary = $28,000 car
$200,000 salary = $40,000 car

The only note is you should divide this value by two if you have two cars.

[bjl584]

Originally Posted by YLTL_Dan

Dave's Ramsey rule is that the value of your total 'toys' - cars, boats, RVs, etc - should be less than 50% of your gross income.

I took that a little more detailed to create the "Rule of 20%" when buying a car... that you shouldn't spend more than 20% of your salary on a new car purchase. One year out of college, I spent $28k on a new car when I made $45k/year... I get physically ill when I think about that today!

Cheat sheet on how much car you can afford:

$20,000 salary = $4,000 car
$40,000 salary = $8,000 car
$80,000 salary = $16,000 car
$140,000 salary = $28,000 car
$200,000 salary = $40,000 car

The only note is you should divide this value by two if you have two cars.

Is Dave talking about purchase price of your toys or is he talking about straight up value of the things that you own shouldn't exceed 50% of your income? Is it is the later, how does he account for depreciation? And, what happens when you retire and your income drops? Does he advocating selling these items?

[disneysteve]

Originally Posted by bjl584

Is Dave talking about purchase price of your toys or is he talking about straight up value of the things that you own shouldn't exceed 50% of your income?

I believe he is referring to value but he really uses that as interchangeable with cost. If your income drops, however, you certainly might need to sell something. He often advises that. We here often advise it, too. If the stuff is bought with debt and you can no longer support the payments, you need to sell things. If, however, the items are fully paid for, it won't matter though selling something might help raise funds to improve your situation.

[YLTL_Dan]

Originally Posted by disneysteve

I believe he is referring to value but he really uses that as interchangeable with cost. If your income drops, however, you certainly might need to sell something. He often advises that. We here often advise it, too. If the stuff is bought with debt and you can no longer support the payments, you need to sell things. If, however, the items are fully paid for, it won't matter though selling something might help raise funds to improve your situation.

I agree with DS's assessment. It's a simple formula that works well in many situations... but it's a little tougher when you start to look at paid for items vs in-debt items. For example, if I made $50k/year my allowance would be $25k, but it makes a big difference if that $25k is paid off or if you still owe on it.

[ecoadapt]

It is funny to me how people ASSuME that I am unable to afford a newer car.

It's sad fact that people really pass instant judgment on someone's ability to buy new because you value your things well!

Maybe it's my choice not to be a slave to my car and make the vehicle
I drive put money in my pocket.

It's your choice as well not to mind them. Keep your pocket healthy! Lol, Hehe..