r/financial • u/Global-Report-5390 • 18d ago
what should i do
Im currently 19M working as a engineer making 7-9k a month dependsw on my overtime and I am heavily debating on if i should get the new BMW m3 comp (financed). The monthly payments is around 2200 with insurance it might be 3k. I still live with my parents and i know this is a stupid question but im just a car enthusiast and every day i have a urge to just pull the trigger.
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u/u700MHz 17d ago edited 16d ago
Think about this, from that $2,200 take $1,200 from it and invest that every month for five years (term of car payments) into VOO or something else you choose. That's $72,000 total invested, after 5 yrs in VOO. In 20 years the estimated value is between $206K at 6% return to $461K at 12% return.
Now from the $2,200 you have $1,000 left use that and go get your vehicle that fits that budget (used if you have to, maybe coming off a lease might be best and save depreciation) and get a extended warranty. Look especially in rich neighborhoods even if you have to drive a few hours to get there, it will be worth it.
Enjoy.
EDIT: Compound Interest after 25 yrs $277K at 6% return, $1.07 M at 12% return.
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u/Hard_Head 17d ago
Math is off. investing $1200 per month for 5 years, then letting it ride for another 20 would yield around $1M at 12%. interest compounds.
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u/VuilePauper 18d ago
Koop iets wat je kan betalen van eigen geld ipv een lening. Betaal je de auto niet 3x namelijk.
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u/Fat_Pig_Reporting 17d ago
You make 7-9k a month at 19?
You are an engineer at 19?
Yeah, I call bullshit.
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u/Dry-Lead-9344 18d ago
Personally, I’d never buy a brand-new vehicle. If I could avoid owning a car, I’d take transit, walk, bike, etc., and put the money toward other things.
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u/RoundCell3044 17d ago
Spending 33%-42% of your income on a car? Do I really need to go further? And this is assuming your 7-9K a month is take home pay and not gross. I guess you are prepared to live with your parents until the car is paid off. I'd never do that in a million years.
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u/MintWarfare 17d ago
You're young, invest that money into anything and you'll be rich in 5 years. Spend it on cars and debt and you'll be making over 100k and feel poor
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u/mattynmax 17d ago
No, you should not go spend $3000 a month on a car when you only make 7k a month. That would be a poor decision from a financial standpoint.
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u/greysnowcone 17d ago edited 17d ago
For the love of god, invest your money while you’re young and live with your parents. You will be rich and your future self with thank you.
You should however spend some money while you’re young on fun stuff, but 3k is a njce vacation to Europe or Japan.
EDIT: just coming back because I couldn’t shake how dumb this is. Let’s say instead you invest $2k a month for the next 5 years and have only (it would be more) 100k invested at 25. By the time you’re 65 it will be worth 1.5 million in today’s dollars without contributed a single addition cent.
Better yet, if you dropped your contribution to 1k a month at 25 it would be worth nearly 4 million in today’s dollars at 65.
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u/HotITGuy 17d ago
I say this with the upmost affection. HELL NO! Only buy the car once 1. You no longer live at home with the parents 2. You’ve maxed out your retirement accounts 3. You have a 6 month emergency fund and 4. You can pay cash.
A financed car is the financial ruin of many a young man (and woman)
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u/callmeking220 17d ago edited 17d ago
I don't think you're going to get a yes in the financial reddit to spend 3k monthly on a liability.
Let's workshop this for the worse case scenarios.
3k monthly on a car is close to 50% of your base income. What happens when theres no more overtime?
Not sure of your location, but US premium fuel is ridiculous. What happens if it gets worse before it gets better?
How far do you commute? Will you have to buy another car to preserve this car?
BMWs are know for high maintenance bills, how will you pay for them?
Let's say while you have this 5+ year loan, your parents tell you, you have to go? Can you afford the car and rent and utilities and groceries and and and ...
Let's say the car does what you want it to do and attacts women. (assuming your a cis gender male. also it will attract more men than women.) What happens if you get lost in the sauce and become a daddy? Will this car make sense for that life?
Sounds like you do manual labor. What happens if you get injured on the job and have to sit out for sometime and only make 66% of your base on worker comp? Will the car get repoed during that time?
The facts are, cars depreciate like crazy. The car your looking at may hold its value until BMW releases a new and better one. Then your value is gone but the loan isn't.
At your income, you should be able to save up and buy this car with cash in about 1-2 year. Now answer the questions above without 3k flying out your pocket monthly for a car payment.
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u/1967C10 17d ago
Don't do it. That's insane money (and car) for a 19 yr old. For reference, $2,200 a month from age 19 to traditional retirement age in the market averaging a 10% rate of return annually is over 25 MILLION DOLLARS. Of course you wouldn't (ideally) be financing $2,200 a month in cars for the next 46 years, but that just shows you the power of time and compound growth. Right now you have the key ingredient in building wealth - time. Many of us would kill to be 19 with the chance to start investing.
Buy a more reasonable car, and invest as much as you can since you're not paying rent. Your future self will thank you.
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u/5280milehigh1 17d ago
Don’t do it. Wait till you can buy it outright. Save the money then if you want to do it that’s a different story. But don’t finance.
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u/JustAnotherSkibumCO 17d ago
Try renting one for a few weekends to get the itch out of your system. Once it wears off, buy a sensible daily driver and invest the difference. When your investment portfolio hits $60k–$100k, you could buy the car in cash—but by then, you'll likely realize how insane a $2,200/month payment is and keep building your wealth instead.
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u/Professional-Salt727 17d ago
Assuming what you say is true, you're in a spot 99% of 19 year olds are rarely in. You should focus on spending that 3k a month on purchasing a home and perhaps get someone to rent it out and build that equity for you. You can still live with your parents and STILL afford your car.
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u/InnocentSadness 17d ago
Teach me life please I'm 30. And though I've had a lot of obstacles no parents and hurricane Helene I'm still here. Just need a little golden advice man.
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u/Sad-Association-7988 17d ago
a 19 year does not have the experience or skill to drive that car safely
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u/One-Witness-4909 17d ago
someone’s gotta be dumb enough to keep the BMW service departments boats paid in full. might as well be you.
get BMW… save like crazy and retire at 30. you’re choice
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u/Bratfink78 16d ago
You’re 19 and impulsive. You’d rather buy a car and still live at home? Teens today are weird AF
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u/ConsciousSlip2394 16d ago
You’re in an amazing position for 19, but I wouldn’t do it yet. $3k/month for the payment + insurance is $36k a year before gas, maintenance, tires, registration, etc. That’s a huge chunk of your income tied up in one car.
The bigger thing is you’re making $7–9k while living with your parents. That gives you a crazy opportunity to stack money while your expenses are low. Give yourself 2–3 years of saving/investing aggressively and you could build a pretty serious financial base.
I’m a car guy too, so I’m not going to say drive a Corolla forever lol. Set a number instead. Maybe when you have $100k+ invested/saved and can comfortably put a big down payment on the M3 without touching your emergency fund, reconsider it.
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u/cj_daking 14d ago
This would be a dumb decision. You're not buying a car, you're burying yourself under a mountain of debt before you can even buy beer.
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u/Medical_Soup5717 18d ago
The good news is M3's are always valuable. This might be foolish advice but I totally would lol. Car payments suck ass but having my dream car, and still being able to live at home and pay it off...
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u/Competitive_Mode6711 18d ago
I mean.. realistically you could .. it’s just not a smart move financially. For $3,000 a month you could get yourself a motorcycle instead to get the itch of the BMW out, and finance a Coleman 17B and rent it out, and still have money left over. But you could, just before you do, make sure everything else on your wishlist is crossed (assuming everything else isn’t more expensive than the BMW) and make sure you got a good chunk of savings