JamesVaughn3rd

iTrader: (3)

Forbes does know what they're talking about (most of the time), but it's not 20% of your income. It's 20% of your monthly expenses. That's a common guidline by more than just Forbes, that car expenses shouldn't exceed 20% of your monthly income. Which means car payment plus fuel plus insurance plus anticipated repair costs.

There is no way in the world that Forbes said you shouldn't spend more than 20% of you one year income on a car, paying cash outright. That's like saying you shouldn't spend more than 40% of your income on a house, so you're limited to buying a house that costs $40k dollars if you make $100k a year. All expenses are analyzed by financial planners on average income, not one time. While financing a car/depreciable asset isn't a good investment, neither is going to a bar and drinking beer.

Did you even read what you quoted? I said it would NOT be a good idea to buy it at his current income level.

REVIT93RX7

It's not how much one will cost initially. It's about the cost in the long term. These cars are getting older, the parts are getting hard to find and Mazda keeps increasing the prices. You can mickey mouse stuff but that is not what these cars deserve. I think the first time you need to spend lots of money it will take the joy out of owning the car. I would find something else if I were you.

1QWIK7

iTrader: (33)

Yeah, 20% of your month expenses, IF you finance/lease. Do the math though.

They take into consideration that you already know buying a car IS a bad investment. You think they actually would recommend you financing or leasing a car?? lol

When they say 20% of your annual income, they are assuming you are going to keep the car for a couple of years. When they say 20% of your monthly expenses, they obviously know you're making a monthly payment, for 48-72 months etc.

So just because you make 12000 a year (lets say) and your "monthly" payment is 200 bucks, thats 20% of your monthly expenses, or 2400 bucks (20%) of your annual income, doesnt mean its a logical thing to do. Because if the car is worth 24,000 and you make 12,000 a year, you CAN NOT afford it, regardless if you have chosen a monthly plan. So 20% was that magic number.

Thats why forbes suggested what they suggest. They dont recommend loans. They want you to be smart with money, not borrow money and pay interest back on something that WONT give you money back. Its a bad investment. Thats why i said they suggest 20% of your annual income. If you can afford the car, you can afford it now.

Financing or leasing is a totally different story.

And financing an FD is an entirely other different story, and stupid among ALL levels.



Bad comparison. Cars to houses.

Unlike cars, houses APPRECIATE in value. Of course the scenario is different.

Good thing you mentioned about drinking beer, because again you dont account social and emergency related expenses. Because forbes does. Thats why they "SUGGEST" 20% of your annual income. The rest is for your other expenses and/or disposable income, depending on your lifestyle.

Listen im not gonna sit here and think i know it all because i dont but i read forbes alot because i find it interesting how people can lose and/or gain money and common spending habits etc etc.