Can I afford a $75k car
Currently an AN2 in banking and will be joining a growth PE firm in Texas this summer making the below comp. I would plan to purchase over the summer before starting not now.
Comp: $150 base + $150 bonus
Rent: $3k
Savings: $40k cash, another $20k in 401k/HSA
Loans: $50k student loans (half are 5.5% interest, rest are low like 2-3%)
I am interested in purchasing a new car, I don't really care for fancy watches or jewelry.
EDIT: Think I've decided I'll make the purchase. I'll probably buy half in cash (will be getting a ~$40k bonus this summer) and will finance the other half.
Yes, buy it.
Yup - you can look into trying to finance it
Pay off ur loans first then buy it in cash
Considering your annual compensation of $300k, current expenses, and savings, it seems feasible to afford a $75k car. However, it's crucial to assess long-term financial goals, account for potential hidden costs, and ensure a comfortable safety net. Prioritize financial stability before making a luxury purchase like a car...
Okay ChatGPT
Yes, easily affordable! You deserve it man and life’s short. Saving for a rainy day is overrated.
You can, though are you saving for a house, you could be one of the few of the younger generations able to put down 20%, what did I see under 40 year olds buying houses the average down payment was 8.3% last year. Though you got a nice savings I'd work on 50k car like a really nice commuter car or a older sports car. Then take that other money and build up your 401K/HSA or a personal brokerage account. But honestly it depends on the person, if you loveeeee cars get the car. If you want a house, be stingy to get the house. I'm in the same boat, comps not that high, think about 50k less and my savings are lower but my Roth is 150k plus and my 401k/HSA is 100K plus, personal brokerage is in the 15k range. I'm looking for a house so going with a nice Toyota for now.
I would encourage you to think about this a bit differently. You're presumably very young as An2 and compounding is your friend, and should also recognize that $300k TC is not what it used to be given how expensive life is these days. I think the idea of "six figure" salary was popularized in the 70s/80s? For what it's worth ~$100k in 1985 is ~$300k in purchasing power today.
Keep in mind your bonus is only once a year so you can get into murky waters with your spending budget if that number does not hit where you expect it to -- lifestyle spend based more off salary and then saving most of your bonus is more bulletproof financial plan (albeit conservative).
Napkin math here for illustrative purposes...
So, yes you could make it work. But if you're looking at your monthly cash flow and maxing out retirement savings along the way you don't have a lot of cash buffer which would not make me feel good...
**EDIT: I missed your student loans. I would pay those off before making any big purchases.
If I lived back in Texas I would absolutely do it. Go get some v. Your rent worries me a bit - just because I hope the average age of your apt is not too high because you should be hitting that pool easy v in the summer. Hopefully big unit. Go get in shape if not. Congrats
Yes sir apartment is new and has a pool
You can definitely afford it. I still don't think it's smart. Consider too that your insurance + maintenance will be much higher as well. Since you're so young, I'd reccomend getting some more money into your savings/401k/investments first and putting the car off a couple years. You're about 24 - 25 I'd assume? I promise you the next 2 - 4 years will be the fastest years of your life. Just hold on a bit and get yourself in a better position first.
What car?
I echo buzz_bronco, yes you can afford it, but if you can help it...this is the time to be compounding. If your current car is paid off, man, you'll look back and realize how nice that was once you start making payments on the new one (this was me). Milk that thing as long as you can. Save and invest. And of course, enjoy your higher comp a little bit!
There’s a similar thread out there about juniors who are into cars. If you’re genuinely passionate and have a few dream cars in mind, by all means work hard and buy the cars! But if you’re just looking for a car and assume you need a luxury vehicle to both appeal to others/stroke ego… then I don’t think a car is worth it.
bump
Please, please, please buy a house first no matter what location.
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