<p>A lot kids decide to live at home in order to buy expensive toys. I know a mom who has 3 grown boys living at home. She gets up early every morning to pack their lunch and she does their laundry. If you are making 50K and don’t have bills to pay, then you could definitely afford an expensive car.</p>
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<p>Some rules of trading from Mauldin:</p>
<p>NEVER ADD TO A LOSING POSITION
Never, ever, under any circumstance, should one add to a losing position … not EVER!</p>
<p>INVEST ON THE SIDE THAT IS WINNING
Learn to trade like a mercenary guerrilla.</p>
<p>DON’T HOLD ON TO LOSING POSITIONS
Capital is in two varieties: Mental and Real, and, of the two, the mental capital is the most important.</p>
<p>GO WHERE THE STRENGTH IS
The objective of what we are after is not to buy low and to sell high, but to buy high and to sell higher, or to sell short low and to buy lower. Sell markets that show the greatest weakness; buy markets that show the greatest strength.</p>
<p>MAKING “LOGICAL” PLAYS IS COSTLY
In a Bull Market we can only be long or neutral; in a bear market we can only be bearish or neutral. “Markets can remain illogical far longer than you or I can remain solvent.” Trading runs in cycles; some are good, some are bad, and there is nothing we can do about that other than accept it and act accordingly.</p>
<p>THINK LIKE A FUNDAMENTALIST; TRADE LIKE A TECHNICIAN
Keep your technical systems simple. </p>
<p>UNDERSTAND THE ENVIRONMENT
In trading/investing, an understanding of mass psychology is often more important than an understanding of economics.</p>
<p>THE RULE THAT SUMS UP THE REST
Do more of that which is working and do less of that which is not.</p>
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<p>The quality of vacations and time together aren’t proportional to the amount of money
spent.</p>
<p>We did spend money on vacations and time together be still managed to sock away
quite a bit. Part of that is setting up systems to keep living costs low and setting
aside money for recreation.</p>
<p>Investments should grow exponentially so starting early gives you a big leg up on
others. Of course you have to understand where to invest and in what direction.</p>
<p>As Gourmetmom points out, it depends on a variety of factors. Normally, if your monthly payments on car, mortgage, student loans etc. exceed about 35% of your income, you become high risk. So if you have $100,000 income and your mortgage payments are $30,000 a year, you cannot have car payment of more than say $400 a year which will not really get a Mercedes unless you make a significant down payment.</p>
<p>Again, this debt payment to income ratios are a little fuzzy and in today’s environment, banks may a look at 30% or less rather than more. A few years back, the situation was totally different…</p>
<p>Hence, the answer to the OP’s question is “It depends on your other monthly payments towards debt, the amount you have to put down as down payment, your salary, your assets, any unique circumstances you have, your credit rating etc…”</p>
<p>
So can a Corolla, Civic, or actually most cars nowadays.</p>
<p>OP - Don’t worry about it. Firstly, you’ll probably end up accepting the highest paying offer you receive anyway (not necessarily, but probably). Secondly, your priorities will likely change as you get further along in life (note how I avoided saying ‘maturing’). You may find yourself more interested in traveling, or buying a house, or making investments that’ll hopefully increase in value. </p>
<p>You might also just want that car. If so, you can usually still buy it but make the deal match your resources - i.e. if you have plenty of income you could buy it new. If you don’t have quite the income level and don’t want to spend your career supporting paying for your car, by a used (okay - ‘pre-owned’) car of the model you like. A car that’s 2-3 years old with under 40K miles that’s been taken care of decently is pretty much like a new car anyway and will last a long time and you’ll avoid the steepest part of the depreciation curve. You can even buy a ‘Certified pre-owned’ car and still have a factory warranty for a long time.</p>
<p>There really are too many variables to give you any concrete answer. I’ve known people who were willing to spend the majority of their income on car payments for higher end cars which I thought was ridiculous but - it’s their money.</p>
<p>Remember also to factor in repayments for any LOANS you may have, including educational loans, credit cards, etc. Housing and other expenses also take a chunk out of any salary.</p>
<p>The main thing to keep in mind is to figure out what you’re willing to compromise to get what you want. Sometimes you just don’t know what you’re willing to put up with until you buy that expensive car, or you find yourself house poor. But that’s how you figure it out. When you’re sitting in your little apartment with that fancy car out front, but without any $ left over for going out with your friends, it might not seem so great. Then again, you might be lucky enough to be able to afford it all.</p>
<p>Don’t forget insurance…a $50k car with a 20-something single male driver will not be cheap. Don’t forget medical insurance, copays, disability and life insurance, either.</p>
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Depends on a multitude of different things. Married? Kids? Own a home? Live in a high cost of living area?</p>
<p>Figure you put 10K down and are paying off 40K over 48 months. That means you are a looking at ~1k/month payment. That does not include insurance/gas/maintenance. Insurance will probably be $200/month if under 25 (view that as a minimum, probably ~125-150/month if over 25 with a clean record). If you make 100K/year (in Cali) that’s probably around ~5.1k/month take home. That does not include any 401K investment or any additional health insurance premium payments. Figure you are working with ~4k/month if maxing your 401K to 15.5K/year. The payment will be 25% of you net income. If I was looking at 750+/month in rent I’d be highly wary of a load like that.</p>
<p>Also, OP, don’t forget taxes. Taxes suck. If you earn $100,000, probably $25,000 will go to taxes. You don’t take home $100K; you take home $75K. And then from that net amount, you have to buy everything.</p>
<p>As has been pointed out here your payments would be approx $1K per month. Instead of going into debt for a new Mercedes you should consider saving that same $1K for 2.5 years and pay cash for a very low mileage 3 year old E-Class. It will “drive” better knowing it’s paid for.</p>
<p>Try $60,000 take home after all taxes and employee contributions, if you don’t have many deductions.</p>
<p>Pay attention to the insurance premiums as well. Also other maintenance costs including time spent, even under warranty, in the repair shop- that can be a time consuming annoyance.</p>
<p>Easier solution- marry someone with lots of expendable cash, or who already owns a Mercedes :)</p>
<p>Plan to date when you have that hot sexy car? Budget for that, too! (I don’t think the drive-through at McDonald’s will suffice!) :)</p>
<p>Before you spend $50k on a car you should be making $1mm per year. Otherwise you will be a poseur. If you are making $1mm then you will appear modest and frugal with your $50k car.</p>
<p>The problem is the only people that could afford those sexy sports cars are are middle aged people like us (if people are sensible), so every time I see a great 2 seater around my town it’s always driven by some middle (or old) age person. Yeah, when I was in my 20s, I wished I had a convertible. I was too practical. When I finally got one in my 40s, I would only drive it with the top down if it wasn’t too hot (70s), not too windy, not too humid… so only 3 times a year. Maybe I should I have done it when I was younger.</p>
<p>I think men wait until they have no hair to get blown around in the wind. But then they need a hat to avoid skin cancer.</p>
<p>jym - is that why so many of them wear a hat? I thought it was to keep hair out of their face.</p>
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I think you’re generally right and I’ve observed the same but I’ve been driving a convertible since my 20s (I’m still driving the same one every day now) and I had a 2 seater sports car in my 20s (1978 - 280Z) and have had another cool car since I was in HS (and still have it). I’m glad to have been able to drive these cool cars (to me anyway) at that younger age in addition to now. I can relate to the OP wanting a desirable (to the OP) car.</p>
<p>Note though, that I bought the cars used so they were much more affordable than if I was pining for an expensive car I felt a need to purchase brand new. My 44 y/o Mustang is just as fun to drive now, despite the fact that I bought it used over 25 years ago, as if I purchased it new. OP - Unless you have money to burn (where you might need to wait until you’re middle-aged), seriously consider buying a used car since you’ll find you can get more car, sooner, for less that way. Whatever you buy will be considered used anyway once you drive it off the lot.</p>
<p>Used is the way to go. The problem, of course, is maintenance on the higher end cars. Spending 5k/year in maintainence basically <em>is</em> like having a new payment.</p>