[gaohaibo317]

I am going to be a PhD student in the fall, and I rent an apartment only because I don't know where I will permanently stay yet. I purchased my G82 with a portion of my money invested in stocks over my undergraduate study. To be honest with you, my biggest regret was buying my first car instead of saving the cash for more opportunities. Cars are the worst investment, ever. If the cost of your next car would exceed 50%+ of your savings, I would suggest saving it for the down payment of a house with that money or invest it somewhere else.

[SpeedyATL]

Originally Posted by Salespunk

Now do the math on what your down payment plus the reduced cost of rent vs buy would be at over the last three years. On average real estate has returned 3% and the stock market 8%. The last three years have seen a major market distortion due to population redistribution based on WFH and the pandemic.

My point is that there is no right or wrong answer. If you are financially irresponsible then buy the house. Why? Because it is forced savings. If you are financially responsible then buying is not that important. Here is the math breakdown on the home I owned for 15 years;

Purchase Price $1.4M
Down payment/moving costs $200K
Landscaping/pool $200K
Monthly overage cost vs rent ~$2K
Sales Price after 15 years $1.8M

Doing the math on the opportunity cost;
Net present value of $400K invested in SPY $803K
NPV of $2K/mo at 8% return $54K

You can see that there is basically zero difference between buying and renting in this real world scenario. In fact renting would have been slightly advantageous and the purchase costs are WAY over simplified. We put solar on the house for an additional $50K plus repairs over time, etc.

I am not saying that buying a home is a bad idea. In many cases is makes sense for more reasons than just financial. It is just not the simple decision that people make it out to be either. Like someone else above, we own several properties, but currently rent our primary residence.

The reason many advisors say to buy a home is because people basically suck at saving money. For the average person their primary residence becomes their sole real asset when saving for retirement.

I'm not here to judge or second guess anyone, but....

Just curious how a home in Cali can sell for $1.4, have $200k added in pool, etc and then sell for 'only $1.8' after 15 years. I thought every home in Cali was doubling every 7-10 years over the past couple of decades (2008 bubble excepted)...

[LuckyBystander]

I'm with those who say get a house first. You love cars; I get it. But do you want a lifetime of nice cars or just a lifetime with this one G82? If you want a lifetime of nice cars, that comes only with smart financial decisionmaking.

Make it to where your future self will thank you, not lament you.

[gaohaibo317]

Originally Posted by gaohaibo317

I am going to be a PhD student in the fall, and I rent an apartment only because I don't know where I will permanently stay yet. I purchased my G82 with a portion of my money invested in stocks over my undergraduate study. To be honest with you, my biggest regret was buying my first car instead of saving the cash for more opportunities. Cars are the worst investment, ever. If the cost of your next car would exceed 50%+ of your savings, I would suggest saving it for the down payment of a house with that money or invest it somewhere else.

However, I made a lot of great friends with my bimmer. My life would never be the same without my X5. When you have a nice car and people love hanging out with you (I helped them a lot since most people did't really have cars yet), you get to know more people, not just from the car community, and potentially more platforms for your future career. I would've never known people from the grad school or got a chance to work with one of the best professors in my field.

[Ibiza]

Own, 3 car garage to fit both of my M's.

[Vishal50028]

Own, mortgage paid down low enough that combined with car payment, I'm only out $1750 per month

[maverick618]

Renter here, and I always laugh at people that try to have this discussion with me. I'm not getting a car like this as an appreciable asset. Life is uncertain and short. My current circumstances and responsibilities allow me to indulge myself a little. In 10-15 years I may be much more financially secure, but may also have dramatically different responsibilities that would inhibit me owning a car like this.

[NightWriter]

Originally Posted by Vishal50028

Own, mortgage paid down low enough that combined with car payment, I'm only out $1750 per month

Mortgage + car payment only $1750? Either you're living in a cardboard box, or... oh, ok, Central Florida. Checks out

[Vishal50028]

Originally Posted by NightWriter

Mortgage + car payment only $1750? Either you're living in a cardboard box, or... oh, ok, Central Florida. Checks out

Lmao. Yep. Got a post 2007 recession deal here

[2011ninja]

Where is my trust fund baby option living in finished basement with my own private entrance.

[Ibiza]

Originally Posted by 2011ninja

Where is my trust fund baby option.

I'm really the Tinder Swindler🤣

[yinyan1980]

Buy a house and a used F80. House price will go up while car price will depreciate quickly

[jmg]

Originally Posted by maverick618

Renter here, and I always laugh at people that try to have this discussion with me. I'm not getting a car like this as an appreciable asset. Life is uncertain and short. My current circumstances and responsibilities allow me to indulge myself a little. In 10-15 years I may be much more financially secure, but may also have dramatically different responsibilities that would inhibit me owning a car like this.

As someone who is probably 10-15 years older than you, you can have the cars, AND the house if you execute a plan for financial security early, which many people generally believe consists of "rules" for your transportation and mortgage expenses:

10-15% gross monthly income rule for your car, car insurance and fuel.

28% gross monthly income rule for your mortgage, insurance, and property tax.

So, if you can afford to spend $2000/mo on your car, then you should be able to afford almost $4000/mo on a home. On a 30 year fixed jumbo at 4%, including PMI and property taxes etc, that's a $600k-$700k home.

Take this with a grain of salt, as everyone's situation is different, but it's a good ballpark figure for being financially secure. You might want to spend a bit more on your car if you don't eat out, for example.

[Limegrntaln]

I run a little different than most people on this thread. I spent 20 years in the military. I thought it was a good idea, at the time, when you don't know what you want to do.

I ended up retiring, about 10 years ago, from that, and now I'm onto my second career. I spent 10 years married, and another 10 recovering from a divorce. Now, 15 years after getting divorced, I'm finally living my better life.

Son, graduated from HS, last year and is onto college, I'm on my 3rd brand new house. I live in California, albeit in the Sacramento area, houses still aren't cheap. $600k-$700k in my neighborhood. My 3rd brand new house, will be 5 years old, next week and I live on a 1/3rd acre, in a 5 bedroom 3 bath, close to 3K sq 1 story.

I'm closer to $200k a year and than I am to $150k, but it's taken into my mid 40s to get here. Kids, divorce, child support, etc. Everyone has a different path, but my only suggestion is attempt to make as many calculated decisions as possible.

Do you have any idea where you want to be in the kid department? 32 is semi late to be starting a family, if you're not even married. Where do you want to be with that?

I plan on retiring in the next 10 years, and currently sock 14% away into my retirement accounts. I also have a military retirement, full medical, and I'm 80% service connected.

So, that's about $3,700 a month retirement, that I already have coming to me, before any of my income is included. I use that for house and cars, and my regular income is what I live, invest and stack my other retirement accounts with.

Everyone's avenue is different. Without kids and marriage figured out. You're stacking car debt on top of house debt without deciding on the most expensive decision, which is marriage and kids. Get your bottom heavy decisions figured out so, your Jenga puzzle of life, doesn't come toppling down.

[Salespunk]

Originally Posted by SpeedyATL

I'm not here to judge or second guess anyone, but....

Just curious how a home in Cali can sell for $1.4, have $200k added in pool, etc and then sell for 'only $1.8' after 15 years. I thought every home in Cali was doubling every 7-10 years over the past couple of decades (2008 bubble excepted)...

This is a fallacy. Prices for the most part in have been range bound for almost 30 years in most areas since the late 80's. You can see it if you look at the pricing history in places like Rancho Santa Fe, La Jolla, etc. This recent cycle in the first time it has broken above the trend line.

To be clear you always have areas that gain ground. For example an area in San Diego called Leucadia has seen amazing growth over the last 30 years. That is only because it went from meth houses to the in and trendy spot to live because it was one of the last areas where you could get acreage on the coast. In reality these are outliers though. Look at the cycles on average houses and the peaks in cycles have only been 10-15% higher.

[Salespunk]

Originally Posted by jmg

As someone who is probably 10-15 years older than you, you can have the cars, AND the house if you execute a plan for financial security early, which many people generally believe consists of "rules" for your transportation and mortgage expenses:

10-15% gross monthly income rule for your car, car insurance and fuel.

28% gross monthly income rule for your mortgage, insurance, and property tax.

So, if you can afford to spend $2000/mo on your car, then you should be able to afford almost $4000/mo on a home. On a 30 year fixed jumbo at 4%, including PMI and property taxes etc, that's a $600k-$700k home.

Take this with a grain of salt, as everyone's situation is different, but it's a good ballpark figure for being financially secure. You might want to spend a bit more on your car if you don't eat out, for example.

I honestly think your numbers are high. If you can keep your backend ratio (all fixed debts like car payments, credit cards and house) below 30% you will live very comfortably. 30-40% and you will have to make some serious sacrifices. Above 40% you are playing with fire and not saving anything.

[jmg]

Originally Posted by Salespunk

I honestly think your numbers are high. If you can keep your backend ratio (all fixed debts like car payments, credit cards and house) below 30% you will live very comfortably. 30-40% and you will have to make some serious sacrifices. Above 40% you are playing with fire and not saving anything.

Oh I totally agree. I'm at 7% transportation and 14% housing. CCs are paid off every month, and I have no other debt. I was just presenting the more palatable numbers for the youngins!

[maverick618]

Originally Posted by jmg

As someone who is probably 10-15 years older than you, you can have the cars, AND the house if you execute a plan for financial security early, which many people generally believe consists of "rules" for your transportation and mortgage expenses:

10-15% gross monthly income rule for your car, car insurance and fuel.

28% gross monthly income rule for your mortgage, insurance, and property tax.

So, if you can afford to spend $2000/mo on your car, then you should be able to afford almost $4000/mo on a home. On a 30 year fixed jumbo at 4%, including PMI and property taxes etc, that's a $600k-$700k home.

Take this with a grain of salt, as everyone's situation is different, but it's a good ballpark figure for being financially secure. You might want to spend a bit more on your car if you don't eat out, for example.

All good advice, which I agree with. My point had more to do with my current life situation, rather than personal finance.

[skyline408]

A point no one else has mentioned.

Big difference in enjoying an M3 in your 20s vs 40s.

[ChrisM4]

House first for sure. If you are smart with your mortgage and house size you could have a large portion of the house paid off in 8 years depending on where you live, your down payment, your income and how aggressively you pay it down. Plus interest rates will be rising so depending on the rate you can negotiate you can lock in some payment certainty as well.

If you need to move for work you could sell and get the equity out or rent.

I have always enjoyed fast manual transmission cars but hold off on something like the G80 until you get some equity (market or real estate) and a disciplined savings plan in place. Until then buy a lower cost manual sports car and enjoy it.

[Jproos]

The last time I rented I drove a Honda Civic DX. I personally wouldn't and didn't spend significant money on a car until I owned my house outright.

I know the desire for nice cars. I've wanted an M3 for decades but I waited until all the relevant factors lined up because they were more important for financial prosperity

[Forzanerazzurri]

Originally Posted by Jcali86

Ignore the boomer above. These are the last few years of cars like this. Buy it and love it. Buying a house and having kids is so last century. Live your life, you could die of a virus next month for all you know! I will say one thing they have completely right though and I 100% agree; don't buy this car without having a savings account, retirement account etc etc. A mortgage doesn't matter though yet.

"Location: San Francisco"