How much money do you put aside for car and rent?

TigerUK

TigerUK

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Aug 23, 2008
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Just making a humble living with internet marketing right now, but I've figured a lot of stuff out and now I can scale up.

I don't want to go too crazy and start spending too much money on fancy apartments and cars.

I'm trying to work out my needs to then work out my income goal.

I was wondering what % of your income do you think is realistic for rent and car payments (I intend to buy a very good condtion used uadi tt for around £15K, which over the course of a year will be something like £1250 per month.

I'm planning on spending something like 20% of monthly income on car, and 15% on rent.

How much do you spend?

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regardless of what I make I plan on paying my self out around 4000/month to live on when I go full time. That will pay my mortgage allow me to save for personal items like a car and whatever other toy I want.

So if I can make 20k in a month I will pay my self 4k and save the rest so down the road I can diversify into a more stable industry like real estate or something or maybe a franchise.

I haven't spent a single penny I have earned and don't plan on it until I have 1 years salary saved up which for me is around 40k!
 
Rule of thumb: you should make as much in a week at the very least to equal one months rent payment. As for me I've surpassed that, however that is the advice I would give to someone who is starting out.

I would also be sure you have 6-9 months rent saved in case all your campaigns go to shit.

I've always loved toys but even as well as I do now I still own a used car, skipping the monthly fee. Last year when I "quit my day job" I got married and had a baby which multiplied my expenses by, oh say 3! Good luck and good forthright.

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As little as possible on both. Unless you have a solid (2 year) track record of bringing in lots of income, any success you have can only be considered temporary.

There's a big difference between making money and keeping money. It's relatively easy to do the former, but takes a lot of discipline to do the latter. Yet it's the latter which differentiates people who live high-rolling lifestyles who are still basically wage slaves, and those who become financially independent (ie don't need to work).

I spend quite a bit on rent because I have to live in an expensive part of the country (due to wife's career). However I don't spend anything at all on cars apart from fuel, insurance etc - very little. IMO if you need a car payment, you can't afford the car. If you really want a car like that, save up for it.

Cars + High rent are fixed costs that you can't reduce easily. If you have a bad few months (and nearly everyone does at some point), a payment that seemed affordable earlier can quickly become a millstone.

Far better to save some, and also spend on things like holidays and good times with friends that you can easily curtail if you need to cut back.

Btw, if you want to be wealthy, and you're in your 20s earning good money, aim to put away about 50%+ of what you're making each month. If you do as well as you're planning to, that means you'll be able to buy a house in cash when your schoolfriends can't even get a mortgage in a few years.
 
I pay myself a small salary based off what I make and invest the rest. On the salary I pay myself every month with I pay about 1/6 on rent. I don't have a car payment because I hate making payments on liabilities.

I think what you're doing sounds fine. I think if you can save at least 1/3 - 1/2 of your monthly take home you're doing great.
 
OP, i've been asking myself the same question a lot lately.

I think amateursurgeon nailed it best.

and if you need to make payments on a car, you can't afford it.

definately don't overextend yourself. do you really need a new car? i personally think 1 months salary is a good benchmark number to spend on a car. so you make 3k/month, tough shit, you can only afford a car for 3k. it sucks to think about it that way, but i think that's the necessary discipline to save and not pile up debt.

15% on rent sound ok - also i like the rule of thumb of having your rent be one weeks worth of salary - thanks.

on the flip side, you said you planned on paying 20% on a car payment and 15% on rent - IMO thats retarded.

You're car is going to depreciate like a motherfucker, your going to ding it, dent it, basically make it shittier than it is when you bought it and are going to be paying to watch it decline.

spend more on rent since your living there and using it a lot more than a car.
 
amateursurgeon said:
Btw, if you want to be wealthy, and you're in your 20s earning good money, aim to put away about 50%+ of what you're making each month. If you do as well as you're planning to, that means you'll be able to buy a house in cash when your schoolfriends can't even get a mortgage in a few years.
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Agree very much with this. I'm only 21 but I still save ~65% of my post-tax income because I never want to have to worry about money. Downside--I don't even own a car (live in a very urban area). Upside, I could stop earning any money and still live comfortably for 5 years. Once I expand that 5 year number to, say, 15 years, I'll maybe start buying a nice car and spending more than 1.5k a month on rent.
 
Here is what has helped me

Rent: 15-25%
Car: Buy it cash or don't buy it

If you have to have a car payment, go for 25% total for both

This is assuming you make less than $40,000
 
It's good to see so many "responsible" responses. I've been in this industry a long time and there are always ups and downs that you should plan on. Things change in the blink of an eye. One day someone that is "ballin" is dropping a few grand on dinner and the next they are out looking for a "real" job because they didn't save enough on the upswing.

Don't spend much money on a car until you have at least bought a house. When you buy a house, if you aren't paying cash, get the shortest term on the mortgage you can possibly afford. Going from a 30 year to a 20 year mortgage can save you 6 figures pretty easily.

If you plan on having kids in the next 10 years, save as much as possible now because expenses sky rocket quick. I just had my 2nd this year and between preschool for the older one and a nanny for the baby we are dropping $2k per month just on child care. That doesn't include health insurance, college funds, clothes, toys, food, fun, etc for them.
 
Don't pay any rent yet but I'm looking for a few places right now. I don't plan on spending more then 10-15% of my monthly income on rent. In fact, I refuse to do so. I'm currently reinvesting 60% of my business profits back into the business so I can eventually live comfortably and have a few years worth of money saved up.
 
Just to add to what I wrote last night.

To give you an example, I'll compare two of my friends - Adam & Bob (real people, but not their real names), both of whom have been in business for a while.

Adam makes about £300,000 a year. He has three kids, lives in a big house in Surrey (probably worth about £650,000, and mortgaged), and drives an £80K BMW which he bought new on credit. He eats out at restaurants in London every lunchtime. He has a considerable amount of credit card debt.

Bob other makes about £100,000 a year. He has no kids, lives in a flat in London (worth about £250,000. Mortgaged, but he's about to pay it off completely). He has no unsecured debt, and owns two investment properties. He drives a £2,000 Rover, paid for in cash. He cooks his own food at home most days, but dines out occasionally.

(Bob's reaction when he saw Adam's new BMW was to smile and say to me "I don't need an 80K car to feel good about myself")

Both love what they do, but Adam works about 60 hours a week. His health is shot to shit, and he doesn't see his kids very often. He only goes on holiday for about 1-2 weeks a year, because he has to keep the income in to keep the lights on.

Bob works about 30 hours a week. He spends 2-3 months a year travelling, during which he doesn't work.

Neither of these friends are yet at the stage where they're financially independent, but Bob will get there very soon. Adam certainly won't until his kids have left college, and probably not for a long while after that unless he kicks his high spending habit.
 
^^ good one. btw for me I save like 95% of what I earn :D and yeah recently bought a semi-luxury apartment worth $110K and own some other real estate and some cash in bank. I don't really set aside anything specifically for car as I save 95%.

I'm still living with my parents so home and food is not a problem :) but hey I expend on my home and family.
 
amateursurgeon said:
Just to add to what I wrote last night.

To give you an example, I'll compare two of my friends - Adam & Bob (real people, but not their real names), both of whom have been in business for a while.

Adam makes about £300,000 a year. He has three kids, lives in a big house in Surrey (probably worth about £650,000, and mortgaged), and drives an £80K BMW which he bought new on credit. He eats out at restaurants in London every lunchtime. He has a considerable amount of credit card debt.

Bob other makes about £100,000 a year. He has no kids, lives in a flat in London (worth about £250,000. Mortgaged, but he's about to pay it off completely). He has no unsecured debt, and owns two investment properties. He drives a £2,000 Rover, paid for in cash. He cooks his own food at home most days, but dines out occasionally.

(Bob's reaction when he saw Adam's new BMW was to smile and say to me "I don't need an 80K car to feel good about myself")

Both love what they do, but Adam works about 60 hours a week. His health is shot to shit, and he doesn't see his kids very often. He only goes on holiday for about 1-2 weeks a year, because he has to keep the income in to keep the lights on.

Bob works about 30 hours a week. He spends 2-3 months a year travelling, during which he doesn't work.

Neither of these friends are yet at the stage where they're financially independent, but Bob will get there very soon. Adam certainly won't until his kids have left college, and probably not for a long while after that unless he kicks his high spending habit.
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So the moral of that story is don't have kids?
 
Don't have a car, motorbike is paid for, and rent is $160/month for a nice 4bdrm house. Water is about $8/month, and electric meter is broken, so for the past 6 months electric has only been $1.60/month. So my monthly bills cost a nice dinner out with a few drinks afterwards, or in another way, less than the amount of dog food I buy each month. :)

I'm actually quite happy with myself this time around. First time I started making good coin I was 20, and was just a total f*cken moron with it. I'd goto casinos and drop $6k in one night, give waitresses a $20 bill for a $3.50 drink and tell them to keep the change, wake up bored and just piss off to Mexico for a 2 week trip that costs $15k, and whatever else. And I didn't even care, because I was 20, retarded & naive, and just figured it's only up from here. Never entered my mind that my income might actually drop.

This time around, I've pretty much kept the exact same lifestyle. A little nicer I guess, but definitely nothing special, and I'm not pissing away money. I just hang out, watch the money pile up in my bank account, and I have absolutely no plans whatsoever for it. I love that!
 
amateursurgeons analogy was awesome.

I have a friend that pays $500/month for a BMW and makes 40k/year. still lives at home.

I love cars and i made about 75k this year, had 30k saved up, spent it all on student loans (debt) instead of buying a new car.

for me, i get much much much much more satisfaction over being debt free than owning a nice car. i LOVE cars, and want a new one so bad, but the fac that it's suc a shitty investment, and thati don't have an easy 30k to fork over is the reason i don't have one.

if i had a 50k beemer, making $500/payments each month for a lease btw, i'd want to shoot myself.

if i took that same $500 and decided that one night/weekend a month, i'm gunna do something special w/ the GF and blow all that money - id have a much better time
 
jaxstar said:
So the moral of that story is don't have kids?
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That's for you to decide. It depends on your priorities.

Bob isn't bothered about having kids... he'd rather spend his time traveling.

Adam comes from a big family himself, so the kids part probably suits him well (whether it's really necessary to send them all to private school aged 5, an expense I forgot to add here, is another question).

If your idea of a happy life is to have lots of kids, then yes, have kids. But they can be a big drain on your finances, and they probably mean you won't be able to do other things.

Personally, I have one child. I'm not sure we'll ever have more, and tbh that's just fine with me. I love kids, but I also like my freedom and time alone. A three child family = no freedom or time alone. Also, because we have one, it's feasible for us to manage without childcare... my wife and I juggle, and both carry on working ok. Not only does this save a fortune, but it's awesome spending so much time with my toddler.
 
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