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Is this financially irresponsible?

MaverickMan

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I think that's relative to a lot of young ppl these days.

One of my friend groups is clearing 300-400k from one or two sources of income and we consider that to be GOOD money at this time. (We are all in Enterprise tech sales/IT)

Another friend group is in the 100-150k range and they are very happy as well.

It's very subjective I'll admit. We live in DC/Northern VA where COL is absurd. So clearing anything over maybe 200k is considered good money here.
I made the most ever 46K last year. I think that is good enough.
I've always heard as a rule of thumb that whether you are purchasing a car for cash or financing it, the price of the car should be no more than 35% of your annual gross pay.

So if you are buying a $50,000 Bronco, you need to be making at least $143,000 per year.
I plan of buying a $45k Bronco but its cool because I made $46k last year. The payments will only be 13% of my income. No big deal. Its different when you dont ever plan on selling it or using its value in any way.
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PowPow

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I think you have that turned around. this is an expense
1) The price of the vehicle is valued in CY 2021 $. You are taking that price(lets assume you have 45k over 5 years ($750/mo). The payments are constant. They don't go up as inflation depresses the value of the dollar. Which means the 1/60th level set payment is worth less and less to the BANK accounting for inflation. As long as your revenue (wages) tracks with inflation, you win. Plus you could put the $45k into a very low interest bearing instrument and bend this equation in your favor even more.

2) The issue of depreciation happens no matter how you pay for the vehicle. If you paid cash, the value of your asset depreciates, you now have less. Same as you pay over time. That is a different kettle of fish entirely.
In regards to depreciation, I was referring more to the fact that you'll get underwater faster. The longer you take to pay off a car, the faster you'll end up owing more than it's worth. and dragging out a loan, even at 0% interest will do that.

Plus, let's not forget, there's no such thing as 0% loans. What bank would do that? How would they make money? You're paying for it somewhere.

Ever notice 0% interest deals are usually an option between cash back or 0%? that's because that cash back when not taken is just used to pay the interest.
 

abe

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Curiosity from an old retired guy, what do young single people consider "GOOD MONEY" these days?
I guess it all depends on the type of lifestyle one wants to live and the area one is located. I'm single, no kids, a dog and 2 cats. I made 51k last year and that's good money in small town IN. I buy whatever I want within reason. If I want to go on vacation, I go. It's all relative though. If I made 51k in LA or NY, I'd have to choose between paying my mortgage or eating lol.
 

tyrobronco

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My BL / BD build difference was $1300.

With better information ahead of time, maybe it would have been more.

But I'm not trusting the dealership to make any changes to my order and having them mess something up.
 

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A51Bronco

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Iā€™m Financially responsible......I told my dealership Make my wildtrak max options. Seems responsible enough lol
 

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My wife told me to get what I want, so I'm getting what I want knowing that I'm probably going to really pay for this decision when she buys her next vehicle.
Sounds just like same trap I am in.
 

timhood

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Since I have all this time on my hands waiting for word that production has started, I am constantly looking at B&P thinking, maybe I should not get a BL and go with a loaded BD? Then I look at the price difference and break it down per year, per month, per day, and tell myself "wait a minute, a BL is only the cost of a cup of coffee each day! I can do that!"

Is that genius or what?
We wanted Lux and either leather or MGV, so we had the same thought process, only between OB and BL. Part of the decision came to needing leather on OB (we don't like cloth) but being able to stay with MGV on OB. That brought the two builds $2,200 closer. It got to a point where it seemed that all the extra capability of BL was worth the upgrade.
 
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Brongo

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We wanted Lux and either leather or MGV, so we had the same thought process, only between OB and BL. Part of the decision came to needing leather on OB (we don't like cloth) but being able to stay with MGV on OB. That brought the two builds $2,200 closer. It got to a point where it seemed that all the extra capability of BL was worth the upgrade.
Same. I wanted MGV and Lux so I had one choice.
 

timhood

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In regards to depreciation, I was referring more to the fact that you'll get underwater faster. The longer you take to pay off a car, the faster you'll end up owing more than it's worth. and dragging out a loan, even at 0% interest will do that.
I think you mean the longer loan period means there's a longer period of time where the loan balance exceeds the value of the vehicle. Without a sufficient down payment, everyone is "under water" rolling off the lot on Loan Day 1.

To @JDS' point, I prefer to take a low interest loan and continue to have my money invested. With our last vehicle, the loan rate was 1.99% and the equivalent cash needed to buy the vehicle outright was invested and had earnings worth the cost of the vehicle by the time it was paid off. So I look at paying cash as the opportunity cost of not earning those returns. Sure it's a not guaranteed return, but it's not hard to beat the 2.19% I'll be paying. And, in a worst-case scenario, I can tap into that cash if a situation becomes dire.
 

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If you really want to make yourself sick think about the missed opportunities. That same $50K invested in a halfway decent growth fund will double in 5-years and quadruple, or more, in 10.
 

ReimundKrohn

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Fiscally responsible? What new vehicle purchase is, given how fast they depreciate as soon as you leave the lot. In my case, I have a job that provides me a personal vehicle ā€œgratisā€; and have had that benefit for more than 20 years. Thatā€™s how long itā€™s been since I owned a vehicle of my own. I donā€™t need to buy any vehicle; but I am turning 50 this year and the Bronco is either everything I have ever wanted or a milestone midlife crisis - either way, gotta have it. šŸ‘ŒšŸ¤—.
 

Stroopaloop

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Since I have all this time on my hands waiting for word that production has started, I am constantly looking at B&P thinking, maybe I should not get a BL and go with a loaded BD? Then I look at the price difference and break it down per year, per month, per day, and tell myself "wait a minute, a BL is only the cost of a cup of coffee each day! I can do that!"

Is that genius or what?
If you got it. Get it.
 

BroncoAZ

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I changed mine from Black Diamond to Badlands today. Net $5K difference over 8 years of ownership is an easy decision to get what I really want.
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