Vehicle Decisions... I don’t want to be financially irresponsible, please help.

[Anonymous]

Howdy Fellow MyFICO peeps!

I am trying to make a responsible decision in buying a vehicle and I wanted other people’s input or opinion in the matter.
I am 28, have no kids and am in a serious, long term relationship (7 yrs about to ask her to marry me at the end of November).
I am a project engineer and I make around $85k/yr. I also own a duplex that brings in $1450/mo in rental income with the mortgage being $950, so an extra $6k/year.

I commute 2.5 hrs/day to my job. It’s heavy on the construction side, but also development. I’m the lead project engineer for our company so I am often finding myself having to drive/accompany the owners and project managers to various, potential land acquisition deals.

I want to buy a truck or suv. I currently have a bmw m3... and she is my baby. 414hp @ 8200 rpm... she moves when I tell her to move!!! Vroom!!!!!
But... she doesn’t really have the best ground clearance/4x4 capabilities. I am trying to decide between a $45k 4Runner, but am a little unimpressed with finishes and a few other minor things.
On the flip side, I’m looking at two different trucks ranging from $52k-61k... a Chevy 1500 LTZ Z71 or a F150 King Ranch.

My problem is I feel incredibly guilty buying a $61k truck. My BMW was used, and cost less than that. I also don’t want to be left with the feeling of unsatisfaction if I purchase the 4Runner. Again, I drive 2.5 hrs/day. It’s got 270 hp which is pretty weak considering corollas and camrys yield more than that now-a-days. The Z71 is sick, but I’d be paying nearly $1100/month between gas, payment and insurance. Which is insane to me. At the same time, I make plenty of money. Dave Ramsey would frown at the idea of me purchasing a fancy, new vehicle, but the commute is heavy on miles and I really like the idea of a solid warranty and maintenance package.
I felt very guilty after buying my bmw, and don’t want to feel the same way again. I come from a very low income family and am not used to this.

What are yalls input? Should I just get what I want? Or should I buy the 4Runner? It’s not a bad vehicle and has the 2nd highest resale value.

If it matters, my credit scores are all low 700s. Between 704-727.

[Anonymous]

I'm in my 40s and was in a top 10% income class in my 20s and I regret all of my expensive SUVs that I just drove to work and back in (sometimes 3 hours round trip, too).  Just because all that cash blown would have let me retire way way sooner than I did!  But, I'm a cheapskate, lol.

I would say get what fits in your means.  You have decent income for some cities but low income for others.  Depending on where you live, your income could either be great or "how does he eat?" so it's hard to say what your cost of living is like.

Almost all cars depreciate the most their first year, so if you do buy new, keep that in mind.  How old is your BMW and do you have a history of replacing a car at about the same time?  Also factor that into your math.

With EVs and autonomous cars on the very near horizon (3-5 years), don't expect big gas guzzlers and non-autonomous cars to hold value as much as historically.  I was a big V8 guy for 20 years, now I prefer my small EV and I can't wait to get a level 4 car that would handle the 2.5 hours of driving so I didn't have to.  But that technology horizon is very close, so don't expect depreciation rates to stay the same tomorrow.

Do the math, figure out how much you're putting away towards retirement and your emergency fund and a future family coming -- and if you have ALL your goals met in the "save for tomorrow" line items, spurge on a car/truck if you want and can afford it!

I still prefer seeing people buy 1 year used cars but not everyone wants that, and lots of folks are car people so splurging on a car for you might be like splurging on a boat for me.

The absolute best suggestion I can make, though, is this: if it's for your job, negotiate for your employer to buy it or pay for it, not just mileage.

[redE2move]

I'd have to say I agree with @ABC.  Unless you're bringing in 3-4 times the value of that new ride it just seems a bit much.  If you're gonna be married soon, think about her too.  Do you want to create that much debt and have a large monthly payment like that sticking to you each month?  Maybe that money can be invested in to more property and building more on your financial wealth. Just the thought of a $60,000 vehicle that you are clearly going to but loads of miles on just doesn't seem plausable.  It would make me feel guilty to.  At your age, I'd invest more and bring in more money before buying a car that expensive.  You're only 28, and with a wife in your near future (possibly kids afterwards) there are so many other things to prepare for.  Your talent will yield you those clients and they didn't mind the BMW, so why should the truck be any different.  

[Anonymous]

If you are conserned about clearence look at the Jeep Wrangler series.  We live in a small town with our biz we drive on a lot of gravel, drirt, windy and narrow roads.  Lots of these roads have very deep ruts.  DW has a Wrangler  Rubicon Unlimited the ulimiate in comfort and off road.  She has the soft top but regrets it due to noise. I have a Wrangler Sport SE Unlimited.  I do not have same off road axle  power she has but really have only needed it a few times.   Both are 4X4.   Both look nice.  The cost a lot less than the BMW.  I have owned Chevy  S-10, Blazers, Ford Rangers, Isuzzu Pups (those were fun) and GMAC Envoy.  It was DW Rubicon they tried to steal. (see misc post)    I am planning on replacing her car in the next few months with a new 2018 Jeep Wrangler Sport SE.   I  would buy the Jeep and save.  We could buy the new Porche SUV, we have seen several arround town  but don't want to blow the money. 

[jamevfan]

I agree I needed to get out of my infiniti and couldnt decide on a bigger vehicle and bought a 2017 Jeep Wrangler Sport S and it was the best decision of my life involving purchases and I get to play in it when I want 4x4 rocks~

[Anonymous]

$85k is a good income, but I wouldn't call it "plenty of money".  And definitely not enough to support a $60k vehicle purchase or $1100 in monthly expenses. 

Why don't you check out the truck you really want but a few years old and probably half the price?  Though you seem to drive a lot to be eyeing a vehicle with lousy gas mileage.

[Anonymous]

Something to note as well on a big car purchase in your 20s, regardless of income...

If you can drive your current car for the 5 year loan term on a $60,000 car and roll those car payments into an average investment for 5 years and then stop investing and let it ride...

$1,081 / month x 60 months with an average rate of return of 7% = $77,393 estimated balance at the end of 5 years.  Now let that ride for 15 years with no reinvestment.

At the end of 20 years total, assuming a 7% return, you will have an estimated $220,489.50.  That's the balance if you only socked away $1081 for the first 5 years and then totally ignored the investment and just let it ride and grow.

A lot of folks ask me how I retired in my early 40s without making millionaire level income.  It was easy -- at 31 I decided to stop buying things I couldn't afford and instead investing towards the future.  I also got lucky with market booms so my returns were closer to 18% average annually, but still, the cost of a nice car in your 20s may be equal to the cost of paying off a mortgage in your 40s completely.

If you actually let that initial 5 year investment ride until you're 68 (40 years total), at 7% average return you might be looking at close to $900,000 -- just by keeping your current car for 5 more years.

Not sure how exciting ANY car seems with numbers like that.  But it's also the math facts that auto makers don't want anyone to know.  They sell shiny, loud and fast.

[iced]

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@Anonymous wrote:
Howdy Fellow MyFICO peeps!

I am trying to make a responsible decision in buying a vehicle and I wanted other people’s input or opinion in the matter.
I am 28, have no kids and am in a serious, long term relationship (7 yrs about to ask her to marry me at the end of November).
I am a project engineer and I make around $85k/yr. I also own a duplex that brings in $1450/mo in rental income with the mortgage being $950, so an extra $6k/year.

I commute 2.5 hrs/day to my job. It’s heavy on the construction side, but also development. I’m the lead project engineer for our company so I am often finding myself having to drive/accompany the owners and project managers to various, potential land acquisition deals.

@I want to buy a truck or suv. I currently have a bmw m3... and she is my baby. 414hp @ 8200 rpm... she moves when I tell her to move!!! Vroom!!!!!
But... she doesn’t really have the best ground clearance/4x4 capabilities. I am trying to decide between a $45k 4Runner, but am a little unimpressed with finishes and a few other minor things.
On the flip side, I’m looking at two different trucks ranging from $52k-61k... a Chevy 1500 LTZ Z71 or a F150 King Ranch.

My problem is I feel incredibly guilty buying a $61k truck. My BMW was used, and cost less than that. I also don’t want to be left with the feeling of unsatisfaction if I purchase the 4Runner. Again, I drive 2.5 hrs/day. It’s got 270 hp which is pretty weak considering corollas and camrys yield more than that now-a-days. The Z71 is sick, but I’d be paying nearly $1100/month between gas, payment and insurance. Which is insane to me. At the same time, I make plenty of money. Dave Ramsey would frown at the idea of me purchasing a fancy, new vehicle, but the commute is heavy on miles and I really like the idea of a solid warranty and maintenance package.
I felt very guilty after buying my bmw, and don’t want to feel the same way again. I come from a very low income family and am not used to this.

What are yalls input? Should I just get what I want? Or should I buy the 4Runner? It’s not a bad vehicle and has the 2nd highest resale value.

If it matters, my credit scores are all low 700s. Between 704-727.

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You're sending mixed signals here. You seem to want a vehicle that you can drive until the wheels fall off and will be used for commuting rather than pleasure driving, but then you cite the appearance/performance aspect. I wouldn't recommend a performance car for the daily grind as you're just going to waste it sitting in traffic. If you want a daily driver, get a daily driver.

The amount of vehicle for the amount you make is also a little out of whack IMO. My rule is that if I finance a vehicle at all, do not finance more than 15% annual income for it (I make $200,000/year and my last car purchase was $31,000 after all taxes and fees). Unless you plan to put $40,000 down, the prices you've cited would be a significant cost at your salary. If you even halved that estimated monthly auto expense to $550, you'll save over $6600/year. Over a 60 month loan, that's $33,000 more you spent for a nicer trim and/or faster acceleration. If you think that's worth it, go ahead, but $33,000 is a decent part of a down payment on a home, invested to make even more money for you, or put toward your retirement nest egg.

Resale value is irrelevant if you plan on driving the vehicle a long time (or better, until the wheels fall off). Do you plan on selling the vehicle after a few years? If so, will you finance it in such a way that you aren't upside down on it when you do?

My advice is to take a step back and ask yourself just how important the 'sick' factor is in this purchase. You want something comfortable and reliable because you're going to spend 2.5 hours a day in it. If it's going to construction sites, that finish is also going to get beaten up rather quickly.

[Anonymous]

I forgot to mention resale value.  Jeeps hold resale value.  DW Rubicon we bought new for $25K .  It has been well taken care of. We now  have a line of people eanting to buy it with ofers as high as $15K. 

[Anonymous]

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@Anonymous wrote:

I forgot to mention resale value.  Jeeps hold resale value.  DW Rubicon we bought new for $25K .  It has been well taken care of. We now  have a line of people eanting to buy it with ofers as high as $15K. 

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They really do. They've been catching my eye lately, and I spent some time searching used classifieds. (A hobby since I'm currently too cheap to buy anything LOL.)  I was surprised how well they hold their value.