I want a new car.

[maclover]

New user here.

I'm fresh out of school, graduated in spring/summer 2007. And have been working ever since.

Student loan debt (mine): 111K or so, half at 3.8%(30yrs) and half at 5%(10yrs). Payments are roughly 800$/month.

Wife's student loans: 75K (She's still in school, no payments are due yet 6.8% subsidized)

Savings: 75K (HSBC)
Retirement account: 41K (Vanguard Index funds)

Monthly income: avg about 15K/month pretax, some months I make more, some months I make less.

No credit card debt. No mortgage. Fixed and variable expenses probably run me about 3-4K a month, some months we're cheap and some months were not.

The reason we have a lot in savings is because we might want to buy a house and a dental practice for me in the future (years). My wife will start residency in July so we'll have some income from her to pay off her student loans.

I been thinking about a MINI Cooper S for the longest time and even test drove one twice. Cost would be 29K. I currently have a 2002 Ford Ranger with almost 98K miles on it. For the most part, the truck works fine. It'll need new brakes, tires and a timing belt soon.

I was thinking about financing the car at a low rate, our credit score is excellent. Financing, because we would probably make more money in the bank than paying for the car in cash.

Should I or should I not get the car?

[tulsa_sr5]

I'd suggest 2 options that would save you a bunch of cash.

#1 Hold off till some major debt payoff is reached, ie. all or half of one of your current loans

#2 Non-s used model for maybe 15-18k. My ex owned the standard before, and has a used S now. The normal one she had was plenty powerful and a damn nice car. They really hold their value and are pretty cheap to own overall.

I'd suggest option 1 though. Focus on paying off a big chunk of your current debt and treat yourself with a custom ordered one that has exactly everything you want.

[cicy33]

I would say that if you really want that type of car as said above, buy it one or two years old. Either way you lose money as soon as you drive it off the lot. I personally will not buy new again. I hate the payment! Not to mention that this buyout thing really made me think about all the cars that are out there used that are usable but not really used. I am trying to recycle cars!

[maclover]

used MINI

used MINIs are somewhat hard to come by and they are priced just about as high. I've just looked. Looks like maybe I'll just drive the truck for a while longer.

As for the student loan debt. I have no intentions on paying my portion off early, since the interest rates are low. When my wife starts her residency, we're going to aggressively pay off her SLs with her new income.

[tulsa_sr5]

Yeah, used minis really hold their value. The 2004 my ex had she drove for 2+ years and sold for about 1k less than she paid. That said, the 2003 - 2006 ones are coming down in value.

I guess mostly I look at your earning situation of more than 10k free cash per month, and think about how quick you could be debt free AND a millionaire. Even ignoreing your wife's soon to be substantial income, 10yrs should be easy. At that point you are looking at an easy 80k/year in interest. I can't think of a good reason you'd want to pay interest when you could easily have interest buying you you everything you could ever want.

[maclover]

not exactly 10k free cash

after taxes it's not that much. i think on a 15k month, it's about 10k home depending on which part of the year I'm in (SS tax). And on slow months, I won't hit 15, it'll be more like 12. Maybe I should revise my avg month pretax to 14. That's more reasonable.

Overall I put away 4-5k into my savings/investments after expenses. And I always leave a little bit in the checking account for emergencies.

Thanks for all the replies.

[sakigt]

I agree. Go used. If you cant find a clean used example for less than 25k you arent looking hard enough, imo.

Buy Cars Online, New & Used Car Search, Auto Classifieds <--- Try here

With the economy these days you should be able to haggle a bargain with a dealer.

And Im not saying this because you cant afford 29k. Youve worked so hard and you deserve a newer ride. Im just saying why throw 9k out the window like that.

[disneysteve]

Looking at this from a different angle, make sure you don't allow yourself to fall into the trap that so many other recently-graduated professionals do. Being a doctor myself, I've seen it happen many times. You spend years in school while many of your friends are already out earning a living and getting their lives underway. When you finally graduate and start getting a real paycheck, you want to go out and get the stuff you've been deprived of all these years: new car, house, big TV, electronic gadgets, nicer clothes, dining out more, etc.

Perhaps this doesn't fit here, since you do have a substantial amount of savings, but just take it as a friendly warning. It can be a slippery slope.

Personally, I wouldn't spend $29,000 on a car. I'm a physician. I'm driving a 1998 Camry that I bought 1-year old in August 1998. It has 114,000 miles on it. Can I afford a new car? Sure. Would I like a new car? Sure. But I have no plans to replace it until it dies or becomes too unreliable or expensive to maintain. By the way, I repaid $102,000 in student loans in 12 years thanks to keeping spending under control.

[tripods68]

Health care industry is one of the industry immune to US recession. As the baby boomers ages, more and more doctors are needed, thus securing your lifes earning potential.

Without mortgage, credit cards, and a child to take care any time soon, this is probably the best time to spend your money. I'd sell your existing truck if I were you and use that proceeds on the new car. Enjoy your new car!

[sakigt]

Personally, I wouldn't spend $29,000 on a car. I'm a physician. I'm driving a 1998 Camry that I bought 1-year old in August 1998. It has 114,000 miles on it. Can I afford a new car? Sure. Would I like a new car? Sure. But I have no plans to replace it until it dies or becomes too unreliable or expensive to maintain. By the way, I repaid $102,000 in student loans in 12 years thanks to keeping spending under control.

Ill be about that much in debt as well... I was looking at paying it down in the same length of time. How much were you paying a month? I was looking at $1,000-$1,200 a month. 30 years just sounds like a LOOOONG time to pay it off.

[scfr]

The truck you have really isn't that old. I'd hold on to it if I were in your shoes.

Why not start socking away what your monthly payments on the MINI would be in to a high-interest savings account? In 4 or 5 years, your savings plus the interest earned plus the trade-in value of your truck might be enough to buy the car in cash.

[maclover]

paying in cash

When I do eventually get a new car, is it better to finance it and leave the cash in a high yield savings account or other investments?

YOu can get pretty low rates on car loans now.

Isn't it good to keep the cash on hand. Esp if you already have enough for the car?

[disneysteve]

Health care industry is one of the industry immune to US recession.

This really isn't as true as you might think. I've definitely seen the impact of the lousy economy in my practice, and this area hasn't been hit that hard.

When people lose their jobs, they often lose their health insurance.

When people are struggling financially, they often can't afford the out of pocket costs associated with their care such as copays for office visits and medications. They avoid or delay treatment as a result.

Not to mention health insurance issues, declining reimbursement for doctors, rising overhead costs, etc.

Doctors suffer in a weak economy just like everyone else.

[disneysteve]

Ill be about that much in debt as well... I was looking at paying it down in the same length of time. How much were you paying a month? I was looking at $1,000-$1,200 a month. 30 years just sounds like a LOOOONG time to pay it off.

You're right on track. I paid about $1,200/month.

I had actually been shooting to pay it back in 10 years but about 7 years in, I quit my job and was unemployed/under employed for a year or so and had to cut back to minimum payments for a while.

[disneysteve]

When I do eventually get a new car, is it better to finance it and leave the cash in a high yield savings account or other investments?

It all depends on the rates. If you can get financing at a lower rate than what your money is earning, take the financing. Otherwise, pay cash.