How much spend on car? Boglehead Standard

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jharkin
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Re: How much spend on car? Boglehead Standard

Post by jharkin »

Vanguard User wrote: Sun May 22, 2022 6:05 pm
BernardShakey wrote: Sun May 22, 2022 5:52 pm
Vanguard User wrote: Sun May 22, 2022 5:31 pm About $15k?

Sweet spot is certified used about 4 years old and under 50k mileage.

I have a Ford Fusion at 38k only now. It’s a 2016. It’s worth more than I paid for.

I believe buying a Honda/Toyota for reliability is a myth.
Admittedly a small sample size but I have owned two Toyotas, a Ford, a Volkswagen, two Pontiacs (for those that remember), a Subaru, five Hondas, a Kia, two Volvos, and a Cadillac.

The Toyotas have been the most reliable, easily.
I thought it’s all about the maintenance?
It’s not a myth, and it’s NOT about maintenance (I.e. you can’t oil change you way out of Audi failing ignition coils).

We studied Toyotas methods in engineering school and at work (my company is a software vendor to them). Read this book if you are curious. https://books.google.com/books/about/Th ... escription


What IS true is that the gap has closed significantly as everyone else has learned to copy their techniques.
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firebirdparts
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Re: How much spend on car? Boglehead Standard

Post by firebirdparts »

The right answer is simply to get your needs met at the lowest overall cost of ownership, like a business would do. There are two problems you can see; nobody wants to define their needs adequately and nobody wants to estimate the overall cost of ownership. But ideally, a specification for what you must have from a car would really help you. That’s what I think.

Cars are very very cheap to operate, really. Not so cheap to depreciate. You can’t really wear one out in any reasonable scenario. It’s all good news, really. You could save a ton simply by choosing something that any reasonable person knows is reliable. You could save a ton simply by choosing something that any reasonable person knows is basic mass produced transportation. If you want to.

I would avoid benchmarking anything based on car value, and I do. You need to benchmark overall cost of ownership.
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Re: How much spend on car? Boglehead Standard

Post by Jack FFR1846 »

I would guess that the average BH household has 2.5 cars. With all the threads "My daughter just got her license and we want her to be safe so are going to buy her the absolute safest car on the market...a new Mercedes S class" adding extra cars, I think that's about right.

If you went over to MrMoneyMustache, I'd think the number would be like 1.0. So many "I only ride my e bike and gave my car away" kinda threads.

I don't fit into either. I have a lifted, big tire Wrangler Unlimited for snow plowing and offroading that makes MMM members faint and have 4 cars along with one of my sons who still lives with us who owns 2 cars (both of which are cool and take premium fuel).
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SmileyFace
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Re: How much spend on car? Boglehead Standard

Post by SmileyFace »

From the hundreds of threads on this topic there is clearly NO Boglehead standard.
Car aficionados will spend their money on cars for sport and luxury.
Some believe buying used will save you money in the long run.
Others adhere to buying new and keeping for many years (decade or more - this is the camp I am in).
Others stick to buying Toyota, Honda, Subaru for their past reliability ratings.
Others like American brands.

Me - I am of the camp of buying new reliable cars and keeping them for a long time. I have timed some of my purchases for periods of time when dealerships had excess inventory and were willing to drop down below invoice prices for the incentives they were receiving. This practice, for me, negated the whole "Buy lightly used to save money" argument as I bought a couple of new cars for only a few dollars more than a 2 or 4 year old car would have cost. I also don't believe in paying a premium for luxury (e.g. Lexus over Toyota) but understand why people do (and perhaps I will do so one day when I am fully FI). But since there is NO boglehead standard on this topic - I fully know my buying isn't necessarily the Boglehead way.

And why should there be a Boglehead standard for car buying? Buying a car is NOT an investment (at least not normally).
pasadena
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Re: How much spend on car? Boglehead Standard

Post by pasadena »

I think the "Bogleheads Standard" would be to buy the car you need, as opposed to the car you want (or want your neighbors to see), and at a reasonable price, relative to your (liquid) net worth and savings rate. Now, "need" and "reasonable" are very hard to define and subject to a lot of (possibly heated) arguments. Some will tell you to only buy used for cheap, others will disagree. Another standard is not to finance, unless the loan rate is low enough to make sense, but you're supposed to at least be able to pay cash. And you're supposed to keep the car for a long time.

Mostly, the Boglehead standard is to frown on status symbol cars.

Personally, I buy new. Mostly because I don't feel comfortable buying used, as I don't know anything about cars, and I also don't want the hassle. My personal line of comfort, cost-wise, is around $30k. Which is just above what my current car cost about 2 years ago. I financed about $20k over 48 months, mostly because I wanted an instalment loan to improve my credit score. I paid it off last month. I kept my last car 8 years, and will probably keep this one until I retire in 8-10 years.

I promised myself that I'll buy (cash) a really nice car when I retire. If I retired today, it'd be a Tesla.
JackoC
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Re: How much spend on car? Boglehead Standard

Post by JackoC »

Determine how much you can afford to spend on consumption in total, spend as large or small a % if it on cars as you want to. Specifying a rule just for cars includes the estimator's tastes and preferences for cars, not necessarily relevant to anyone else. There's at least somewhat more relative objectivity to what a person can afford to spend in total at a given combination of income, assets and age. There won't be one universal rule for total affordable spending either, but people aren't going to come up with 10x different answers for it like they do with car buying rules on these threads.
H-Town
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Re: How much spend on car? Boglehead Standard

Post by H-Town »

SmileyFace wrote: Tue May 24, 2022 7:36 am From the hundreds of threads on this topic there is clearly NO Boglehead standard.
Car aficionados will spend their money on cars for sport and luxury.
Some believe buying used will save you money in the long run.
Others adhere to buying new and keeping for many years (decade or more - this is the camp I am in).
Others stick to buying Toyota, Honda, Subaru for their past reliability ratings.
Others like American brands.

Me - I am of the camp of buying new reliable cars and keeping them for a long time. I have timed some of my purchases for periods of time when dealerships had excess inventory and were willing to drop down below invoice prices for the incentives they were receiving. This practice, for me, negated the whole "Buy lightly used to save money" argument as I bought a couple of new cars for only a few dollars more than a 2 or 4 year old car would have cost. I also don't believe in paying a premium for luxury (e.g. Lexus over Toyota) but understand why people do (and perhaps I will do so one day when I am fully FI). But since there is NO boglehead standard on this topic - I fully know my buying isn't necessarily the Boglehead way.

And why should there be a Boglehead standard for car buying? Buying a car is NOT an investment (at least not normally).
It depends. I don't think a twenty something should buy a new car when they still have student loan, mortgage, etc. A new car would prevent them to save early on. On the other hand, a thirty or forty something who is more than half way to their FI goal can afford to buy a new car without slowing down their FI goal.
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JackoC
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Re: How much spend on car? Boglehead Standard

Post by JackoC »

bltn wrote: Mon May 23, 2022 8:47 am
BernardShakey wrote: Mon May 23, 2022 12:00 am
KlangFool wrote: Sun May 22, 2022 8:59 pm
BernardShakey wrote: Sun May 22, 2022 8:32 pm
KlangFool wrote: Sun May 22, 2022 6:32 pm OP,
2) I only buy new car.
4) Hence, I spend whatever I can afford on a new car after I save 1 year of expense every year.
Why do you only buy new cars? For many, many years (last couple years notwithstanding), buying a lightly used, recent model with low miles was more financially prudent. Unless you're one of the "I just have to have a brand new car" guys, I don't get it.
I save enough money to afford a brand new car. I could afford this luxury. So, why not?
Money is just a tool to live your life. It is not the goal by itself.
Sure, ok. I think I've heard you use these words before -- you do what you do, I do what I do, to each its own. Peace.
I wonder if certain models have new car warranties, like 4 years/50,000 miles, that don t transfer to the second owner. I believe that might be the case with BMW. Possibly others .
BMW new car warranties are transferrable. I don't know of a maker now which doesn't allow that for at least basic factory warranty. It might not be automatic, so the next buyer could neglect to do it, and there are limits sometimes on transfer of 'extra' warranties like Hyundai's 100k/10 yr powertrain warranty being halved for the second owner, as was mentioned.

Otherwise I find Klang's point incontrovertible. Decide what you can afford to spend in total. Spend it on whatever you like. There is no objective value to avoiding 'excess' or 'status symbols'. People who seek to accumulate relatively large amounts of money (the basic purpose of this forum) are going to be seeking satisfaction via money in some way and if they have great success very likely spending some of it on things somebody else is going to consider 'excess' or 'status symbol' even if not a car. That line of argument against cars *people can afford* is fundamentally inconsistent in context of this forum IMO. If the car (and it's upkeep, sure) and everything else comes to less than the $X per year you can afford to spend and you want it, you get it, end of story. Determining $X might be subject to useful objective rules of thumb, how much of $X should be car just isn't IMO.
Hoosier CPA
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Re: How much spend on car? Boglehead Standard

Post by Hoosier CPA »

I don't think there's anywhere near a consensus in here. Some are frugal, some are near-obsessed with the latest safety tech, some prefer electric, some like older. Some see anything beyond the basics as unneeded consumption and others enjoy cars.

Have to hit savings/investing targets first and then figure out how to allocate the rest according to your priorities.

I would like to buy newer and nicer cars but can't justify it right now.
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Watty
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Re: How much spend on car? Boglehead Standard

Post by Watty »

firebirdparts wrote: Tue May 24, 2022 6:00 am Cars are very very cheap to operate, really.
I would disagree with that statement. When you consider the cost of gas, insurance, tires, routine maintenance, non-routine maintenance, parking, etc those costs could be more than the annual depreciation of some cars.

This will also vary a lot depending on the car that you have which is why you want to consider the total annual cost of ownership over the long run when you are determining which car to buy.
wander
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Re: How much spend on car? Boglehead Standard

Post by wander »

We have a 30-year old Toyota (V8) that is the go to car for our long distance travel for its smooth ride, quiet and strong. It tops 300k miles recently but nothing stops it. For car this old, we have to spend more time on cosmetic than actual repairs.
We also have another 20 year old Honda that tops 200k.
I don't understand the boglehead standard at all. I like to keep cars at top performance so it is more like a hobby to me. I think I know how to fix my car's problems better than most mechanics.
Saying that, we may move on to electric cars next time when on the market for new ones. At some point in life, I need to let go of car repair tools. :D
JackoC
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Re: How much spend on car? Boglehead Standard

Post by JackoC »

Watty wrote: Tue May 24, 2022 10:22 am
firebirdparts wrote: Tue May 24, 2022 6:00 am Cars are very very cheap to operate, really.
I would disagree with that statement. When you consider the cost of gas, insurance, tires, routine maintenance, non-routine maintenance, parking, etc those costs could be more than the annual depreciation of some cars.

This will also vary a lot depending on the car that you have which is why you want to consider the total annual cost of ownership over the long run when you are determining which car to buy.
The amount of money you spend on car includes everything related to the car, agreed. But by same basic principle I'd apply here (spend the total $'s you can afford to spend, no useful rule in my IMO what % of that total if any should be related to cars). And if it's a pretty cheap car you keep a long time and drive a lot, maybe need to rent a parking space*, capital cost could be a minority of lifetime cost. Not so likely with cars bought new pretty expensive, not kept a long time nor driven a lot (all our cars are bought new pretty expensive and driven less than average miles, some have been kept a long time others not, according to the precise metric 'what we feel like doing').

Anyway I think this like some other topics often proceeds from the assumption of irrational 'other people', who do exist in large numbers. The kind of Dave Ramsey candidates who find themselves sinking into debt, have never bothered counting up what they spend in any detail, and then once asked say 'but yeah I need to lease that BMW**'. But let's assume we here are rational. The rational direction of decision making is how much you make and reasonably expect to, how much assets, how old leading to a decision how much you can afford to spend in total. That's quasi-objective though depends on individual situation. How much of the total you 'should' spend on cars has absolutely no objective answer IMO, and the idea you would entirely misjudge the likely costs of upkeep is again assuming irrationality.

*one might also consider the extra capital cost to have a home with space to park a car 'for free' vs. not having it, in some areas that's a choice.
**the most common whipping boy among brands for this. As mentioned, similar priced Tesla's have magical immunity from being cited in these examples. :happy
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SmileyFace
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Re: How much spend on car? Boglehead Standard

Post by SmileyFace »

H-Town wrote: Tue May 24, 2022 9:31 am
SmileyFace wrote: Tue May 24, 2022 7:36 am From the hundreds of threads on this topic there is clearly NO Boglehead standard.
Car aficionados will spend their money on cars for sport and luxury.
Some believe buying used will save you money in the long run.
Others adhere to buying new and keeping for many years (decade or more - this is the camp I am in).
Others stick to buying Toyota, Honda, Subaru for their past reliability ratings.
Others like American brands.

Me - I am of the camp of buying new reliable cars and keeping them for a long time. I have timed some of my purchases for periods of time when dealerships had excess inventory and were willing to drop down below invoice prices for the incentives they were receiving. This practice, for me, negated the whole "Buy lightly used to save money" argument as I bought a couple of new cars for only a few dollars more than a 2 or 4 year old car would have cost. I also don't believe in paying a premium for luxury (e.g. Lexus over Toyota) but understand why people do (and perhaps I will do so one day when I am fully FI). But since there is NO boglehead standard on this topic - I fully know my buying isn't necessarily the Boglehead way.

And why should there be a Boglehead standard for car buying? Buying a car is NOT an investment (at least not normally).
It depends. I don't think a twenty something should buy a new car when they still have student loan, mortgage, etc. A new car would prevent them to save early on. On the other hand, a thirty or forty something who is more than half way to their FI goal can afford to buy a new car without slowing down their FI goal.
I wouldn't make this generalization. I got a new car 3 months out of college near invoice-pricing with 0% financing and drove that Toyota Camry for 12 years. A new car allowed me to have reliable transportation and focus on savings. The loan payment was very low - if I had bought used I would have spent a few dollars less on the car BUT would have spent more on financing since you can't secure a 0% loan on a used car (at least not that I know of). It allowed me a reliable commute once I replaced my old Chevy that kept breaking down. It was a Very low total cost of ownership across those initial 12 years for me.
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Re: How much spend on car? Boglehead Standard

Post by sailaway »

I would also say that my new car fresh out of my Masters was a great choice. Being new and taken care of properly, it lasted me through my PhD and well into my first "real job." I then bought it's replacement new just because there weren't any hybrids on the used market at the time.
BogleMelon
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Re: How much spend on car? Boglehead Standard

Post by BogleMelon »

Vanguard User wrote: Mon May 23, 2022 2:59 pm
BogleMelon wrote: Mon May 23, 2022 10:27 am
Vanguard User wrote: Sun May 22, 2022 5:31 pm About $15k?

Sweet spot is certified used about 4 years old and under 50k mileage.

I have a Ford Fusion at 38k only now. It’s a 2016. It’s worth more than I paid for.

I believe buying a Honda/Toyota for reliability is a myth.
And so is buying a "certified" car
https://www.youtube.com/watch?v=hOH8jXTwELg
Certified means it’s taken care of with maintenance.
No! It is another marketing gimmick that means nothing except than higher profits for the seller. I have personally tested a car before that was supposed to be CPO, and it was obvious that something is very wrong with the brakes. The salesman (setting in the passenger seat) couldn't even responded when I told him something is off here. The only way to "certify" a car is by taking it to an independent mechanic of yours and let him certify that it is a taken-care-of car.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
mega317
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Re: How much spend on car? Boglehead Standard

Post by mega317 »

I test drove a "certified" car once that pulled so bad I ended up going about 50 on the freeway until the next exit.
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Re: How much spend on car? Boglehead Standard

Post by Vanguard User »

BogleMelon wrote: Tue May 24, 2022 12:43 pm
Vanguard User wrote: Mon May 23, 2022 2:59 pm
BogleMelon wrote: Mon May 23, 2022 10:27 am
Vanguard User wrote: Sun May 22, 2022 5:31 pm About $15k?

Sweet spot is certified used about 4 years old and under 50k mileage.

I have a Ford Fusion at 38k only now. It’s a 2016. It’s worth more than I paid for.

I believe buying a Honda/Toyota for reliability is a myth.
And so is buying a "certified" car
https://www.youtube.com/watch?v=hOH8jXTwELg
Certified means it’s taken care of with maintenance.
No! It is another marketing gimmick that means nothing except than higher profits for the seller. I have personally tested a car before that was supposed to be CPO, and it was obvious that something is very wrong with the brakes. The salesman (setting in the passenger seat) couldn't even responded when I told him something is off here. The only way to "certify" a car is by taking it to an independent mechanic of yours and let him certify that it is a taken-care-of car.
I checked my car’s maintenance history. Ford did routine maintenance on it before they sold it to me.
BogleMelon
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Re: How much spend on car? Boglehead Standard

Post by BogleMelon »

Vanguard User wrote: Tue May 24, 2022 1:44 pm
BogleMelon wrote: Tue May 24, 2022 12:43 pm
Vanguard User wrote: Mon May 23, 2022 2:59 pm
BogleMelon wrote: Mon May 23, 2022 10:27 am
Vanguard User wrote: Sun May 22, 2022 5:31 pm About $15k?

Sweet spot is certified used about 4 years old and under 50k mileage.

I have a Ford Fusion at 38k only now. It’s a 2016. It’s worth more than I paid for.

I believe buying a Honda/Toyota for reliability is a myth.
And so is buying a "certified" car
https://www.youtube.com/watch?v=hOH8jXTwELg
Certified means it’s taken care of with maintenance.
No! It is another marketing gimmick that means nothing except than higher profits for the seller. I have personally tested a car before that was supposed to be CPO, and it was obvious that something is very wrong with the brakes. The salesman (setting in the passenger seat) couldn't even responded when I told him something is off here. The only way to "certify" a car is by taking it to an independent mechanic of yours and let him certify that it is a taken-care-of car.
I checked my car’s maintenance history. Ford did routine maintenance on it before they sold it to me.
Did you *mean* that Ford "reported" they did a routine maintenance? :twisted:
Last edited by BogleMelon on Tue May 24, 2022 2:37 pm, edited 1 time in total.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
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Re: How much spend on car? Boglehead Standard

Post by Vanguard User »

BogleMelon wrote: Tue May 24, 2022 2:02 pm
Vanguard User wrote: Tue May 24, 2022 1:44 pm
BogleMelon wrote: Tue May 24, 2022 12:43 pm
Vanguard User wrote: Mon May 23, 2022 2:59 pm
BogleMelon wrote: Mon May 23, 2022 10:27 am
And so is buying a "certified" car
https://www.youtube.com/watch?v=hOH8jXTwELg
Certified means it’s taken care of with maintenance.
No! It is another marketing gimmick that means nothing except than higher profits for the seller. I have personally tested a car before that was supposed to be CPO, and it was obvious that something is very wrong with the brakes. The salesman (setting in the passenger seat) couldn't even responded when I told him something is off here. The only way to "certify" a car is by taking it to an independent mechanic of yours and let him certify that it is a taken-care-of car.
I checked my car’s maintenance history. Ford did routine maintenance on it before they sold it to me.
Did you that Ford "reported" they did a routine maintenance? :twisted:
Yes. It’s in the Ford app. It shows what was done from mile 0.
MathWizard
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Re: How much spend on car? Boglehead Standard

Post by MathWizard »

Cars are on average the 2nd biggest household expenditure in the midwest US.

Code: Select all

https://www.valuepenguin.com/average-household-budget
I look at net worth for a car.

My first car at $200 was nearly my entire net worth.
I mowed lawns and painted to get enough money to buy a car
so I could get to work outside of my 125 person hometown.
This allowed me to buy my 2nd car.

Each subsequent car was a lower percentage of my net worth.

Only 3 cars were bought on loan, as cheaply as possible, while I was in grad school.

I keep my (bought 2-4 years used) cars 10 years, and currently set aside less than 1% of my net worth per year
(currently 0.25%) on a nice replacement car.
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Re: How much spend on car? Boglehead Standard

Post by mceagle555 »

wander wrote: Tue May 24, 2022 10:56 am We have a 30-year old Toyota (V8) that is the go to car for our long distance travel for its smooth ride, quiet and strong. It tops 300k miles recently but nothing stops it. For car this old, we have to spend more time on cosmetic than actual repairs.
We also have another 20 year old Honda that tops 200k.
I don't understand the boglehead standard at all. I like to keep cars at top performance so it is more like a hobby to me. I think I know how to fix my car's problems better than most mechanics.
Saying that, we may move on to electric cars next time when on the market for new ones. At some point in life, I need to let go of car repair tools. :D

I follow a similar approach to you. I have a 14yr old Lexus (Bulletproof V8) that I do all my own maintenance on. I'll happily enjoy the quiet ride, lower insurance, and keep it for a LONG time.
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Re: How much spend on car? Boglehead Standard

Post by Dottie57 »

I buy what I can easily afford and is comfy.

1 - AMC gremlin in a blue purple color. No a/c. Or carpeting on floor free from dad.
2. Ford maverick -used
3. Honda civic hatchback - new. It rusted out in 6 years no A/C. Manual transmission.
4. Chevy Nova - yippeeee I achieved A/C!
5. Toyota camry sedam. Gorgeous deep green car.
6. Toyota Camry Hybrid. - my favorite car by far. Meltaway Mint green color. The light green color allowed me to find my car in a sea of black, gray, silver, white, beige and dark red car.
7. Toyota Camry darkish red Camry XLE. has the new Toyota safety features which I love.

My cars have obviously been upgraded. But it looks like Toyota is my brand. If I get a next car, it will be smaller - maybe a hatchback of some sort and probably cheaper.
pnw_guy
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Re: How much spend on car? Boglehead Standard

Post by pnw_guy »

Jags4186 wrote: Sun May 22, 2022 4:10 pm There is no Boglehead’s philosphy. Bogleheads is about an investment forum that focuses on low cost, tax efficient, index investing. Everything else is just posters’ opinions.
True. But people that adopt a Bogleheads investment philosophy (e.g., low cost, tax efficient, index investing) also tend to find areas of consensus in other areas of life. Just like the investment philosophy, those other areas of consensus also tend to be thoughtful and reasonable.

Cheers.
WalnutBadger
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Re: How much spend on car? Boglehead Standard

Post by WalnutBadger »

May not be a BH standard per se, but I like The Money Guy's rule of thumb. He says 20/3/8; 20% down payment, no more than 3 years financed, and the monthly payments should not exceed 8% of your monthly gross income.
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HMSVictory
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Re: How much spend on car? Boglehead Standard

Post by HMSVictory »

BH standard is to pay cash for a car you can easily afford.

How do you know you can easily afford it? If writing the check doesn't make you go "ut oh I think I screwed up".

Some like to finance for "cheap money" but you aren't going to get rich on the delta between your car loan and your 3 fund portfolio.

If you have to get a loan for a car you are definitely way out of bounds in the car pricing. Price could be $10k for a used car or $100k for new luxury car.
Stay the course!
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HMSVictory
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Re: How much spend on car? Boglehead Standard

Post by HMSVictory »

jharkin wrote: Tue May 24, 2022 5:42 am
Vanguard User wrote: Sun May 22, 2022 6:05 pm
BernardShakey wrote: Sun May 22, 2022 5:52 pm
Vanguard User wrote: Sun May 22, 2022 5:31 pm About $15k?

Sweet spot is certified used about 4 years old and under 50k mileage.

I have a Ford Fusion at 38k only now. It’s a 2016. It’s worth more than I paid for.

I believe buying a Honda/Toyota for reliability is a myth.
Admittedly a small sample size but I have owned two Toyotas, a Ford, a Volkswagen, two Pontiacs (for those that remember), a Subaru, five Hondas, a Kia, two Volvos, and a Cadillac.

The Toyotas have been the most reliable, easily.
I thought it’s all about the maintenance?
It’s not a myth, and it’s NOT about maintenance (I.e. you can’t oil change you way out of Audi failing ignition coils).

We studied Toyotas methods in engineering school and at work (my company is a software vendor to them). Read this book if you are curious. https://books.google.com/books/about/Th ... escription


What IS true is that the gap has closed significantly as everyone else has learned to copy their techniques.
My 2012 Toyota 4Runner has 96k miles on it and has had exactly nothing break. Nothing.

Been a fantastic vehicle. Hope to get another 10 years out of it.

While other makers have copied the production techniques that Toyota uses (Kaizen) they have not implemented it as well. You can copy another teams playbook but it doesn't guarantee you can execute like them. Toyota's factories are still the best run in the world (especially the ones in Japan - Tahara).
Last edited by HMSVictory on Wed May 25, 2022 8:34 am, edited 1 time in total.
Stay the course!
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Re: How much spend on car? Boglehead Standard

Post by JackoC »

pnw_guy wrote: Tue May 24, 2022 4:40 pm
Jags4186 wrote: Sun May 22, 2022 4:10 pm There is no Boglehead’s philosphy. Bogleheads is about an investment forum that focuses on low cost, tax efficient, index investing. Everything else is just posters’ opinions.
True. But people that adopt a Bogleheads investment philosophy (e.g., low cost, tax efficient, index investing) also tend to find areas of consensus in other areas of life. Just like the investment philosophy, those other areas of consensus also tend to be thoughtful and reasonable.
I'd state it a little differently. People on this forum based on an investment philosophy with solid basis in objective theory (costs matter, etc) often also share various subjective opinions (such as some inherent virtue in having old/cheap cars). Sometimes some of them confuse one for the other.

There's nothing wrong with the second opinion, but it's distinct from a philosophy like the first. It's much more dependent on unstated assumptions about means and tastes. Assuming the person makes a 'normal' amount, assuming they 'must' live a 'normal' lifestyle otherwise, you might deduce a general range of prudent car expenditure*. But lift those artificial assumptions and you can't conclude anything. That's different from BH investing philosophy proper which if it depends at all on the person's level of means only does at the margin. It doesn't depend at all (the *method* of investing not the amount saved) on the person's consumption tastes. There's also obviously way more pushback here to saying old Toyota's are part of an 'investing philosophy' than index funds are. :happy Same goes even for fixed very low %'s of income or assets going to cars. The easy explanation being again the difference between an objectively based philosophy and individual posters' subjective opinions, as was said.

*a post above encapsulates it well, the poster lives in a nicer house in the neighborhood with an old Toyota, a neighbor lives in a 'dump' in the neighborhood with a Lamborghini Urus. The inference is the poster couldn't also afford the Lamborghini, neighbor couldn't also afford to upgrade their house (it at least didn't seem to include the common fact-free assumption that somebody driving an expensive car must not be able afford it at all). But some people could afford both, while the neighborhood is probably 'nice' enough many couldn't afford an old Toyota and a 'dump' in that neighborhood. No such narrow assumptions are needed to say 'costs matter' in investing.
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Re: How much spend on car? Boglehead Standard

Post by smitcat »

Dottie57 wrote: Tue May 24, 2022 2:52 pm I buy what I can easily afford and is comfy.

1 - AMC gremlin in a blue purple color. No a/c. Or carpeting on floor free from dad.
2. Ford maverick -used
3. Honda civic hatchback - new. It rusted out in 6 years no A/C. Manual transmission.
4. Chevy Nova - yippeeee I achieved A/C!
5. Toyota camry sedam. Gorgeous deep green car.
6. Toyota Camry Hybrid. - my favorite car by far. Meltaway Mint green color. The light green color allowed me to find my car in a sea of black, gray, silver, white, beige and dark red car.
7. Toyota Camry darkish red Camry XLE. has the new Toyota safety features which I love.

My cars have obviously been upgraded. But it looks like Toyota is my brand. If I get a next car, it will be smaller - maybe a hatchback of some sort and probably cheaper.
It's really wonderful that you can remember each car that you have owned - glad they served you well.
Californiastate
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Re: How much spend on car? Boglehead Standard

Post by Californiastate »

HMSVictory wrote: Wed May 25, 2022 8:31 am
jharkin wrote: Tue May 24, 2022 5:42 am
Vanguard User wrote: Sun May 22, 2022 6:05 pm
BernardShakey wrote: Sun May 22, 2022 5:52 pm
Vanguard User wrote: Sun May 22, 2022 5:31 pm About $15k?

Sweet spot is certified used about 4 years old and under 50k mileage.

I have a Ford Fusion at 38k only now. It’s a 2016. It’s worth more than I paid for.

I believe buying a Honda/Toyota for reliability is a myth.
Admittedly a small sample size but I have owned two Toyotas, a Ford, a Volkswagen, two Pontiacs (for those that remember), a Subaru, five Hondas, a Kia, two Volvos, and a Cadillac.

The Toyotas have been the most reliable, easily.
I thought it’s all about the maintenance?
It’s not a myth, and it’s NOT about maintenance (I.e. you can’t oil change you way out of Audi failing ignition coils).

We studied Toyotas methods in engineering school and at work (my company is a software vendor to them). Read this book if you are curious. https://books.google.com/books/about/Th ... escription


What IS true is that the gap has closed significantly as everyone else has learned to copy their techniques.
My 2012 Toyota 4Runner has 96k miles on it and has had exactly nothing break. Nothing.

Been a fantastic vehicle. Hope to get another 10 years out of it.

While other makers have copied the production techniques that Toyota uses (Kaizen) they have not implemented it as well. You can copy another teams playbook but it doesn't guarantee you can execute like them. Toyota's factories are still the best run in the world (especially the ones in Japan - Tahara).
Do you have hard data to back up your claim? The claim sounds like something out of the mouth of a former US administrator who shall remain nameless.
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Re: How much spend on car? Boglehead Standard

Post by HMSVictory »

Californiastate wrote: Wed May 25, 2022 8:42 am Do you have hard data to back up your claim? The claim sounds like something out of the mouth of a former US administrator who shall remain nameless.
Besides the overwhelming positive experience of most Bogleheads and myself with Toyota?

I don't need data to know that its the best vehicle I have owned as that is just..... common sense.

Sigh.... here you go:

https://www.motorbiscuit.com/5-most-rel ... -for-2022/
https://www.cargurus.com/Cars/articles/ ... car_brands
https://www.carmax.com/articles/most-re ... car-brands
https://businesstech.co.za/news/motorin ... -for-2019/

:oops:
Stay the course!
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Re: How much spend on car? Boglehead Standard

Post by Californiastate »

HMSVictory wrote: Wed May 25, 2022 9:04 am
Californiastate wrote: Wed May 25, 2022 8:42 am Do you have hard data to back up your claim? The claim sounds like something out of the mouth of a former US administrator who shall remain nameless.
Besides the overwhelming positive experience of most Bogleheads and myself with Toyota?

I don't need data to know that its the best vehicle I have owned as that is just..... common sense.

Sigh.... here you go:

https://www.motorbiscuit.com/5-most-rel ... -for-2022/
https://www.cargurus.com/Cars/articles/ ... car_brands
https://www.carmax.com/articles/most-re ... car-brands
https://businesstech.co.za/news/motorin ... -for-2019/

:oops:
Dear facepalm.
You specifically called out a specific Toyota plant. Reference specific data comparing that plant to other plants. Refrain from clickbait articles in your submission. You can provide the hard data or just admit it's your opinion from internet surfing.
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Re: How much spend on car? Boglehead Standard

Post by mega317 »

HMSVictory wrote: Wed May 25, 2022 8:30 am Some like to finance for "cheap money" but you aren't going to get rich on the delta between your car loan and your 3 fund portfolio.
Agree 100%. But it's kind of also a Boglehead thing to spend lots of energy on an arbitrage effort, in one exists, for like $100.
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Re: How much spend on car? Boglehead Standard

Post by RetiredCSProf »

I have read that the average cost of *new* car ownership is $10K per year -- maintenance and consumption need to be considered along with the purchase price.

I have been driving plug-in hybrids for the past four years. My next car will likely be all-electric. The savings of not having to pump gas (well over $6 per gallon in CA) more than makes up for the initial extra cost of buying an electric car. Rebates from the local electric company and IRS tax credits made up any difference in the purchase price.

Edited my post to clarify that this is the avg cost for owning a new car, according to AAA
Last edited by RetiredCSProf on Wed May 25, 2022 2:35 pm, edited 1 time in total.
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Re: How much spend on car? Boglehead Standard

Post by abc132 »

While there is going to be a lot of deviation based on preferences, I think a simple rule for those who have a working car at at least 1x annual expenses invested would be to save up enough cash to outright purchase the car. You can afford it if you can spend the time/effort to pay for it in cash, while still meeting your investment goals. If your current car dies unexpectedly or you are just starting out, you may need a different vehicle and may need to "borrow" from future free cash flow. Saving up for the next car should be part of the budget so you should always have something saved for this purpose, as well as knowing how long it will take to complete the car payment based on current budgeting.
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Re: How much spend on car? Boglehead Standard

Post by vfinx »

RetiredCSProf wrote: Wed May 25, 2022 1:09 pm I have read that the average cost of car ownership is $10K per year -- maintenance and consumption need to be considered along with the purchase price.
Wow, that is quite a lot. With reasonable deal-hunting effort, pre-covid, one could easily lease an entry-level luxury vehicle with maintenance bundled in for $6k a year, and then still come in under $10k with insurance and gas added. I would hope that most folks that are not car enthusiasts would come in well below $10k. Even if the $10k only refers to the first year ownership cost, it's still quite high.
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Re: How much spend on car? Boglehead Standard

Post by H-Town »

RetiredCSProf wrote: Wed May 25, 2022 1:09 pm I have read that the average cost of car ownership is $10K per year -- maintenance and consumption need to be considered along with the purchase price.

I have been driving plug-in hybrids for the past four years. My next car will likely be all-electric. The savings of not having to pump gas (well over $6 per gallon in CA) more than makes up for the initial extra cost of buying an electric car. Rebates from the local electric company and IRS tax credits made up any difference in the purchase price.
10k per year? Wow! I thought $5k was high.

From my excel tracking, here is the average month cost of car ownership per month (*):
163.86 depreciation
88.50 gas
26.80 insurance
23.69 tires, oil change, break, etc.
8.33 inspection & registration
---------
$311.19 per month
12 x
---------
3,734.23 per year

(*): total cumulative cost divided by the total months of ownership to date. The longer I keep the car, the lower the depreciation going to be.
Time is the ultimate currency.
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Re: How much spend on car? Boglehead Standard

Post by hand »

There's no official Bogleheads orthodoxy on cars, but there is a significant and very vocal overlap between Boglehads and frugality/ cheapskates (the beige Camry crowd).

Were there to be a official Boglehead stance on cars, my take is that it should be to:
1) Take the time to understand your true needs in terms of capability, reliability, safety and costs
2) To the extent that you desire more (speed, trendiness, luxury, technology) than you need, make sure you understand and can afford the annual cost as part of your discretionary budget, and will be able to continue to afford the cost of the extras for the life of the vehicle.
3) Beware hedonistic adaptation, and don't buy too nice, to early in life
4) Make sure you get a good price for your final choice when you buy

While I have a soft spot for truly basic transportation, be cautious about compromising too much on the reliability and safety fronts - for many living above the subsistence level, cutting corners in these departments can represent a false economy.
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Re: How much spend on car? Boglehead Standard

Post by mega317 »

H-Town wrote: Wed May 25, 2022 1:52 pm
RetiredCSProf wrote: Wed May 25, 2022 1:09 pm I have read that the average cost of car ownership is $10K per year -- maintenance and consumption need to be considered along with the purchase price.

I have been driving plug-in hybrids for the past four years. My next car will likely be all-electric. The savings of not having to pump gas (well over $6 per gallon in CA) more than makes up for the initial extra cost of buying an electric car. Rebates from the local electric company and IRS tax credits made up any difference in the purchase price.
10k per year? Wow! I thought $5k was high.

From my excel tracking, here is the average month cost of car ownership per month (*):
163.86 depreciation
88.50 gas
26.80 insurance
23.69 tires, oil change, break, etc.
8.33 inspection & registration
---------
$311.19 per month
12 x
---------
3,734.23 per year

(*): total cumulative cost divided by the total months of ownership to date. The longer I keep the car, the lower the depreciation going to be.
Last year spent 6k total on 2 cars, both 2016 crossovers. It will be more this year with $6.50 gas but only 1000-1500 I think.
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Re: How much spend on car? Boglehead Standard

Post by kabob »

Been buyin 2yr old, <24k miles, just offLease cars for the last 2 decades and had great luck with em...
Just bought this one last one in mid 2020... ( for less than 50% of sticker price! That's BogleFrugal!)
Image
Been drivin it for bout 2 yrs now, just went off it's 36mo warranty - and it's a good one - a Keeper...
Image
My wife & I like it! We call it the Glider - it IS Smooth,Quiet & Comfortable...
Yea, it's a Ford(aFordable), but a Nice Good one! and with darkest legal tint the pearl White looks Great!
Plus we like to keep at least 1 American car (and during the last BigMarketDip , 2008, Ford make me So much $$$$$ they bought me cars for the rest a my Life... [it's only fair that I keep a Nice Ford around])
RetiredCSProf
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Re: How much spend on car? Boglehead Standard

Post by RetiredCSProf »

mega317 wrote: Wed May 25, 2022 2:04 pm
H-Town wrote: Wed May 25, 2022 1:52 pm
RetiredCSProf wrote: Wed May 25, 2022 1:09 pm I have read that the average cost of car ownership is $10K per year -- maintenance and consumption need to be considered along with the purchase price.

I have been driving plug-in hybrids for the past four years. My next car will likely be all-electric. The savings of not having to pump gas (well over $6 per gallon in CA) more than makes up for the initial extra cost of buying an electric car. Rebates from the local electric company and IRS tax credits made up any difference in the purchase price.
10k per year? Wow! I thought $5k was high.

From my excel tracking, here is the average month cost of car ownership per month (*):
163.86 depreciation
88.50 gas
26.80 insurance
23.69 tires, oil change, break, etc.
8.33 inspection & registration
---------
$311.19 per month
12 x
---------
3,734.23 per year

(*): total cumulative cost divided by the total months of ownership to date. The longer I keep the car, the lower the depreciation going to be.
Last year spent 6k total on 2 cars, both 2016 crossovers. It will be more this year with $6.50 gas but only 1000-1500 I think.
I have edited my post to clarify that $10K is the average cost of new car ownership. See https://www.caranddriver.com/news/a3742 ... expensive/ or search for other references to the AAA study
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Re: How much spend on car? Boglehead Standard

Post by Vanguard User »

BogleMelon wrote: Tue May 24, 2022 2:02 pm
Vanguard User wrote: Tue May 24, 2022 1:44 pm
BogleMelon wrote: Tue May 24, 2022 12:43 pm
Vanguard User wrote: Mon May 23, 2022 2:59 pm
BogleMelon wrote: Mon May 23, 2022 10:27 am
And so is buying a "certified" car
https://www.youtube.com/watch?v=hOH8jXTwELg
Certified means it’s taken care of with maintenance.
No! It is another marketing gimmick that means nothing except than higher profits for the seller. I have personally tested a car before that was supposed to be CPO, and it was obvious that something is very wrong with the brakes. The salesman (setting in the passenger seat) couldn't even responded when I told him something is off here. The only way to "certify" a car is by taking it to an independent mechanic of yours and let him certify that it is a taken-care-of car.
I checked my car’s maintenance history. Ford did routine maintenance on it before they sold it to me.
Did you *mean* that Ford "reported" they did a routine maintenance? :twisted:
Yes. It’s on the car’s history in the Ford app and Carfax.
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Re: How much spend on car? Boglehead Standard

Post by BogleMelon »

Vanguard User wrote: Wed May 25, 2022 2:42 pm
BogleMelon wrote: Tue May 24, 2022 2:02 pm
Vanguard User wrote: Tue May 24, 2022 1:44 pm
BogleMelon wrote: Tue May 24, 2022 12:43 pm
Vanguard User wrote: Mon May 23, 2022 2:59 pm

Certified means it’s taken care of with maintenance.
No! It is another marketing gimmick that means nothing except than higher profits for the seller. I have personally tested a car before that was supposed to be CPO, and it was obvious that something is very wrong with the brakes. The salesman (setting in the passenger seat) couldn't even responded when I told him something is off here. The only way to "certify" a car is by taking it to an independent mechanic of yours and let him certify that it is a taken-care-of car.
I checked my car’s maintenance history. Ford did routine maintenance on it before they sold it to me.
Did you *mean* that Ford "reported" they did a routine maintenance? :twisted:
Yes. It’s on the car’s history in the Ford app and Carfax.
You do understand that "reporting" 120-points inspection (or whatever number they put here) is one thing, but physically lifting the car and looking thoroughly underneath it, then changing those rusty pipes is completely another thing, correct?
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather
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Re: How much spend on car? Boglehead Standard

Post by JackoC »

hand wrote: Wed May 25, 2022 1:53 pm There's no official Bogleheads orthodoxy on cars, but there is a significant and very vocal overlap between Boglehads and frugality/ cheapskates (the beige Camry crowd).

Were there to be a official Boglehead stance on cars, my take is that it should be to:
1) Take the time to understand your true needs in terms of capability, reliability, safety and costs
2) To the extent that you desire more (speed, trendiness, luxury, technology) than you need, make sure you understand and can afford the annual cost as part of your discretionary budget, and will be able to continue to afford the cost of the extras for the life of the vehicle.
3) Beware hedonistic adaptation, and don't buy too nice, to early in life
4) Make sure you get a good price for your final choice when you buy

While I have a soft spot for truly basic transportation, be cautious about compromising too much on the reliability and safety fronts - for many living above the subsistence level, cutting corners in these departments can represent a false economy.
Sounds reasonable. It has no numbers and shouldn't. The numerical part is determining how much you afford to spend in total on consumption. Once you have that number, and given your point 2 (reasonably estimate average annual cost of your car buying policy) it's just what % of the total available for consumption you want to spend on cars. Wrt point 3 you do have to think about that, but it's hard to know what satisfaction a different car buying policy will give you without actually doing it. And the flip side of expensive cars too early is expensive cars too late to enjoy them as much as you would have when younger, thinking of performance cars more than cushy cars.
Last edited by JackoC on Wed May 25, 2022 3:03 pm, edited 1 time in total.
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Re: How much spend on car? Boglehead Standard

Post by stocknoob4111 »

I paid $27K out the door brand new for my car and I thought that was crazy expensive... if you actually figured out how much it costs per mile to buy, maintain, gas and insure a car it's eye popping.

The worst part of it is that in the last 5 years i've put only 23000 miles on it since I hardly drive so it's just been an enormous waste of cash that I wished I would've rather invested. Oh well, too late for that, it's nice to drive so guess i'll just enjoy it as much as I can.
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Re: How much spend on car? Boglehead Standard

Post by hand »

stocknoob4111 wrote: Wed May 25, 2022 3:03 pm I paid $27K out the door brand new for my car and I thought that was crazy expensive... if you actually figured out how much it costs per mile to buy, maintain, gas and insure a car it's eye popping.

The worst part of it is that in the last 5 years i've put only 23000 miles on it since I hardly drive so it's just been an enormous waste of cash that I wished I would've rather invested. Oh well, too late for that, it's nice to drive so guess i'll just enjoy it as much as I can.
Is it really too late? With car prices still high, and stocks beaten up perhaps you could still sell and invest?
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Re: How much spend on car? Boglehead Standard

Post by HMSVictory »

mega317 wrote: Wed May 25, 2022 12:10 pm
HMSVictory wrote: Wed May 25, 2022 8:30 am Some like to finance for "cheap money" but you aren't going to get rich on the delta between your car loan and your 3 fund portfolio.
Agree 100%. But it's kind of also a Boglehead thing to spend lots of energy on an arbitrage effort, in one exists, for like $100.
Good point. I prefer to spend my time doing other things but whatever floats your boat. :beer
Stay the course!
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Re: How much spend on car? Boglehead Standard

Post by HMSVictory »

kabob wrote: Wed May 25, 2022 2:20 pm Been buyin 2yr old, <24k miles, just offLease cars for the last 2 decades and had great luck with em...
Just bought this one last one in mid 2020... ( for less than 50% of sticker price! That's BogleFrugal!)
Image
Been drivin it for bout 2 yrs now, just went off it's 36mo warranty - and it's a good one - a Keeper...
Image
My wife & I like it! We call it the Glider - it IS Smooth,Quiet & Comfortable...
Yea, it's a Ford(aFordable), but a Nice Good one! and with darkest legal tint the pearl White looks Great!
Plus we like to keep at least 1 American car (and during the last BigMarketDip , 2008, Ford make me So much $$$$$ they bought me cars for the rest a my Life... [it's only fair that I keep a Nice Ford around])
Hope you have better luck then we did with Ford.

Let's just say I have 30 of them in my fleet and they have been self destructing at an alarming pace. Engines imploding on 2022 models. I got 3 dead new Ford Explorers sitting in my lot waiting on complete engine replacements. We just sent 200 brand new cars back to Ford and switched to Dodge. I'm not mad about it but they are falling apart (yes we are hard on them) and I'm looking forward to getting the Durango with the v8!
Stay the course!
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Re: How much spend on car? Boglehead Standard

Post by Vanguard User »

BogleMelon wrote: Wed May 25, 2022 2:47 pm
Vanguard User wrote: Wed May 25, 2022 2:42 pm
BogleMelon wrote: Tue May 24, 2022 2:02 pm
Vanguard User wrote: Tue May 24, 2022 1:44 pm
BogleMelon wrote: Tue May 24, 2022 12:43 pm
No! It is another marketing gimmick that means nothing except than higher profits for the seller. I have personally tested a car before that was supposed to be CPO, and it was obvious that something is very wrong with the brakes. The salesman (setting in the passenger seat) couldn't even responded when I told him something is off here. The only way to "certify" a car is by taking it to an independent mechanic of yours and let him certify that it is a taken-care-of car.
I checked my car’s maintenance history. Ford did routine maintenance on it before they sold it to me.
Did you *mean* that Ford "reported" they did a routine maintenance? :twisted:
Yes. It’s on the car’s history in the Ford app and Carfax.
You do understand that "reporting" 120-points inspection (or whatever number they put here) is one thing, but physically lifting the car and looking thoroughly underneath it, then changing those rusty pipes is completely another thing, correct?
Why would a Ford dealership sell a rusty pipe car?
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Re: How much spend on car? Boglehead Standard

Post by Johny Fever »

I think the best cars I have ever bought were the 2 2021 Landcruisers that we bought last year. Flipped em with in a month for 118K and 115K. Made about 25K each on them. People are nuts for these trucks....yea...they are nice but....come on...LOL
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Re: How much spend on car? Boglehead Standard

Post by makingmistakes »

KlangFool wrote: Mon May 23, 2022 1:16 pm
We're wolves wrote: Mon May 23, 2022 12:40 pm
I believe runner wasn't using "bigger ticket item" to mean large compared to your net worth, but instead to mean large compared to other things you normally buy (gallon of milk, pair of shoes, etc). So unless you are regularly buying other things that cost $30-50k, then, unless you are truly ultra high net worth, new cars are indeed bigger ticket items who's cost you should consider a little more closely than you would a $12 book for example.
We're wolves,

To each its own. Your opinion and your point of view.

When I need to buy a new car, I buy a new car. I consider what I want in that new car. Price does not come into consideration at all. Maybe it does for you.

" new cars are indeed bigger ticket items who's cost you should consider a little more closely than you would a $12 book for example."

My question to you is this. Why should this be true? If the big ticket spending does not affect my annual saving, why should this matters? I can pay this with cash and fit the spending within my annual expense.

I save enough. Then, I can spend the rest.

KlangFool
Price has to play into it at some level. You don’t have an unlimited amount available. You only have available what is left over from your net earnings for the year minus the one year’s expenses you save minus your other expenses.

Unless you mean you can dip into savings from previous years or you are implicitly qualifying it by the general price range of cars that meet what you “want in a car” is such that you can still easily afford it.
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