Am I overspending?

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  1. Zeffy94

    Zeffy94 Senior Member

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    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.
     
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  2. TypeSiR

    TypeSiR Senior Member

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    Definitely refinance if your current rate is higher than 3% but only after tomorrow (see article below). Only you know if you're overextended in your budget. Generally, pay off your credit cards first, if any. I'd rein in on the mods if you feel you're spending too much on the car. Selling only makes sense if you've another car for transportation and if you feel you can't afford it anymore. But, OTOH, if you don't feel the love for the car or simply want to save up for real estate purchase, then do a quick and decisive decision sooner rather than later. You're still young, a fun car is always around the corner when you're more established financially down the road. Good luck.

    https://www.barrons.com/articles/th...wednesday-whats-next-matters-more-51568624401
     
  3. ez12a

    ez12a Senior Member

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    Sell and buy a used Veloster n? Civic si?

    48k gross isn't a lot. living at home is what is enabling this kind of lifestyle (for now). Your car is taking up a years salary before taxes--Not worth imo.

    You can always come back and buy one once you make more.
     
  4. boosted180sx

    boosted180sx Senior Member

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    well, the first mistake was that you traded in a car with negative equity and you rolled it over to your new loan.
    Depending on your APR, you may look into refinancing. I am not the one to include the amount of fuel you'd spend as part of the cost considering it's not necessary a bad mpg car and you'd probably be spending similar amounts unless you step down to a 1.5 again or a prius or something.

    25% of your income for a car payment is on the higher end but i don't think it's that bad. Buying a car that's worth your annual take home though is kinda high. But every state has different cost of living so it's hard to say. 48k in cali vs where you are is probably a lot different.

    You can also always step down to a smaller tire to save on tire costs. 18" tires are much cheaper than 20". The cars running cost isn't too bad once all the initial parts on it are replaced with cheaper components if that's what your worried about.

    How much money is left on your lien? So let's say you trade in the car and break even. It's going to be pointless imo if your going to be purchasing another car since you'll be jumping right back into a lien.
    And also how happy will you be? I had a friend who got rid of his s2000 for a family car and felt so miserable in life driving such a boring car that after a few months, he ended up trading it in and getting a CTR.

    If your just bored of the car or feel like it's not worth it anymore, it's best to sell now and concentrate on real estate.

    Although, I'm not the one to speak as i do spend too much on cars so it's probably better to get advice from others lol.
     
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  5. Papayank

    Papayank Senior Member

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    Yes
     
  6. ToofHurts

    ToofHurts Senior Member

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    Over spending. Read bogleheads.org
     
  7. OP
    OP
    Zeffy94

    Zeffy94 Senior Member

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    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
     
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  8. Driveitlikeuboughtit

    Driveitlikeuboughtit Senior Member

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    >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.

    So you make $48k gross and your take-home "net" pay is less after taxes? Just trying to parse your use of "net".

    Do you still have that Rav4 is or is that a past car?
     
  9. Neciovato

    Neciovato New Member

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    If you have made about 18payments - then you should have paid about $9500 and if so - it sounds like with the way these cars keep their value that you might either be in the positive or close to being even on it. If that is the case, I would consider options as to what your trade in value would be if you got something else. I would start there at least - and if it makes sense then maybe look to switch to a different car.

    Some options is maybe a Civic SI, a used Focus ST or GTI if you want to keep a hatch - these cars are great and are tunable. Is it a CTR - no but it does provide solid MPG and smiles as well after a tune. Another option would be a 370Z - while a lot of people will say they are slow, truthfully they are a lot of fun and a manual offers a great driving experience (granted I am bias since I have one haha).

    The other option would be to add more money to your monthly payment or look for a 2nd job to pay off your current debt. I get the whole idea of wanting a great car but purchasing a car that costs as much as your yearly salary - not worth it bc maintenance costs as well as other costs always seem to creep up. Whatever you decide - good luck - just remember while it might be a cool car - it never feels ‘cool’ when you have that payment every month.
     
  10. OP
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    Zeffy94

    Zeffy94 Senior Member

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    Correct, the net pay is even less after taxes. The RAV4 is a secondary vehicle
     
  11. silverblip

    silverblip Senior Member

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    Am I overspending?
    Yes you are.
     
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  12. davemarco

    davemarco Senior Member

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    Honestly man, I could have stopped reading after "negative equity". You should NEVER be voluntarily making a decision that results in negative equity, not if you have a choice in the matter. I humbly submit that my gross household income is more than 4 times yours, and despite a complete lack of any student debt, I still worry daily over saving enough for retirement, saving to buy a house, saving to buy my wife a car if her's dies, saving enough in case a kid comes into the picture, saving enough in case I get suddenly and catastrophically ill beyond what insurance will pay for, etc. The list of financial concerns goes on forever - you just don't realize it yet.

    You're fortunate in that you are being insulated from the primary expenses that one must absorb when living on their own - that is the only reason why $48K a year gross with a $500+ car payment doesn't feel like the crippling ball and chain of poverty that it is. You're free to do what you want, but unless you expect to inherit significant generational wealth you'd be better off building a financial foundation for yourself than dumping it into a car.
     
  13. Si_chRis

    Si_chRis Senior Member

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    What industry do you work in? Depending on your years of experience, you can always find other opportunities that will boost your salary much greater from what you're making now that will make things a bit more comfortable financially with the Type R, and allow you to save for a house much quicker.

    As others have mentioned, refinance your car loan if you can. Find a side hustle if your job isn't paying enough to support your current goals.
     
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  14. Driveitlikeuboughtit

    Driveitlikeuboughtit Senior Member

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    Well, everyone's situation is different but a 2nd car is a pretty big luxury. Insurance, maintenance, $$$ tied up in depreciating assets.

    You can always circle back to the R later. I would consider how much negative equity you have in the R before making a decision, but one of your cars probably needs to go.

    But again, it's your decision and your priorities are your own. You're only young once.
     
  15. GraphiteAZ

    GraphiteAZ Senior Member

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    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.
     
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