Can I afford this sports car of my dreams? Posting all my finances inside..
I'm 23 and have been at my current job for about a year. I'm in consulting and I travel every week, so I'm on the road Mon-Thurs. I only drive on Thursdays, Fridays, Sats, and Sundays. So please keep that in mind. Anyway, here are my finances:
Equity/Brokerage Account: $20K
Roth IRA: $1,600 (don't contribute to this anymore)
401(K): $4,200 (contribute 7% of each paycheck to this)
The car I want is a used sports car that costs $56,000 at the dealer. I'm assuming I'll be able to haggle it down to $54,000 and that I will trade my car in for around $12,000. So, the car would be $42,000.
Can I afford this? I'd probably try to put a downpayment of $12,000 and finance the other $30,000.
My insurance will probably double from $140 to $280 (wouldn't be surprised if it did, but I'm not sure how much it would go up exactly).
Gas consumption would probably double. I fill up about twice a month, so I'd probably be filling up four times a
month with the new car: additional $120 in gas per month.
I have excellent credit and zero debt, but I am financing my current car. It's about $350 a month but I pay $500 a month because I want to pay it off quicker. An online calculator shows that a $30,000 loan @ 5 years with a 2.9% interest rate (my current rate) would be around $850 a month.
So, in terms of monthly cash flows, I'm currently spending $780 a month on my car.
The new car would require $1,410 a month. That new monthly car price + my current monthly expenses (including EVERYTHING) would turn out to around $3,000. My monthly take-home is around $3,200. So I'd only be saving $200 a month. Of course, that number will fluctuate up and down.
So, can I do this? I'm leaning towards 'NO!' because I have a car in good shape already. I have a good job with a good income trajectory and I love cars. This car is pretty much my reasonably-attainable dream car and I'm debating whether to go with the 'hey, fuck it, you only live one' mentality, or the 'delay your urges now and splurge later on' mentality.