Hello All,

First off I have searched on this topic and have found some info but I would like some opinions on my situation. (I know selfish me) Let me give you some background on me. I am a Network Admin and earn $50,000 per year. I have a condo that I have a $730 payment on my current car payment of $285. My utilities are around $300 per month( cable modem, cable, cell phone and electric). In addtion, I have a credit card with a $1000 balance and condo and car ins. of $95 per month. I also put about 9% into a 401k. Also have a $4500 savings account. My question....CAN I AFFORD THE WRX?. I say yes and my father says no. My father argues that just because I can afford the payment does not mean that I can afford the car. His point of view is interesting and probably correct. He is retired at 55 and a car nut. He has 3 autos over $55,000. My pop says that he can afford any car he wants but says, " you don't see me driving really expensive cars. " I guess that is relative. HA! He claims that I should be concentrating on saving more and argues that your savings account determines what you can afford. I am still young and argue that this car will be a hobby of mine and my transportation. Most hobbies cost money. Any feedback is appreciated. I just need some of your thoughts and opinions.

By the way, I have already put the deposit down $1000 a month and a half ago. And will put another $9k down at delivery. This money is in additon to my savings. ( equity in my current car)

Can I afford the REX? Any others grappled with this?

Thanks a bunch in advance!

You can afford the car. Even if you put 0 down, you're looking at a payment in the $500 range for a standard 60 month loan. However, in this day and age of low interest rates, I question the wisdom of putting $10K down on a depreciating asset.. basically that $10K will become $7K once you drive it off the lot. If you have the credit to get a loan through a credit union that will give you a 5% rate, do that and just put the 10% down. Put the rest of your cash in a reasonably diversified (non-tech focused) mutual fund and you're likely to at least match if not beat the APR on your loan. Why put so much money into something that depreciates as soon as you drive it off the lot?

Also, having the extra money in your bank account will help you out a lot in the long run should things change in your life (loss of job, etc) for whatever reason.

-n.

I had to take my financials into account too. I only make around 33k a year, soon to be $585 rent, figured car payment of $500 a month, and guessed 100-150 for utilities. I figured after the 401k being deducted, I could save in the area of $500 per month. The biggest thing that killed me is paying the insurance on 2 cars (within 2 weeks of each other) and will be the new apartment. So, I guess my advise is look into the future and see where any major bills may lie. Just do the math...an hour or so figuring out exactly what your total monthly bills will be vs. incoming money will save a lotta headache in the end.

thanks guys...the car will be here in 2 weeks if the wait si approx 2 months. I am going to have to decide quickly. Anyone else?:confused:

If you assume a $26,000 price for the car out the door, your payment (9% loan, 60 months) is $332.13. This is counting your $1000 deposit and the $9000 trade. The same loan over 48 months will cost you $398.16. Either is well within your budget. Figure you take home $2700 per month, your listed expenses add up to about $1100. Add in $600 for food and entertainment, and you've still got $1000 per month in disposable income.

Some thoughts: If the interest rate on your credit card is high, you should use your savings to pay it off, totally. Also, if you own your condo and that $730 is a mortgage payment, you should consider a home equity loan to finance the car. That loan would have a tax advantage, which would lower the final cost to you.

PS: I teach finance for a living. If you want more specific advice, PM me.

Don

Go to the dealership, work it out on paper. It's more than that:(

Hmmm, I could be wrong, but I think you're old enough to make your own decision about this. You have a good job with important responsibilities, you own a condo, and you are aware of your current financial situation. You shouldn't have to ask your dad or even take his advice (which was very surprising).

Sit down and just look over everything long and hard. Decide what you really want and if you're willing or able to afford it.

P.S. - Get rid of the credit card debt!!!

P.P.S. - If you want my advice: Get rid of everything else and get the WRX!!!:D

Thanks... I am old enough...just really respect and love my dad:p

I bet your dad didn't get to where he is by splurging when he was young. Sure there are better investments and the car will depreciate faster than you think. If you don't need it don't get. But If it provides and fulfills your utility than it is worth buying.

I think it is a great car for 26k. but if i were on a budget and absolutely needed a car, I would have gotten an altima ( $2000 rebate on top of the invoice price).

utility= awd, abs, 4w disc brakes, srs x4,
fun=227hp.

Im affording it on your salary, with no money down, on a more expensive apartment.

Here is my .02. If you are puting all of your extra income into savings so you can retire at 55 like your wise father, than it is not a good idea to get the car.

If you are foofing the money that you would use for your payments on other things to bring additional joy to your life than I say, scrap some of those other things, get the car and keep it in great shape so when you retire at 55 you have a classic in your garage, like dad;)

I make nowhere near $50,000 per year [go lower], no credit card bills [they are paid-in-full monthly], rent is $50 bucks lower than your condo. I had a "trade-in" that I got $10,500 for, and paid cash for the rest of the WRX. I didn't owe anything on the trade-in. Do whatever you feel is necessary to get the car. $1,000 owed on a credit card is just bad karma. Stop running up THAT bill. Plan ahead. Always budget your money for more than you need.:o

The advice I got from my parents was:

"Decide how much you want to save, and figure out how to live on the rest." A little sacrifice now could pay huge dividends in the future. I was able to quit working at 45 and have lots of toys.

However, I didn't start following Dad's advice until I was 25. I will assume that you will be purchasing a WRX in the near future. Have fun.

Everything is relative. I smile everytime I fire up my rex and pull out of the driveway. To me this is worth a big fat car payment on something that depreciates. On the other hand, I wouldn't want to stay home everynight and eat Ramen Noodles cause I had no money. Maybe I'd buy a cheaper performance car (ie used etc). You could probably get a used RS for cheap and add a turbo later.

Don't forget that your insurance will probably go up if you get a rex, also there are those speeding tickets... I am finding it VERY hard to drive at semi-legal speeds with the rex hehe.

PS max out your 401K. It sucks now but you will be **very** glad you did.

have fun!
-john

Well, It sounds from some of these postings and info from the archives that my income to expense, and amount financed looks pretty good. I have seen many postings of people that have stretched it quite a bit to get the WRX. I think I am going to get it. I love cars and I think I will love this one. I am confident from my planning that I won't be eating Ramen noodles every night. I never questioned whether or not I would have to reduce my eating statndards, etc. Anyway, I am up for a raise in Oct. and will be getting a $5000 cash settlement in Sept. i think I would do it with out these but I will be that much more comfortable with them. Thanks for all your help guys and girls. Nice to have so many different views.

Think about it this way. Whatever one does "not" spend, should be saved - right? Therefore, it is incorrect to ask yourself whether the WRX is worth the roughly $30,000 you would initially pay. It is more correct to ask yourself if it is worth the value of the same $30,000 wisely invested - 30 years from now. ( OK - I've simplified things a bit, but I'm just making a point.)

The most important years of your "saving years" are, by far, the first years. At the very least, your 401K should be maxed.

Ahh Hell!! Forget it!!

Monday, when you get to work, max out your 401K. Just do it!! Then go buy the damn car. I think you'll find that you still have enough excess cash for the WRX. I would probably do the same thing if I were in your "lead footed" shoes.

Arthur

It seems that everyone overlooked a small detail.
your current car is not paid off, thus you can deduct the balance that you owe from the cost of the wrx, cheapening the virtual cost of acquisition.
hope that helps... I'm in a very similar situation.

What do you mean about lowering the cost of acquistion. I must be missing something cause I don't understand your theory.

I'm in college, working when I'm not in class, and I can afford it. It's all about money management.

Sounds like everyone has some pretty good advice to offer. I was in a similar boat as you. My dad's a financial planner and is always getting me to put away as much as possible, but surprisingly was quite supportive in my decision to get this car (I figured he'd tell me to buy something much more affordable). But he also owns a Sub. and knows they're awesome cars.

I am 22 yrs old, web developer, and make the same salary you do. I dropped $5k down and my payments are about $400/month. My last car was a '96 Civic and my payments were only $100/month. Chances are though, if you're a network admin right now, you're only going to be making more money in the future (if you know what you're doing anyway). It sounds like you can afford it easily right now, and probably even easier in another 6months-year.

Your dad wants you to be smart with your money, and the fact that you are even considering that this may be a somewhat poor financial decision, shows that you are not an idiot with your money. I say go for it because I guarantee you will love this car. Play while you can cause once yer married and have kids (unless you already do) then it will probably be a lot harder to do and buy the things you really want.

------------------------

:D :D :D Black '02 WRX Sedan :D :D :D

overall, you are in very good financial shape. you can afford the car, pay off your credit card balance, and probably bump up your 401k contribution (remember that increasing monthly 401k contributions will lower your monthly taxable income).

one big factor to think about, however, is job security. these days ya gotta be sure that your company has no plans to cut employees. if your company ever mentions the phrase "burn rate," forget about making any major purchases for now!

your dad might be against you buying the WRX because your current car apparently still is in good shape. if so, you probably don't "need" a new car. because the WRX is a really fun car at the cost of the average new car in the US, and because of your good financial position, it sounds like buying it now would not be irresponsible splurging.

i remember when i was 22, my dad wanted me to get the nissan sentra SE, instead of the SE-R, because of the cost ($1k difference). i bought a 1 yo 1991 SE-R, and i never, ever regretted the choice i made. :D just so you know, my WRX replaced that car.

when i told my pragmatic non-driving-enthusiast folks about my new WRX, their first question was "how much did it cost?" the second question was "is it safe?" to keep the story short, my folks think i made a great decision! well, so i didn't mention the turbo-thing! :D

you guys have been pretty helpful to say the least.

I've been in your position, dbryan. I wanted a second car, I ordered it and put money down, I asked for oppions from iClub members, and debated the whole finacial situation. In the end, my mother was laid off, so I decided to help out the family more.

Needless to say, I gave up the car. Yes, I sigh every time I see one.... and, I still want one, BADLY. But I firmly believe in delaying gratification. Better things come to those who wait.

Determine the difference between your wants and needs. Sure, you can afford the payments, but realisitically, how long do you plan on keeping the WRX stock? Give a mouse a cookie, and he'll come back for milk. We all know that car payments and insurance aren't the only expenses you aquire after purchasing a vehicle.

Good luck with your decision!
Pearl :)

Sorry about the delay in answering...

Basically what I'm trying to say is that you still owe $X on your current car. Therefore, you have to take that number into account when figuring how much you are spending on your WRX.
put another way..
the choice isn't either a WRX or sit at home, it's a WRX or your current transportation.
put yet another way...
say I had a 1999 inferior-mobile, w/ payments till 2005
monthly is approx $400.
I've already paid $9600 on a POS now worth $14k
if I keep the POS, I will pay $400x12x4 ($19,200)
if I got a WRX right now I can pretty much penalty free take that virtual $14,800 ($19.2K - $4.4K) and consider it as put towards the WRX.
this calculation works best when you owe alot on a vehicle thats not worth nearly as much.
HTH

-RC

I don't think its a matter of whether you can afford it or not. Sure, the payments may be no big deal. The question is if its a smart idea to get it now.

Is this a spontaneous decision to get one? If so, then wait for a month and research it and think on it. Impulse buys are never a good thing.

What is the status of your current vehicle? Is it warrantied? Cheap to own? Fast and satisfying? Most millionares don't make car payments and they typically drive a car that is more than 10 years old. Guess what most millionares would say about buying ANY new car...

How long have you had your current car? Are you sure you want to buy another before that one is even payed off? Not a smart thing to do IMO. Stick it out. Pay it off. You'll feel much better about buying a new one if you do that.

Why would you have ANY credit card debt? To put it plainly: Any debt is stupid. I guess most people are stupid, but just how stupid are you?

You make good cash, but don't use that to guage how much debt you can safely have. Pay off your current debt before making any other major purchases.

10k i put down 8500 and my payments are 390 and i make less no problem

When I get in these decision jams I ask myslef these questions: What if I die tommorrow? Next week? Did I have fun(within the realms of reason) Or did I worry about saving all my cash for when I'm old and retired. It would be nice to retire at 55 but what the hell, you can't take money with you. I know it sounds a bit irresponsible, especially to somone of your(and my) dads generation, but my dad said the same thing, and I still went and bought the wrx. Is the payment gonna put you out that much? If so, wait till you can better afford it. If not, GO FOR IT!

so many people gave you such good advice, i figured i'd give you the more careless advice you want to hear.:lol:

I bought my last car making about the same salary you do. My rent was a bit more, but the monthy expenses were about the same.

If you can get the car payment down to around $450 then you could afford it.

Thanks guys.... you all really have some great advice. I ordered mine at the beginning of June. The dealer had me come in yesterday cause they had a S Red Wagon( 5sp). They even offered it to me for $500 less cause it had been test driven even though the guy said it hadn't. It had 40 miles on it. All very hard I am sure. I told them "no" and that I would wait for my black, 5spd, wagon. I am going to get it, and I finally feel comfortable with my decision. I know I will get so much enjoyment out of it. However, I must say the suspension felt pretty soft. Thanks !