Your income to cars' worth ratio?

[biomed_eng_2000]

What is your income to cars' worth ratio?

I have a friend that makes about $95k per year.
His cars are now worth about $17k.

His "income to car" ratio is $95k/$17k = 5.6

What is your or your friend's ratio?

What do you think a good ballpark ratio should be?

I have another friend that makes $50k and drives a $30k car. That ratio would be 1.7, way too low!

 

[javacontour]

We have 3 cars, and are at about a 7 to 7.5 figuring all cars.

 

[Ray Garlington]

I'm at 6, which I'll guess is on the low side.

 

[BuickGN]

2.8... ouch. It's pretty easy really with no kids and no ex wives to take my money.

 

[MGregoir]

I am at about 3.5:1 with my car right now and once I am working full time, it will go to 8:1.

My dad is 5.8 to 1 because he just bought a fairly new car.

I think that 3:1 is the cutoff ratio for most people who are living within their means. That would be a person making $55,000 a year driving an $18,000 car.

 

[ThirdeYe]

$0 (full-time college student, unemployed)/$3,800 (what I paid for my car) = 0!

 

[Russell]

about a 9 to 1

 

[Kestas]

I'm at 2. It was around 9 when I was a junior engineer saving money. Now I'm spending it. One advantage of old age is compounded interest.

 

[rpn453]

I'm at 0.3 for 2007. I'll probably be at about 0.2 for 2008, unless I decide to get one of them job things.

 

[MrCritical]

I don't think the income/car value ratio is what you're looking for.

If I make $50k a year, own my house, and have no credit card debt, I can handle a whole lot more car than someone with a $200k mortgage and ten grand in credit card debt.

 

[benjamming]

net income or gross?
using KBB or what?

If gross and using KBB, then 10:1.

 

[HM12460]

there isn't a car or truck (for personal use) on this planet worth over $10,000.

 

[ryansride2017]

Originally Posted By: MrCritical
I don't think the income/car value ratio is what you're looking for.

If I make $50k a year, own my house, and have no credit card debt, I can handle a whole lot more car than someone with a $200k mortgage and ten grand in credit card debt.


Bingo. What the car is worth is irrelevant. Income/debt owed is the important figure.

 

[biomed_eng_2000]

This is a CAR FORUM...so I want to know about car enthusiasts spend on their cars.

For example, if I were at my home theater forum, I would ask how much their home theater costs relative to their income.

Perhaps a "net worth" to "car worth" ratio might be a fun statistic too.

 

[brianl703]

It was around 26 (yes twenty-six). Then I got a new car year before last. Now it's around 4.4 if you go by what the cars are worth now, around 16 if you go by what I actually owe on them.

 

[Brett Miller]

I'm at 2 but my house paid for.

 

[Spector]

Well, this is somewhat of an indicator of where people place their emphasis on what is important to them. Low number, like new cars, maybe keeping up with the Jones, higher number, more common sense practical cost conscious looking to save money in the long run.

hmm, maybe the mortgage industry should start to use this, low number, don't apply for a loan (unless retired and or won the lottery or inherited the bucks)

 

[rpn453]

Originally Posted By: HM12460
there isn't a car or truck (for personal use) on this planet worth over $10,000.


You've got a typo on your profile. It says "west michigan" instead of Mexico.

 

[eljefino]

My wife and I've got four vehicles.

Counting what I paid for them in past history as what they're presently worth, about 14. They have not depreciated much despite 5, 3, and 1 years' worth of ownership. Last car is a $250 beater I just got.

 

[Bror Jace]

This isan interesting thread ...but the original ratio/calculation is a bit simplistic.

I'm pretty frugal but will spend some of my money on a decent car ... in my case a late-model Civic. My score is about 3.75.

A couple of mitigating circumstances: I am single with no kids and I usually keep my cars at least 5 years. Someone could buy the same car, trade it in every 2-3 years and they'd be paying close to double what I'm paying each year to own the same make & model.

A probable better analysis would NOT include purchase price but instead factor in all costs associated with keeping said car on the road: depreciation (the biggest for owners of any late-model car), insurance, fuel, other maintenance & repairs, etc ...

Of course, most people would have a hard time correctly calculating this unless you led them through it step by step.