how much you should spend on a vehicle? Meaning is it supposed to be a % of your income or just what you feel comfortable with? I kind of am hoping for some sort of formula or something, because I have a hard time spending money these days and it would be nice to know what people would think is "ok!"

Thanks! - Ann

I believe you should set up a budget and see how much $ you have leftover. Usually at dealerships they will let you know how much your monthly payments will be towards your vehicle without factoring in full coverage insurance costs. It worked easier for us in this sense.

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You must be the change you want to see in the world ~ Gandhi

If you are following the Dave Ramsey it goes by the amount of cash you have.

Totally understand, but what if I have 40,000 (just an example) of cash....that doesn't really mean I should spend all of it towards a vehicle.....

I think its a combination of things one being evaluating want vs Need. I think you first need to look at what vehical sits your needs by asking how many people is it going to carry, where are you driving it, how much are you driving it. Look at how much you have in your budget for a car payment if you are going that route based on my payments 14-15K is going to be a $300 payment there are auto loan calculators out there. I have used the one on my CUs website.
A car is not a house it isn't an investment you should expect to get money out of. So my answer is something reliable and, that fits your life style and won't burden you into further debt.

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Kimberly Proud Mommy to Bethany Rose April 2006

He also says all of your vehicles should never have a combined value of more than half of your take home.

eg. You make $40,000 a year. Your cars shouldn't be worth more than $20,000 at any time (including the day you buy it). So if you have one car that is worth $5,000, you could spend up to $15,000 on the next, assuming you would pay cash for it.

Or if you made $100 K take home and had one car worth $25,000 then you could buy another worth $25,000 which would equal half of your take home ($50,000).

Not that we follow this. We have one car that is worth about $2500. But for the one we're saving up for we'll make sure we still to under this figure.

I think just using common sense and looking at your budget will keep you in line. I view a vechicle as just that. Something to get you from place to place. Personally, I'd rather put more into my home (because it's an investment) than putting it into a vechicle that loses 40% value in just a few short years. I'd think paying cash for a used car is a wiser choice.

Exactly what I was looking for-- thank you!

Too bad common sense ain't all that common!

We will be paying cash-- thank goodness!

That's so funny...and true for some people!