Can I Afford it?

[swaymonae]

I want to play also! I want to spend $4k on carpet - out of savings.

Net monthly income: $4400/mo
Mortgage: $1003/mo
Phone bill for 3 phones: $120/mo
Cable and internet: $112/mo (I only have 1 choice for cable/internet service out here)
Car Ins: $42/mo
Utility avg: $250/mo
15% of Gross goes to 401k
$300 extra a mo. goes to additional mortgage payment
$1000/mo goes to cash savings (until I get a year's worth of salary saved up, currently at $21k)
$200/mo goes to Roth IRA
$100/mo Son's college savings (he already has the prepaid tuition plan)
$50/mo goes to daughter's gas money while in college

So, can I go ahead and get the new carpet? Or should I wait until I have the full year's worth of salary saved?

Most of that stuff is expendable if you were to lose your job, but your savings is under 8 months and if you're going to take 4k out of that, it would only be about 5 months.. of your current gross..

Are you really comfortable with dropping your savings all the way down to 17k??

Personally, I wouldn't even be thinking about a carpet until I hit 30k.. then save up for that seperately, without touching your savings.

Sorry.. she's been strict lately.. I'd say you are denied. You need more liquid savings.

___________________


If you were willing to live on just the basics, however,.. that's a different story...

If you lost your job,...

The kids would have to get a job and pay for their own gas, or buy then a bus pass.
If phone's weren't in contract, you could cancel them or lower the plan
$300 extra towards mortgage would decease
200 to Roth, 100 to college savings would be put on hold
Cable and net would be cancelled or put on a lower plan
15% to 401K would decease.

Given those, you may be able to live off of 2-thirds of your income, and that's over 9 mos worth.. but I'd still save up seperately, as oppose to knocking your beautiful 21k savings down to 17k.

If you're willing to make those sacrifices in the event that something bad happens, then you are approved.

[swaymonae]

What I want to buy:

Solid Gold Toilet - 30 lbs gold @ $100/oz = $480,000

Me:

50 somthing TV financial adviser, author

Single, snappy dresser, nice tan

Take-home - $2 million a month

Savings/Assets - $25 millioin

How am I paying for it? American Express Black Card, of course!

hahaha!!!

You are denied!

Hhaha.. just cause.

[boosami]

This thread should really be its own main forum section...

[disneysteve]

Steve,

I spend alot of my money on fancy jackets. Plus that tanning is not cheap either.

Come on. You live in Florida. Don't you have sun there?

[wincrasher]

Steve,

I spend alot of my money on fancy jackets. Plus that tanning is not cheap either.

[disneysteve]

wincrasher - First, that should say $1,000/oz, not $100.

Next, if you earn $2 million/month and you are in your 50s, you should have a whole lot more than $25 million in savings.

I think you'll have to be content to do your business in a traditional porcelain model for a couple hundred dollars at Home Depot.

DENIED.

[wincrasher]

What I want to buy:

Solid Gold Toilet - 30 lbs gold @ $100/oz = $480,000

Me:

50 somthing TV financial adviser, author

Single, snappy dresser, nice tan

Take-home - $2 million a month

Savings/Assets - $25 millioin

How am I paying for it? American Express Black Card, of course!

[Dixiechick]

I want to play also! I want to spend $4k on carpet - out of savings.

Net monthly income: $4400/mo
Mortgage: $1003/mo
Phone bill for 3 phones: $120/mo
Cable and internet: $112/mo (I only have 1 choice for cable/internet service out here)
Car Ins: $42/mo
Utility avg: $250/mo
15% of Gross goes to 401k
$300 extra a mo. goes to additional mortgage payment
$1000/mo goes to cash savings (until I get a year's worth of salary saved up, currently at $21k)
$200/mo goes to Roth IRA
$100/mo Son's college savings (he already has the prepaid tuition plan)
$50/mo goes to daughter's gas money while in college

So, can I go ahead and get the new carpet? Or should I wait until I have the full year's worth of salary saved?

[disneysteve]

I contribute $500 per month (13.8% of take home) to my Roth

OT, but remember that the Roth limit is $5,000. Your $500/month will have it maxed after 10 months. Don't over fund it, and make sure to put the final $1,000 in savings, too, even though you can't put it in the Roth.

[CanIAffordIt?]

Thanks for the replies.

Yes, the IRA is little low, but it was $55K when I rolled it over 18 months ago... Oh well, at 30 yrs old, I have time on my side and hopefully things will turnaround.

I contribute $500 per month (13.8% of take home) to my Roth and $300 (8.3% of take home) per month to long term savings (online savings acct).

I have no 401k company match so I do not contribute to the 401k. As soon as my company switches the match back "on" (which was previously 5% for me putting in 5% for a total of 10%), then I will jump back in and contribute.

Yes, I do recognize this car is a "want" not a "need".

[kork13]

While I agree completely that this is a very good question, Suze doesn't focus on if the person SHOULD buy the item but rather if they can AFFORD to buy it (though she certainly will comment on things she finds unnecessary). There is nothing wrong with having some wants in your life if you can afford them.

I'm with you kork13. My car isn't worth $8,000. It is more like $3,500 or so if I'm lucky and I'm not planning to replace it any time soon.

HEY! I APPROVED IT, DIDN'T I?!?! No, I just tacked those two thoughts on as a follow-on thought.

[disneysteve]

Do you need a new car right now?

While I agree completely that this is a very good question, Suze doesn't focus on if the person SHOULD buy the item but rather if they can AFFORD to buy it (though she certainly will comment on things she finds unnecessary). There is nothing wrong with having some wants in your life if you can afford them.

I'm with you kork13. My car isn't worth $8,000. It is more like $3,500 or so if I'm lucky and I'm not planning to replace it any time soon.

[kork13]

Pulling $11k from savings leaves you with $38,000 . . . almost 10 months of net INCOME, so safely what, 20 months of expenses or so? That's still a reasonable emergency fund.

I'd say you are approved unless there is some other large purchase on the horizon (real estate).

I agree, it seems you can afford it. Two things, though... Do you need a new car right now? If your current car is working for you well, there's little reason (IMO) to ditch it for something else. A car still worth $8k probably still has a few more years in it. Also, a little light on the retirement savings... How much (% income) do you contribute to retirement each month? I might suggest increasing that amount.

[red92s]

I am a longtime lurker, so here goes:

I would like to buy:
A new-to-me (used) car = $19K

Here's the money:
Age: 30
No kids, single
Monthly income: $3,600 take home
Rent: $950
NO Car Payment, current vehicle has been payed off for 4+ yrs
NO CC debt
Roth IRA: $8K
401k: $5K
IRA (rollover from previous job): $38K
Savings: $49K

How would I be paying for it?
From savings and then selling current vehicle for $8K....so out of pocket approx $11K

Let me know if I can afford it. Thanks

Pulling $11k from savings leaves you with $38,000 . . . almost 10 months of net INCOME, so safely what, 20 months of expenses or so? That's still a reasonable emergency fund.

I'd say you are approved unless there is some other large purchase on the horizon (real estate).

[CanIAffordIt?]

Longtime lurker.....can I afford it?

I am a longtime lurker, so here goes:

I would like to buy:
A new-to-me (used) car = $19K

Here's the money:
Age: 30
No kids, single
Monthly income: $3,600 take home
Rent: $950
NO Car Payment, current vehicle has been payed off for 4+ yrs
NO CC debt
Roth IRA: $8K
401k: $5K
IRA (rollover from previous job): $38K
Savings: $49K

How would I be paying for it?
From savings and then selling current vehicle for $8K....so out of pocket approx $11K

Let me know if I can afford it. Thanks