# How do you afford you car?



## Rick D (Jul 15, 2014)

mrgmccombs said:


> I am sooooo jealous.. I have vague, foggy memories of being a young engineer just out of school. Buying any toys I wanted and spending as much time on anything I felt like that day. I had 2 dogs (a Weimaraner and a G.S.P.)that followed me wherever I went(except work of course) . Ahhhhh the memories... Still have one of the girls left with me but she is an old lady Weimaraner now at 16. I did learn my lesson on the bad business decision though. I had no idea what I was getting myself into but I see the light now!! Man that is one good looking pup you have! Nice car too.
> 
> Sent from my SM-G955U using Tapatalk


 TY...... Not sure if you can read the note....


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## Autoputzer (Mar 16, 2014)

Kamdog said:


> I think this Samurai is out of his mind. 10% of income? A $10,000 car is the most anyone should buy with a $100,000 income? Or is that $10,000 a year on cars if you have $100,000 a year income? Neither way is for me.


At some point in my career, I went from being mostly an engineer to being mostly an accountant and writer.

The accountant in my makes me not look at the purchase cost of cars when determining what cars I can afford. Instead, I look at the annual deprecation of the cars. The average annual deprecation of my 535i will be about $7.5k over eight years. The average annual depreciation of Frau Putzer's X3 will be about $5k over eight years.

I bet the annual average deprecation of your two cars combined has been less than $10k. So, you're sort of following a reasonable interpretation of the Samurai's foolishness.

Physically and psychologically tracking the annual depreciation costs will make you correctly tolerate those increased annual maintenance costs as the car gets older. My biggest single invoice at the BMW dealer's service department was $2.5k. My service writer seemed surprised how well I was taking it. I explained that was because the annual deprecation on that eleven year old car that year was trivial, and the $2.5k service makes the car one that still makes me very happy. In contrast, the fist year's deprecation on my new BMW was $19k.

There's also a eleven year old Cobalt's deprecation in my annual total, but that's trivial. It actually appreciated about $200 in 2010,, during the recovery after the meltdown.

The problem with the Financial Samurai, Dave Ramsey, Suze Orman, et al is that they're peddling advice to morons. It's mostly good advice, but it's tailored for morons none the less. Specifically, it's too simplified. Things should always be a simple as possible, but not any more so.

Come to think of it, the dealership's owner was surprised how well I took that $2.5k repair bill. It happened to be the same day as their annual customer Christmas party. We were chatting over the shrimp and Champaign. Teasing him, I'd mentioned that the party made up for my $2.5k repair bill that day. He said "Uh, oh!" I then explained that I'd been exceptionally happy with his service department over the eleven years I've had my BMW, and that their work on my car was worth every penny. Somewhere along the line, my service writer got promoted to the service manager. I'd like to think that conversation was a very tiny part of that.


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## Autoputzer (Mar 16, 2014)

mrgmccombs said:


> Nope, not in construction..although I did work in a door shop when I was just out of high school. I was just looking for anything I could buy with the cash in my pocket that weekend...I wonder how that van is doing today? ***129315; Mechanical Engineer working in Defense Microelectronics now. I have had that thought of becoming a mechanic cross my mind once in a while recently. I am doing this work on my cars and paying for all the parts, when I could be getting paid for both!
> 
> Sent from my SM-G955U using Tapatalk


I'm a BSME, myself. Stick with engineering. I'm 59 now. As you get older and your eyesight, knees, back, and muscles deteriorate, working on cars becomes less enjoyable. In your 50's, you will appreciate being able to make a living in an air conditioned office, sitting in an Aeron chair, thinking, tippy-typing, and clicking.

When I was 40, I spent several months installing some equipment I designed on about a half dozen ships. It was fun getting out of the cubicle. But, after the third or fourth ship, I was appreciating my nice comfy cubicle.


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## Kamdog (Apr 15, 2007)

Autoputzer said:


> At some point in my career, I went from being mostly an engineer to being mostly an accountant and writer.
> 
> The accountant in my makes me not look at the purchase cost of cars when determining what cars I can afford. Instead, I look at the annual deprecation of the cars. The average annual deprecation of my 535i will be about $7.5k over eight years. The average annual depreciation of Frau Putzer's X3 will be about $5k over eight years.
> 
> ...


I was never going to buy a car that I could not afford. My definition of afford is that the payments fit where I want in my budget, and any possible unexpected expense comes with an oh ****, and the whipping out of the checkbook, rather than how can I pay this bill and still pay my basic living expenses?

However, as I have mentioned in another forum, sometimes I feel trapped in my own frugality. Lifelong, ingrained and learned habits are hard to break.


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## coachop (May 14, 2018)

I afford mine because they've been used. My present one a 1999 528i cost me the repairs to pass smog a total of $981. It has low mileage 119k,pristine body & paint just need to replace the drivers seat.


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## Autoputzer (Mar 16, 2014)

Kamdog said:


> I was never going to buy a car that I could not afford. My definition of afford is that the payments fit where I want in my budget, and any possible unexpected expense comes with an oh ****, and the whipping out of the checkbook, rather than how can I pay this bill and still pay my basic living expenses?
> 
> However, as I have mentioned in another forum, sometimes I feel trapped in my own frugality. Lifelong, ingrained and learned habits are hard to break.


You're way beyond what I'd do, in that you'd finance a BMW in the first place. I didn't buy my first one until I could write a check for it and do so painlessly.

I did finance $50k of the X3's $55.3k out-the-door cost. But, that was only because they were offering 1.9% for 60 months, and by financing it I got another $500 in rebates. Somehow, my salesman and dealership got some kind of "spiff" for me financing the car. The $50k we had in checking account to pay for the car went into a CD that pays a more than 1.9% even after taxes. I put the remaining $5.3k on my BMW FS Visa card, earning 4% rebates ($212) which I got toward the X3.


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## gkr778 (Feb 8, 2013)

Autoputzer said:


> The problem with the Financial Samurai, Dave Ramsey, Suze Orman, et al is that they're peddling advice to morons. It's mostly good advice, but it's tailored for morons none the less. Specifically, it's too simplified. Things should always be a simple as possible, but not any more so.


That's all true. However, I'm grateful for that advice, as I fall into the moron category when it comes to finance (and many other things).

Having put that advice into action, my family and I are debt free. I can now make sense of personal finance topics slightly higher in the moron - genius distribution, including stuff related to automobile affordability.


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## 528iDad (May 5, 2018)

They’ll really send you to school to fix BMWs? I pay for premium mounting 4G- but would love some more consistency and credibility. I know book time is a pain. But the credentials and stability might be worth it. 


Sent from my iPhone using Bimmerfest


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## Autoputzer (Mar 16, 2014)

gkr778 said:


> That's all true. However, I'm grateful for that advice, as I fall into the moron category when it comes to finance (and many other things).
> 
> Having put that advice into action, my family and I are debt free. I can now make sense of personal finance topics slightly higher in the moron - genius distribution, including stuff related to automobile affordability.


There's a difference between stupidity and ignorance. Ignorance can be eliminated with education and training. Stupidity can't.

My mother was a secretary and a bookkeeper. She had a two-year degree in accounting. Her career was the second career in the family, and she followed by dad around in his military career. So, she never achieved her potential in her career. But, she knew how to manage money. The Putzer's generally don't. She often referred to the "Putzer poverty gene."

She made me take bookkeeping in high school. That, and taking engineering economics in college (no longer a required course in engineering schools) is where I got my financial skills.

Most of her life, my mother would rant that high school curricula should include bookkeeping as a required course. But, one day she changed her mind. She said that if the entire population knew how to manage money the entire economy would collapse.


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## Doug Huffman (Apr 25, 2015)

Autoputzer said:


> She said that if the entire population knew how to manage money the entire economy would collapse.


Yes, very good! The *Greater Fool* is an essential aspect of economic theory.


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## Kamdog (Apr 15, 2007)

Autoputzer said:


> There's a difference between stupidity and ignorance. Ignorance can be eliminated with education and training. Stupidity can't.
> 
> My mother was a secretary and a bookkeeper. She had a two-year degree in accounting. Her career was the second career in the family, and she followed by dad around in his military career. So, she never achieved her potential in her career. But, she knew how to manage money. The Putzer's generally don't. She often referred to the "Putzer poverty gene."
> 
> ...


She needn't have worried, even if everyone were taught how to manage money, not many more people would have known how to do so. I was taught trig in the 11th grade, got a 95 in the class, and couldn't do any of it now.


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## Autoputzer (Mar 16, 2014)

Kamdog said:


> She needn***8217;t have worried, even if everyone were taught how to manage money, not many more people would have known how to do so. I was taught trig in the 11th grade, got a 95 in the class, and couldn***8217;t do any of it now.


Yeah, that's a good point. An old girlfriend of mine had an associate's degree in business. She measured her financial wellbeing by how much more debt she could rack up on her credit cards before reaching her limits. Using that metric, getting a new credit card with a $5k limit was the same as getting... $5k.

She worked in the same 40,000-person bureaucracy as I did. So, even after I moved to Floriduh she could track me down on the intranet. I'd hear from here every time her and husband #2 or #3 had reached another $10k increment in credit card debt, asking for advice. My advice was always the same: earn more, spend less, or a combination of the two. I'll never forget her response once to my advise: "Yeah, yeah. Other than that, what can I do?"

I had a GS-12 engineer co-worker who couldn't do trig' anymore. He's also leased about a dozen luxury cars over the last 30 years. Apparently, he can't do algebra either. After 40 years of work, his only wealth is the equity in his house and his Harley-Davidson in his garage. God takes care of idiots, though. He's squeaked into CSRS right before the door slammed shut. Actually, we think his degree is in engineering technology. Technologists have a four-year degree, but they take less math and more practical stuff.


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## Doug Huffman (Apr 25, 2015)

CSRS for twenty-five years with max TSP contribution. Absolutely stunning return on investment!!!!

It will be a crime that CSRS $900Billion will be rolled into SS rather than being distributed to the surviving annuitants.


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## Autoputzer (Mar 16, 2014)

Doug Huffman said:


> CSRS for twenty-five years with max TSP contribution. Absolutely stunning return on investment!!!!
> 
> It will be a crime that CSRS $900Billion will be rolled into SS rather than being distributed to the surviving annuitants.


My serial-leasing friend has $0 in TSP contributions. But, he'll have 40 years of CSRS time (counting four years in the military).

That 6% you paid into CSRS doesn't cover your benefits. So, that $900B really doesn't belong to the CSRS annuitants. The unfunded liability of OASDI (a.k.a. Social Security) is currently about $17T. The unfunded liability of Medicare is currently almost $28T. So, that $0.9T is just a drop in the bucket.


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## Doug Huffman (Apr 25, 2015)

LOL. Thank you for your contributions. Apropos, see the part played by the Greater Fool, and the hierarchy of greater fools.


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## hooligan_clt (Nov 29, 2017)

Autoputzer said:


> This topic would have been more interesting with a poll question and a lot of choices. People don't like putting their personal financial information out on the Interwebs.
> 
> You'd probably find very weak correlations between wealth, income, and the cost of the cars people drive.
> 
> ...


I've always loved those SE-Rs....

:thumbup:


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## Rick D (Jul 15, 2014)

Autoputzer said:


> Yeah, that's a good point. An old girlfriend of mine had an associate's degree in business. She measured her financial wellbeing by how much more debt she could rack up on her credit cards before reaching her limits. Using that metric, getting a new credit card with a $5k limit was the same as getting... $5k.


 Sounds like some of the women I used to date... The only add here would be " and only make the minimum payment each month".... LOL


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## 7enderbender (Jun 11, 2018)

Really interesting question and interesting comments here. Few observations:
I grew up in Germany and moved to the States in my late 20s. So I see how BMWs are viewed very differently. In Germany 5 Series BMW are standard issue company cars that many folks in middle management and up get handed as a ***8220;benefit***8221; (most of those people don***8217;t realize that they pay high taxes on this benefit and that nothing in life is free - especially when considering that German wages are significantly lower than American or Canadian wages for instance). So the notion of a company benefit being a ***8220;luxury car***8221; isn***8217;t really there. 3series Bimmers are considered entry level cars naught by public employees and then handed down to low riding kids who turn them into the same kind of street racers like a certain segment of the population in the states does with Japanese rice rockets. 

So here in the US BMWs are ***8220;luxury cars***8221; - usually better spect than in Europe. So who are the buyers? I see retirees (my son observed that I my late 40s I was the youngest person at the dealership when we picked up mine), trust fund kids of sorts, and trophy wife***8217;s? And the occasional person who just loves cars and always wanted one. 

With regard to money spent: I***8217;m a mid level executive at a pretty large organizations and have worked hard to get there over the last 25 or so years. Never spent much money on cars for myself. Always Japanese, always basic and small. As the second highest ranking employee in my building I kinda took pleasure over the last four years to pull into the parking lot with a beat up 15 year old Subaru, while the folks who work for us (I know their salary, and their making pretty good money on average) blow their money on their leased GMCs and Lexusus and the occasional Mercedes or BMW. Big boss drives a 3series also, nothing fancy. 
We alway had good minivans over the last few years. And in general the focus for me has been to give the kids access to good experiences and ensure that the wife doesn***8217;t need to work (she does some consulting work for good coin on the side but has times where she rather spends time with the kids who are being homeschooled - instead of doing work for people who won***8217;t listen anyway and only hire her so they can say they did something). We***8217;re not even big on vacations and fancy things like that. I have a guitar buying habit though...

So, now in my late 40s I may have hit a minor midlife crisis and bought that 335. Paid part of it cash, rest paying off via the cheap BMW financing. I don***8217;t do leases. Wasteful and I put on too many miles. The last 4 years at least I drove for free, before that I took the train for a while. So I felt like I deserved a nicer ride, nothing too outrageous. I must admit that I briefly debated Porsche instead. The monthly payment doesn***8217;t make much of a diffenece to me right now - though I am aware of the total cost including the opportunity cost of just stuffing the money away. But then again, my goal is not to turn my kids into trust fund hippies (they***8217;ll be mostly on their own hopefully not because I***8217;m cheap but because I***8217;d worry about their self worth otherwise). And I have no plans on being the richest guy in the cemetery either (unlikely in our area, but that***8217;s a different conversation).


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## charlesberry (Nov 19, 2009)

I buy used, usually CPO cars. Just got an M235 that was 3 years old with 4,000 miles for a hell of a lot less than a new 2018. Let someone else take the depreciation hit. We've been lucky with .9% interest via BMW Financing. That's like using BMW's money for free. I have a shop where I do my own maintenance and repair. Once you do an engine swap, everything else is pretty much noise. I like small cars, like the 2 series and the Z4. I have zero interest in a 5 or a 7 series. Too much that will go wrong in those big cars. I"m also a 10 year guy. Once I get a car, it's a 10 year commitment. Drive the hell out of it. We once traded a 4 year old car, they gave us nothing on trade it. Boy did we take a bath on that car. I said never again - now it's 10 years. I have an F30 335 now and I can't dump that thing for another 5 years.


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## rmay6850 (Mar 12, 2017)

I paid for it in full when I could afford it 
I was comfortable with the maint nance cost as well

I will say, I question everyday if it was worth the investment.
I***8217;m 57 and would not do it again, only my opinion though


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