[DJKapeesh]

So I enjoy putting food out for the TROLLS while getting some pretty good advice from a few wise members about finance.

This time I want to make sort of a game of scenarios where you give your (good or bad) advice about the financial situation in each scenario.

So here we go:
Assumption: These people need a car.
What car should the person in each scenario drive?

Assumption: These people have no investments and just cash savings
What should this person do with their savings?

Assumption: Retirements is being maxed at 5k per year.
What should this person save per paycheck?

Others?

1. Scenario 1
   Age: 26
   Income: $80,000 yearly, monthly = $5050 after tax
   Savings: $15,000 , Retirement: $10,000
   Monthly Bills: $1600
   (Bills include: Apartment, Married income 120k yearly, Student Loans 30k)
   
   
2. Scenario 2
   Age: 32
   Income: $73,000 yearly, monthly = $4240 after tax
   Savings: $25,000 , Retirement: $25,000
   Monthly Bills: $1900
   (House, Single, Student Loans 15k)
   
   
3. Scenario 3
   Age: 50
   Income: $115,000 yearly, monthly = $7260 after tax
   Savings: $5000 , Retirement: $10000
   Monthly Bills: $2400
   (House, Married income: 170k, (1) Car payment for wife $450 monthly on a 42k car)
   
   
4. Scenario 4
   Age:45
   Income: $115,000 yearly, monthly = $7260 after tax
   Savings: $10000 , Retirement: $20000
   Monthly Bills: $2000
   (Apartment, Single)

Bonus Question:
In order to afford a $50,000 car between the age of 25-30 what should your finances look like?

Have fun with this one. Interesting to see what you would do in these situations.

I will evolve this thread as I see responses and what the conversation will look like.

BIG QUESTION FOR THE ELITE
What we are looking for now is someone who can afford (EXOTICS) and making over 200k yearly to explain how you got there and what it took to get to this level?

Seems some of us consider 75k a sweet spot that doesn't change until this level of income but are unsure how to reach it????

[BayMoWe335]

As a Wharton graduate, I would say none of them should be driving a brand new car.

Scenario 1, Decent income for age, way too much student loan debt. Should be paid off immediately with that income and before a car. Not nearly enough in savings or retirement.

Scenario 2, Again, not enough savings/retirement. Student loan needs to be paid immediately.

Scenario 3, They shouldn't have a payment on a car at that age. Joke savings and retirement. Needs to be ramped up significantly, my suggestion is the max catch up 401k at $24,000/yr and a separate IRA.

Savings after emergency fund should be in a low cost quality ETF (index), small cap/international growth for young people, perhaps more balanced for the older folks, but still 70% invested in stocks.

Retirement max isn't $5k/yr and should be fully maxed with all 3 scenarios. $18,000/yr in 401k, maxed roth/traditional IRA at $5,500/yr depending on the income rules.

[bimmerfrk]

Originally Posted by DJKapeesh

So I enjoy putting food out for the TROLLS while getting some pretty good advice from a few wise members about finance.

This time I want to make sort of a game of scenarios where you give your (good or bad) advice about the financial situation in each scenario.

So here we go:
Assumption: These people need a car.
What car should the person in each scenario drive?

Assumption: These people have no investments and just cash savings
What should this person do with their savings?

Assumption: Retirements is being maxed at 5k per year.
What should this person save per paycheck?

Others?

1. Scenario 1
   Age: 26
   Income: $80,000 yearly, monthly = $5050 after tax
   Savings: $15,000 , Retirement: $10,000
   Monthly Bills: $1600
   (Bills include: Apartment, Married income 120k yearly, Student Loans 30k)
   
   
2. Scenario 2
   Age: 32
   Income: $73,000 yearly, monthly = $4240 after tax
   Savings: $25,000 , Retirement: $25,000
   Monthly Bills: $1900
   (House, Single, Student Loans 15k)
   
   
3. Scenario 3
   Age: 50
   Income: $115,000 yearly, monthly = $7260 after tax
   Savings: $5000 , Retirement: $10000
   Monthly Bills: $2400
   (House, Married income: 170k, (1) Car payment for wife $450 monthly on a 42k car)

Have fun with this one. Interesting to see what you would do in these situations.

I will evolve this thread as I see responses and what the conversation will look like.

5k a month on 80k... are you sure about those numbers. sounds like bs accounting to me

[DJKapeesh]

Originally Posted by bimmerfrk

5k a month on 80k... are you sure about those numbers. sounds like bs accounting to me

25% bracket and 6667 before tax.

6667 x .7575 = ?

Yes the math is simple based on tax bracket and how u fill out your papers

[Whostheboss]

Originally Posted by bimmerfrk

5k a month on 80k... are you sure about those numbers. sounds like bs accounting to me

That's what i'm thinking too. $5,050 on $80K salary?

[MightyMouseTech]

All four scenarios, with that kind of savings for retirement, should be looking at buying a used Corolla. Or is that the amount they are putting away each year?

[overcoil]

Scenario 1, could have inheritance in the future but high chance of divorce. Young enough to get a new car - resale and low maintenances: Honda Fit maybe Corolla.

Scenario 2, inheritance possible? But house maintenance, reliable Japanese car with sub $200 monthly payments or a special $99/ month deal on a new car.

Scenario 3 scares me the most, where are his savings? Even if his house is paid off. But a cheap new car ( low maintenance ) shouldn't change his situation much?

[Whostheboss]

S1. Could afford a new car, not to exceed $50,000. finance it for no more than 72months

S2. Could afford a new car, not to exceed $40,000. Finance it for no more than 72 months

S3. At that age, should focus more on saving for retirement. Since they are already maxed out at 5K a year. I say put more on the regular savings.
However, could afford a new car, not to exceed $25,000.

[csu87]

I am going to base my car choices off a 36/48 month loan vs the typical 60 month loan. Usually can get better interest rates this way, and you arent paying forever on an older car.

Scenario 1
Buy a cheap reliable car or one with a good warranty. I would recommend Hyundai Elantra/Sonata. Once those student loans are paid off, upgrade. I would also recommend making double and triple payments on the student loans till they are gone.

Scenario 2
Buy a cheap, reliable car again. With just over 50% available for misc expenses, you dont want to have a $500/600 car payment.

Scenario 3
No offense, but my married income is similar to this, but I am just over half their age with a much better savings/retirement accounts. They dont have enough to even put a down payment on a car, so they will have to look at a used cheap car from a less than desirable dealership that takes a $0 downpayment. Time to search late night TV for commercials.

Scenario 4
Monthly income vs bills is enough to justify a $50k car imo, but they dont have the cash available to use towards a down payment. less than 6 months of bills in savings, terrible retirement amount. Save half that paycheck for several months until you have built up enough in savings to live for 6 months and to afford a 10% at minimum down payment. That is your typical depreciation as soon as you drive off the lot, so at least you wont be completely upside down on your loan.


Bonus Question
IMO, and this is what I have based my big purchases off of, my total loan payments I keep below 30% of my income before taxes. This includes mortgage, CCs if there are any outstanding balances, car payment, etc. I also do 3-4yr car loans because I do not want to be paying on something that is either out of warranty, or is an older car. This way you can keep ahead of depreciation.

I keep my emergency savings (if I get laid off/hurt/etc and cant work) as a cash savings at an amount where I can pay all my bills for 6months, have a decent amount extra for 6 months for misc expenses, as well as a couple grand extra for a major house/car expense. Once you have this amount set, you dont withdraw any, and can add a small percentage of your savings/month to it. The rest of savings are put into different investment accounts ranging from long term to short term. Short term are where I pull money out if I need it, long term I tend to let it sit and accrue interest.

One question I have, is the Monthly Bills including all health insurance, car/home insurance, utilities... or just what is listed? That will also change what exactly they can afford to buy and save.

[Whostheboss]

DID you just add S4?

I didn't see it at first.
S4 is in the best shape to buy a $50,000 car comfortably.

[SheaButter]

I actually appreciate the attempted effort on scenarios, but it's just too generic to provide any real data on.

For example: "what car should each person drive?" are they tall, fat, short, do they like sports cars, luxury cars, brands?...

The economics relating to geographical location also comes into play. Are they living in Detroit? Or are they in Laguna Beach? This is actually important because IMO you shouldn't be driving a Lamborghini if you live in a 1BR apartment and haven't bought a house yet (that JUST MY opinion, I understand that's the bachelor dream for some)

Does gas mileage to them matter? If this is just a funzies scenario then I cant play since I am a data guy. If you're looking for a real scenario answer, there are a lot of intelligent people on this board, and I bet if if you give REAL data, you'd get some great feedback.

Cheers bro!

[overcoil]

Bonus Question:
In order to afford a $50,000 car between the age of 25-30 what should your finances look like?

Have fun with this one. Interesting to see what you would do in these situations.

I will evolve this thread as I see responses and what the conversation will look like.[/QUOTE]

Stable income
Savings with no hardship to make a year of payments if not working
No insurance claims
Safe secure parking
At the age of 25 mature enough to handle a 320hp car if...

[Whostheboss]

Originally Posted by SheaButter

I actually appreciate the attempted effort on scenarios, but it's just too generic to provide any real data on.

For example: "what car should each person drive?" are they tall, fat, short, do they like sports cars, luxury cars, brands?...

The economics relating to geographical location also comes into play. Are they living in Detroit? Or are they in Laguna Beach? This is actually important because IMO you shouldn't be driving a Lamborghini if you live in a 1BR apartment and haven't bought a house yet (that JUST MY opinion, I understand that's the bachelor dream for some)

Does gas mileage to them matter? If this is just a funzies scenario then I cant play since I am a data guy. If you're looking for a real scenario answer, there are a lot of intelligent people on this board, and I bet if if you give REAL data, you'd get some great feedback.

Cheers bro!

Oh no here we go again with the " i don't have enough data to answer".
Just answer the question based on the information you were given. Don't be scared of being wrong.

[csu87]

Originally Posted by ScottSinger

Stable income
Savings with no hardship to make a year of payments if not working
No insurance claims
Safe secure parking
At the age of 25 mature enough to handle a 320hp car if...

if that was the deciding factor, I dont think anyone would be on this forum

[kprocivic]

Originally Posted by Whostheboss

Oh no here we go again with the " i don't have enough data to answer".
Just answer the question based on the information you were given. Don't be scared of being wrong.

I don't think it has anything to do with being scared just everyone is different. I've have personally helped customers in the same demographic purchase brand new m6, m4, cash, Still living at home with 100k cars. lol

[Whostheboss]

Originally Posted by kprocivic

I don't think it has anything to do with being scared just everyone is different. I've have personally helped customers in the same demographic purchase brand new m6, m4, cash, Still living at home with 100k cars. lol

Are you serious? $100k car while still living at home? oh man! Some people have it good.

[SheaButter]

Originally Posted by Whostheboss

Oh no here we go again with the " i don't have enough data to answer".
Just answer the question based on the information you were given. Don't be scared of being wrong.

I'm not scared to be wrong, it has more to do with needing data for a real answer, there are so many data guys on this forum that would give very comprehensive answers. Like I said, if this is just for a "for fun scenario" I don't have an answer.

Retirement is only maxed around the 5k marker if you make under $105k (roughly) with a Roth IRA.

Scenario 5:
-Age:33
-Income: $115,000 yearly, monthly = $7260 after tax
-Savings: $10000 , Retirement: $20000
-Monthly Bills: $2700
-$400,000 house in Seattle, WA and not looking to move/upgrade)
-Single
-Loves sports coupes in the sports/luxury class.
-A short daily commute
-Likes car mods>stock cars

Given this scenario I would say they would be greatly suited for a 2012 S5 Coupe. Why, with 20% down you're looking at around a $500/mo payment allowing flexibility to modify the car with performance/aesthetics parts, and allow a budget for maintenance/repairs. This car is AWD but still has more of a RWD feel, which is great for performance in the rainy Seattle, WA. The car will hold value at a reasonable rate. This car budget also allows freedom for other projects/travel.

[Whostheboss]

Originally Posted by SheaButter

I'm not scared to be wrong, it has more to do with needing data for a real answer, there are so many data guys on this forum that would give very comprehensive answers. Like I said, if this is just for a "for fun scenario" I don't have an answer.

Retirement is only maxed around the 5k marker if you make under $105k (roughly) with a Roth IRA.

Scenario 5:
-Age:33
-Income: $115,000 yearly, monthly = $7260 after tax
-Savings: $10000 , Retirement: $20000
-Monthly Bills: $2700
-$400,000 house in Seattle, WA and not looking to move/upgrade)
-Single
-Loves sports coupes in the sports/luxury class.
-A short daily commute
-Likes car mods>stock cars

Given this scenario I would say they would be greatly suited for a 2012 S5 Coupe. Why, with 20% down you're looking at around a $500/mo payment allowing flexibility to modify the car with performance/aesthetics parts, and allow a budget for maintenance/repairs. This car is AWD but still has more of a RWD feel, which is great for performance in the rainy Seattle, WA. The car will hold value at a reasonable rate. This car budget also allows freedom for other projects/travel.

[MightyMouseTech]

Personally, I would not think of buying a $50k car until retirement savings were well, WELL into the 6 figures.

[P1]

Originally Posted by Whostheboss

Are you serious? $100k car while still living at home? oh man! Some people have it good.

Naah, some people just are idiots with their money and at 25, have think it's wise to spend $1K+ a month on renting (I mean leasing) a brand new M6.

[BayMoWe335]

If you have any student loans after about age 28, unless you are an MD or something, you failed finance and life.

[Whostheboss]

Originally Posted by BayMoWe335

If you have any student loans after about age 28, unless you are an MD or something, you failed finance and life.

i'm over 28 and i still have student loans