[Mr Clean]

Ezmass

Beautifully said ! There's absolutely no reason why you (Chad) or anyone shouldn't take what ezmass said into heavy consideration. His advice is spot on, and probably will be the last of its kind that you will hear anywhere.

I remember when I was looking for a newer car a few years back (had to be in 2010 as I graduated HS and wanted a present for myself). I had the e39 and wanted to get into something more powerful and redesigned. I considered the e60 545 when passing by a dealer's lot and fell in love. It was white with the sport package, fully optioned out and selling for $23,000. Perfect ! Until I saw it had 75,000 miles and my Dad realized the front bumper was repainted poorly. I tried to convince my Dad to love the car as much as I did despite the high miles and shoddy paint work but he explained to me the dangers of owning a high mileage 6 year old V8 (which I would keep another 5 years as I would still be repaying the loan bringing total ownership to 11 years). I took his advice and with a heavy heart I moved on. My friend ended up buying the car and showing it off to me (I hated him for that) until he had valve stem failure a year later. Dealer quoted him $10,000 but he replaced the engine for $6,000 out the door. Shortly after that he discovered that the car was hit pretty bad in the front (which is why the bumper was repainted) and various components were damaged and needed replacement. $2000 repair bill. To make a long story short, he couldn't pay the car off due to the unexpected repairs and using his money that should've been for his car payment WITH the repair money (that's a different story for a different time). Over a 2.5 year period he spent almost $10,000 on repairs alone. Now his credit is shot and he can't think about getting into a house anytime soon. That could've been me.

Chad

The truth is you can't afford the car right now. Your looking to buy a car with a $55,000 plus MSRP and miles over 100k within a 3 year period. That find was at the bottom of the barrel and if you have to search that low just to get into the F10 then you better put more thought into this. I know it sounds like I'm a jerk but the truth only comes in one flavor. You recently bought your 545i, and if it was financed through a loan, your still making payments at present, and will be for a few years. If you bought it cash outright, then you need time to recover and should be using your money and time to establish a petty cash fund for repairs. At the end of every month, put a fraction or percentage of what would've been your car's payment into this fund to save for unexpected repairs in the future. For Ex: You would've been paying $500 a month, so you decide to save 40% of that amount equaling to $200 saved every month. Do NOT touch this money for anything except unexpected repairs and set a predetermined dollar amount (say any repair equaling to or surpassing XX% of your monthly salary where it would take X days to gather. This might be a bit confusing but once I construct a model and put in some more numbers you'll understand. The key here is that you MUST structure your finances properly and have enough "room" to adjust to any unexpected change or you will become overwhelmed and risk damaging your credit very fast. Remember, if one payment on any debt is 30 days or more late, you will never be able to have 100% on time payments again. Provided you pay all your bills ontime from that time forward, you will be at 99% max.

Lets establish a scenario. You now live in NYC and make $40,000 per annum
(The following are all approximations and based off NYS and NYC tax information, 0 federal allowances, 0 dependents, independent status and filing single. Assume you have no rent and utilities expense due to living with your parents, but you decide to eat out often and as a result incur food expenses. I also tried rounding some figures up to the dollar.)

Gross
Annual Salary $40,000
Monthly Salary $3,334
Bi-Weekly Pay $1,667

Net Tax
Annual Salary $28,000
Monthly Salary $2,334
Bi-Weekly $1,167

Monthly Expenses
Food $210
Gas (Fuel) $200
Car note $600
Insurance $175
Mics Expenses $150

Total Monthly Expenses $1335

Income (Net Taxes and Expenses) $999
The above is the money you can decide to spend or save. Its the left overs after paying taxes and expenses.
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So the model is completed. Can you spot whats off in the above example? The "Car Note" expense happens to be almost 3x the amount of the next highest expense (Food). It also happens to be almost 25% of your monthly salary net taxes. In the next model, I'll try to implement what I was saying before about establishing a petty cash fund for unexpected expenses, using 40% of what would've been the car note as the monthly addition.
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Gross
Annual Salary $40,000
Monthly Salary $3,334
Bi-Weekly Pay $1,667

Net Tax
Annual Salary $28,000
Monthly Salary $2,334
Bi-Weekly $1,167

Monthly Expenses
Food $210
Gas (Fuel) $200
Insurance $175
Mics Expenses $150

Total Monthly Expenses $735


Assets
Petty Cash Fund Established for Unexpected Car Repairs ($600 for previous car note x 40%) $240

Income (Net Taxes and Expenses) $1359

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Ok, so now that's better ! As you may have noticed there are quite a few changes to this model. First, the subtraction of the "car note" from your monthly expenses, second the creation of an asset account entitled "Petty Cash Fund ..", third a number assigned to the Petty Cash Fund (which I briefly explained above) and fourth the addition of $360 to your Monthly Income Net Taxes and Expenses. Note that even though you are setting the $240 aside from your salary to your fund, it is not counted as an expense. Reason being is you can always use the money from your fund to pay for something in the future because it is something you own not owe. To put it simply I'll ask you this rhetorically: You need a cooling system overhaul which costs X amount of dollars. Can you use the money set aside for your car's repayment which was promised to your debtor on specified days of the month as per your agreement or can you use the money you set aside from your salary which you promised to yourself to cover events such as the one taking place at present? There you go.

Now in this latest model you will notice that you gained $360 to your income net taxes and expenses as a result of the difference between what would've been the car note ($600) minus the $240 you set aside for the fund. Its a win-win because now you have a fund for the car and an extra $360 in your pocket. In the event of something unexpected happening, like you need to take your girlfriend out on a special night, you can afford to use $100 without needing to subtract from your income (nt&e). Additionally, the fund is only 10% of your monthly salary (net taxes).

I want to draw your attention to the points of why this model is better than the others:

- It allows you more "wiggle room"
- It grants you more money in your pocket after paying various expenses
- It helps you to structure your finances and gives you options on where to put your money and what and how to cover unexpected expenses (which may arise at any time)
- It aids you in living within your financial means and gives you a financial road map on planning for your future

The final model will be an example of what others have been warning you against. Purchasing a car that has the potential for expensive repairs in the future while trying to maintain car note repayments.

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Gross
Annual Salary $40,000
Monthly Salary $3,334
Bi-Weekly Pay $1,667

Net Tax
Annual Salary $28,000
Monthly Salary $2,334
Bi-Weekly $1,167

Monthly Expenses
Food $210
Gas (Fuel) $200
Car note $600
Insurance $175
Mics Expenses $150
Unexpected car repair expense (one time expense not continuous)$ 1500

Total Monthly Expenses $2835


Income (Net Taxes and Expenses) $-501

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We have a huge problem here! Its evident you cannot afford the expense of having your car repaired this month! With no fund established to give you leverage and after paying your other bills you don't have enough to cover your car's repair. Your actually negative (loss) in the event that this repair must take place within this month (maybe you depend on your car heavily to get to work and without it you have no means of transport). Even if you leave your car home and take the bus or train to work you still owe that car note and have to pay insurance. Additionally, the money that would've been spent on gas expense is now a transportation expense and may increase due to more frequent use. Even if you zero'd out food and misc expenses, you still wouldn't "break-even".

Does this clear things up a bit? I could go on to show you what an end of the year balance sheet would look like if you started saving $240 towards the fund for 12 months and incurred an unexpected expense versus not saving and having the expense but I think you got the jist of it.


Conclusively, I hope that by enjoining numbers to various scenarios, you will be able to see what others here are trying to tell you more clearly. We are all car enthusiasts and are here to learn more about our cars and in doing so we just may find out more about ourselves. One thing I learned is there are far reaching influences from every spectrum of the forum as we all come from different walks of life each with our own unique experiences and perspectives. There is a wealth of knowledge to be tapped and that is evident by the people who took time and effort to read and respond to your thread. Don't take the seriousness of our responses lightly because you see words pop up on a screen and not our faces. It is imperative that you take a good look at the suggestions provided and try to extract even one point that makes sense to you. Poor long term planning and the notion of "it is better to live today and forget about tomorrow" is what led to the economic decline and collapse a few years ago. In order to balance and maintain various liabilities at the same time one must have an impeccably organized, detailed and meticulous financial system in place. Unfortunately, many maintain their liabilities without balance and live "on the edge" for much of their lives. Seriously, life is too short for that. Take your time and plan things right. Build on what you already have and never start something new without finishing the old first, and in due time, you will be enjoying the finer things in life comfortably.

Best of luck

- Mr. Clean