04-09-2006, 01:27 AM
Location: Brentwood, CA
Join Date: Jul 2005
Mein Auto: 2006 ///M Roadster
Well, that sounds aweful responsible, unlike most Americans.
Originally Posted by jetstream23
Divide your salary by 3, that's the price of the car you should get !
Multiply your salary by 3, that's the value of a mortgage you should undertake for a new home assuming 20% down, no PMI and a reasonable interest rate (i.e. under 6.5%).
Doing more than that means your eyes are likely bigger than your wallet or your brain.
Of course, there are lots of assumptions here but this is my baseline.
All kidding aside, my home is now worth 10x my salary ... but I bought it when it was worth 6x my salary. Did I make the right decision to buy in spite of the 3x rule? I'd have to say so. Also, didn't really have a choice in the Bay Area.
Only 1/3 of your salary on a car? Well ... that's aweful bad if you make $30k/year, you can't even buy a new car. I think that might be a little conservative, especially for a single guy. I do think it comes down to priorities though ... a car fanatic spending his annual salary on a car might make sense. The average driver who doesn't care about door dings, drives their car through the Chevron Car wash, and hasn't a clue on how to wax a car probably shouldn't spend even 1/3 of their salary on it. If my father spent $60k on a car I'd just die ... he doesn't take care of his cars.
I do think that if anybody is going to buy a $60k car, they need to have a garage to park it in. I'd recommend looking at a modest home with at least a single car garage first ... then find a way put a nice car in it.
2006 BMW ///M Roadster
- Premium/Nav - Triple Black (Mine)
2004 BMW 530i
[E60] - Sport/Premium/Naviation (w/slushbox
) SilverGrey/Black (Wife's)
1990 BMW 525i
[E34] - (Daughter's)
PREVIOUSLY - 2003 BMW Z4 3.0i
"Happiness is a garage full of bimmers!" (and a couple of go-karts)