Poll: Salary to afford a new E46 M3?

Well, based on some of these posts I could afford 2 M3's...maybe a coupe and convertible but honestly, I would not want to put myself in that situation. Although I love my car and I needed 4 doors unfortunately, I know that automobiles are depreciating assets and borrowing money to buy something that decreases in value over time does give me a hollow feeling in my stomach. Although I wouldn't say that car loans are "bad debt" like credit cards or personal loans, they aren't really "good debt" either like mortgages or education loans. They probably fall somewhere in the middle simply because cars fulfill an essential need....transportation.

I am quite conservative however and half my family is in the Financial Services industry so I was taught about the time-value of money when I first started getting allowances as a kid. Ultimately, its up to each individual to decide how to allocate their money. And, to the degree that your car is more than just transportation and is a significant hobby and source of enjoyment for you, it can be justified that you might spend more. Just don't kid yourself about your real financial situation. Determine a budget for your car as IF it were only transportation and then take some of the money that you would use for entertainment and other hobbies on a monthly basis and add it to you car funds if that's how you feel about it. Okay, I'm off the

Originally Posted by Moderato

If my wife and I both made over 100K a year and didn't have any kids to worry about I'd be driving something a *little* more expensive then the M3. You either have some serious debt or worship money in the bank if with 200K/year and no kids you can "justify" an M3.

That's silly. Some people may prioritize other things like serious investing, vacation homes, boat, traveling, or other expensive hobbies before their car choices. It doesn't mean that you have debt issues or that you worship money in the bank. Which is why this question is impossible to answer.

Alex

Originally Posted by BahnBaum

That's silly. Some people may prioritize other things like serious investing, vacation homes, boat, traveling, or other expensive hobbies before their car choices. It doesn't mean that you have debt issues or that you worship money in the bank. Which is why this question is impossible to answer.

Alex

What I said is not silly, and if you paid attention to the wording you would have to agree. If you make 200K+ per year and you have no kids, there is no way you would have to "justify" an M3, and that's a fact.

Originally Posted by Moderato

What I said is not silly, and if you paid attention to the wording you would have to agree. If you make 200K+ per year and you have no kids, there is no way you would have to "justify" an M3, and that's a fact.

It certainly is if you add in the either having debt issues or worshipping money part. Edit it the way you did above and I agree with you.

Alex

For those reasonable people who own a home and are paying off their M3 I would like to offer a financial tip. Home equity loans are going for ~5.5% right now (over 700 fico score and good credit). Do the home equity loan for the five years with your same payment and the interest you pay annually is tax deductible.

For those that have a home and think the payment is too much, but you're dying to have an M3...get a low rate home equity where the interest is still tax deductible and if you extend to 10 years your payment will be less than the 330 or other car you're currently paying for, but don't want. I don't recommend this unless you think at some point you can catch up and pay the loan down sooner or else the interest will eat you up even if it's tax deductible.

By the way, don't lease cars unless you can write it off. Unless you live in a state where there is no sales tax like Montana or Oregon you are paying the entire amount of sales tax on the MSRP. Most people think you're simply paying sales tax on the MSRP - residual, but that is not the case in most contracts.

I offer this up because if you really want an M3 or other $50k automobile there are ways to finance smart and then ways not to.

It does not matter how much you make, obvioiusly it will be easier if you make more money, but if you can save the 48K you need (for base model) plus taxes and such..and you can afford to maintain it..go for it..

you might have to save for a few years..but once you decide to set that money aside its doable

Its not how much you need to make. its how long it will take you to save up the money you need...without finding something else you want to buy in the meantime..

A good example would be if you made about $100,000, that would be a nice salary to buy a 50K car at..think after expenses you set aside 12-13k a year, thats 4-5 years and your good to go

even setting aside 10K, thats 5 years..good things are worth waiting for

Originally Posted by Moderato

What I said is not silly, and if you paid attention to the wording you would have to agree. If you make 200K+ per year and you have no kids, there is no way you would have to "justify" an M3, and that's a fact.

Not if you live in L.A. and recently bought a house (within the last year).

Median price for a house in Irvine is reacing $750,00. For someone making $200,000+ a year it'd be somewhat financially irresponsible to own an M3...The insurance and upkeep plus the monthly payment and mortgage would basically mean nearly 85% of your monthly take home goes to the car and the house. A little too close for comfort if you ask me.

Rest of the country its another matter.

Originally Posted by The HACK

Not if you live in L.A. and recently bought a house (within the last year).

Median price for a house in Irvine is reacing $750,00. For someone making $200,000+ a year it'd be somewhat financially irresponsible to own an M3...The insurance and upkeep plus the monthly payment and mortgage would basically mean nearly 85% of your monthly take home goes to the car and the house. A little too close for comfort if you ask me.

Rest of the country its another matter.

The person making $200k a year could also just buy a cheaper house. Surely they exist?

Lease for 700per mnth or 8400 per year. After 3 years youre out 25400. Whats the residual on a 3 year old m3? So maybee youre 10gs ahead buying. But interest earned on not buying adds up to about 4500. So buying you are say at best 6gs ahead.

Hey yuore right dont lease unless you own a business and can deduct the lease, cause then you could be even to 5gs ahead of buying, and at the end you can just get another new one, instead of trying to sell a 3-5 year old car with needs.

Hey a lease is a rental, at the end you just turn it back in. If you finance to buy over 5 years figure what your paymentsa are going to be, how much will you need to spend on a car after 5 years of hard driving. It takes 10 years for buying and repairs to really make sense and even out to the avg lease costs over the same period..

Originally Posted by swchang

The person making $200k a year could also just buy a cheaper house. Surely they exist?

in socal then you are buying a condo, maybe even a apartment conversion condo

Kind of silly to compromise on a potentially appreciating asset to buy a depreciating asset eh?

Why do people keep posting on this pointless thread? This argument is futile. It is asinine to discuss how much one should make to be able to buy an M3 because they are owned by all types with varying or no income (the 17 year old with generous parents). If the original poster was looking to try to figure out the average income of M3 owners or to get a cross section of what kind of people buy M3s, he or she should have thought about how to better phase the question of this poll to avoid such ridiculous responses.

Originally Posted by swchang

The person making $200k a year could also just buy a cheaper house. Surely they exist?

In L.A.? The average house price is about $500K. The average house price in OC is about $750K.

And if you're buying a cheap house so you can get an expensive car, your priority is AFU. House appreciates (or depreciate less), the car lose half its value the second you drive it off the lot.

Sure you can be financially irresponsible and buy whatever you want. That's why I ended up where I am now, at one time with over $120,000 worth of cars in the garage in a $210,000 house. Very stupid move on my part.

Originally Posted by The HACK

In L.A.? The average house price is about $500K. The average house price in OC is about $750K.

And if you're buying a cheap house so you can get an expensive car, your priority is AFU. House appreciates (or depreciate less), the car lose half its value the second you drive it off the lot.

Sure you can be financially irresponsible and buy whatever you want. That's why I ended up where I am now, at one time with over $120,000 worth of cars in the garage in a $210,000 house. Very stupid move on my part.

I dunno, I guess I was figuring one could just buy what one can afford - house mortgage ~35% take home salary, car payment ~20% take home salary.

Originally Posted by The HACK

Sure you can be financially irresponsible and buy whatever you want. That's why I ended up where I am now, at one time with over $120,000 worth of cars in the garage in a $210,000 house. Very stupid move on my part.

Well at least you could always be happy about the cars you had. Which cars did you have that added up to 120K?

Originally Posted by The HACK

Sure you can be financially irresponsible and buy whatever you want. That's why I ended up where I am now, at one time with over $120,000 worth of cars in the garage in a $210,000 house. Very stupid move on my part.

yeah, but the important thing is the fact that now you have ******** house. why do you think we all come over to your place to work on our cars?

Originally Posted by liuk3

yeah, but the important thing is the fact that now you have ******** house. why do you think we all come over to your place to work on our cars?

Well we ALL know why you come over. To gawk at my neighbor you perve.

Originally Posted by The HACK

Well we ALL know why you come over. To gawk at my neighbor you perve.

I'm just giving a friendly smile to help keep up your neighborly relations...

Lol

If you can pay your bills, put money away for retirement, and still manage to save $$ for a car...

...save the money and pay cash when you get enough. You should be able to earn enough interest to pay for an option or two.

Originally Posted by Tumbler

For those reasonable people who own a home and are paying off their M3 I would like to offer a financial tip. Home equity loans are going for ~5.5% right now (over 700 fico score and good credit). Do the home equity loan for the five years with your same payment and the interest you pay annually is tax deductible.

For those that have a home and think the payment is too much, but you're dying to have an M3...get a low rate home equity where the interest is still tax deductible and if you extend to 10 years your payment will be less than the 330 or other car you're currently paying for, but don't want. I don't recommend this unless you think at some point you can catch up and pay the loan down sooner or else the interest will eat you up even if it's tax deductible.

By the way, don't lease cars unless you can write it off. Unless you live in a state where there is no sales tax like Montana or Oregon you are paying the entire amount of sales tax on the MSRP. Most people think you're simply paying sales tax on the MSRP - residual, but that is not the case in most contracts.

I offer this up because if you really want an M3 or other $50k automobile there are ways to finance smart and then ways not to.

True but you end up changing the collateral on that loan. I love when the latest financial *****s start pitching loans to people who can't afford them or try to encourage them to "consolidate their debt" into "one low monthly payment." They push people to take credit card debt, car loans, etc. and roll it into a home equity loan. Now, guess what, you've taken some debts that were previously unsecured and backed them up with your home so if you find yourself in trouble (medical emergency, etc.) and can't make your payment then you could lose your house. This is a somewhat unrealistic situation but highlights the potential for financial problems when people either overextend themselves or choose the wrong method for paying or financing purchases.

Originally Posted by rwfisher

If you can pay your bills, put money away for retirement, and still manage to save $$ for a car...

...save the money and pay cash when you get enough. You should be able to earn enough interest to pay for an option or two.

Or, if all your bills are paid, no debt except for a mortgage and you max out your 401(k) then look for a very low financing rate like I did. I have enough "money in the bank" for a few BMW's but I like having that money earn money for me. So I pay half in cash and finance the rest at a rate approximating inflation these days. Paying $45K in cash wasn't a smart move for me when that money earns in the 5-6% range and the cost of borrowing was lower than that.

Originally Posted by jetstream23

Or, if all your bills are paid, no debt except for a mortgage and you max out your 401(k) then look for a very low financing rate like I did. I have enough "money in the bank" for a few BMW's but I like having the money earn money for me. So pay half in cash and finance the rest at a rate approximately inflation these days. Paying $45K in cash wasn't a smart move for me when that money earns in the 5-6% range and the cost of borrowing was lower than that.

Even at rates of 1.9-2.9% financing, if you're not purchasing or leasing through a business, do you really think a 5-6% stocks return rate is worth it? You're dealing with capital gains taxes, fees for each stock transaction, and inflation. (I'm not challenging you, just questioning. I had originally thought low-interest finance rates were smarter, but now I'm not as sure.)

Originally Posted by swchang

Even at rates of 1.9-2.9% financing, if you're not purchasing or leasing through a business, do you really think a 5-6% stocks return rate is worth it? You're dealing with capital gains taxes, fees for each stock transaction, and inflation. (I'm not challenging you, just questioning. I had originally thought low-interest finance rates were smarter, but now I'm not as sure.)

Good questions but I'm getting over 2.5% tax free in an Arizona Municipal MM fund that has no Fed or State taxes. That doesn't include mutual funds and stocks that are performing somewhat better on the whole (some down, some up obviously) and several stocks that are sporting healthy dividends which are taxable at only 15% (i.e. MO, BAC).

Originally Posted by Moderato

If my wife and I both made over 100K a year and didn't have any kids to worry about I'd be driving something a *little* more expensive then the M3. You either have some serious debt or worship money in the bank if with 200K/year and no kids you can "justify" an M3.

why is that? Ive made well over 200k the past 3 years and still debate whether I should make such a purchase. Im facing a career change, and less income. I should be at around 150k yr, my house note is $1250 month, and im not sure if i can now afford a CPO 04 M3. I just dont like living month to month with a car note taking up a lot of my money.

i think its financially irresponsible to live in California period!

That is somewhat of a joke, but seriously, i cant see myself working as hard as i do and my dollar going nowhere. Especially when i can do the same elswhere and my money goes 3 or 4 times as far. You guys do have nice weather though!

Originally Posted by The HACK

Not if you live in L.A. and recently bought a house (within the last year).

Median price for a house in Irvine is reacing $750,00. For someone making $200,000+ a year it'd be somewhat financially irresponsible to own an M3...The insurance and upkeep plus the monthly payment and mortgage would basically mean nearly 85% of your monthly take home goes to the car and the house. A little too close for comfort if you ask me.

Rest of the country its another matter.