How do you rate? like my monthly budget?

[Anonymous]

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liberty603 wrote:   as a yonger person, a cool car is more desirable, not financially sound, but still desireable none the less. thnx

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Meh.  I've got six kids who drive.  They define their coolness in means other than their cars.  Not one of them would consider a pricey ride a "cool" purchase.  Oh, wait - I take that back.  I almost forgot - Our oldest is a bit stuck on this and he and his beautiful young wife both have cool cars.  They are both working professionals,  She recently emailed us asking us for an enormous loan because they cannot make ends meet.  Sad but true.  Our advice to them?  Sell your cars and get more reasonable rides.  His siblings haven't fallen into the same trap.

I have to hand it to you, liberty603, because you brought your "stuff" to the table and looked for insights and input.  Very desirable traits, indeed.  And cool.  Nicely done.

[MarineVietVet]

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@Anonymous wrote:

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Meh.  I've got six kids who drive.  They define their coolness in means other than their cars.  Not one of them would consider a pricey ride a "cool" purchase.  Oh, wait - I take that back.  I almost forgot - Our oldest is a bit stuck on this and he and his beautiful young wife both have cool cars.  They are both working professionals,  She recently emailed us asking us for an enormous loan because they cannot make ends meet.  Sad but true.  Our advice to them?  Sell your cars and get more reasonable rides.  His siblings haven't fallen into the same trap.

I have to hand it to you, liberty603, because you brought your "stuff" to the table and looked for insights and input.  Very desirable traits, indeed.  And cool.  Nicely done.

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A perfect response.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[Anonymous]

My goal is to buy a BMW M3 in early summer.... at the same time I would much rather have a house to park it at.

So every day I need to tell myself to just keep money in the bank and make a good decision later on down the road when I'm ready.  I would however never have a $1000 monthly car payment, the only reason you would have that is if you were to put little to no money down.  If you really want to buy a car, I would at least cover a 40% down payment.  If it takes you more than a year to save up for a 40% down payment, then you probably should pick a more reasonable car for now or keep saving.

Most people I know finance everything and put themselves into a terrible position when they had to choice to bank some money instead of rushing into things.  They live paycheck to paycheck and if anything were to happen to their job, they'd file bankruptcy.  With the 40% down on a car (or so), you can at least protect that and get what you owe back out of it.

[MattH]

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@Anonymous wrote:

Liz Pulliam Weston has a great article on the 50/30/20 budget (as outlined in "All Your Worth: The Ultimate Lifetime Money Plan," written by Harvard bankruptcy professor Elizabeth Warren).  She includes a calculator where you can plug in your numbers to see how you line up with the 50/30/20 budget.

The 50/30/20 plan recommends no more than 50% of your take home for musts; your wants can take up to 30%; and savings and debt repayment take up the last 20%.  I may not have your numbers exactly right - you'll want to do it yourself; but the budget you outlined comes up with 86% for musts; wants at 2%; and savings and debt repayment at 12%.  So it's 36% high on musts; and 8% low on savings and debt repayment.  And a lot of wants i.e. clothing, gifts, eating out are missing altogether.

There's a lot of good resources online on setting up a budget.  Hope this is a little helpful!

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+1 Liz has long struck me as one of the better personal-finance writers out there and that article is an excellent one.

Do you remember Rumsfeld's line about "known unknowns" versus "unknown unknowns" a few years ago?  I don't much like the guy, but on this he had a point.  In the world of budgeting, I think in terms of "expected unexpected" expenses versus "unexpected unexpected" expenses.  For example, my car is 10 years old so about once every couple of years it requires me to spend over a thousand dollars at the garage.  Most recently this happened in late November 2010.  I cannot predict the next time this will happen, and it's a little annoying when it does, but so long as I have the cash keeping this car is a lot cheaper than getting a newer car would be (I wonder how many people find themselves forced to get a newer car not because a car purchase makes long-term sense but just because it's a lot easier to get financing to purchase a car than it is to get financing to fix the car you have!).  Similarly, from time to time something at home needs fixing (A/C, furnace, dishwasher, stove, plumbing, etc).  Again I cannot predict when the next such event will happen, but I would be astonished if 2011 does not have at least one sudden need for a home repair of some description.  All of which means, in any month without such surprises there had better be a few hundred bucks of surplus, not part of the "savings" budget line but just to build up reserves towards the next surprise.  Because expenses do fluctuate, I look at my numbers over longer periods of time: how does what my wife and I have in the bank and other investments right now compare to what we had five years ago?  Divide that difference by five, and I get our true net saving over that span of time.

Also, the key principle behind that LPW article is: some expenses are a lot easier to cut on short notice if need arises.  For instance, my wife and I like to eat out and we sometimes go to fairly expensive places.  But should our finances suddenly get tighter, we could instantly stop eating out or at least switch to cheaper places.  However, if I buy an expensive new car and then get into difficulty, that car payment would be much harder to reduce!

[MattH]

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Cyan007 wrote:

My goal is to buy a BMW M3 in early summer.... at the same time I would much rather have a house to park it at.

So every day I need to tell myself to just keep money in the bank and make a good decision later on down the road when I'm ready.  I would however never have a $1000 monthly car payment, the only reason you would have that is if you were to put little to no money down.  If you really want to buy a car, I would at least cover a 40% down payment.  If it takes you more than a year to save up for a 40% down payment, then you probably should pick a more reasonable car for now or keep saving.

Most people I know finance everything and put themselves into a terrible position when they had to choice to bank some money instead of rushing into things.  They live paycheck to paycheck and if anything were to happen to their job, they'd file bankruptcy.  With the 40% down on a car (or so), you can at least protect that and get what you owe back out of it.

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Did you ever notice, the smaller the car in the TV ad, the bigger the house behind it?

[Anonymous]

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@MattH wrote:

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@Anonymous wrote:

My goal is to buy a BMW M3 in early summer.... at the same time I would much rather have a house to park it at.

So every day I need to tell myself to just keep money in the bank and make a good decision later on down the road when I'm ready.  I would however never have a $1000 monthly car payment, the only reason you would have that is if you were to put little to no money down.  If you really want to buy a car, I would at least cover a 40% down payment.  If it takes you more than a year to save up for a 40% down payment, then you probably should pick a more reasonable car for now or keep saving.

Most people I know finance everything and put themselves into a terrible position when they had to choice to bank some money instead of rushing into things.  They live paycheck to paycheck and if anything were to happen to their job, they'd file bankruptcy.  With the 40% down on a car (or so), you can at least protect that and get what you owe back out of it.

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Did you ever notice, the smaller the car in the TV ad, the bigger the house behind it?

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Haha... I did notice that these commercials which show a million dollar+ house and the guy jumps up and down getting his hands on a KIA.... I chuckle at that.