car payment / income
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Joined: Aug 2005
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From: Milford, CT
Originally Posted by Grok42
Great thread. I don't own a G yet but I'm following the used market so I can pick one up when they get a little more affordable. I'm not bashing anyone as everyone's situation is different, but I can't believe the percentage most are spending on cars.
I would never finance a car unless I was in a tight spot and had no other option, so I would ask eveyone to add one more stat to the thread. Total the current value of all your autos and let us know what percentage of your yearly net income that is. I'm defining net income as Gross income minus any legaly enforced deductions (taxes, child support, etc). So if you gross 120K and net 90K and own $50K in autos your percentage would be 50K/90K = 55.6%.
Since I don't own a G yet, I'll pretend I just bought a new 6MT. In that case I would be at 41% instead of my current 7%. The general rule of thumb is that you shouldn't have more than 50% of your annual yearly income invested in cars. This is a much better indication of the load cars have on your money since it reduces a lot of the variables. Notice this works for both leases and cars owned since it is only interested in the value of the cars.
I would never finance a car unless I was in a tight spot and had no other option, so I would ask eveyone to add one more stat to the thread. Total the current value of all your autos and let us know what percentage of your yearly net income that is. I'm defining net income as Gross income minus any legaly enforced deductions (taxes, child support, etc). So if you gross 120K and net 90K and own $50K in autos your percentage would be 50K/90K = 55.6%.
Since I don't own a G yet, I'll pretend I just bought a new 6MT. In that case I would be at 41% instead of my current 7%. The general rule of thumb is that you shouldn't have more than 50% of your annual yearly income invested in cars. This is a much better indication of the load cars have on your money since it reduces a lot of the variables. Notice this works for both leases and cars owned since it is only interested in the value of the cars.
Originally Posted by pinoy_g35
my, my. are you out of your mind? 50% of you annual yearly income for your car is just excessive! you'll be having $1 meals all the time and you'll be miserable! trust me, i've been there and it wasn't a pleasant experience.
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77% of my monthly income goes on this money sucking ***** of a car...she gets me every time....drains my pockets....destroyed the kids college fund...behind on the mortage....half the time I take public transportation to work because I can't afford gas.......(oh I always buy premium... I may short myself and my family.....but the ***** must have premium).
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Joined: May 2005
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19 years old.
1. car payment 650/month
2. car insurance 130/month gas 160/month
3. 0/month
Well, if we are talking about Gross, 16 percent of my money goes towards my car. With net income it is more like 23 percent. I still live at home and rent is only $450 a month. In a way I wish I didn't get the car and save up to buy a home instead. Now I'm stuck because I don't want to down grade to a beater car.
1. car payment 650/month
2. car insurance 130/month gas 160/month
3. 0/month
Well, if we are talking about Gross, 16 percent of my money goes towards my car. With net income it is more like 23 percent. I still live at home and rent is only $450 a month. In a way I wish I didn't get the car and save up to buy a home instead. Now I'm stuck because I don't want to down grade to a beater car.
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Joined: Oct 2004
Posts: 802
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Originally Posted by dennyduong
19 years old.
1. car payment 650/month
2. car insurance 130/month gas 160/month
3. 0/month
Well, if we are talking about Gross, 16 percent of my money goes towards my car. With net income it is more like 23 percent. I still live at home and rent is only $450 a month. In a way I wish I didn't get the car and save up to buy a home instead. Now I'm stuck because I don't want to down grade to a beater car.
1. car payment 650/month
2. car insurance 130/month gas 160/month
3. 0/month
Well, if we are talking about Gross, 16 percent of my money goes towards my car. With net income it is more like 23 percent. I still live at home and rent is only $450 a month. In a way I wish I didn't get the car and save up to buy a home instead. Now I'm stuck because I don't want to down grade to a beater car.
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Joined: Feb 2005
Posts: 67
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From: Mississippi
Originally Posted by pinoy_g35
my, my. are you out of your mind? 50% of you annual yearly income for your car is just excessive! you'll be having $1 meals all the time and you'll be miserable! trust me, i've been there and it wasn't a pleasant experience.
I assume the first poster was wanting to know how much he could spend on a car and not be outside the norm. Asking what % of your CASH FLOW goes to cars isn't a very good statistic when trying to determine what everyone's ratio of income to car is. Maybe I own a G outright from some money I got from my parents but I only make $30/year. In that case I'd only spend maybe 4% year on cars. But with my formula, the same person would own 110% of their yearly income in cars, which is bad. Since it's based on current value, it doesn't matter what your down payment was or if you leased or bought.
Basically if everyone gave this stat, then the first poster could easily do a quick calculation and determine how much car he can get based on whomever he wants to pick as resonable. Or if he just wants an idea of how car crazy we are as a group, he'll have a much better idea.