Paging all Financial Loungers

[warren_s]

I'm currently driving an '05 Infiniti G35x and I was thinking of getting rid of it (selling it to my mother) in the fall and picking up an 07+ Chevy Tahoe.

My reasoning for this is because in the next few years, I'll be popping the question and hopefully having some kids. My original train of thought was that if I get the truck out of the way with, it's one less expense to manage once we are married and have kids.

Unless you're planning on having triplet fatties with pituitary disorders the first time around, you do NOT need a Tahoe to cart children around.

And even if that is your plan, you aren't married yet, and you shouldn't even contemplate having children until after you've been married for a year and have a reasonably good sense that things are going to last and that you're going to be happy.

[mk2_dub]

IMO you have way to many variables there for anyone to give any solid advice just off the cuff.

personally. i think its a bad idea to swap out a car you know is doing well, for something unknown (no matter how reliable the new ride will likely be).

you are adding on more debt right? not good.

you havent even proposed yet, but she is your wife? jumping the gun.

not quite married and talking about buying a car for your potentially maybe possibly 'some' kids?

not saying you dont have the right to think this way. but you are trying to line up LOTS of "if's".

i see no reason to swap out of your car right now. you dont have kids. you dont need the truck. hell you might find that the girl and yourself have fertilization issues and it takes 6 yrs to get her knocked up...

i do understand wanting to be prepared but man. try for one step at a time.

what i would do...
refi or pay off the car.
save, save, save.
get married.
save, save, save.
buy house.
knock her up.
have kid #1.
see if you will have kid #2.
knock her up. (or not)
buy SUV. (or not)

this all goes out the window though if the reason you are selling your car is to help your mom out.

I appreciate the input. I just like to be prepared for anything that life throws my way. My mom's current car is in "meh" shape ('05 Corolla CE), but she's wanted my car since I first bought it. Plus, she deserves it.

if you want to be a family man, then that means you need to be responsible with your household money.

you could easily keep the G and not mod it if you were actually dedicated to doing the family thing right.

you shouldnt need to toss a perfectly good car for a craptastic SUV driving experience.

plus...
your numbers show a real savings of $10/mo.
G -- $230+$230+300 = 760
T-- $300+$150+300 = 750

and you dont drive alot, why do you think you will spend $300/mo gas?
and why would the G and Tahoe have the same gas expense, does the G get that bad of mileage?

on top of that. when you buy a car, any car. you are going to pay taxes. that money is just gone. whether you note that in your budget anywhere or not, its an expense and its not ever coming back to you.

I know I don't drive a lot, I was just ballparking the $300/month on gas in case of unforeseen instances.

With regards to the G and Tahoe having the same gas expense, the G takes 75L of premium fuel while the Tahoe will take 98L of regular so somewhere down the line, it's gonna even out.

In Canada, how large a mortgage you can afford (with insurance through CMHC... a prime mortgage) is dependent on your gross monthly income and your other debt obligations. Two ratios are important. Gross Debt Service (GDS), the percentage of your monthly income that goes to the mortgage, property taxes, condo fees (if applicable) and heating cannot exceed 32%. Total Debt Service (TDS), which cannot exceed 40%, is those costs plus the monthly payments on all other debts. If you have credit cards or other revolving credit, they calculate the monthly payment based off of what it would be if the card was maxed out.

Further, for calculating the cost of the mortgage, they use a "qualifying rate" of interest currently at 5.24%, so even if you take today's lower rate of interest on your mortgage, you'll be able to still afford the mortgage if rates go up by renewal time. The longest amortization currently allowed is 25 years, and minimum down payment is 5%.

What all this means is having a $20k car loan isn't the issue. The issue is your monthly payment. For a $300/mo car loan to lower the house you can afford to $360k, you'd have to already be looking at housing costs within the 32% GDS threshold, and then have debt putting you over the 40% TDS threshold. 8% is a lot of wiggle room ($666/mo on a nominal joint gross annual income of $100k), so if $300 would affect it at all, you either have too much 'other' debt, or you don't have a high enough income to qualify for the more than $360k house to begin with even with zero debt.


Put another way, for your GDS calculation, the monthly payment on a $500,000 house in Oakville with 5% down ($475,000 mortgaged) at the qualifying rate is $2,844/mo, plus property taxes and heating. Add that on, say you're at $3,400/mo. You'd need a total gross income of $10,625/mo, or $127,500/yr in order to pass the GDS on that. If you're making that kind of money between the two of you, a $300/mo car payment shouldn't be enough on top of other debt payments to cap your TDS.


I've entertained the thought of future-proofing my vehicle choice before. My wife and I are married 3 years, still with no kids, and yet a couple years ago I was looking at 3-row vehicles like the Taurus X, Flex, and CX-9, entertaining thoughts about easier road trips with friends, but also future proofing for eventual kids. I'm glad I didn't. All it took was a couple test drives to realize I wasn't ready for that yet. Get it when you need it, and not before. There's plenty of time left.

Funny you should mention the housing market in Oakville as that's where I live!

[c615586]

IMO you have way to many variables there for anyone to give any solid advice just off the cuff.

personally. i think its a bad idea to swap out a car you know is doing well, for something unknown (no matter how reliable the new ride will likely be).

you are adding on more debt right? not good.

you havent even proposed yet, but she is your wife? jumping the gun.

not quite married and talking about buying a car for your potentially maybe possibly 'some' kids?

not saying you dont have the right to think this way. but you are trying to line up LOTS of "if's".

i see no reason to swap out of your car right now. you dont have kids. you dont need the truck. hell you might find that the girl and yourself have fertilization issues and it takes 6 yrs to get her knocked up...

i do understand wanting to be prepared but man. try for one step at a time.

what i would do...
refi or pay off the car.
save, save, save.
get married.
save, save, save.
buy house.
knock her up.
have kid #1.
see if you will have kid #2.
knock her up. (or not)
buy SUV. (or not)

this all goes out the window though if the reason you are selling your car is to help your mom out.

+1

[mk2_dub]

Unless you're planning on having triplet fatties with pituitary disorders the first time around, you do NOT need a Tahoe to cart children around.

And even if that is your plan, you aren't married yet, and you shouldn't even contemplate having children until after you've been married for a year and have a reasonably good sense that things are going to last and that you're going to be happy.

Well I'm not planning of having "triplet fatties" but you can't fight fate, right? Who knows what I'll have.

I know I don't NEED to get a Tahoe to cart my family around but I WANT a Tahoe to cart my family around. I'd prefer a large SUV over a minivan any day.

And regardless of whether I'm married yet or not, the thought of marrying my girlfriend and having kids together brings me nothing but joy, so what's the harm in planning early if both her and I know that things are going to last and that we'll both be happy.

[Mike!]

Funny you should mention the housing market in Oakville as that's where I live!

Elementary, my dear Watson. Actually, educated or not, it was a lucky guess. I just thought of what one of the pricier areas in the 905 would be. If you were north of the city they're building all kinds of semis and townhouses everywhere for relatively cheap prices, and Vaughan or Newmarket aren't that far from, say, Richmond Hill. Oakville only has so much expansion room or nearby cheap areas. Where do you go if not there, Milton? Have a fun commute.

It's laudable to be prepared for anything coming your way. Rewarding your mom with a car she likes isn't a bad idea either. You just don't have to turn around and spend your money on a people mover (yet) instead, unless it's what catches your eye. Heck, you could even lease a JCW Mini (2-door, Clubman, or 4-door Countryman) through your GF if that sort of thing appeals to you. No reason to be in a penalty box for "a few years" preparing, unless of course it's not a penalty box to you.

I happen to like the Tahoe myself, so I don't mean to bash it. It's a good truck that I would consider if I really wanted to own a truck... but I really don't.

[dunhamjr]

I know he got rid of it - just wanted to vent about the car!

missed that last sentence.

[mk2_dub]

Elementary, my dear Watson. Actually, educated or not, it was a lucky guess. I just thought of what one of the pricier areas in the 905 would be. If you were north of the city they're building all kinds of semis and townhouses everywhere for relatively cheap prices, and Vaughan or Newmarket aren't that far from, say, Richmond Hill. Oakville only has so much expansion room or nearby cheap areas. Where do you go if not there, Milton? Have a fun commute.

It's laudable to be prepared for anything coming your way. Rewarding your mom with a car she likes isn't a bad idea either. You just don't have to turn around and spend your money on a people mover (yet) instead, unless it's what catches your eye. Heck, you could even lease a JCW Mini (2-door, Clubman, or 4-door Countryman) through your GF if that sort of thing appeals to you. No reason to be in a penalty box for "a few years" preparing, unless of course it's not a penalty box to you.

I happen to like the Tahoe myself, so I don't mean to bash it. It's a good truck that I would consider if I really wanted to own a truck... but I really don't.

Thank you for the input!

With regards to housing situation in Oakville, you could not be more right. We are looking in both Oakville and Burlington, and I've been considering Milton as they also have a GO line for the commute.

I do want to reward my mom with the car as I know she's always wanted a luxurious car, but always spent her money on myself or my older sister (putting us both through college and university), and I personally don't consider the Tahoe to be a penalty box, I really like it.

I think I'm doing quite alright for a 23 year-old, I have no debt besides what is left owing on the G.

[PsyberVW]

I think I'm doing quite alright for a 23 year-old, I have no debt besides what is left owing on the G.

Not sure how you define this, but this could be a penalty when trying to apply for a home loan. Not having enough credit / well enough established credit can be as much of a pain as having bad credit.

[Mike!]

Thank you for the input!

With regards to housing situation in Oakville, you could not be more right. We are looking in both Oakville and Burlington, and I've been considering Milton as they also have a GO line for the commute.

I do want to reward my mom with the car as I know she's always wanted a luxurious car, but always spent her money on myself or my older sister (putting us both through college and university), and I personally don't consider the Tahoe to be a penalty box, I really like it.

I think I'm doing quite alright for a 23 year-old, I have no debt besides what is left owing on the G.

As long as transit is available for your commute, living farther out, at least to start, might not be bad at all.

And if you just like the Tahoe anyway, that makes it a no brainer. With the insurance savings, it won't cost you any more than the G.

Like PsyberVW says, just make sure you have credit history otherwise such as a credit card you use and pay off. You do sound like you're doing well for your age. I was 24 when my wife and I bought our house, and getting in the position to be able to afford it young feels like it was the right thing to do.

This thread needs some good looking Tahoe pictures...







They're pretty good looking on the road, in my opinion, especially compared to the derp-face on the Yukon.

[dunhamjr]

Not sure how you define this, but this could be a penalty when trying to apply for a home loan. Not having enough credit / well enough established credit can be as much of a pain as having bad credit.

not having a current debt load... does not mean not having credit.

when i bought my first house i had a total of $1k in 'debt'... and a 770 credit score.

[dunhamjr]

As long as transit is available for your commute, living farther out, at least to start, might not be bad at all.

i will be the first one to speak out on this. do. not. do. it.

if you can help it at all, live where you have a short commute. taking into consideration where you want to live.

i have a 50 mile round trip commute. i use 'transit'. its still a wasted 2 hours out of each and every day that i go to the office.

been doing it for 8.5 yrs now. if i could, i would live in 1/2 the house with a 1/4 of the land just so that i could have a 15 minute commute.

[Oliver@triplezoom]

Not sure if it's been asked, but if your commute is so short, how is it that you're spending $300/month in gas?

[dmorrow]

As said before, you want to get a SUV now because you plan on getting engaged, then married, then buy a house, then have kids. Seems like all of this will take years (got to be at least three years at best for the 2nd kid?) and a chance none of it will happen (it's true). By the time the SUV is needed it will may be worn out (2nd kid is how far away?).

Drive the car into the ground and save your money until this happens.

Also, you may want to share this timeline with your girlfriend (or not as it may shock her) as she may not be considering any of it. When you tell her you bought the SUV because you will need it when you have your 2nd kid she may tell you she's doesn't understand how it will last for 8-10 years.

[mk2_dub]

Not sure how you define this, but this could be a penalty when trying to apply for a home loan. Not having enough credit / well enough established credit can be as much of a pain as having bad credit.

I have credit. I just prefer to keep my debts low or non-existent. My Visa is paid off everytime it gets used and I never miss any other bills that are due. Most of my friends are struggling with student loans, lines of credit, rent, etc. I never understood why everyone WANTS to move out as soon as possible. Now if they NEED to move out, that's a different story...

As long as transit is available for your commute, living farther out, at least to start, might not be bad at all.

And if you just like the Tahoe anyway, that makes it a no brainer. With the insurance savings, it won't cost you any more than the G.

Like PsyberVW says, just make sure you have credit history otherwise such as a credit card you use and pay off. You do sound like you're doing well for your age. I was 24 when my wife and I bought our house, and getting in the position to be able to afford it young feels like it was the right thing to do.

Thank you for the positive feedback. Much appreciated!

You hit the nail right on the head. I was thinking living a bit further would probably be wiser as it'll probably cost me less to start.

...
Also, you may want to share this timeline with your girlfriend (or not as it may shock her) as she may not be considering any of it. When you tell her you bought the SUV because you will need it when you have your 2nd kid she may tell you she's doesn't understand how it will last for 8-10 years.

This timeline has been shared and edited by my girlfriend. She fully stands behind my decisions, so whichever vehicle I decide on, she'll be fine with. We both know we're going to stay together so it works.

[Fe2O3]

I like Tahoes, but an 07 that could have been purchased in 06 is already 6 years old and could be 9 years old by the time the hypothetical kids get in it. Not seeing any sense in making this move for the listed reaons, but if you just WANT one now there's nothing wrong with that.
Why not just say "My mom wants my car and I want a Tahoe cuz I think they're cool"

[mk2_dub]

I like Tahoes, but an 07 that could have been purchased in 06 is already 6 years old and could be 9 years old by the time the hypothetical kids get in it. Not seeing any sense in making this move for the listed reaons, but if you just WANT one now there's nothing wrong with that.
Why not just say "My mom wants my car and I want a Tahoe cuz I think they're cool"

To answer your question, I'm actually looking at the 09+ Tahoes now, as yesterday I found out that for MY09 they switched transmissions from a 4-speed to a 6-speed automatic for slightly better fuel economy.

As well, from past experiences, I know that GM trucks can stand the test of time, so whether it's 6 years old or 9 years old, I know it'll be a great vehicle.

And I don't say "My mom wants my car and I want a Tahoe cuz I think they're cool", because that's not the case. Those are two of several reasons why I'm looking for a change, but not the only ones.

[thebigmacd]

$360k in Ontario will buy either an older fixer-upper or a newer townhouse/semi-detached.

Spoken like a true 905-er...hate to break it to you, but The 905 <> Ontario

A brand new detached home in London, Ontario (population 350,000) can be had for $230,000, in the surrounding areas as low as $200,000.

Fixer uppers are down around $150,000 or even less here. My perfectly-maintained 40-year-old house on a 1/4 acre property was $190,000 three years ago and even that was $10,000 over asking.

Yes in Toronto my old house would have probably cost $500,000 but that's Toronto...Ontario is a big place...42% bigger than Texas actually.

[mk2_dub]

Spoken like a true 905-er...hate to break it to you, but The 905 <> Ontario

A brand new detached home in London, Ontario (population 350,000) can be had for $230,000, in the surrounding areas as low as $200,000.

Fixer uppers are down around $150,000 or even less here. My perfectly-maintained 40-year-old house on a 1/4 acre property was $190,000 three years ago and even that was $10,000 over asking.

Yes in Toronto my old house would have probably cost $500,000 but that's Toronto...Ontario is a big place...42% bigger than Texas actually.

No need to break anything to me... I know this.

Hate to break it to you, but the 519 is ridiculously far from downtown T.O. where I work, so evidently, I ruled the 519 out beforehand.

Thanks for the input though.

[Oliver@triplezoom]

No need to break anything to me... I know this.

Hate to break it to you, but the 519 is ridiculously far from downtown T.O. where I work, so evidently, I ruled the 519 out beforehand.

Thanks for the input though.

Right, but you never specified Toronto. You said Ontario.

[mk2_dub]

Right, but you never specified Toronto. You said Ontario.

Well played sir.

[Mike!]

It is very true that areas of Ontario other than the GTA and Ottawa are a lot cheaper. Usually if you hear "houses in Ontario are expensive" or "insurance in Ontario is expensive," they're talking about the GTA.

That said, even though my then 6 year old, 1200sqft detached home on a 30' x 120' lot was "only" $224,000 3 years ago in Kingston, that's still a lot higher than the same thing would be in much of the US, like where I grew up in Ohio.

Everyone and their dog seems to be calling for a price correction in the Toronto housing market, but it's the 416 condo market that seems like it will be affected more than anything. Detached homes are still going to be valuable, though they may drop some.

[484]

With regards to the G and Tahoe having the same gas expense, the G takes 75L of premium fuel while the Tahoe will take 98L of regular so somewhere down the line, it's gonna even out.

Wait.....Wait, what? Are you one of those people that believes the gas tank capacity or fillup frequency determines the cost of feeding the car?

The point you are trying to make is true, but because of MPG or L/KM, not fuel tank capacity.

[mk2_dub]

Wait.....Wait, what? Are you one of those people that believes the gas tank capacity or fillup frequency determines the cost of feeding the car?

The point you are trying to make is true, but because of MPG or L/KM, not fuel tank capacity.

75L x $1.489/litre for premium = $111.675/tank
98L x $1.249/litre for premium = $121.422/tank

2005 Infiniti G35x - 13.5L/100km City + 9.1L/100km Highway
2009 Chevrolet Tahoe LT - 15.1L/100km City + 10.0L/100km Highway

The numbers are not far off whatsoever, which leads me to believe that they will be comparable in fuel economy with regards to my driving needs/habits.

[trisgolf]

OP,

I would suggest this depend on your priorities. If buying a house is your top priority, then get a house first because adding a new car pmt might effect your debt and income ratio. If things are going well, you can buy the Tahoe maybe 6 months after you bought the house.

About selling your G35 to your mom, ask her to wait maybe 6 - 12 mos depend on how soon you will buy a house.

[dmorrow]

75L x $1.489/litre for premium = $111.675/tank
98L x $1.249/litre for premium = $121.422/tank

2005 Infiniti G35x - 13.5L/100km City + 9.1L/100km Highway
2009 Chevrolet Tahoe LT - 15.1L/100km City + 10.0L/100km Highway

The numbers are not far off whatsoever, which leads me to believe that they will be comparable in fuel economy with regards to my driving needs/habits.

I am surprised, I figured you were off and the Infiniti would be much cheaper on gas. From looking it up it looks like you are right, the overall cost isn't that much different. The 05 Infiniti really got 16 city/23 hwy (I didn't know what model you have and I looked up U.S. info).

[mk2_dub]

I am surprised, I figured you were off and the Infiniti would be much cheaper on gas. From looking it up it looks like you are right, the overall cost isn't that much different. The 05 Infiniti really got 16 city/23 hwy (I didn't know what model you have and I looked up U.S. info).

Yeah, most people are surprised when they find out the fuel economy of the G35x. It's a heavy car with a thirsty engine, and it doesn't help that it's AWD.

Pretty crazy that it's that close in fuel economy #'s to a massive truck like the Tahoe.

[BostonB6]

Not knowing about your situation in full it's hard to comment on this from a financial point of view.

From a purely non-financial point of view, your reason for buying the Tahoe now stinks. By the time you get married and have your first child, you will be 3-4 years down the line. Heck, you're not even engaged yet. And when you do have children, really don't need all that extra room right away. What I think you're doing is trying to rationalize a vehicle purchase with the excuse that you're planning ahead.

My advice to you is to keep the G35 until you're married, settled into a house, and wifey is pregnant. But, if you really want to get rid of the G35, buy something fun and enjoy it for the next few years and worry about the family truckster at a later point in time.