Car payment
I am moving to a city where a car is mandatory and need to get a new car. I am curious how much others spend per month on their cars.
I am looking at something that would cost me just under $600 a month. Is this too much to spend as an associate ($150k salary). My bschool loans will be just under $1k per month.
Is the $150k base or all in?
Assuming all in, I would say $600/mo is a bit high, especially with $1k/mo in student loans, but it depends on how you want to live (nice apt? Many meals out? Travel? Etc). If you are a huge car fan and this will make you happy then go for it, if it is mostly a “point A to point B” type thing then save the money for the things you truly enjoy. At the end of the day it’s a depreciating asset, so you really need to enjoy it in order to put money towards that as opposed to savings, things you enjoy, or paying off your loans faster
$150k a year is ~$8k a month after taxes (assuming a reasonable tax location). Max out your 401k and you are at $7k, assume $2k for rent and you are at $5k. And $2k for loan, car, insurance, leaves you about $3k a month for other expenses.
Now the difference between $400-$600 a month isn’t much, but you’ll also save a bit on insurance, etc. Considering you can lease a BMW 3 series for $400/mo I would say you can do pretty well around $300-400 a month.
But I’m a big car fan, so I’ve done far worse damage to my net worth with cars.
That’s just base not all in. I assume all in will be $225-250
Got it. Then more reasonable, I would still pay off loans first and prioritize that. But again, if you really enjoy cars, you can afford that, so enjoy life a bit.
Bump
What city for IB do you need a car?
Would guess H Tine
Charlotte. You could get away without one but it would be annoying.
Hmmm maybe it's different as an associate, but I wouldn't think you would need one as an analyst but yea agreed could be annoying especially for associate and you being a bit older.
good buddy of mine in PE in CLT doesn't have a car but he also basically stays within a 4-6 block bubble and uses the scooters when he has to go to south end and rent a car for beach weekends or bum a ride with a friend. I personally couldn't do it, but then again I don't live uptown
Following
questions like "is this too much to spend" are foolish.
first things first, what's your savings rate. is it at least 20%? ideally more, but whatever.
after that, layer in your rent, loans, mandatory expenses, plus some fun money
if the car payment doesn't take away from those goals, go for it
me personally? my car payment is 2% of my monthly income. I buy used luxury sedans on the cheap, but that's just me
What type of used luxury cars?
japanese only, I hate being in and out of the shop and I drive a lot so reliability is paramount. so lexus, infiniti, acura, stuff like that
I would buy a =$20,000 car with 30,000 mileage. With a 60 month, 3.5% car loan that should be around $360, which I think is reasonable. You then have to add insurance ($200/mo?) and some type of annualized maintenance.
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