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    Thread: Is $700/M too much?

    1. Member
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      09-09-2012 12:30 PM #1
      Would like to purchase a car but wondering if $700 a month is too much in my situation, have never paid over $470, but after crunching some numbers it seems to be ok...alright here goes and oh yeah this is dual income with the fiancée.

      After paying for:

      Mortgage (new build, therefore I assume nothing will go wrong right now)
      Utilities
      Insurance
      Food
      Pension
      Gas
      Fiancée's car

      I have leftover $1250 and she has $900... we do want kids but probably in a couple years. I'm 29 and she's 26. The house we purchased is a good size, so we have no problem raising a family and staying there till paid off. We are going to put money aside for a rainy day, but that's where the 'is $700 too much?'

      Would like some recommendation and/or opinions...thanks!!

    2. Member GeoffD's Avatar
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      09-09-2012 01:22 PM #2
      Your consumer debt (car, credit cards, installment loans, etc) shouldn't be more than 5% of your gross. Do you make $160,000? If not, you probably shouldn't be locking yourself into $700 per month for a depreciating asset.

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      09-09-2012 04:52 PM #3
      We have no CC debt and no loans beside her car...jointly we make close to 160k but not quite.

    4. Senior Member Hostile's Avatar
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      09-09-2012 05:09 PM #4
      What is the term of the loan? Paying $700 for 5 years is a bit different than $700 for 2...

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      09-09-2012 06:15 PM #5
      You make close to $160k and yet you only save $2150 a month?

      It seems insane to me that you are considering assuming a $700/month payment to further reduce your monthly savings. This will bring you to only being able to save ~11% of your gross, barring any emergency needs that may arise

    6. Member rich!'s Avatar
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      09-09-2012 06:36 PM #6
      didn't mention emergency fund - especially considering kids in the future; work towards a 1 year pillow.

      once ya have kids - expensive cars seem silly
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      09-09-2012 06:38 PM #7
      Quote Originally Posted by Hostile View Post
      What is the term of the loan? Paying $700 for 5 years is a bit different than $700 for 2...
      It would be for 5 years

      It seems insane to me that you are considering assuming a $700/month payment to further reduce your monthly savings. This will bring you to only being able to save ~11% of your gross, barring any emergency needs that may arise
      We get taxed heavily in Canada hence why we only have 2150 after everything has been taken care off...both of our jobs also have guaranteed yearly raises, so that $700 won't be as significant in a couple of years.

      Thanks for the comments!

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      09-09-2012 06:43 PM #8
      Quote Originally Posted by rich! View Post
      didn't mention emergency fund - especially considering kids in the future; work towards a 1 year pillow.

      once ya have kids - expensive cars seem silly
      We do have a pillow though, so we would be adding to that

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      09-09-2012 08:39 PM #9
      Quote Originally Posted by Zorro83 View Post
      It would be for 5 years
      Can? Sure. Should? Eh that really is up to you, $700 seems ridiculous for a car to me, especially for 5 years, but your money.
      I'm just a regular Joe, with a regular job. I'm your average white, suburbanite slob.

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    10. Member GeoffD's Avatar
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      09-09-2012 09:46 PM #10
      Quote Originally Posted by Zorro83 View Post
      It would be for 5 years
      So at zero, or near-zero interest rates, you're borrowing $35,000+. People who have their financial act together have a 'car fund' and pay cash for their car.

    11. Member BetterByDesign's Avatar
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      09-10-2012 01:36 AM #11
      Something doesnt seem right about your picture.

      Consider leasing to give you some flexibility; if she is 26 and you are having kids, this will be sooner than later and $700 a month for car for 5 years would generally suck when you look at your kid then back at your car.
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    12. Senior Member Hostile's Avatar
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      09-10-2012 07:23 AM #12
      Quote Originally Posted by GeoffD View Post
      So at zero, or near-zero interest rates, you're borrowing $35,000+. People who have their financial act together have a 'car fund' and pay cash for their car.
      It's actually $42,000...

      OP, I hope that $700/month doesn't include a down payment. There is no way in hell I'd pay a $700/month car note for 5 years.
      iain

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      09-10-2012 08:06 AM #13
      Thanks for the comments...definitely food for thought!

    14. Member justinclark's Avatar
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      09-10-2012 11:29 AM #14
      I am pretty analytical when it comes to finances, as it seems many on this thread are... I have spreadsheets of every financial aspect of my life since I was 18.

      I am young too - mid-20's... Personally, I get a lot of enjoyment out of my car - I get almost no enjoyment out of going out w/ my fiance to a nice dinner, or sbux everyday or $300 day trips...

      What I am trying to say is that you should view depreciating assets the same as fun $ and develop an overall budget to stay under. My fun budget includes new furniture, date nights, cars and trips. I keep it around $1.5k a month averages(which includes vacations). If you get enough joy out of the car itself - it's worth it... If you can't justify it, there are a lot of ways to get the same high. I am finding more and more that I do whatever it takes to raise my endorphins every day, and I am living a better life because of it.
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      09-10-2012 11:55 PM #15
      Quote Originally Posted by GeoffD View Post
      So at zero, or near-zero interest rates, you're borrowing $35,000+. People who have their financial act together have a 'car fund' and pay cash for their car.
      wait... what?

      why would i ever post out $40k cash, if i could borrow the money for 0%?
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      09-11-2012 09:50 AM #16
      Quote Originally Posted by dunhamjr View Post
      wait... what?

      why would i ever post out $40k cash, if i could borrow the money for 0%?
      I was thinking the same thing. Even if it was 5 grand, I'm going to take the loan if its

    17. Member Mtl-Marc's Avatar
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      09-11-2012 10:37 AM #17
      Quote Originally Posted by jnm2.0t View Post
      Can? Sure. Should? Eh that really is up to you, $700 seems ridiculous for a car to me, especially for 5 years, but your money.
      This. New cars are never a good financial move.
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    18. Member GeoffD's Avatar
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      09-11-2012 12:21 PM #18
      Quote Originally Posted by Mtl-Marc View Post
      This. New cars are never a good financial move.
      I disagree.

      I buy new cars paying cash and put a 100K mile extended warranty on them. I run them as far beyond the 100K extended warranty as I feel comfortable and then unload the car for another new one. To earn a living, I need a reliable car. A new car with an extended warranty bounds the overall ownership cost to the routine service in the owners manual, tires, and brakes. It's one less thing to worry about and have to project manage. I don't buy luxury or premium brands. I tend to buy leftovers at the end of the model year. My Fahrenheit GTI was a leftover with a $3K marketing incentive invoice deal so I only paid $23K for it. The GTI before that one was also an invoice deal leftover.

      I question the financial wisdom of going $40,000 in debt to buy a depreciating asset since that price point is sport/entry-luxury. 5 years from now, that car with 100,000 miles on it is going to be worth almost nothing. It's the same thinking that has people buying McMansions.

      The OP has a fiancee with a car payment. The reality is that their combined debt payments should be no more than 5% of their combined income. That won't support a car payment on $40,000+ car.

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      09-11-2012 01:18 PM #19
      I make over $160k by myself and I would never get a $700/month car. I rather buy a car outright and my last purchase was made with the profits I got through dumping stocks.

      What is the OP's investment and retirement savings portfolio?

      If you don't contribute much then you better start soon.

    20. Moderator Oliver@triplezoom's Avatar
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      09-13-2012 06:16 PM #20
      Quote Originally Posted by Vision33r View Post
      I make over $160k by myself and I would never get a $700/month car.
      Hardly a surprise coming from someone who lists their phones where you're supposed to list your vehicles.

    21. Senior Member beng's Avatar
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      09-14-2012 10:43 AM #21
      Quote Originally Posted by rich! View Post
      once ya have kids - expensive cars seem silly
      Quote Originally Posted by rich! View Post
      once ya have kids - expensive cars seem silly

      Quote Originally Posted by rich! View Post
      once ya have kids - expensive cars seem silly

      Quote Originally Posted by rich! View Post
      once ya have kids - expensive cars seem silly

      Quoted multiple times to stress the significance of this statement. I would never have thought that I'd feel that way (hell, Ive spent countless hours on this automotive site I love cars so much). ...but my daily driver is now a Honda Civic. ...its not because I couldnt afford something nicer... its because I dont really get the kind of enjoyment out of car ownership anymore. With work, kids, house... I have very little time for anything else. I think Ive washed my Civic like 3 times. My prior car was a meticulously maintained TL-S. Tuned, modified. ....before that... a modded A4 1.8t. Loved them both. I sometimes miss having them... but most of the time Im just happy I pay practically nothing to own the Civic. Free maintenance, good gas mileage... barely any monthly payment. All of that $$ saved is going other places.

      My two cents. If you're thinking of having kids in say the next 3 years.... Go for a lesser payment (you can still get a helluve lot of car in the 300-500 range)... and bank the rest of that cash. You'll be happy you did once a kid comes along.
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    22. Senior Member dunhamjr's Avatar
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      09-14-2012 10:50 AM #22
      Quote Originally Posted by beng View Post
      Quoted multiple times to stress the significance of this statement. I would never have thought that I'd feel that way (hell, Ive spent countless hours on this automotive site I love cars so much). ...but my daily driver is now a Honda Civic. ...its not because I couldnt afford something nicer... its because I dont really get the kind of enjoyment out of car ownership anymore. With work, kids, house... I have very little time for anything else. I think Ive washed my Civic like 3 times. My prior car was a meticulously maintained TL-S. Tuned, modified. ....before that... a modded A4 1.8t. Loved them both. I sometimes miss having them... but most of the time Im just happy I pay practically nothing to own the Civic. Free maintenance, good gas mileage... barely any monthly payment. All of that $$ saved is going other places.

      My two cents. If you're thinking of having kids in say the next 3 years.... Go for a lesser payment (you can still get a helluve lot of car in the 300-500 range)... and bank the rest of that cash. You'll be happy you did once a kid comes along.
      along the same lines for me.

      just before the boy was born in June, we got rid of 2 car payments.
      personally i went from a purchased new, perfectly mint and modified 2008 GTI with only 22k miles on it.

      to a 2004 Saab 9-5 arc wagon. its reliable. quick enough. and was completely paid off with just the equity from the two trade-ins.

      we do still have too many cars, but one of them is actually leaving to a new home this afternoon.
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    23. Member rich!'s Avatar
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      09-14-2012 11:06 AM #23
      only having time to clean your car once or twice a year makes it fun - how much kiddie snack food you can find.
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      09-14-2012 01:55 PM #24
      Quote Originally Posted by Oliver@triplezoom View Post
      Hardly a surprise coming from someone who lists their phones where you're supposed to list your vehicles.
      I think Galaxy was actually a car that is also a phone.
      Last edited by BetterByDesign; 09-14-2012 at 01:57 PM.
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      09-19-2012 10:56 PM #25
      Quote Originally Posted by Oliver@triplezoom View Post
      Hardly a surprise coming from someone who lists their phones where you're supposed to list your vehicles.
      I daily drive a Prius and it puts money back in my pocket every time I fill up.

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