VirgilFlowersParticipantStatus: AttorneyPosts: 6Joined: 11/13/2018
I always find the advice I get on here and on Bogleheads useful for putting things into perspective and helping me think about what I actually care about. I’m four years out from graduating law school (actually exactly 4 years out today) and have managed to pay off my law school loans and build up a pretty nice nest egg in the last few years by being aggressively frugal. Now that loans are paid off I’m still trying to figure out the right balance between saving and enjoying my income.
My old car crapped out this week and after taking it in to the shop I found out that it needs more work than its worth. With the exception of buying a car for my wife last year I’ve never purchased a vehicle and since I thought I’d get a few more years out of this one I haven’t put much thought into what I want/how much I should spend.
Some background/additional detail:
- Age: Early 30s
- Kids: None at the moment but likely in the next year or two
- Household Income: Roughly $400k (I’m in biglaw and DW is an educator). This includes a year end bonus. Monthly take home is just over $14k after taxes, 401k, medical, etc.
- Future income: Difficult to predict. If I stay in biglaw my salary will continue increasing significantly every year. If I leave I’d be looking at roughly $200k best case scenario. DW’s income (she makes roughly $60k) is stable but we aren’t sure if she will want to take time off after we have kids.
- Assets: Roughly $500k ($250k retirement, $50k cash and $200k rental)
- Debts: $70k on the rental (2% – intrafamily loan) and a $13k student loan (0.0%). No consumer or auto debt.
- Fixed expenses include: $3.5k/month on the rental and $3.3k on housing (rent and utilities)
I’ve driven the same old car forever and now that it’s finally time to get a new one I’m being really tempted by the siren song of a used or CPO low end luxury car (think 3 or 5 series BMW or a Lexus IS350). I am however very sensitive to lifestyle inflation. Talking to friends and family I’m getting recommendations that fall clearly into two camps, work friends all tell me to get a low end luxury car and friends from outside of the law all tell me to get a Subaru or another Toyota.
What is a reasonable amount to spend? Any suggestions on how to approach this/how to think through what to get?May 15, 2019 at 3:22 pm MST #214803CordMcNallyParticipantStatus: PhysicianPosts: 2132Joined: 01/03/2017
Everyone is a bit different. How long are you looking to keep the car? If you don’t work on them yourself, I wouldn’t recommend ever owning an out-of-warranty luxury car (I don’t know how long the BMW or Lexus CPO warranties last).
What’s the rest of your spending like? With your income, you can pretty much get whatever car (exotics excluded) you want and be fine as long as you don’t keep doing that every 2-3 years.
“But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
― Benjamin Graham, The Intelligent InvestorMay 15, 2019 at 3:38 pm MST #214811abdsParticipantStatus: PhysicianPosts: 181Joined: 01/16/2017
You didn’t include one of the most important things… how much do you care about cars?
You seem to be doing quite well so if you love cars then get a cool car. If you don’t care about cars then get something inexpensive and reliable.AntaresParticipantStatus: PhysicianPosts: 458Joined: 01/20/2016
I love a car that handles well and has a lot of power. I bought a CPO BMW 3-Series some years ago. It was a lovely piece of engineering.The day it was out of warranty, I hit a huge pothole at night. Never saw it coming. My headlights were jostled out of proper alignment, and couldn’t be adjusted. At the dealership, I learned that the lights were sold only as a pre-fabricated package, both lights together only, were not repairable, and I’d need to spend $1600 for a new set of headlights. I learned what BMW stands for: Break My Wallet. If money is important, you can’t own a luxury vehicle out of warranty. I got rid of the car.
Ever since I’ve driven a Suburu WRX. Plenty of power, excellent handling, no luxury at all. And no ridiculous bills. Lesson learned. YMMV.
http://www.YouTube.com/c/shoutingfromtherooftops for my Youtube channelGoBlueMDParticipantStatus: PhysicianPosts: 64Joined: 05/27/2017
Biglaw requires a new bmw 5 series on a lease, followed by Audi A7 (S7 if you’re bold) on a lease.
Smalllaw requires a used Lexus IS250 or bought new shiny Toyota Camry.
Next question.PedsParticipantStatus: PhysicianPosts: 3614Joined: 01/08/2016
Or lease something for 2 to 3 years and see if it’s truly the lifestyle you want…Molar MechanicParticipantStatus: Dentist, Small Business OwnerPosts: 364Joined: 10/29/2017
Get what makes you happy within reason. Serious question…If you are biglaw, you probably live in a major coastal city. Do you really need two cars? If so, and again assuming you live in a major city and commute with traffic, do yourself a favor and check out a Tesla Model 3. With average driving, the 5 year cost of ownership is similar to a Camry, and autopilot is a lifesaver in traffic. It also stands out in a sea of BMWs and is way more fun to drive.TimParticipantStatus: AccountantPosts: 2123Joined: 09/18/2018
When you are looking, checkout Edmunds True Cost to own. It is one source of independent data. You might be surprised with the value lost in the first three years. Some of the favorites fad quickly.
Leasing has some tricks. The residual value is model year and mileage driven. Lease at the new model year. Increases your residual thus lowering your payments.
A used Lexus or a new Honda will run you about what a leased BMW costs you for 3 years. But then, you won’t have a car. Your choice.
Housing (noted you are still renting) and transportation are two big rocks. What you spend on transportation won’t be available for housing or savings.
Which would you want more, housing or savings or twice as expensive transportation? Your choice again.May 15, 2019 at 8:06 pm MST #214835EndlessSummerParticipantStatus: PhysicianPosts: 2Joined: 05/12/2019
1) The real Virgil Flowers is a saint
2) This thread wastes server space. The evidence is EVERYWHERE.May 15, 2019 at 8:32 pm MST #214841ACNModeratorStatus: PhysicianPosts: 549Joined: 01/08/2016
Get a genesis g80 sport or the new g70.
Fully loaded cars with all th e bells and whistles for half the price of BMW, MB, audi.
If you're ever having a bad day, just remember in 1976 Ronald Wayne sold his 10% stake in Apple for $2,300.May 15, 2019 at 8:42 pm MST #214842jhwkr542ParticipantStatus: PhysicianPosts: 1085Joined: 02/15/2016
I wouldn’t do a used BMW. Fairly high maintenance costs. You’ll need to figure out what class of car you want. Toyota and Honda always have longevityMay 15, 2019 at 8:57 pm MST #214845DreamgiverParticipantStatus: PhysicianPosts: 733Joined: 03/09/2017
Lexus with V6 engines or Porsche 911/Boxter/Cayman get my vote for luxury cars, the former if you are not a real big car guy. Your retirement is a little skinny and not owning a house, do you have plans to ever own? Not ready for a big 911 splurge, but used Lexus IS or ES should be fineMay 15, 2019 at 9:01 pm MST #214846wideopenspacesParticipantStatus: PhysicianPosts: 960Joined: 01/12/2016
You are in great shape financially and it’s not the end of the world to get whatever car you want. If you are planning on kids soon though, at least get a car that will allow you to comfortably drive your child around. So no BMW 3 series. If you enjoy spending ridiculous amounts of money on car repairs, go ahead and get that low end status symbol. I don’t care about cars and don’t like wasting money on something that just gets me from point a to point b, plus I know kids ruin cars, so I’d go practical with a Toyota. But you get to choose how to spend your extra cash, we all indulge in different ways.HandFellowParticipantStatus: PhysicianPosts: 168Joined: 01/18/2016
Forget Honda and Toyota. Get something with a little personality. Get a Volvo wagon or a used Volvo C30. Or a VW Golf GTI. Or an Alfa Romeo Giulia. ACN has some good ideas too.May 15, 2019 at 9:06 pm MST #214848antheusParticipantStatus: Resident, PhysicianPosts: 90Joined: 04/18/2017
To each their own. Cars are more important to some people than others. I bought a new civic 5 years ago in residency. It’s not the flashiest but you can never go wrong with a reliable Japanese entry level model. My personal opinion is that the worst option is an expensive luxury car where you pay a premium for the brand. I’m not a car guy but if I were to upgrade I would go for whatever gives me the most bang for my buck on either end of the spectrum.May 16, 2019 at 5:07 am MST #214865