[Gatte]

I'm thinking as I type this, that I might be out of line here but I'm really looking into getting an M2 and do not know if financially, that would be the right thing to do as opposed to investing in something that would grow and stick with my m235i a little longer.

I'm sure I am not the only one who's thinking this and would like to know what salary I should be making that it would make the purchasing of an M2 financially prudent. My only other significant expense is rent which is like 850 $ a month.

P.S: I invested a lot in GOPRO last year and let's just say, if I had put the losses from that into the M2, it would bridge the price difference b/w the m235i and M2.

[IDABMW]

I drove beaters and "practical" cars till I became fiscally independent. I didn't like taking loans on depreciating assests. I believe getting fiscally independent is more important than any vehicle. Probably blasphemy for this forum.

To answer the question and providing you are saving for retirement in CA around 100 k a year.

[zenmaster]

According to here, your total monthly vehicle expense (including principal, interest and insurance) shouldn't exceed 10% of your gross income:http://www.interest.com/auto/news/ho...-spend-on-car/ (i.e. if $8K/mo, then $800 car payment and insurance)

I agree with that, as it's sound financial advice.

[04RC51]

Don't be silly! You can afford it. Rent it and get a lower payment and then give it back in 2 years. You can find a way.

[Gatte]

Originally Posted by zenmaster

According to here, your total monthly vehicle expense (including principal, interest and insurance) shouldn't exceed 10% of your gross income:http://www.interest.com/auto/news/ho...-spend-on-car/ (i.e. if $8K/mo, then $800 car payment and insurance)

I agree with that, as it's sound financial advice.

Kinda close to that but not there yet.

[M///Fanatic]

To each his own! You only live once, choose wisely!

[Twix]

I make $9/hr at McD's yo. Just kidding, but I'd say if the car payment and insurance is more than 10% of your income, you'd be ok if you're renting a home or have a very small mortgage. Your debt ratio shouldn't exceed 45%. At least that's what I've been told.

[le panecito]

Let's say your payments will be around $800/mo, I'd say your household should be around $100k.

[Bluenose-2er]

Originally Posted by zenmaster

According to here, your total monthly vehicle expense (including principal, interest and insurance) shouldn't exceed 10% of your gross income:http://www.interest.com/auto/news/ho...-spend-on-car/ (i.e. if $8K/mo, then $800 car payment and insurance)

I agree with that, as it's sound financial advice.

I would agree with something in that range (10%)... though the percentage might depend a little on your lifestyle and current economic situation. I.e. if it is really healthy and your lifestyle is otherwise modest you could go a little higher.

That being said, back when I was younger I wouldn't let that stop me from overextending myself for something I really wanted... a life's lesson hard learned!

[metrickid]

If you can afford the car without sacrificing anything else when everything is paid for each month and savings and retirement funds have been paid for also - just go ahead!

[3tekcorps]

Originally Posted by Twix

I make $9/hr at McD's yo. Just kidding, but I'd say if the car payment and insurance is more than 10% of your income, you'd be ok if you're renting a home or have a very small mortgage. Your debt ratio shouldn't exceed 45%. At least that's what I've been told.

45% is about the max debt level. More reasonable is 25%-35%. These are the guidelines the federal government have placed on mortgage lenders and higher ratios are now considered predator loans.

I'm curious to know what the estimated federal debt ratio is now.

[zenmaster]

Originally Posted by Bluenose-1er

That being said, back when I was younger I wouldn't let that stop me from overextending myself for something I really wanted... a life's lesson hard learned!

Me neither!

[gmzanatta]

Here is what you should ask yourself:

1. Are you happy with the M235i? If not, what are the reasons and would an M2 fill that void?

2. Do you have the disposable income for it? Sit down and do a paycheck-by-paycheck budget for the whole year. Include every source of income and every single expense you have and then play around with car payment values. This is a simple but very useful tool to get in the right range.

3. Can you actually afford it? If something were to happen, how long can you carry the car payment without an income? I always make sure to have at least a 3 month buffer dedicated just to car emergencies.

All in all, my biggest advice is to do and keep a running budget for the whole year. Not only is a great tool for figuring things like this out, but also serves as a great reminder not to buy so many M-Performance parts.....

[Black Gold]

I wouldn't buy a 50k car making 100k.

I would also suggest that one save at least 2k cash per month in addition to maxing your 401k contribution. This doesn't include whatever your annual bonus is.

If, in addition to that, you can pay for whatever the car note costs, it's reasonable.

I have had more expensive cars and now we have cheaper cars with a bigger income and it is much less stressful and we are saving much more. As our savings grow and make more money, opportunities to own more cars will come.

My 2 cents as a low mid 30s car guy.

[Benzima]

Originally Posted by zenmaster

According to here, your total monthly vehicle expense (including principal, interest and insurance) shouldn't exceed 10% of your gross income:http://www.interest.com/auto/news/ho...-spend-on-car/ (i.e. if $8K/mo, then $800 car payment and insurance)

I agree with that, as it's sound financial advice.

I agree with the website and the "20/4/10" rule:

• at least 20% down payment
• maximum 4 years loan
• maximum 10% of gross monthly income

[paradoxical3]

There are so many other factors to consider too....

A guy making $80k with a higher probability of rapid income growth (for example, a resident doctor or new attorney) can afford the car more than the guy making $100k flat with no advancement opportunity.

Also, driving a limited car like the Porsche GT3 and to a much lesser extent the M2 is actually cheaper than driving a honda civic - as long as you are willing to only drive it for a short time (6mo-1yr). You can drive a GT3 for 10k miles and sell it for practically the same price you paid. I could sell my M2 right now for new MSRP or a slight premium, which means I'm driving it for free currently. I know guys that routinely buy and flip limited cars and literally drive them for free in perpetuity. Gotta have the resume and funds to get one of those cars in the first place though, but once you do you're golden.

[PrematureApex]

Originally Posted by Benzima

I agree with the website and the "20/4/10" rule:

• at least 20% down payment
• maximum 4 years loan
• maximum 10% of gross monthly income

20% down at current interest rates? Absolutely not. 2% is as cheap as money gets. Borrow all day, as much as you can, at those levels. (assuming you can otherwise afford the car, of course)

$50k car on $100k salary isn't exactly sound advice. But people will do what people will do.

[PrematureApex]

Originally Posted by paradoxical3

There are so many other factors to consider too....

A guy making $80k with a higher probability of rapid income growth (for example, a resident doctor or new attorney) can afford the car more than the guy making $100k flat with no advancement opportunity.

Also, driving a limited car like the Porsche GT3 and to a much lesser extent the M2 is actually cheaper than driving a honda civic - as long as you are willing to only drive it for a short time (6mo-1yr). You can drive a GT3 for 10k miles and sell it for practically the same price you paid. I could sell my M2 right now for new MSRP or a slight premium, which means I'm driving it for free currently. I know guys that routinely buy and flip limited cars and literally drive them for free in perpetuity. Gotta have the resume and funds to get one of those cars in the first place though, but once you do you're golden.

True, but those are all risks. Accidents happen, careers don't go as planned, legal markets are often volatile, car markets change. But I don't disagree entirely.

I want to know what residents are making $80k though.

[gmzanatta]

Originally Posted by PrematureApex

$50k car on $100k salary isn't exactly sound advice. But people will do what people will do.

This is all relative.

I think a $50K car on $100K a year salary is easily doable depending on your lifestyle, especially on a model like the M2.

$100K for household is a little harder, but can still be done if you're mindful of your finances.

It really all comes down to doing your own, personalized budget/accounting and paying what you deem is comfortable under your particular circumstances.

[BurpZilla]

Originally Posted by Gatte

I'm thinking as I type this, that I might be out of line here but I'm really looking into getting an M2 and do not know if financially, that would be the right thing to do as opposed to investing in something that would grow and stick with my m235i a little longer.

I'm sure I am not the only one who's thinking this and would like to know what salary I should be making that it would make the purchasing of an M2 financially prudent. My only other significant expense is rent which is like 850 $ a month.

P.S: I invested a lot in GOPRO last year and let's just say, if I had put the losses from that into the M2, it would bridge the price difference b/w the m235i and M2.

Save up until you do not need a loan or payments. Then buy it. (Sell GOPRO ;0) )

[chmura]

It doesn't matter how much you make. Well it does to a certain degree. What mostly matters is your lifestyle and how much you spend on a monthly basis.

[PrematureApex]

Originally Posted by BurpZilla

Save up until you do not need a loan or payments. Then buy it. (Sell GOPRO ;0) )

Sure, but don't buy it in cash..finance it.

Invest that pile of money you have and make much more than a mere 2% over the long-term.

Hell, even paying down your mortgage makes more sense than putting money down on a car w 2% financing available,