[gtmassive75]

"your car could be worth more than your annual salary" 2 times more... that's me. Beauty of America.. you don't have to be rich or have high end job to own a car, house or fancy clothes...btw I came off the boat also...and I work for minimum wage $5hr..

[BavariaExclusive]

What is the point of this post? Not sure

[The X Men]

Originally Posted by ezmaass

I won't comment on my exact income, but I will say I'm "compliant" with my own rule of thumb.

As for a minimum wage worker, I see your point. Essentially, like all rules, once you get to the far extremes of the spectrum, you get outlying cases that call for exceptions to the rule. But to be quite honest, if I was making minimum wage, I'd be looking to purchase the absolute cheapest transportation that gets the job done reliably - maybe a $15k car that's 3 years old and now goes for $10k or so? I don't know. It's certainly a much more unique situation.

Like I said, I want to stress the word "personal" in the rule, though, since I think I'm way more fiscally conservative than a lot of people I know, and not everyone has the same priorities. I was just surprised to see how many people responded in the below $50k / $100k since an F10, no matter the model, is a pretty pricey vehicle... and, especially under $50k of income, one could be driving a car that costs more than their entire annual salary.

If a reliable car cost $10000, then a person making minimum wage would spend about 60% of their gross salary into their car. Personally, I like the weekly net income vs. monthly payment formula better.
People spend money in different ways, some people take expensive vacations, some like expensive dinners and some like to spend it socializing. Most of us in here like to spend it on cars, for some that means taking a vacation close by instead of a 2 week vacation in Europe.
One final note, those who check off income of less than $50000 probably have other source of income. Some of it can also be attribute to the fact that we have become a society of buy now and pay later mentality. The low interest rate certainly make it possible for someone making $50000 to buy or lease a new or used BMW.

[ezmaass]

Originally Posted by gtmassive75

"your car could be worth more than your annual salary" 2 times more... that's me. Beauty of America.. you don't have to be rich or have high end job to own a car, house or fancy clothes...btw I came off the boat also...and I work for minimum wage $5hr..

Originally Posted by The X Men

Some of it can also be attribute to the fact that we have become a society of buy now and pay later mentality. The low interest rate certainly make it possible for someone making $50000 to buy or lease a new or used BMW.

And this is what's completely dangerous and what leads to disasters like we saw in 2007/2008 when the markets began to melt down. Buy now, pay later... or the idea that as long as someone allows you to lease or finance something, that it's financially feasible. As we saw with the housing and credit crisis, many millions of Americans were way in over their head... and each and every time, the bank said, "yes" to the loan.

When someone is driving around a car that's worth 2x their salary (and they're making minimum wage), it's evident that the system is still broken, and banks are still allowing unreasonable amounts of credit to be extended - maybe because they've now learned that Americans will print trillions of dollars and go further into debt as a nation in order to bail them out of their bad loans. It's really not the "beauty" of America, it's the stupidity of America to be quite honest. Apparently we learned very little from this past "great recession" about over-extending and "buy now, pay later" mentality.

I can respect that people have priorities, and some will spend more on cars versus houses or vacations, etc - perfectly cool. However, at levels this extreme (above), it's not a matter of priorities any longer... it's a matter of common sense.

[BigK]

Originally Posted by ezmaass

I won't comment on my exact income, but I will say I'm "compliant" with my own rule of thumb.

As for a minimum wage worker, I see your point. Essentially, like all rules, once you get to the far extremes of the spectrum, you get outlying cases that call for exceptions to the rule. But to be quite honest, if I was making minimum wage, I'd be looking to purchase the absolute cheapest transportation that gets the job done reliably - maybe a $15k car that's 3 years old and now goes for $10k or so? I don't know. It's certainly a much more unique situation.

Like I said, I want to stress the word "personal" in the rule, though, since I think I'm way more fiscally conservative than a lot of people I know, and not everyone has the same priorities. I was just surprised to see how many people responded in the below $50k / $100k since an F10, no matter the model, is a pretty pricey vehicle... and, especially under $50k of income, one could be driving a car that costs more than their entire annual salary.

ezmaass, I completely understand your rational thinking, it would surprise me that you make such salary without being rational. However, I believe in life, there’s priority and then there’s happiness. If buying a car means putting a smile on someone’s face everytime he/she gets in it, then that’s a fantastic deal! How many times can we really say paying for rational life priorities made us happy? For me, a house doesn’t make me happy, paying for my kids’ education doesn’t make me happy, half of my retirement account got wiped in 2009...

I’ve seen people spending their life savings on action figures and comic books. To me that’s a waste of money, but to them, they mean the world. Again, I doubt how accurate the result from this poll really is but for all the young guys and gals out there, if it makes you happy then do it! It feels different driving a 5er in your 20s than in your 50s. If you can pay for happiness, that’s as good of a deal as you can get.

[The X Men]

Originally Posted by ezmaass

banks are still allowing unreasonable amounts of credit to be extended - maybe because they've now learned that Americans will print trillions of dollars and go further into debt as a nation in order to bail them out of their bad loans. It's really not the "beauty" of America, it's the stupidity of America to be quite honest. Apparently we learned very little from this past "great recession" about over-extending and "buy now, pay later" mentality.

What are the alternatives, let our economy crash? I am afraid we are in too deep to back out now.

[///M ARMY]

I get laid in koo aid and fried chicken. Don't need any cash

[LACSTER]

Originally Posted by ///M ARMY

I get laid in koo aid and fried chicken. Don't need any cash

I love fried chicken.

[bkM3]

Originally Posted by slingxshot

'

What are you paying for your lease?

I got 610/m 36 months 30K miles for 0 down.

412.55/month 36 months 30k miles 0 down ny taxes in the payment

[ezmaass]

Originally Posted by The X Men

What are the alternatives, let our economy crash? I am afraid we are in too deep to back out now.

It's a valid question - I'm not sure I have a great answer. You're right, the problem here is that our entire economy got so punch drunk on consumer spending - spending that was based upon credit, and credit that was backed by little more than fantasy. So what happens when reality catches up, and the consumers can't continue to spend $1.25 for every $1 of income? The economy crashes as it did in 2007/2008. It's 6 - 7 years later, and home prices have still not recovered as a result of that crash.

It'll be painful, but I think the only resolution is finally bringing consumer lending back in-line with reality of what people can afford to repay. This time around it was a housing bust. Next time around? Probably student loans if I had to guess. At least with tangible assets, like houses, cars, boats, etc, there's something to repossess, and the bank can recover at least part of their investment even if that asset lost value. With student loans, wow - good luck... intangible assets and zero recoverable value.

But back to spending on cars... I can completely respect that people will have differing priorities, and where someone may prioritize spending on a home, another may prioritize spending on a car, etc. But I still do maintain that at a certain level, it's beyond a priority and becomes a general liability - and as we saw in 07/08, not just for the individual, but for the bank backing it... and therefore, the general taxpaying American, as we've now set the precedence that banks will be "saved" by Uncle Sam when they make bad loans. BTW, I'm also not arguing we shouldn't have bailed out the banks this past time around - I think all generally sound economists agreed there wasn't a better option; however, it's troubling to see that we've yet to pass any real reform that keeps it from happening again, and easy credit (now with low interest rates) is back in style.

Quite a tangent here... All in all, I think people should spend their hard-earned money on what brings them happiness... but do so within reason that's not going to put yourself or your family in financial straights... or for that matter, your fellow Americans. I doubt very many people think of their personal finances as having an effect on the macro economy of our country... but the past melt-down should have been an eye-opener. It's death by a thousand cuts - many millions of individuals making poor financial decisions, aided by a number of banks happy to give them enough rope to hang themselves... and it impacted everyone.

Similarly, you may say, "it's not my priority to save for retirement" - and perhaps you see that as an individual and personal decision... you'd rather drive a 5-series BMW. Well, what happens when the millions of Americans who prioritized material goods over retirement savings reach an age where they can no longer work? Who takes care of them? Who pays for their care? Maybe it was once their children - but less so these days, and trending further from it. The answer? Society. Taxpayers. What's great about America is that it's a country that ALLOWS for these personal freedoms and choices - but it's quickly eroding because we've created a formula that's encouraging people to overspend and live for today without a thought for tomorrow. And what happens then? Well, the government steps in - and we create more programs to take care of the people who can't (or chose not to) take care of themselves. We can't just let the bulk of entire generations starve on the streets once they can no longer work - we need retirement homes for them, healthcare, etc. Sure, they can be low quality - as the government will excel at - but in order to fund it, we need more tax dollars.

So, where does it all eventually lead? Higher taxes, more socialized government, and less personal freedoms. If people can't be trusted to prioritize their own income and do things like save for retirement, well, the government will do it for us. Just pay 50% or 60% of your income in taxes, and all will be provided - spend whatever is left of your income after taxes on whatever makes you happiest in the moment, and fall into the government social safety net when things go bust. We just can't expect a nice luxury old age home... probably something more along the lines of a hospice.

So, sorry to paint such a gloomy picture, but the truth here is ugly. Americans ONCE had longevity of financial vision and planning... but creative lending, easy credit, etc, has created the "buy now, worry about how to repay later" society we now have. And the impact is far from personal. As I said above, the only way to unwind this is really to reform the credit and lending system to help make it more responsible - both for borrowers AND lenders alike. I'd like to believe that America can also retain much of its individual freedoms... and people SHOULD be trusted to do what they see fit with their own income. But if we continue, as a society, to poorly prioritize individual finances, and we consistently need more government intervention to save us from those poor decisions, then the result will be a bigger, more socialized government that's all too happy to step-in, confiscate more of your income as taxes, and provide those services for you... dictating EXACTLY how it'll all work, and likely with very mediocre results.

I'm happy to see more people enjoying a BMW 5-series than would have been able previously... and, of course, the decision of how they prioritize their finances is theirs... FOR NOW.

[Noggie]

I dont live in the US so this does not directly apply to me.
However if most people here are, well, normal working people I'd expect to see the majority between 50-100k, which may be the reality, talking personal income, not household income.
This average income is not far off my country, however cars are a lot more expensive over here. A small Hyunday is just about $50k, so car loans are, well, something you have unless you are very rich. Everyone pretty much have one, the only difference is that the more you make the more expensive car you have. This is also why the cheap versions are most common among BMWs where I live, 520i and d are the most common ones, because the bigger engined ones are a lot more expensive to buy.

My personal opinion is that you should not borrow more than half the value of the car.

[The X Men]

Originally Posted by ezmaass

the problem here is that our entire economy got so punch drunk on consumer spending - spending that was based upon credit, and credit that was backed by little more than fantasy.

The answer is to go back to the gold standard when money is actually worth their face value, but that's a fantasy more than reality. Raising interest rate is not the way to go either, it will reducing consumer spending, which will result in another recession, which is why the feds have kept the prime rate so low. It is the lender’s responsibility to make sure the loans goes to qualified borrowers, but the way the government bail out the banks, I am not sure they are trying very hard to seek out those so called qualified borrower. As far as the bank is concerned. the bottom is profit for the bank’s shareholder, even if that means lending money to borrowers who are not qualified. In that sense, I guess the stock market are partly to blame too.
Learning from pass recession is not one of our strong suit, human beings in general have a very short term memory. Just look at all the wars we fought and we learn nothing from it. Saving for retirement sure makes financial sense, that is if only everybody does it. If everybody was self reliance, there would be no need for welfare and social security. Unfortunately, the mentality is that the government will bail them out. Well, guess who pays for it when the government bails people out, we do.
Some people will spend disproportional more on their car than others. When you thing about it, where do you spend most of your time during the day. Number one would probably be at home, then work and then in the car. Most people like to have a nice house, good job and a nice car. A modern day car is like a man's horse in the old west, its more than a form of transportation, it speaks for itself and it is a part of one's personality.

[noixd]

You guys writing novels here but basically be smart about your $$$ and learn to live below your means. If you making under 50K and driving a bmw good for you. You flossin now but you will be regretting it later.

[gtmassive75]

"ezmaass".. "your car could be worth more than your annual salary" 2 times more" I was being silly... and what I meant about minimum wage..was when I came to this country I work for almost 10yrs, earning under or about $15 an hr.. and within 6 of those yrs I was able to buy my 1st house.. because that was my American dream and that was priority. What I'm saying is that you can be a millionaire and I can work for an average salary, but I can drive a BMW just like you,..(speaking in general, not directed at you) That's the beauty of America.. I work day and night then and day and night now..because I want more.. Point of my post.. work hard and you get whatever you want, because this country can provide those dreams we have.

[gtmassive75]

Originally Posted by bkM3

412.55/month 36 months 30k miles 0 down ny taxes in the payment

hook me up with your dealer.. i need a X5

[CmdllbF11]

Originally Posted by ezmaass

And this is what's completely dangerous and what leads to disasters like we saw in 2007/2008 when the markets began to melt down. Buy now, pay later... or the idea that as long as someone allows you to lease or finance something, that it's financially feasible. As we saw with the housing and credit crisis, many millions of Americans were way in over their head... and each and every time, the bank said, "yes" to the loan.

When someone is driving around a car that's worth 2x their salary (and they're making minimum wage), it's evident that the system is still broken, and banks are still allowing unreasonable amounts of credit to be extended - maybe because they've now learned that Americans will print trillions of dollars and go further into debt as a nation in order to bail them out of their bad loans. It's really not the "beauty" of America, it's the stupidity of America to be quite honest. Apparently we learned very little from this past "great recession" about over-extending and "buy now, pay later" mentality.

I can respect that people have priorities, and some will spend more on cars versus houses or vacations, etc - perfectly cool. However, at levels this extreme (above), it's not a matter of priorities any longer... it's a matter of common sense.

Ezmaass has got to be a reformed banker...! Lol

[ezmaass]

Originally Posted by gtmassive75

"ezmaass".. "your car could be worth more than your annual salary" 2 times more" I was being silly... and what I meant about minimum wage..was when I came to this country I work for almost 10yrs, earning under or about $15 an hr.. and within 6 of those yrs I was able to buy my 1st house.. because that was my American dream and that was priority. What I'm saying is that you can be a millionaire and I can work for an average salary, but I can drive a BMW just like you,..(speaking in general, not directed at you) That's the beauty of America.. I work day and night then and day and night now..because I want more.. Point of my post.. work hard and you get whatever you want, because this country can provide those dreams we have.

I agree with this - and I applaud your dedication and hard work!

[ezmaass]

Originally Posted by CmdllbF11

Ezmaass has got to be a reformed banker...! Lol

Haha... I'm not sure there is such a thing.

[Noggie]

Just an open question to all you US citizens.

Do most Americans buy a car cash in hand, or do you finance part of it?

Also. it appears leasing a car is common in the US, something it is not in my country.

[The X Men]

Originally Posted by Noggie

Just an open question to all you US citizens.

Do most Americans buy a car cash in hand, or do you finance part of it?

Also. it appears leasing a car is common in the US, something it is not in my country.

Interest rate here in the US is so low, it doe not make sense to buy a car with cash.

[bkM3]

Originally Posted by Noggie

Just an open question to all you US citizens.

Do most Americans buy a car cash in hand, or do you finance part of it?

Also. it appears leasing a car is common in the US, something it is not in my country.

iv noticed that most high end cars (bmw,mercedes, etc) tend to be leased as the manufacturers' banks tend to give very favorable lease rates.

[Noggie]

Originally Posted by The X Men

Interest rate here in the US is so low, it doe not make sense to buy a car with cash.

Ok, makes sense.
For us the interest rate on a car loan is typically 5-10% depending on how much you put in, and the length of down payment.
Some just include the car loan in their house loan if they have available capital in the house (if you own say 50% of the house , you can easily get reduce that to 40% to pay for a car)

Originally Posted by bkM3

iv noticed that most high end cars (bmw,mercedes, etc) tend to be leased as the manufacturers' banks tend to give very favorable lease rates.

A lease is no good for most in my country.
A lease is typically 3 years.
First you need to put in a lump sum, the size of this determines your monthly payment. So lets say you pay $15.000. This money is now lost, you will never see this money again.
For the next 3 years you pay, I don't know, $500 a month. Plus insurance and any service on the car unless you get a service package.

After 3 years you give it back, it will be scrutinized by the dealer and they will charge you for any scratch or dent, and if you have done excess mileage based on a preset norm (i.e 10.000 miles a year).
And you will now probably have to pay a bit extra for these things.

Then you walk home with nothing. You have spent 15.000 up front, and an additional 18.000 in monthly fees. You have spent $32.000 to use a car for 3 years.
To me this is crazy.
When you buy a car you at least have the resale value in you hand when it is sold, and if you can put 15.000 into lease, you can use that as a down payment on the car, and a car loan should not cost more than $500 a month.
But at least you have something left after 3 years something you don't when you lease.
This is why I buy my cars and not lease.