Am I overspending?

[jmark]

Yeah, I know living at home enables the lifestyle, which I even justified to myself even though I knew it wasn't a good thing.



My rate is 4.49% from USAA

That rate isn't terrible. USAA is a top notch company. I have my insurance and credit card from them. With a 72 month loan I would start rounding up or paying extra when possible. Most of the interest is up front on a car loan. FYI I have a 3.24 % loan from my credit union.

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[GeezR]

As someone once said:"If I had all the money I spent on race cars, I'd spend it on race cars".

I think it wld be a mistake to pay off/sell the car. Because of the way car loans are structured, you are mostly paying off interest the first half. Payments toward principal are made the 2nd 1/2 of the loan. So the first year you may pay $7000 total and $5,500 of that or more goes to interest and just $1.5K toward reducing principal. By the last year it's the opposite.

While your car expense is disproportionate to your income, your living expenses are very low, thx to staying at home. Seems like it sort of balances out.

The Type R appears to be a big part of your enjoyment of life. So enjoy it. I have seen many folks putting off the things that make them happiest until they can comfortably afford them, and that moment never comes or, when it does, they are too old, lame, or disabled to enjoy it. So building quality into your everyday life is critical to a full life (IMHO).

This perspective comes from my lofty perch of being a 72 year old and having lived thru car "Deserts" when family, kids' college costs, etc., ate up every penny. Your time for cars-come-last will happen soon enuf, so live it up now, and, if you are like me, again later in life.

 

[willskiGT]

Hey guys, when I bought this car 18 months ago, the hype surrounding the purchase and the heat of the moment may have caused me to put myself in a fairly bad place. The reason is due to the fact that when I was budgeting the car, I was really planning for my 2017 coupe to fetch at least 21K - it fetched about 16K, and to compensate I threw a bit more money down (almost 14K) on the purchase so I could "afford" the monthly payments. (My original plan had $450ish... after taxes it was close to 40K and then the negative equity pushed the price to close to 47K, which is where I threw the cash down to bring it to something more affordable) Afford is a relative term here. I am paying $526.37 a month for 72 months. I had read that I should not be pushing a loan out this far, but I really wanted the car. Plus, all the hassle of getting the dealership to get it in, ugh, I felt obligated to do it, even though a part of me was like "that's way too high of a payment". I also did not factor in how much more I'd be spending on fuel compared to my 2017 coupe.

A little background about me... I'm 25 years old, with a stable job but I still live at home. I don't plan on living here forever, but I would rather live at home compared to living in an apartment (sorry, that kind of living just doesn't suit my tastes, not to mention rent up here isn't really cheap). I am fortunate to be able to live at home, but I have to contribute to the bills and such (around 700 a month). So, what I've been saving up for (slowly..) is a down payment on a modest sized townhome, within the next 3-4 years hopefully. My job nets me a salary of $48K before taxes, which should increase over the next year because it was mentioned to me more or less that a promotion is coming. But that's still months away, so I'm operating on 48K before taxes.

Well recently, it just feels like I'm burning through cash left and right. So I took a few hours to deeply analyze all my spending, and I would be partially right about that. Between the monthly payments and fuel costs (which is about $34 a week because even with 28mpg a small fuel tank don't hold anything), I'm spending almost $700 a month to own the CTR. Now, in terms of emotions, I'd say it was totally worth it, considering the times and smiles the CTR has given me. But ultimately I have a habit of focusing on the present and not the future.

My car related expenses are about 25% of my monthly income, and that's not including the thousands I've spent on tires, modding my exhaust, and two insurance deductibles. It's honestly a lot.

One of the things I could do - not that i even want to think about it - is trade this in for something that might not kill me financially and wouldn't totally suck my soul out. (Don't really know what that is but...) The only reason I figure that I can do this is because the resale value should still be high enough to close my loan without earning me negative equity. Or, I could try and refinance, but my fear is the maintenance that is creeping up will still be pricey. At least I don't need tires again this year...

Anyone have any advice? This is the only place where I can feel like I can actually get advice so I'm hoping someone has insight on what is best. This is a really special car and despite all the pains I love it dearly still, but at the same time I don't want to be stuck at home at 30 years old. I'm also in no risk of defaulting any time soon; I have a decent amount in savings I keep for emergency funds. Plenty in there to keep me afloat even if I lost my job.

You bought (effectively due to negative equity) a $47k car with a $48k pre-tax/retirement salary. Yes, you are overspending if you don't want to live with your parents long-term.

When the dealer low-balled you on the 2017 trade-in you should have stopped there. You could have had $14k in the bank towards a home downpayment, but instead bought a depreciating asset.

Sell the car (don't trade it in, you will get hammered) private party, and either lease a new car with a low monthly payment or buy something used, cheap, and reliable (or just drive your RAV4, wasn't clear if it's all yours or your family's). I know it's not likely what you want to hear, but you should be amassing capital at your age/salary, not overspending on a hotted-up hatchback.

Look, I know there is always the temptation to go out and buy as much car as you can possibly afford, but you have to resist it until you are in a more stable place financially. When I finished B school, I really wanted a Ferrari 599/FF, 991 GT3, or McLaren 4C/650S/570S. I could definitely swing the monthly payments, especially with the combo of my signing bonus + stretching the loan out beyond 60 months.

But I didn't, because it's more important to save that money or deploy it somewhere that it will earn 10%+ instead of losing 10%+. My wife and I will likely use the extra monthly income to either renovate our house (increasing its value) or to buy a rental property.

Resist the temptation to overspend on cars and constantly trade stuff in until you can truly afford it (aka own your own home, salary closer to/in 6 figure range, etc).

 

[willskiGT]

Well you're stuck with the Type R. Regardless of how you budget, you'e super upside down. Even with your massive down payment, you need to ride out this ship. You can re-finance at a lower rate, but it's going to be hard with that much negative equity.

I would recommend living as modestly as possible.

From my understanding, the total on the car was $47k after TTL and he put $14k down, so the loan was only for $33k. He definitely is not underwater. From running a quick amortization schedule: https://www.amortization-calc.com/auto-car-loan-calculator/ with 4.49% interest, 72 months, $33k, 18 payments so far, he owes around $25k. So probably around $8-10k in positive equity depending on mileage condition.

 

[jayevo23]

Could always buy a used one later down the road. Alot enthusiast pick up their cars in the used market and will especially be the case with the Type R due to dealer markups. If you do decide to trade it in, I would get a quote from Carvana as there alot of them are on there already for a reason. They give you the KBB value or close to it. As someone who was in that situation with my current car until a 30k bump in my salary, it's not worth it.

 

[Prodigy71]

wow man reading your post makes me think i should reevaluate my finances lol I'm in a similar situation like you. I think you should just save up as much as you can, live modestly, DONT trade in the type r and pay it off, live at your parents for the time being (you're helping with the rent anyways). It doesn't hurt to enjoy things in life. If it seems like you need more money, just pick up a second job.

 

[Zeffy94]

Could always buy a used one later down the road. Alot enthusiast pick up their cars in the used market and will especially be the case with the Type R due to dealer markups. If you do decide to trade it in, I would get a quote from Carvana as there alot of them are on there already for a reason. They give you the KBB value or close to it. As someone who was in that situation with my current car until a 30k bump in my salary, it's not worth it.

Carvana seems interested in low balling the hell out of me, offering only 26K.

 

[JoYu]

Tons of responses

If it were me I would try and evaluate things as they are at this moment. Let the past be the past.

So at this moment
How much can you sell the car for?
What would you buy?
What would the real savings be?
If you are looking at a different new car you are going to take a big hit again, may have to pay tax etc.

Then compare that to the enjoyment you get from the type R.

If it were me I would keep the car, you have already worked hard to get out of the negative equity situation which you should feel good about. Now that you are in a good situation, the "smart" decision would be to sell the car. but I would have to give myself the same advice and sell my type R and buy a beater civic to drive around and put that monthly payment towards smart investments, but that just is not going to happen

 

[GraphiteAZ]

Could always buy a used one later down the road. Alot enthusiast pick up their cars in the used market and will especially be the case with the Type R due to dealer markups. If you do decide to trade it in, I would get a quote from Carvana as there alot of them are on there already for a reason. They give you the KBB value or close to it. As someone who was in that situation with my current car until a 30k bump in my salary, it's not worth it.

This is what I did. I looked at New, but a used '19 with low miles is a much better deal.

 

[GraphiteAZ]

Carvana seems interested in low balling the hell out of me, offering only 26K.

How many accidents has the car been in? How many miles?

 

[TypeSiR]

Carvana seems interested in low balling the hell out of me, offering only 26K.

You’ll have better luck selling privately on CarGurus, OfferUp, and Craigslist.

 

[ez12a]

Only use Carmax/Carvana as a last resort. Never use a new car dealer unless the offer is amazingly good.

You should be selling private party if you want to get the most for the car. It is worth the hassle. I sold my Lexus with 2 accidents and a failing transmission (disclosed) to a private buyer for $2k more than carmax offered easily.

You can probably get $30k for your car on the private market.

 

[Zeffy94]

How many accidents has the car been in? How many miles?

Technically 2 (Rear ended someone and the other one I got rear ended, both were done at exceptionally low speeds and repaired with a reputable body shop), but the carfax only shows 1. It's got 20K miles on it (now 21K) and an aftermarket exhaust, which I could attempt to swap back to OEM to see if would raise the value.

Only use Carmax/Carvana as a last resort. Never use a new car dealer unless the offer is amazingly good.

You should be selling private party if you want to get the most for the car. It is worth the hassle. I sold my Lexus with 2 accidents and a failing transmission (disclosed) to a private buyer for $2k more than carmax offered easily.

You can probably get $30k for your car on the private market.

Only thing I worry about selling privately is making sure I don't get like scammed or anything.

 

[ez12a]

Only thing I worry about selling privately is making sure I don't get like scammed or anything.

Meet the buyer at his bank and have him produce a cashiers check. Dont accept cash for a purchase this large (could be fake).

 

[NapalmEnema]

If they let him stay then he can save some serious money for said house. It would actually be the quickest way out into that.

If you stay with mommy and daddy past 18 you should reasonably kick in some level of rent. So just sitting there, making as much money as possible by not paying anything and not letting your parents enjoy their golden years so you can 'get ahead' is about the most selfish thing anyone on the planet can ever do.

So with respect, no, this is never an option unless you intend to pay rent. Now I know in silly states like California you have to live with your parents to save money to buy a 1 bedroom house for 4 million when you're 40, but the rest of the country works differently so aside from there or NY -

MOVE OUT AND MAKE YOUR OWN

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