Buying cars in yo 20's
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It is not insane to have just liability. Just understand that if you hit someone, you are out the car.
If you call brokers you can have them quote multiple companies and get back to you with the best deal. R&R is who I use. Keener Insurance is another, northbrook insurance. Google insurance brokers in your area and see who is local, then do some searching for reviews. Even asking your FB friends who they use is a good way to go (if you are a FB dude).
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Here is some real life info.
I bought my 135i when I was 21 (now 23). Was making $12/hr part-time while going to school full-time. Daily drove a shitty 1996 328is with 230k and a boat load of stupid issues. Also had a turbo Miata as a weekend/fun car of 3 years. Both were paid for. I was paying $375 for rent, $100 for gas/food/other, and $50 to insure both cars with liability. Rough expenses of $550/mo if nothing came up. My parents paid my cell phone bill and bought me food or gave me a little money if needed every once in a while. They knew I appreciated it.
I was sick of driving my crappy E36 and had an idea. My renting lease was almost up and I could move home (free) after living on campus for 3 years. I could either continue paying rent or buy a nicer/more reliable car and commute. As you can see, I chose to sell both of my cars and trade my rent expense for a car loan expense. Obviously this was after a lot of thinking and research.
I found a fully loaded 6-speed 2008 135i that perfectly fit my requirements. It had 82k miles and I knew it might need maintenance (somewhat expensive). I wanted to build credit so I decided to go for it. Put $5k down on a $18k loan at 2.85% interest. Monthy payment of $232 and pay $70/mo for full coverage insurance. The car is lumped into my parents auto insurance plan wih 3 other vehicles through Allstate. I have a clean driving record and so do they.
Fast forward to now, I owe $7k on the car. The only other debt I have is school loans. I have 1 credit card that I've paid in full every month. I spent about $4k on modifications since buying it 15 months ago. Maintenance over that time has been less than $1k (installed myself or with the help of friends). All of this while living a normal lifestyle.
I graduated last week and make A LOT more money than I did when I bought the car. I'm so glad I did it because I was able to build credit without missing a payment or adding more debt. Now I plan to pay the car off before this time next year and then save to buy a house.
Words of advice:
- make sure you have a safety net for non-automotive related expenses
- make sure you have money for maintenance or a backup plan if something happens
- don't cheap out on insurance. It's not worth risking everything with only liability. Get full coverage or don't buy it. Find something with affordable full coverage insurance.
- if you're trying to scrap up all your cash to buy one car, rethink your priorities. You might be better off building credit with a loan so you can spare your capital elsewhere as long as you know you can afford it.
- if you take out a loan, you better be putting at least 15% down and be locked into a low interest rate.
- you shouldn't have to change your spending habits or live paycheck to paycheck to "afford" a car.
My situation worked out perfectly. I got the car I wanted and it was very reliable. I was lucky enough to live with my parents for free. No two situations are ever the same, but basic expense calculations go a long way. It can be done, just know what you're getting into. If you have doubts, it might be a sign. Your gut is always right.
It sounds like you have this all figured out. Just don't buy some janky old E46 M3 with high mileage. That's asking for trouble at your age. Get something that won't be a project and that's been decently cared for. Cars are never a good investment.
/rant
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there is so much fail here.
I can't manage a response to this discussion without being insulting.
2011 E92 M3 6MT ZCP - ESS 625 supercharged
2007 Z4MR
2003 E39 M5
2002 E46 M3
2021 X5 40i -
there is so much fail here.
I can't manage a response to this discussion without being insulting.
I'm insulted by this. Heavily offended.
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there is so much fail here.
I can't manage a response to this discussion without being insulting.
Speak your mind.
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there is so much fail here.
I can't manage a response to this discussion without being insulting.
Let's hear it!
I gave some real insight, doesn't mean I think I'm right or wrong. I'm very happy with my situation. I have a great credit score and only owe 1/3 of what my car is worth. The point of a forum is discussion. I don't mind sharing personal info.
I know most people think a car isn't something someone should finance at a young age. Others think you shouldn't spend money on modifications if you still owe on it. I know friends who worked hard for a nice car and I know others who owe $30k+ with maxed out credit cards.
In the end, a car is just supposed to be something that gets you from "point A" to "point B". Sadly, we've all got a disease.
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I have a severe case of "whileI'minthere's"
I don't have too much to contribute to this thread, but I pay cash for cars, though mine are never too expensive. I pay bills and utilities on time, have one credit card and no loans other than student loans and have a killer credit score. When I decide to get a nice daily (something a touch newer with lower miles) I will be able to get a great loan rate due to the work I have done towards my credit already.
The general motto in America seems to be "get into as much debt as you can", which is not my style.
The safety net of cash for car and non car related things is what will make or break someone. -
I have a severe case of "whileI'minthere's"
I don't have too much to contribute to this thread, but I pay cash for cars, though mine are never too expensive. I pay bills and utilities on time, have one credit card and no loans other than student loans and have a killer credit score. When I decide to get a nice daily (something a touch newer with lower miles) I will be able to get a great loan rate due to the work I have done towards my credit already.
The general motto in America seems to be "get into as much debt as you can", which is not my style.
The safety net of cash for car and non car related things is what will make or break someone.
And I was in your shoes at your age. Give it 2 years and I bet you'll have your nicer, newer daily. I know you've already talked about it
PS: in my post above, you were one of my friends who worked hard for a nice car. Nice car being your boosted E30.
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I seriously appreciate the advice! some good stuff going on here. That being said, I believe I'm NOT going to get an e46 m3 ha.
Honestly after all the shit that breaks every single week on one of my cars, I feel like I want ONE car with a warranty, or at least lower miles.
I have very good credit at this point, and I've gotten quotes under 2% interest for 60 mo's even. Which is pretty insane, but at that point, I think it might be worth it to invest my money elsewhere, and pay off the loan as fast as I can.
the reasonable side of me wants to buy some subaru, but I know I won't be happy with it. After driving a 135i I'm slightly biased, and the insurance rates are pretty great still.
sk8 or die
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it's all good Jake.
Please note that when I say "you" as follows, it pertains to generically speaking anyone. It isn't directed at any individual.
What I'm seeing here is common which is posturing of this attitude like "yeah I'm set, I got it bro. I'm so successful in my early 20's working for somebody else that they give me enough scraps off their plate that I can buy X". No, you aren't set. You've accomplished nothing. You make dogshit as far as real money is concerned, and it isn't enough to ever be independent. I hate seeing kids with a 2 in front of their age who think they've somehow "made it" with their little degree and their little job, or worse - still finishing school and trying to explain to the world that they have all this opportunity and things will be so grand and perfect. Yes, congrats, you've just become like millions of other people running the rat race. Giving people the rundown on how you've stood up a run-of-the-mill modern Western life isn't impressive.
Here's an idea: rather than talking about how little is owed on a car or house, or justifying expenses of cars, all based on some small income and this little box that 99% of 20-somethings fall into - instead talk about how you're going to start a business or invest in some way that will fund your car desires 1000x over down the road. So you have a house? Houses are money pits. They are not investments. Nice to have but quite possibly the WORST thing you can do in your early 20's is to buy a house that YOU pay for. I say YOU because if you rent it and someone else pays the interest and taxes and cash flows your escrow to repair stuff on it, then it's not the worst thing anymore.
Working hard is something to be proud of. Working hard for material things like cars and houses is stupid. Work hard to become smarter about how to have the experiences you as a person want out of life
Storytime:
I grew up playing soccer with a buddy who I still play with to this day. 20+ years. Really nice, unassuming guy. He was failing physics in high school so he started the physicsforums website as a place for people to answer questions, etc. He took that and ran with it, still went to UWM and got a comp sci degree just to have a fallback (positioning), but he's never worked for anyone beyond the age of 18. The forums took off and now he has the likes of Harvard professors contributing content. He has a 6 figure RESIDUAL income from the traffic and literally spent his entire 20's out of the USA for 9 months out of the year. Every year. all he did was travel the world and he still to this day at the age of 32 does not have to work for anyone and is currently spending summer in Tanzania and surrounding countries.
THAT is success. It's not about having X number of dollars to buy a house or cars or whatever or being "rich" - it's about having the freedom to pursue what is important to you at your leisure, on your own clock, not having to answer to someone demanding you are 9-5 somewhere 5 days a week or whatever the case may be unless you truly want that structure in your life. He was smart about what he did, rather than just "work hard" to do the "yea i'm gonna go to college and get a job and ride that one out", and now he has infinitely more freedom to do what he wants with his life, not beholden to the whims of banks, employers, or any other form of debtor.
I do very well for myself but usually all I can ever think about is how I'm going to get my next property in order to get to a point where someday I can say "I will do what I want on my own terms and I do not need this job". I really want to be able to coach soccer again, and I'd love to get enough track time where I can start instructing. I'd love to be able to travel as a software consultant maybe a couple months a year helping companies understand architecture that really want to learn and better themselves, rather than be tied to some elitist investment firm like I am now who favors politics over progress. I'd love to have time to help young entrepreneurs get started, even help bankroll them or fund ideas because I personally know how hard it is to get capital to pursue things like that. But I can't do any of those things right now because I wasn't smart until age 25 when I started getting properties for myself and doing web development outside of my day job because I knew I'd never even have a shot at some semblance of freedom otherwise. 13 years from now, when I'm 45, my goal is to be able to do all those things on my own terms. But I'm ok with that because I've defined the goal, the terms of it, what I want and how I will keep myself sane in the meantime *cough* with my modestly priced 135i *cough*.
So when I see people just starting out, who have done nothing of any merit or value yet in the world, spouting off about these typical things around cars, houses, student loans, credit cards, whatever, yadda yadda modern Western society "success" criteria - all I can think about is this:
STOP. THINK.
You wanna work hard? Great. In your 20's when you have the time and energy to work that hard, at least put your efforts into working hard where a portion of that counts towards helping yourself in the long run. Whatever you give to an employer is making them 20x what they pay you. They bank on that. You're being utterly robbed. Don't get me wrong, I know the system needs millions of work-a-day rat race chumps who will never go anywhere in life, I get that. But at that point all your eggs are in one basket. There is an untold amount of opportunity available for people who want a less stressful life with more freedom to do the things they want if they are smart about it. Almost anybody with intelligence and skills can do something in addition to their regular job to help build themselves up a buffer and start separating themselves.
Do something for yourself in order to insulate yourself from corporations and a world that in general doesn't give a damn about you. The sooner you understand that and work towards it, the sooner you can pursue passion around cars or whatever without caring about the financials.
I know people who can literally write checks for over 100 million dollars. I'm not talking assets - I'm talking liquid cash available on-hand. And you know what? Those people who own big like that are always selling, liquidating, and moving on. That's opportunity for creative, smart people. There's plenty of ways you can be smarter where you "work hard" but you are not "working hard at a career job". and it doesn't even have to be real estate like what I am into. For example, I also am always checking out sites like Quiet Light Brokerage - they broker deals of sales of websites - everything from drop ship businesses to e-commerce to amazon re-sellers to you name it. These are things you can buy small or big, some even potentially grow and flip with some smart moves.
The bottom line is this: work "hard" but realize you need emphasis on being smart about what you're going hard at, and position yourself to react to the inevitable changes in your life. Nobody cares if you have cash to buy a car right now or how little you owe on your house because honestly that means nothing in the grand scheme of things. It seems big to you at a young age but there is a much broader stroke that everyone should keep in mind and the more money you blow on stupid shit at a young age, the less you are positioning yourself for the future.
again, let's not mix this up and make the mistake of boiling it down to having X number of dollars. Define what you want to do in your life, what you're passionate about, and then determine if you are happy giving that up to work for someone else for mediocre money that may get you a few nice-to-haves like a used BMW or a small house. Realize that every dollar you spend now moves you further away from your goal if you are blowing it on cars or anything like it.
Nobody here needs to agree with me, but in the past 8 years I've met a lot of people who are independently able to pursue what they want in life and they don't need to even talk about the costs of BMWs. I know how they did it, the underlying premise is all the same, and all I'm trying to do here is help add some perspective to people who are smart enough to realize that they have opportunity to not struggle as much. And for any of you to say you aren't struggling is a lie. If you don't believe me when I say that, then that means you don't grasp what I'm saying. Stop trying to justify to the world why you're doing what you're doing right now because of how awesome you think you've set yourself up. The unassuming millionaire in his 1988 Corolla doesn't care because he's going to spend the rest of the day on his boat staring at clouds contemplating the mysteries of the universe, without a care in the world.
2011 E92 M3 6MT ZCP - ESS 625 supercharged
2007 Z4MR
2003 E39 M5
2002 E46 M3
2021 X5 40i -
yeah feel free to delete my shit. It's not really important lol - I probably coulda just said "be careful about buying cars when you are just starting out because that sort of thing can set you back a ways, in real terms"
sorry
2011 E92 M3 6MT ZCP - ESS 625 supercharged
2007 Z4MR
2003 E39 M5
2002 E46 M3
2021 X5 40i -
yeah feel free to delete my shit. It's not really important lol - I probably coulda just said "be careful about buying cars when you are just starting out because that sort of thing can set you back a ways, in real terms"
sorry
Well I sir would first like to thank you for contributing to this conversation. You said what most don't even understand. There is a difference between being "rich" and wealthy. You need to set goals and have a path to get there. I think many members here are exactly as you described. Which is sad. Hopefully the OP will now rethink about buying a 156k mile e46 m3.
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Alright moved to new thread, didn't realize this tangent had its own zip code!
Good points being made here, building off Jordan's mega post Warran Buffet has lived in the same house since he started Berkshire Hathaway and has driven Caddilac DTS's or similar not crazy luxury sedans. His 2015 net worth is $72.3 billion.
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Pay off the house, invest stocks (any railroad or bigger trucking company are great investmants) and then buy your dream cars. There will always be car deals.
This.
With all this supposed disposable income now - make good choices with it... Because the chances of it staying that way are slim. Some wise financial planning now will yield dividends for the rest of your life allowing you to do whatever you like once you're older.
Take it from someone who should have done that - and is looking back on it now wishing I would have listened.
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it's all good Jake.
Please note that when I say "you" as follows, it pertains to generically speaking anyone. It isn't directed at any individual.
Great post with some wisdom behind it. It's always nice to see how someone else's brain works.
I left out a "small" part to my equation earlier. I started my own business before buying my car, while going to school and working part-time. I spent my nights developing, programming and designing until the sun came up. Took a nap and went to class every morning. A few months after launch, the money started flowing in. I'd wake up to dollar signs and my phone would be going off with orders throughout the day. After about a year, I couldn't keep up anymore and decided to freeze operations until I secured my degree. I didn't want to hire anyone.
I've never been passionate about school, but figured I'd get my degree after spending years at school. I'm an entrepreneur at heart and you don't know freedom until you don't need to work 9-5 every day. Plus, I made 20x more than what I got paid to "work" for my employer. It's nice being able to go out and spend as much money as you want and know it won't matter. I should have invested more of it, but was living in the moment. Oh well, next time. Go ahead and interpret this as "cocky", but if you're reading this, you can do it too. I follow a lot of informational and influential entrepreneur/lavish lifestyle blogs. The best time to start your own business is in your 20's and the internet offers unlimited, free resources. I'm a firm believer than anyone with the mindset can do it. E-commerce is fantastic! You have the ability to sell anything to anyone in the world. You're not limited to a brick-and-mortar and overhead can be almost non-existent. I'm working full-time now just so I can become my own boss later.
I_love_cars: not everyone has the same mindset. While we seem to view being "successful" as having enough time and money to do whatever we please (maybe I'm wrong), others don't feel the same way. Some people like a stable routine in a field that is much harder, or impossible to do as an entrepreneur.
There will always be someone with more money than you, more time than you, and who is even better at what you do. You need to be happy with yourself at the end of the day, whatever that means. I'm only 23, so maybe I don't know what I'm talking about. Oh well.
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There will always be someone with more money than you, more time than you, and who is even better at what you do. You need to be happy with yourself at the end of the day, whatever that means. I'm only 23, so maybe I don't know what I'm talking about. Oh well.
Beyond anything else, this is really all that matters.
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