Looking for perspectives on what would be financially smart to spend on a car right now.
My 2008 Honda Civic finally died after 10 years. It has 270k miles and needs a new engine, so it’s basically end-of-life. I may trade it in, but don’t expect much value.
My situation:
– In my 30s
– Monthly take-home: $4,700
– Base salary: $110k (bonuses not included)
– I invest a large portion of my income, which is why take-home is lower
– No debt
– Emergency fund: $20k
– Car Fund: $10k
– Need a car ASAP
Given this setup and current used car prices, what would you consider a financially responsible total price to spend on a car?
Curious how others would approach this (cash vs partial financing, older vs newer, etc).
How much would you spend on a car in my situation?
byu/ohcode infinancialindependence
Posted by ohcode
2 Comments
This is my perspective:
If car is the cheapest and practical option compared to public transport- then the cheapest used car which has 1 year bumper to bumper warranty is the minimum you need. Some used car companies offer such warranties. It guarantees no breakdown cost basically and takes care of hidden issues. I do this since I don’t understand cars much. I would categorise this as a NEED.
Anything more expensive than that is a WANT.
Needs shouldn’t exceed 50% of income. Wants 30%. And savings shouldn’t be less than 20%. This is a rule of thumb. Now if you go aggressive – you can save more if that’s your goal
I would put car at 10% of monthly income. That’s it.
Looks like an answer could be $10,000.
Bump it up a couple of k if you see something very low mileage or ‘your color’ or whatever excuse. This is what you saved up for, and how much you saved up for it.