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How much of your NET income should you spend on a car?
- Thread starter maxtdi
- Start date
Sure. I know it is your topic but I am more concerned with the cost of the car then I am the operational costs. All cars need gas and that is a relative constant for most people. If you are trying to surmise how much one would spend on the car, only the cost of the car would be included.
troyguitar
Go Kart Champion
That is not an apples to apples comparison then...
Say Gertrude and James both make $50k gross, but Gertrude pays $6k per year for health insurance and retirement savings pre-tax and James does it after tax for whatever reason. For the sake of simplicity let's say they both have a 25% effective tax rate. Gertrude's "Net" income is then $33k or $2750/month. James, however, would have a "Net" income of $37.5k or $3125/month.
Does James really have a net income of 13.6% more per month than Gertrude?
troyguitar
Go Kart Champion
Multiplying a paycheck by 2 also is not an accurate way to estimate income. You really make over 8% more than that. 52 weeks a year = 26 paychecks = 2.166666 paychecks per month.
D Griff
Go Kart Champion
Pay to play aspect is hugeI suppose I am too grown up/stingy at this point to have a "fun" car with a nice badge
Just get it man... See my post above about spending 32% a month. It makes me happy though. Do you have kids or something holding you back from this?
D Griff
Go Kart Champion
I was just thinking that. But a lot of people get paid bi-monthly. You'd be surprised how many people don't understand there is a difference there. I get paid once per month so these calculations are very quick for me...
Your net income is quite literally what you get paid. Whatever gets direct deposited into your checking account each pay period. That is how much you have to spend.
Right, just a conservative estimate to say the least. I know for me those 2 'extra' paychecks per year are actually 'extra'. Just plopped into savings.
I didn't know we were pulling out our W2's and whatnot (though it is that season)
maxtdi
Go Kart Champion
Nope, no kids, very little housing expenses(<$400), no gf, :laugh: all in line to own something stupid...
r15maniac
Go Kart Champion
as much as possible, then some more......:happyanim:
seriously though, as much as you're comfortable with, without going into debt and paying stupid interest rates on the cc's.
Over the past 10 years or so, I've kept all modding to cash only. It may take a bit longer, but I usually try to keep my cars for a longer period too, so it all works out in the end. :thumbsup:
seriously though, as much as you're comfortable with, without going into debt and paying stupid interest rates on the cc's.
Over the past 10 years or so, I've kept all modding to cash only. It may take a bit longer, but I usually try to keep my cars for a longer period too, so it all works out in the end. :thumbsup:
troyguitar
Go Kart Champion
Right, I was just looking at those this weekend and have been looking at buying a 2nd car this week so this is all quite fresh in my mind :lol:
It really is not as simple as just looking at paychecks if you want to make generalizations. People have different expenses pre- and post-tax that complicate things. Someone doing a lot of pre-tax "spending" will have a smaller paycheck but also fewer things to spend his "net income" on and will therefore be spending a larger percentage of that check on everything compared to someone who is doing more post-tax - even if in reality the two are making and spending similar amounts.
I think you already know this.
I keep EVERYTHING to cash only.
The only debt I have incurred, and plan to going forward, is real estate, cars, and student loans. 3 arguably unavoidable and 'best' debts to have.
THIS also changes how much you spend on cars too. Some people have lots of cash with little expenses and can reasonably/comfortably afford 25-50% on their cars. Others, if you have high living expenses and a bitch-ass, needy wife can only spend 10% or so.