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Reply to "Am I being unnecessarily cheap about new car purchase?"
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[quote=Anonymous]My standard limit is 2 months' gross salary/income for any single car purchase, and 3 months' gross salary/income for total cars owned. This amount of money is affordable for an expenditure that conservatively amortizes over 10 years. At normal tax/retirement-savings rates, this works out to about 5% of take-home income. Remember, it's not about the single cash payment or the monthly installment you are paying, but the depreciation you are taking on the car - that's the true expense of owning a car. To take the OP's income of 300k, that means no more than $50K for any single car purchase, and no more than $75K for total cars owned. Of course, you don't have to spend this much money on a car. You may have other reasons for not wanting an expensive car, but based purely on financial affordability, this is the level of car expenditure you can afford. [/quote]
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