[fmzip]

Originally Posted by Limegrntaln

If I was making $400k a year, I would have an M8 for a daily driver, and a 488 for a weekend car. I make a little under half that, so, I'm not sure what you're doing with the $33k a month, The only thing that makes even remote sense, is a $2 million house, and a fat/ maxed out 401k and retirement account. Coming to the table with $120k, cash, when rates were down at 0.9% would have been a waste of money. I locked in at that rate, in Oct of last year. No reason to drop all of that money, when the finance charge on an M4 is $84 a month on $1,635.

I sock 13% a month away, and I have a mil retirement pension, and I'm 8 years from my second 20 year pension, at 47. So, it all depends on what you feel you need. An M850i for a $400k a year income, is like buying a 1997 Prius making $10k a month.

"An M850i for a $400k a year income, is like buying a 1997 Prius making $10k a month" That's a good one! Very difficult to explain a full story on a forum...

You're quite fortunate with your pensions, I am self employed so we are in two completely different worlds. I have 10 years on you I am 57. $400K this year but normal years I am at $250K. To also note, I am also trying to retire early so these last few years really matter on spending to say the least. Socked away $61K this year in my Solo 401K which is the max. The M850i was also bought this year.

I would imagine your healthcare costs may be covered somewhat with your pensions? Mine will not. I'm self-funding everything and have been for the past 25 years. As we creep closer to retirement, the mindset on frivilous spending tends to change. On a side note, my buddy works at a Ferrari delaership. He told me the average Ferrari owners makes $500K per year and has a net worth of $5+ mil. You need to be in the top 3% to be in that arena which I am not a part of. Age and overall circumstances and views on frivilous spending certainly make a big difference in all these decesion making scenarios. Annual income doesn't really tell the full story as we've been seeing throughout this thread.

Great thread, some enjoyable reading!

[Limegrntaln]

Originally Posted by fmzip

"An M850i for a $400k a year income, is like buying a 1997 Prius making $10k a month" That's a good one! Very difficult to explain a full story on a forum...

You're quite fortunate with your pensions, I am self employed so we are in two completely different worlds. I have 10 years on you I am 57. $400K this year but normal years I am at $250K. To also note, I am also trying to retire early so these last few years really matter on spending to say the least. Socked away $61K this year in my Solo 401K which is the max. The M850i was also bought this year.

I would imagine your healthcare costs may be covered somewhat with your pensions? Mine will not. I'm self-funding everything and have been for the past 25 years. As we creep closer to retirement, the mindset on frivilous spending tends to change. On a side note, my buddy works at a Ferrari delaership. He told me the average Ferrari owners makes $500K per year and has a net worth of $5+ mil. You need to be in the top 3% to be in that arena which I am not a part of. Age and overall circumstances and views on frivilous spending certainly make a big difference in all these decesion making scenarios. Annual income doesn't really tell the full story as we've been seeing throughout this thread.

Great thread, some enjoyable reading!

Yes, that definitely makes more sense. I was simply attempting to fracture the nut. It didn't need a full crack, just a slight fracture into the understanding behind it.

That easily makes more sense, now. Medical is huge, and he's, it's about $120 a month deductible for a $1,200 a month plan. That's huge factor, as is some of the other little tidbits. It's been a great thread, so far.

And yes, frivolous spending is definitely a factor. It's even worse if you've never made the money that you make, now. I'm also afraid that I won't much learn my lesson, until I'm your age, at which time, it'll be too late for me to make any life changing decisions. I'm going to be heavily relying on my retirement pensions, if that sways in the wrong direction, at any given time, it could prove to be disastrous.

[fmzip]

Originally Posted by Limegrntaln

Yes, that definitely makes more sense. I was simply attempting to fracture the nut. It didn't need a full crack, just a slight fracture into the understanding behind it.

That easily makes more sense, now. Medical is huge, and he's, it's about $120 a month deductible for a $1,200 a month plan. That's huge factor, as is some of the other little tidbits. It's been a great thread, so far.

I get it, I was also trying to crack the nut on the gent that posted he bought a 2023 M850i and only made $40K per year. There's always more to the story!

To give you an idea on healthcare costs, I pay approxiamtely $2K a month with a $7500 deductible right now. Each year it goes up 15-20%. If I retire at 60, I'm likely looking at a $30K bill each year til age 65 just for mediocare helthcare!

I remember being in my early working years thinking $1M would be unattainable and plenty to retire. Now the number is a minimum of $2M.

Word to the wise, lifestyle creep is a challenge. Do your level best to off avoid the urge to automatically increase spending when your income increases. Easier said than done when that shiny red car with the prancing horse on it drives off with that beautiful exhaust note!

I've always wanted a Ferrari so what I did was rent one. It was cool, very cool! Check mark off the bucket list and saved me a boatload of money.

[Ttuite]

Originally Posted by fmzip

Now this makes sense! I was wondering if you might have been some young guys living too far beyond their means. Good for you on your retirement. I’m 56 so I am thinking this will be my last splurge before retirement. I paid cash for mine as well. Interestingly enough, I have solar panels too. Those are paid for as well.

As retirement approaches, always trying to find ways to lower overall expenses! Sounds like you have a really good grasp on things. OT questions, why too much income on the first year of retirement that drove up the Medicare payment? How low income do you need to be to pay zero? If I could only figure out low healthcare costs, I’d love to retire before 65

Your annual income Your monthly premium in 2022
Individuals Couples
Equal to or below $91,000 Equal to or below $182,000 $170.10
$91,001 -$114,000 $182,001 – $228,000 $238.10
$114,001 – $142,000 $228,001 – $284,000 $340.20
$142,001 – $170,000 $284,001 – $340,000 $442.30
$170,001 – $499,999 $340,001 – $749,999 $544.30
$500,000 and above $750,000 and above $578.30

[snowbimmer]

Originally Posted by Ttuite

Your annual income Your monthly premium in 2022
Individuals Couples
Equal to or below $91,000 Equal to or below $182,000 $170.10
$91,001 -$114,000 $182,001 – $228,000 $238.10
$114,001 – $142,000 $228,001 – $284,000 $340.20
$142,001 – $170,000 $284,001 – $340,000 $442.30
$170,001 – $499,999 $340,001 – $749,999 $544.30
$500,000 and above $750,000 and above $578.30

To clarify above, that's only the premium for Part B of Medicare. You'll also have to add a Medicare Supplement plan plus prescription drug coverage and most likely vision, dental and hearing coverage or a Medicare Advantage Plan ( which may or may not have a premium, but you'll still have co-pays and deductibles. It. Never. Ends!

Some of my clients that did well and had large IRAs had to take out large Required Minimum Distributions when they reached 70 (now 72). It dumped them into a much higher tax bracket, made more of their social security become taxable and also put them deep into the chart above that eroded a large portion of their social security check due to the higher Part B premiums.

Some times you wonder why you just don't spend all your money early on. You give up a lot of fun while you save and save for retirement, you're not a burden on society, and then you get blasted when you want to spend it.

It makes you want to go screaming into the night.

[SpeedyATL]

[QUOTE=fmzip;29573366]
To give you an idea on healthcare costs, I pay approxiamtely $2K a month with a $7500 deductible right now. Each year it goes up 15-20%. If I retire at 60, I'm likely looking at a $30K bill each year til age 65 just for mediocare healthcare!

See my comment below:

You should look at one of the health cost sharing organizations. My wife and i are small business owners and absolutely love our provider.

We have a 1000 annual deductible and pay about 550/month. You can use any doctor you want. All you have to do is ask for the self pay discount, pay it yourself and then file for reimbursement.

This is not an ad and we have no affiliation other then 5 year members. PM me if you want a referral to the one we use.

[fmzip]

[QUOTE=SpeedyATL;29577740]

Originally Posted by fmzip

To give you an idea on healthcare costs, I pay approxiamtely $2K a month with a $7500 deductible right now. Each year it goes up 15-20%. If I retire at 60, I'm likely looking at a $30K bill each year til age 65 just for mediocare healthcare!

See my comment below:

You should look at one of the health cost sharing organizations. My wife and i are small business owners and absolutely love our provider.

We have a 1000 annual deductible and pay about 550/month. You can use any doctor you want. All you have to do is ask for the self pay discount, pay it yourself and then file for reimbursement.

This is not an ad and we have no affiliation other then 5 year members. PM me if you want a referral to the one we use.

Thanks, I have looked into them before. The issue with HCS like healthcare minitries etc, they aren’t legally bound to pay claims. Unlike insurance companies, they also don't have to follow the Affordable Care Act guidelines nor are they regulated by state or federal agencies. You could find yourself in a real costly situation if they decide not to pay your bills. Not worth the risk in my opinion particularly if something catastrophic were to happen.

[SpeedyATL]

While what you suggest might be true from a legal perspective, the larger ones have hundreds of thousands of members and our coverage is unlimited. So if they failed to pay, their members would run for the exits.

The one we are with has been around since 1981 so if they had a history of not paying, we'd know. We've had a few claims (not large, about 6-12k) and had a much better experience with them than we had with BCBS and zero push back.

To each his own, but if you just put the 1500/mon savings in your pocket, you are almost 18k ahead each year, not to mention the deductible difference. That adds up pretty quickly.

I bet $1500/mon could lease a nice m3/4 or m850, even in these crappy leasing times....

[Ttuite]

Originally Posted by snowbimmer

To clarify above, that's only the premium for Part B of Medicare. You'll also have to add a Medicare Supplement plan plus prescription drug coverage and most likely vision, dental and hearing coverage or a Medicare Advantage Plan ( which may or may not have a premium, but you'll still have co-pays and deductibles. It. Never. Ends!

Some of my clients that did well and had large IRAs had to take out large Required Minimum Distributions when they reached 70 (now 72). It dumped them into a much higher tax bracket, made more of their social security become taxable and also put them deep into the chart above that eroded a large portion of their social security check due to the higher Part B premiums.

Some times you wonder why you just don't spend all your money early on. You give up a lot of fun while you save and save for retirement, you're not a burden on society, and then you get blasted when you want to spend it.

It makes you want to go screaming into the night.

Yes, that is how I got to my 759.00 number. Sorry for the hijack but a question if anyone knows.

I have a AARP United Healthcare HMO Medicare Advantage plan that includes eye and dental and a quarterly $250.00 healthcare supplement bonus (band-aides, vitamins, etc) I had a reverse shoulder replacement and arthroscopic knee repair this year and it cost me $125.00 for each. Most medications are free, (narcotics from surgery) but I don’t take anything serious.
Specialist office visits are $20.00.

This plan costs me nothing per month.

Finally the question:

This plan seems too good to be true. What can go wrong having this plan over either a PPO or standard Medicare supplement.

[SpeedyATL]

Related question to the OP:

What rules of thumb do people use when determining how much you can spend on a new/used car.

I'm as frugal as the day is long but am trying to convince myself that i can easily afford my target preferred car and at 54 it's time to drive what i want, not what my cheap ass dictates.....

The one i heard not too long ago that stuck with me is that the purchase price of all vehicles in your garage should add up to be no more than half your annual income....

[TheMaxXHD]

Originally Posted by SpeedyATL

Related question to the OP:

What rules of thumb do people use when determining how much you can spend on a new/used car.

I'm as frugal as the day is long but am trying to convince myself that i can easily afford my target preferred car and at 54 it's time to drive what i want, not what my cheap ass dictates.....

The one i heard not too long ago that stuck with me is that the purchase price of all vehicles in your garage should add up to be no more than half your annual income....

The most common by far you will find on the internet and what everyone hails as the "gold standard" is the 20/4/10 rule

1.) Atleast 20% down payment on car
2.) No more than 4 years car loan
3.) Total monthly cost of vehicle (payment, insurance, gas, and repairs) is no more than 10% of monthly income

It's not a bad rule if you are trying to be frugal and/or are already in a precarious situation financially, but after that, it kind of falls off.

The average latest US new car price sale is 48,000. The average latest US used car price sale is 33,000.

Those numbers say most Americans aren't giving a crap about the 20/4/10 rule, unless suddenly now everyone is making 200,000+, which most are not.

If everyone followed the 20/4/10 rule, or even a large minority, you'd see a LOT less fancy SUVs and trucks on the road and a LOT more Honda civics.

The rule tries to make a generic guideline based on assuming other expenses, assuming the need to prioritize retirement savings over buying a car, and to dissuade buying high price vehicles due to it being a depreciating asset.

It's not a bad rule, but it's not really a rule, it's a commonly suggested generic financial guidance, based on buying cars being really bad financial investments due to depreciation. Why this matters is many people don't have a big emergency savings, so if things go south, with car depreciation, it's REALLY easy to end up upside down on the car.

A guideline to consider, but not a rule if you know what you are doing.

[FCX5]

Originally Posted by TheMaxXHD

The most common by far you will find on the internet and what everyone hails as the "gold standard" is the 20/4/10 rule

1.) Atleast 20% down payment on car
2.) No more than 4 years car loan
3.) Total monthly cost of vehicle (payment, insurance, gas, and repairs) is no more than 10% of monthly income

It's not a bad rule if you are trying to be frugal and/or are already in a precarious situation financially, but after that, it kind of falls off.

The average latest US new car price sale is 48,000. The average latest US used car price sale is 33,000.

Those numbers say most Americans aren't giving a crap about the 20/4/10 rule, unless suddenly now everyone is making 200,000+, which most are not.

If everyone followed the 20/4/10 rule, or even a large minority, you'd see a LOT less fancy SUVs and trucks on the road and a LOT more Honda civics.

The rule tries to make a generic guideline based on assuming other expenses, assuming the need to prioritize retirement savings over buying a car, and to dissuade buying high price vehicles due to it being a depreciating asset.

It's not a bad rule, but it's not really a rule, it's a commonly suggested generic financial guidance, based on buying cars being really bad financial investments due to depreciation. Why this matters is many people don't have a big emergency savings, so if things go south, with car depreciation, it's REALLY easy to end up upside down on the car.

A guideline to consider, but not a rule if you know what you are doing.

The 20/4/10 rule is the one I am most familiar with as well.

[LogicalApex]

Originally Posted by TheMaxXHD

The most common by far you will find on the internet and what everyone hails as the "gold standard" is the 20/4/10 rule

1.) Atleast 20% down payment on car
2.) No more than 4 years car loan
3.) Total monthly cost of vehicle (payment, insurance, gas, and repairs) is no more than 10% of monthly income

It's not a bad rule if you are trying to be frugal and/or are already in a precarious situation financially, but after that, it kind of falls off.

The average latest US new car price sale is 48,000. The average latest US used car price sale is 33,000.

Those numbers say most Americans aren't giving a crap about the 20/4/10 rule, unless suddenly now everyone is making 200,000+, which most are not.

If everyone followed the 20/4/10 rule, or even a large minority, you'd see a LOT less fancy SUVs and trucks on the road and a LOT more Honda civics.

The rule tries to make a generic guideline based on assuming other expenses, assuming the need to prioritize retirement savings over buying a car, and to dissuade buying high price vehicles due to it being a depreciating asset.

It's not a bad rule, but it's not really a rule, it's a commonly suggested generic financial guidance, based on buying cars being really bad financial investments due to depreciation. Why this matters is many people don't have a big emergency savings, so if things go south, with car depreciation, it's REALLY easy to end up upside down on the car.

A guideline to consider, but not a rule if you know what you are doing.

The hard part is how many of the old guidelines were written in the past so they can be hard to apply to the current times. Interest rates are an important factor to consider.

I committed a cardinal sin under conventional guidance by going for a 6 year loan on my 530e when I purchased it. A long loan is against this guidance, but interest rates were ~2%. Inflation has trended higher, but even prior to current high bumps in the inflation rate the target long-term inflation rate is 2% and raises are over 2% for me annually. Meaning, paying the loan with tomorrow's money is cheaper than yesterday's money. In such a low rate environment longer loan terms and lower downpayment make the most financial sense. The "savings" was pushed into my 401k.

But individual risk profiles also need to be factored in. If you have risk of income drops then the conventional risk can still make sense as you're less likely to be holding onto a depreciating asset that may be valued lower than you estimates when you need to dump it...

[madpistol]

Bumping up because reasons.

I did some research last night and "new" guidance is that a car payment should be no more than 10% of your take home. Mine is currently sitting at 15%.

But... the same guidance says 30% for "wants", and my BMW is most definitely a want. So if you take 5% from wants and move it to car, you're left with 15% for car, 25% for "wants", so it balances.

A BMW is ALWAYS a want. You can get a very decent car for significantly less money. Nobody needs a BMW.

As far as what you can afford... it's amazing what you can do when you don't have a family/SO and put a fat down payment on the car.

[Onizukachan]

If you want a diesel station wagon that lasts, you need a bmw. Lol

[4NIQUES]

Originally Posted by Dr. Ice

Agree and well said! Let’s just say $100,000 is not that much money in today’s times. But with that said, selling this car let me pay for my 2022 xDrive and pocket $20k. Crazy market we live in as well.

Can I ask you something - Why get a BMW when you have a Porshe? I need to know because I want my next car to be a 911 - what are the pros and cons?

[4NIQUES]

Originally Posted by wtwo3

Again I think you're not understanding.

Let me put this another way. The biggest risk is what's unknown, regardless of metric category. A debt-to-income of 100% isn't a risk... you know why? cause it'll get denied. It's manageable risk because it's KNOWN. When you apply for credit, the lender calculates your debt-to-income. You then either meet the threshold or you don't. Simple as that. Unless you're hiding debt off the books, it's a known variable. I'm not talking about what metric impacts your credit score the most on credit karma.

Lack of credit history presents a completely unknown variable into the underwriting decision. BMW is choosing to give out loans with limited credit history in order to compete in this segment, and as such that is undoubtedly the biggest level of risk attributed to THIS segment.

You're also misrepresenting the basis of BMWs additional requirements of 45% debt to income and automotive payment to income of 20%. Those figures are actually higher than what auto lenders typically look for. Lenders typically look for a ~36% debt-to-income ratio for traditional auto loans. So they're giving more leeway to college grads assuming they'll have higher debt to incomes (mainly because incomes of recent college grads are typically significantly lower). Which is the opposite of your original basis of "college grads have a high chance of low debt to income".

As for the cost of the program. I'm saying it doesn't cost them anything to "offer" it. It doesn't have any inventoriable costs associated with it nor developmental costs. The $1,000 is NOT an up-front cost as you mentioned. It's a post-sale incentive. The very nature of offering it is to increase sales in that particular segment. If college students were clamoring to purchase a BMW, THAT'S when BMW would be incentivized to NOT offer the program. You can draw parallel to the current automotive climate vs. the climate 4 years ago. There was a lack of interest in cars, and that's when BMW offered the highest incentives. Now that everyone wants a car, many of those incentives are reduced or completely eliminated.

Totally off topic - just wanted to add my stupid 2 cents in here - again totally off topic - I have been a customer of BMW Financial for 16 years in 2024. I have owned 8 BMWs - during this time - there were moments I had very weak credit but solid down payments and was approved. When I asked why - they said I have never missed a payment plus $5,000 to $10,000 down each and every purchase helps. I am pointing out that credit at times has nothing to do with approvals. I just put $70,000 down on my M4 (but also had good credit) - I heard a down payment of 20 to 30% or more - gets you a GUARANTEED APPROVAL.

[c1pher]

Originally Posted by 4NIQUES

Totally off topic - just wanted to add my stupid 2 cents in here - again totally off topic - I have been a customer of BMW Financial for 16 years in 2024. I have owned 8 BMWs - during this time - there were moments I had very weak credit but solid down payments and was approved. When I asked why - they said I have never missed a payment plus $5,000 to $10,000 down each and every purchase helps. I am pointing out that credit at times has nothing to do with approvals. I just put $70,000 down on my M4 (but also had good credit) - I heard a down payment of 20 to 30% or more - gets you a GUARANTEED APPROVAL.

Putting 20% down almost guarantees you just covered the spread on depreciation from driving it off the lot, that's probably why. Now they don't care if you keep paying or if they repo, they make money either way.

[c1pher]

Originally Posted by 4NIQUES

Can I ask you something - Why get a BMW when you have a Porshe? I need to know because I want my next car to be a 911 - what are the pros and cons?

Some things I've dealt with owning a 911. Maybe if it were a base model, would be lessened. But mine cost $165k before all the other stuff (tax, tags, title, PPF etc). This has definitely been an aspirational car for me.I also want to keep it until I pass or can no longer drive. But with the cost of it, I am always concerned about damage whether from rock chips (mitigated from PPF) or people being people.

I had a 718 Boxster before that and didn't really feel that anxiety. So I mainly drive it for fun, and go places where I don't have to worry about it when unattended. Because I want to hold onto it for a long time, I also ordered an M2 for driving to work and going most everywhere else so I don't have to worry about all that other stuff so much. My wife mainly drives our Macan GTS and despite it being over $100k, it kind of blends in and no one seems to have animosity over it.

[Burrcold]

~$300k

[wtwo3]

Originally Posted by Burrcold

~$300k

Audi owner's salary is legit

[c1pher]

Originally Posted by Burrcold

~$300k

I think I lost the script. What are you referring to? $300k CDN is about $225k USD.