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Login to post Forums » Off-topic discussion » For those with many cars - finances...

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July 27, 2011 3:02 p.m. ppddppdd Reader

We've got two professional incomes that put solidly in the upper middle class. We live in expensive-ish Ann Arbor and have a $2000/mo bill for two kids in daycare, so by the standards of employed university town people we're average, but its still a E36 M3load of money.

We own a '95 Miata, '91 BMW 535i and a $8,000 Accord. I do all my own maintenance and haven't had a car in the shop for something other than an exhaust or alignment in a decade. Total car budget (gas/insurance/repairs/depreciation) is about 5% of our income.

We're incredibly fortunate to have two good jobs now, but we've always tried to live within our means. Having two incomes and one bank account for our entire adult life (from 18 to 33 now) has forced us to rationalize expenditures to each other. Even when our combined income was under $40K/yr, money wasn't something we worried too much about. We bought even cheaper cars (ie, a primary $3500 car and a backup $500 beater), lived in tiny apartments, didn't have a TV, didn't buy new clothes or furniture, etc. We've never had a car loan and still don't have credit cards (just debit cards) and we rent out an apartment in our basement to offset half the $1200 mortgage.

I look at people spending $50K+ on new cars and just can't imagine what they're getting that's worth that money. I can see spending that on a classic that won't depreciate, but a new Audi?

Not a moral judgement. People can do what they want. I just don't understand why people buy the junk they buy. There's big ticket stuff I buy on its merits, but not just because I need new stuff. Maybe it's because I've been downloading TV for years without commercials and don't listen to commercial radio and I avoid the mall like the plague. I'm not being constantly bombarded with advertising designed to make me feel crappy about how old my DVD player is or the fact that my refrigerator is so out of date that it doesn't even make my ice for me and OH MY GOD MY WOOD FLOOR HAS A STAIN ON IT AND OH GOD OH GOD LOOK AT HOW UGLY THAT LAMP IS.
July 27, 2011 3:58 p.m. sachilles Dork

Four registered and insured and 3 not currently registered or insured. Newest car is a 2002. Older cars are cheaper to insure. Have full coverage on all but one of the four. It's not much more for full coverage, car just isn't worth the full coverage. We are required to keep liability on cars in my state for them to be registered. Of the 3 non insured or registered, 2 of them will likely get registered and insured. One is a race car that I tow. I may register and insure it, just to save the gas from towing it to certain events. Another one I just bought, and needs a little work before I want to bother registering and insuring. Haven't had a car payment in half a decade. No desire to get a car payment. Insurance is cheap due to age of drivers and the cars. Insurance is bundled with the house for additional saving. Insurance is through the same company that insured the business I work for. The pretty much bend over the company, so they at least offer the employees a good discount. Registration is $40 a year per vehicle. The vehicles i have are maintained well, and as a result a big repair doesn't happen very often. I doubt we could afford this many cars if they were new.
July 27, 2011 5:12 p.m. oldtin Dork

5 cars - 1 not registered/insured - it's in parts on the garage floor, 2 motorcycles. Good (if not satisfying) job, artist wife. We do freelance stuff to pick up extra cash. For the hobby side, the goal is to swap cars, create value to the point my little obsession can pay for itself.
July 27, 2011 6:46 p.m. friedgreencorrado SuperDork

3 cars, all 1992 models. All paid for. Insurance, liability and uninsured motorist only ($400 for 6mos, 49yrs old and no tix for 10yr). I keep insurance on them all, even if one isn't running for a few months-Georgia actually fines you for a lapse in coverage if you take one off the policy and put it back on after you get it running again. I was making a good living, don't know what's going to happen when the severance pay runs out. Plan at the moment is to buy a cheap house outright with the 401k in January (so it doesn't show up as income on the 2010 taxes) and eliminate the rent payment. Should be able to keep going at the same level, even if the next job pays half of what my last one did. Besides, most cheap properties are in neighborhoods without HOAs, and I can put my cars where I want!
July 27, 2011 9:10 p.m. Toyman01 SuperDork

7 cars, all paid for. 3 drivers, two over 40 and one under 20.

The fleet is, a 97 E150, the tow beast; a 99 Chevy Venture, the Wife's; a 95 Camaro, the Daughter's; a 83 RX-7, mine and ill at the moment; a 93 Buick Roadmaster, a drivable project; a 70 Chevelle, yard art for the foreseeable future; and the Abomination, a 80 Spitfire that was raped by a Mazda. Insurance runs about $2000 a year including a golf cart. All are covered except the Abomination and the Chevelle. I do 75% of the repairs. Real PITA stuff, like the ball joints just done on the E150, I pay someone else to do.

We have a house payment, but no other debit. I'm not college educated. The wife is, English/Journalism. We both have PhDs from the school of hard knocks. Both of us are self employed, me full time and the wife part time, and make pretty good money.

Even when I was broke and making $10 an hour we had too many cars and a boat. I did more of the repairs and they were $300 cars rather than $3000 cars. The RX-7 is from that time, it was $250.

I have driven more $300 junkers than I can remember. Some of them bought, driven for a year, and sold at a profit. Some of them bought, driven into the ground, and sold for scrap. The latest acquisition was the Roadmaster and it was $1200.
July 28, 2011 6:56 a.m. Klayfish HalfDork

There's no one answer to this. Everyone's life and financial situation is different. You have to make choices in priorities. For example, my wife and I are lucky enough to have a pretty good income. We have 3 little kids and a live in nanny. That's what we chose to do, and knew it would eat into our "play" money....well...we actually planned to have 2 kids, but we wound up with twins the second time around. A few years ago, we were getting ready to move into a new construction home. Long story short, the builder went belly up right before breaking ground. We were in a temprory rental house while we were waiting for this one to be built. As luck would have it, we found a house that was in foreclosure. It was much more house than we could ever afford at full price. It was a real stretch on our budget, especially with property taxes included, but we went for it. It's a long term investment for us. So that chews up most of the rest of my fun car budget. I'm now left with my DD '96 Volvo wagon, my HPDE car that I bought for under $1000, and my '65 Olds Delta 88 I bought for $1100.

If my wife and I had chosen to have just one kid, or if fate didn't smile on us and give us twins, or if we still lived in the very first house we bought, things would be different. I'd have a new Corvette as a DD and an Elise as a track toy. It's a lot about choices. While I'd love to have high end cars, I wouldn't trade my life spot right now for anything.
July 28, 2011 11:05 a.m. wearymicrobe HalfDork

I spend ~5% total income on cars, both my wife and I have new 11' Mini S's at 0.9% no money down. The Hot rod runs maybe 50$ a month in maintenance at this point. No kid's, no debt other then the cars (its 0.9%) and a very small cost house for the area ~600K. After taxes, mortgage, cars, and investments we sit at 17% total out of pocket on everything.

I have no idea how people spend any more then that, if I spent what the average is in the US ~15.3% give or take we would both have used Bentley's GTC's

I am a major car nut though and will buy what I want when I want if its a good enough deal that I can get out of it quickly. IE the viper, hot rod, ferrari.
July 28, 2011 12:19 p.m. N Sperlo HalfDork

Microbe made a comment about percentage. I'd say our yearly automotive spending maxes out at 8% of our income.
July 28, 2011 12:23 p.m. Hal Dork

How do we do it? Good planning. 30 years ago since the wife and I had good jobs we decided to try living on one salary and saving the other(other one had been paying the mortgage). Now that we are retired that means we have plenty of "play" money. And we are still living on one income, old habits are hard to breal.

Haven't had a mortgage payment for 30 years. Buy new cars every 10 years or so but pay cash when we do(old ones are turned into project cars). Neither of us likes to travel much so we don't do expensive vacations.

Currently have 3 vehicles(soon to be 4), all have full insurance coverage but with a high($1K) deductible collision.
July 28, 2011 1:05 p.m. BoxheadTim SuperDork

Four cars in the US (my wife's car has been paid for forever, the other ones bought cheap-ish for cash), plus the 911 in the UK that's the most expensive car I've bought in my life (and one of the very few that I partially financed).

Three motorcycles, all paid for but they're not registered at the moment.

The insurance is a little HFM over here thanks to an incident earlier this year but they're all cheapish cars so it's not crippling. Plus I make good money, my wife brings in a little money too and we're not spending that much on life's other necessities - the house we currently rent is small and we live a pretty frugal lifestyle, mainly focusing on paying off a few remaining cards and then attack my wife's student loan with a vengeance.

Actually longer term I'd like to reduce the number of vehicles but I doubt I'll succeed - the basic "needs" are 2x AWD for us out here anyway, plus a "nice" (classic) car and a track shed for me. Then again, they do become a drain on my time and I'm often too tired to do any work on them during the week, which doesn't help.
July 28, 2011 1:08 p.m. rotard Reader

I went the other way. I sold most of my old cars, except for the Mk1 GTI that got stolen, and bought an RX8. It does everything better than the old cars, except for fuel economy. I'm thinking about buying something else to go with it, but there are so many good choices out there.
July 28, 2011 1:23 p.m. Powar Dork

I'm 25 years old and have had multiple cars since I was 17. My parents did not pay my insurance, nor did they purchase cars for me (with the exception of my $250 1987 Escort EXP). I've had a full-time IT job since the week after I graduated from high school, and am a little over halfway to a college degree. I'm planning to return to school as a part-time student next year. I've been with my current company for 5.5 years and make under $50k/. I've had a mortgage for 2 years and have no other debt. I overpay on my mortgage every month. It may be $10 or it may be a few hundred, but I always make myself overpay. I see that as a nice long-term investment.

I've never had a credit card, and only had one signature loan that I squandered on a car, realized that it wasn't for me, and sold the car and paid off the loan.

The cars: I currently have six registered, reliable and insured vehicles. It took me years of buying cheap (but interesting to me) cars to clean up, fix and flip to have what I have now. As someone pointed out earlier, I traded a lot of time and sweat for the miniscule profit that I made on any of the cars. My justification for that is that I truly enjoy doing it. I like scouring junkyards and forums, trying to find a deal on just the right part or car. I enjoy the hunt, and I enjoy the finished product when something comes together. The cars that I have now aren't worth a lot of money. I see that as a great thing since I also really like all of them, and don't have much desire to own more expensive cars (with a couple of exceptions...) I have some non-runners that I'm planning to fix or rid myself of (see my Sonetts for sale in the classifieds!), but I manage to keep my girlfriend and I in presentable, reliable cars for daily use. We currently are daily-driving cars from '90 and '91. Both have working a/c, good paint, nice interiors and run like clockwork. Insurance is cheap. Two of the classics are insured through Hagerty with agreed values. The remainder of the runners are insured through State Farm along with my house. I have no reported accidents and haven't had a ticket since I was 17 years old.

The big secret is that I don't spend money on things other than cars, eating/drinking, mortgage and the occasional somethingorother for the house or the girlfriend. We have cable Internet but no television service. I have a subscription to Sirius and a nice Android phone. Those are my only monthly extra expenditures. My girlfriend gives me a small amount of money to help with the bills every month, but not enough to put a good dent in them, honestly.
July 28, 2011 1:27 p.m. Josh Dork

BoxheadTim wrote:

my wife's been paid for forever

Yeah, but maintenance costs are the killer.
July 28, 2011 2:44 p.m. wearymicrobe HalfDork

N Sperlo wrote:

Microbe made a comment about percentage. I'd say our yearly automotive spending maxes out at 8% of our income.

Percentages is how I do the budget. That way if I get a raise or we need to invest differently. Its quick easy and its informative across different peoples budget.

So our actual current breakdown as of the 1st of next month post tax.

10% Investment 5% Savings 5% Car 3% Utilities. 3% Food/Target 13% Mortgage (Tax Adjusted) 10% 401K.

~50% after tax accounted for in some manner. Everything else is fun money. On a side note this works out well for me, like now we are actually looking at a second home. House will go to 27% adjusted with taxes and Mella Roo's. So I have to drop almost all the outside investment +/- 2% or cut into the 50% that we use to fun. Sell a car or back off on the 401K knowing that a house is a leveraged investment.
July 28, 2011 2:58 p.m. pinchvalve SuperDork

Avoid divorce, avoid credit cards, avoid vehicles that are too cheap to be true, avoid kids, avoid long commutes and avoid expensive hobbies like racing and you will have plenty of money. Just don't do anything that I have done.
July 28, 2011 3:43 p.m. BoxheadTim SuperDork

pinchvalve wrote:

Avoid divorce, avoid credit cards, avoid vehicles that are too cheap to be true, avoid kids, avoid long commutes and avoid expensive hobbies like racing and you will have plenty of money. Just don't do anything that I have done.

It also helps if you can avoid having your non-LLC business go belly up. Guess how I figured out that one.
July 28, 2011 4:59 p.m. Snowdoggie HalfDork

BoxheadTim wrote:

pinchvalve wrote:

Avoid divorce, avoid credit cards, avoid vehicles that are too cheap to be true, avoid kids, avoid long commutes and avoid expensive hobbies like racing and you will have plenty of money. Just don't do anything that I have done.

It also helps if you can avoid having your non-LLC business go belly up. Guess how I figured out that one.

I set up LLCs for a living. If you need one, let me know.
July 29, 2011 7:34 a.m. scardeal HalfDork

pinchvalve wrote:

Avoid divorce, avoid credit cards, avoid vehicles that are too cheap to be true, avoid kids, avoid long commutes and avoid expensive hobbies like racing and you will have plenty of money. Just don't do anything that I have done.

Divorce - agreed
credit cards - agreed
cheap vehicles - got nabbed with that one; not again
kids - no way in hell am I going to avoid them
long commutes - if I can...
racing/Autox - isn't that the whole point?
July 29, 2011 5:39 p.m. Woody SuperDork

It took me a while to get to the multiple car point.

My wife and I both work. We have two kids, but waited a looong time between them.

While I don't really advocate renting, we did it for five years. I had to fight off the pressure from her to buy any crappy house that we could afford at the time that all her friends were doing it. I bought land in a really nice area and built my own house. I didn't have it built, I built it. I cleared the land, drew the plans, swung the hammers, hung the cabinets, painted, etc., and only sub'd out what I needed to. I ended up with a much nicer, much bigger house than I ever could have purchased.

I haven't used a credit card in over 10 years. Debit only. My life got noticeably better when I stopped charging stuff.

If you do finance a car, plan on owning it way past the end of the loan. Get something good that you won't get tired of. I drove my Civic Si for 12 years and 300k miles. I've owned my Miata for 11 years, my WRX for 7.

No iPhone. Basic cable. No video games. I never go out to bars at night. Classic car insurance when you can. I scour the ads every day and jump on the occasional deal that I can flip for a profit.

Live within your means. Don't have kids until you're really prepared and avoid debt. Be patient.
July 29, 2011 6:03 p.m. Gearheadotaku Dork

If you can't pay cash, you can't afford it. Exception being a house. That's how I've been doing it. Spent 10 yrs renting rooms and driving beaters. That allowed me to save for a down payment on a condo. Never owned a car less than 10 years old and try to buy simple stuff. I buy my clothes at k-mart, never owned an I-anything, and stayed off the tobacco and heavy drinking. Don't buy $5 cups of coffee or wear $100 shoes. I do all my own work on everything, home, car etc. Combined home/ car ins saves a bit. Keep your driving record clean. Also, I don't have any health ins. Yes, it's risky but saves me thousands of dollars a year. Spent nearly 2 years shopping for a house as prices tumbled, just waiting for the right one. Never be in a hurry to buy anything, but always be looking to buy.

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