Cost of a car and HHI/NW

[Anonymous]

Anonymous wrote:

Anonymous wrote:Before pandemic the rule of thumb is total car value less than 20% of your HHI. Obviously it varies a lot by individual situations.

This means that 60% of DC metro must be making close to 400-500K HHI

No, it's not what it means. It's a rule of thumb number for being financially comfortable, not based on statistics of how much an average person spends on a car.

[Anonymous]

Idk, I make no assumptions when it comes to cars. Growing up we had a Lincoln Town Car. We had a chauffeur. We also had a Pinto, if you remember those.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Before pandemic the rule of thumb is total car value less than 20% of your HHI. Obviously it varies a lot by individual situations.

I want to buy a car that would be satisfying this condition for sure, but my husband is having a serious freak out. He thinks it's foolish.

Mine too. Total HHI is over $400k and he is resistant to any car whose price starts with the number 5 (or higher.) Prior to Covid that number was 4, but even he had to concede that would be difficult. He also doesn’t like to purchase used, even though I would be willing to get what I want.

[Anonymous]

We have 2010 and 2019 Subarus. Yep, at the moment about 20% of HHI in terms of value. But 20% seems pretty low to me. It would have been 30% 4 years ago. That didnt seem like an ostentatious stretch for finances.

Most important is to never have two car payments at the same time.

[Anonymous]

I hate any percentage rule of thumb. I think it’s better to calculate payment and decide what is comfortable on your net pay in light of other expenses. People are going to place different values on cars and come up with different numbers.

[Anonymous]

Last 3 car purchases were within 3-4k of 45k going back 12 years.

We still own 2 of them. I don’t see a need to go much above that. You can get a nice car for 45k with low miles and a lot of features.

[Anonymous]

Do parents feel such an obligation to pay for college in other parts of the world? It strikes me as odd how often college money is the number 1 priority for a couple, even before their own retirement $$.

[Anonymous]

Car culture is depressing. We are rich because we have only ever purchased one car, it was paid off in one year, it's 14+ years old, cost us 13K, and it has fewer than 90K miles on it. We take the bus, walk or metro most places. Spending 50K a year every few years (not to mention the insurance for an expensive car and fuel) is killing most Americans and then don't even know it.

[Anonymous]

Anonymous wrote:Car culture is depressing. We are rich because we have only ever purchased one car, it was paid off in one year, it's 14+ years old, cost us 13K, and it has fewer than 90K miles on it. We take the bus, walk or metro most places. Spending 50K a year every few years (not to mention the insurance for an expensive car and fuel) is killing most Americans and then don't even know it.

That just means you value money more than you value time. You’re spending more time walking and taking the bus, or you just don’t leave the house. Many people enjoy going more than 6500 miles in a year outside the areas possible to travel by foot or bus.

[Anonymous]

A lot of people make really bad financial decisions. They get their first good job and sign up for a shockingly high car payment. Banks and car dealerships love these people.

We pay cash for cars (starting with when I was 23 and bought a car on Craigslist for $2000).

[Anonymous]

This is why when you read average and median stats for 401k savings, they're shockingly low. Like half of all Americans have $0 saved for retirement.

Then you go read how the Ford F150 and all of these insanely expensive trucks are top selling cars. Go out and see all of the audis, BMWs, lexus, Teslas etc. on the roads. People in America spend, spend spend, have a debt fueled life, and save very little. Then they have to shell out even more for stupidly expensive repairs and maintenance.

We have a healthy income and drive a completely paid off Mazda that was less than $21k. We will need a new car soon, but I wouldn't feel comfortable buying anything more than a smallish Toyota.

[Anonymous]

Anonymous wrote:Car culture is depressing. We are rich because we have only ever purchased one car, it was paid off in one year, it's 14+ years old, cost us 13K, and it has fewer than 90K miles on it. We take the bus, walk or metro most places. Spending 50K a year every few years (not to mention the insurance for an expensive car and fuel) is killing most Americans and then don't even know it.

+1000

[Anonymous]

Anonymous wrote:

Anonymous wrote:Car culture is depressing. We are rich because we have only ever purchased one car, it was paid off in one year, it's 14+ years old, cost us 13K, and it has fewer than 90K miles on it. We take the bus, walk or metro most places. Spending 50K a year every few years (not to mention the insurance for an expensive car and fuel) is killing most Americans and then don't even know it.

That just means you value money more than you value time. You’re spending more time walking and taking the bus, or you just don’t leave the house. Many people enjoy going more than 6500 miles in a year outside the areas possible to travel by foot or bus.

And what's your point?

A used $14k Hyundai, Mazda, or Kia can do that as easily as a $50k Benz or BMW.

Cars are the stupidest waste of money on the planet.

[Anonymous]

These "% of HHI" rules of thumb only apply to poor people. Rich people drowning in money can get what they need for far lower %. The constraints are moral/ethical, not financial.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Car culture is depressing. We are rich because we have only ever purchased one car, it was paid off in one year, it's 14+ years old, cost us 13K, and it has fewer than 90K miles on it. We take the bus, walk or metro most places. Spending 50K a year every few years (not to mention the insurance for an expensive car and fuel) is killing most Americans and then don't even know it.

That just means you value money more than you value time. You’re spending more time walking and taking the bus, or you just don’t leave the house. Many people enjoy going more than 6500 miles in a year outside the areas possible to travel by foot or bus.

Disagree. Nothing to do with valuing money over time. Getting around the city and finding parking in a car is not usually faster than walking and/or public transit, unless you are disabled. It’s definitely less healthy. I’m an exurban mom with a minivan by the way but driving in the city rarely makes sense. Our cars are as bad for us as sodas I bet. They take years off our lifetime if ‘time’ is what you really value.