Team-BHP - Vitamin M - What percent of your annual income do you spend on your car?

Hi guys..

Thought I would ask you a question.
How much percent of your annual income do you spend on a car ? :D
I will be finishing my education and will be employed soon. I need to know !!

Comments, thoughts and rants in the replies please.

@mods
Can you please create a poll with the options
1. <15 %
2. 15-30 %
3. 30-50%
4. 50-75%
5. ARE YOU KIDDING ME ? ALL OF IT !

I hope I posted it in the right section.

Cheers !

NOTE : The poll is NOT public, only to protect those who wish to maintain their privacy.

I FIRMLY believe that your car /s should NOT take anymore than 10 - 12% of your monthly $$$ (the lesser the better). I know for a fact that there's a lot of BHPians way over this comfortable zone, but most of them are younger / students (pocket money) or are in the initial stages of their career. I hope better sense prevails once they grow a little older and have a higher set of responsibilities on their shoulders. We need to understand that a cars costing is not made up of the EMI alone - a popular way of thinking today- they need to visit our cost of ownership article to clearly understand the financial outflow associated with ownership.

I'd rather drive around in a car thats less expensive, personalize it a li't bit, have money in the bank / savings / investments and sleep with that peace-of-the-mind than drive a more expensive car & worry about the next EMI / other large payments. An example : I know of a certain 36 year old who spends about 1/2 of her income on her flashy new German car. When I bump into her at a social gathering, I see her as more of an outright fool than someone of a certain "status" (which she'd hoped).

Related comment : SAVE atleast 40% of what you make. Life will show you more than a single rainy day. Plus, this way, by the time you are in your mid-forties, you'll have a lot of money working for you (interest, dividends etc.).

Related comment II : If you really want that better car, work harder / smarter!! Trust me, it works.

Thanks for your inputs, GTO, wandernomad, vishalpipraiya and white_vdi.

I think I didn't frame the question correctly. What I meant was how much of a percentage of your annual income should be the price of your car.

But as it turns out, i guess, monthly expenses are what really matter and they should be kept at a minimum.

I am a don't believe in the whole idea of taking huge loans to furnish the money to buy big 'status enhancers'. I guess I belong to the old school. Earn money the hard way and spend it right.

And that bit about the rainy days, I am sure many of our friends are finding out the price they pay for not saving enough the hard way. I just hope this economic crisis rides out soon and that everybody emerges in good health and even better spirits !

Cheers

I will post a few facts. I am still in graduation days. The pocket money I get is reasonable ( just about ), but out of that, approximately 50% goes for my automotive needs. Usually its bike, but also I have added a few things in M800 like steering wheel cover, seat covers and if budget permits, I will be installing HU and speakers also.

My take is if automobiles are your dream, they deserve special treatment from your side. As soon as I am financially more independent, a higher percentage of my income would go here. I think rather than trusting anyone else in life, its better to trust machine and treat it well, fulfill your dreams.

OT :

Quote:

Originally Posted by GTO (Post 1173342)

Related comment II : If you really want that better car, work harder / smarter!! Trust me, it works.

I disagree. It doesn't. No proper definitions available.

The question each of us need to ask is what is your dream? Is it to lead a happy life without worrying of tomorrow. Yes that should be your dream. As someone said he spends more than 50% of his income on his car. What else does he do then. Car in itself is not all. You have rent to pay, you have to bring bread on to the table, you need a good vacation once in a while, you need to save for your retirement. The last one is very important.

My two paise here is that saving potential of a person prior to 40 years of age is the highest as he has very limited liabilities. One has to create his retirement fund before the age of 40 and ensure that is invested properly to earn a decent return by the time he/she retires.

Cars should not take more than 10% of your earnings, 40% or more should go towards saving for your retirement.

Given the current recession, and no job security, i would say < 10%.

Edit: On a related note, came across an interesting article in HT business today:

Attitudes towards savings will change- Hindustan Times

Quote:

Crises change people's mindset and their behaviour. The deeper and longer the crisis, the deeper and more permanent are the changes.

Businessmen are now asking, "When will things get back to normal?" If by normal they mean the way things were back in early 2008, then the answer is, “Not for a long time.”

That sounds pessimistic but actually isn't. On New Years' Eve 2007, youngsters thronged restaurants and shopping centres. Jobs were easy, credit cards rampant, and mall builders optimistic. In numbers, those days may come back. The jobs, the sales, the salaries, even the credit will eventually climb back to that 'normal'. But what won't come back is that euphoric feeling.

In America, people say that the Great Depression changed the way a whole generation thought about money, about financial risk and about savings. In India, things will never get as bad as that.

Indians who joined the workforce before 1990 or so have a different way of thinking about money. They grew up in an atmosphere in which intelligent college students used to get easily depressed just thinking about the future. And they don't take opportunities for granted.

I think a good majority of the later generation has negative savings and a negative net worth. They have casually predicated years—even decades—of their future on being able to maintain a growing income flow. And that is exactly where the economic crisis has hit like a psychological tsunami.

I don’t know whether the crisis will get much worse. But if all it does, if it readjusts a whole generation’s attitude to savings, it would almost be worth it. The future is not a straight line upwards. Instead it is a cycle that will have its ups and downs.

This realisation alone could save India's vaunted household savings rate from being flushed down the drain of the new consumerism.

Very well said GTO. I gree with ya on that one.

Its something like this:

I could either put all my money together and buy a Dodge Viper today and slog it out, or invest my money correctly and own a Murcielago 5 years from now.

Its really the same thing as long as smart investments are made. It takes money to make money and squandering it away is the best way to remain poor.

Regarding "Foolish American banks gave home loan to idiots who could not repay, which eventually led to people losing jobs in India. :("

Idiots yes, but the banks are anything but foolish! Capitalism runs the show unrestrained and this is the price of unchecked deregulation.