Mid 20s Guy - How Should I Pay for My Investment Vehicle (Loan Vs Savings)

Save Medicare on 08/04/2018 - 09:12
Last edited 08/04/2018 - 10:01

I'm a guy in my mid 20s in a grad job in Sydney.

I have $108.70 in the bank but my pay day is Wednesday and I've recently cleared my $5000 overdraft account after working 9 weeks of extreme overtime, taking extra shifts so I'm pretty much on 0 with no additional liabilities.

Unfortunately my ability to take on extra shifts, work weekends and make extra money will evaporate once I rotate positions within the company in a week's time .

I'm thinking of upgrading from my 1998 toyota camry to something more high yield like a mazda mx-5 (let's say, $30,000 2-3 years old) in 8-9 months time (when I turn 25 so insurance won't be so expensive). My parents keep talking shit about my camry saying that it's not safe to keep driving it and also it looks bad and reflects poorly on me (what? who cares? who's even looking? but if i'm going to buy a new car I'm going to buy a fun one)

My annual salary is $51000 post-tax and there aren't really any signficant deductions. In the next 9 months I'll make $38.2K post-tax. If I'm looking to buy with cash I'll only have $8.2k to spend for the rest of the year, = approx $900 a month, which, factoring in rent and bills and fuel and food and a small amount of fun things is probably isn't enough to live on.

Does anyone have any quick tips on how to save more money in 9 months? Would it be worth putting it into shares? ETF?
Should I just give up on the notion of buying it outright and live a bit more relaxed and take out a loan when I'm ready to buy? My parents have just paid for six years of uni so I don't want to ask them for anything any more.

What are the pros and cons of saving up for an investment vehicle vs taking a loan out?

Thanks

EDIT I should also add that after seeing crash test videos of a 98 corolla and a 2015 corolla I'm pretty set on not dying because I cheaped out - https://www.youtube.com/watch?v=_ttkVRwOtVE

Automotive Car Loan

Comments

  • rambutann on 08/04/2018 - 11:21
    +11

    It sounds like you are horrible with money.

    Vehicles are not investments. Did you study a bachelor of business majoring in how to waste money?

  • dcep on 08/04/2018 - 11:38

    mx-5 are good but overpriced

    go with the used 86/brz

    or if you don't care about reliability/fuel cost, rx8-s2 are fun af for 10k

    • Save Medicare on 08/04/2018 - 21:02

      I hear it's really hard to find a 86/brz that hasn't been thrashed or modded. It seems to happen less with the ND miatas, which might be because of the higher cost of entry and therefore older owners? Not sure

      • diondai1 on 09/04/2018 - 10:01

        If you're in Melbourne, I know a 50 year old who is selling his unthrashed white 86… You should be able to bargain him down to 27K

        EDIT - Just saw that you're in Sydney

      • Mr Elastico on 09/04/2018 - 10:35

        its not THAT hard to find a clean 86/brz. yes theres a lot that have been thrashed/modded but there's a lot of people who bought them as daily cars so if you know what to look for you'll be fine

  • rgr on 08/04/2018 - 12:17
    -5

    something is strange. a grad job that allows extra shifts and paid overtime? something tells me you're working at ALDI or something. no white collar grad job has these conditions unless it's within engineering/mining but then your pay wouldn't be so shit.

    you're in your mid 20s and you make 51K for a grad job. i think we all know where your priorities lie: you focus on finding a job with significantly higher pay and worry about your material desires later. you have zero room for a loan on a nice car at this stage. i also cannot believe your parents paid for six years of uni for you to be in this kind of situation. after 6 years, you're only fetching 51K on the market? come on son, you must be trolllinnnnn

    • pao2x on 08/04/2018 - 12:38

      Post tax

    • Save Medicare on 08/04/2018 - 15:42
      -2

      Public sector pays peanuts

      • Munki on 09/04/2018 - 10:32
        +3

        Sorry, what? Public sector pay is good. Don't know what you're smoking.

      • johnno07 on 10/04/2018 - 17:27

        Entry-level salary public service for what I would called basically unskilled work is very high. Somewhere over the 100K mark is when the private sector starts to beat it out - if you actually have some skill. Otherwise just earn today's equivalent of $80,000 as a high-school drop-out for the next 40 years as a low-level public service manager. Speaking of QLD government here.

        • Save Medicare on 10/04/2018 - 18:11

          You can't really do my job without a reasonable amount of education (minimum 5 years tertiary study after high school) so while I'm reasonably unskilled within the industry it's not like you can pick someone off the street, drop them into an after hours cover shift and tell them to run free

        • johnno07 on 10/04/2018 - 18:18

          @Save Medicare: I'm not talking about your job as I have no idea what you do, I'm talking about low-level public service roles.

  • EightImmortals on 08/04/2018 - 12:18
    +8

    I hate to bring up an old saying but I have come to totally agree with it: If you can't pay cash for it then you can't afford it and have to go into debt. Now not ALL debt is bad debt, debt you borrow for an appreciating asset, say for an investment home or shares is usually OK and 'usually' pans out over the long term if you can afford to hold the debt on market down cycles. Debt borrowed for depreciating assets LIKE CARS (for the most part, collectors excluded I guess?) is just foolishness and WILL stunt your financial growth considerably (trust me I learned these things the hard way). I gather from your post that this is an emotional purchase for you and that's OK if you were buying a low value item so the inevitable buyers remorse won't hurt so much, but when it kicks in about a week after you buy the MX5, you'll still have x years of repayments to make, PLUS INTEREST which means your 31K car is now a 60K car but will only be worth 5K when it's time to get rid of it. As others have said, spend 5-6k on another Camry or similar and save/invest the rest and in a couple of years if you still fancy the MX 5 you can buy it outright and not have to sweat about it. That still wont make it a good investment but you'll have your new toy and wont be in debt for years once the novelty wears off.

    • Save Medicare on 08/04/2018 - 17:44

      Thanks for the advice. Maybe I won't take a loan on the full amount then. Do you think it would be reasonable to not take a loan but save up for it for 1.5 years and then if I still want it buy it then?

      At that time I would be halfway through 25 and only have a car and be starting again with $0 in the bank.

      • EightImmortals on 08/04/2018 - 18:12
        +4

        In 18 months time you'll be 18 months older. My last car cost 12K and I bought it 10 years ago, I still have it and will replace it when it is no longer viable. I have had new cars and fancy cars numerous times over the years and now spend the least amount possible to get something comfortable and reliable and use my money instead to invest for the future (and support worthy causes) because for me that is what's most important. I don't really bother what other people think about me or how they judge me, real people will accept you irrespective of your material status. When you have earned the 30K in 2 years time you might have a different perspective on the value of money and might have a different plan by then. :)

        For general advice: "Know thyself" and enjoy the journey through life, understand that you will never 'arrive' and that no one thing, especially material things will 'complete' you. You will either learn that yourself through contemplating others advice or doing it the 'hard' way as I did. If you refuse to learn then you will be doomed to repaet the cycle with increasingly expensive 'stuff' with a shorter and shorter 'feel good'. There is a whole other path for you to walk if you choose. :)

        • kiitos on 09/04/2018 - 15:18
          +1

          Wise words, and we'll put. I'm part way there, material goods don't make me happier, but can't locate what would make me happy, other than time with (some) family and (some) friends.

        • EightImmortals on 09/04/2018 - 15:47

          @kiitos: Keep looking, it's right there. :) For me it has been a gradual revelation over many years (continuing), for some lucky people it's like flicking a light switch though. :)

  • [Deactivated] on 08/04/2018 - 13:01

    please just buy a old fiat 126.
    true investment

  • [Deactivated] on 08/04/2018 - 13:10
    +6

    OP, you don't have a high income, and your current car reflects this. If your parents are talking shit about your car, ask them to buy you a new one. Otherwise be happy with what you have, and replace it when you earn more. Your primary focus should be on buying a property and building wealth, not losing it. Add to that, you don't seem like much of a car guy, and would probably buy an automatic MX5, which is a huge faux pas. Stick with what you have till you have more money.

  • RandomNinja on 08/04/2018 - 13:26
    +5

    I like that OP has set a savings goal for himself and is proactively looking for ways to achieve it (regardless of what it is he'll spend it on). This behavior will be useful for when OP has an even larger goal in sight (eg: home).

    OP: To get to your savings goal within a short time frame, there aren't many options. You can cut down your living expenses and/or generate more income. The former we can't help with unless we know your finances. As for the latter, you can take up a part time job on the weekends, sell any skills you have on Airtasker or other contract work etc.

    You can also look at taking out a loan in addition to your savings. If you can get to 25k, a 5k loan could be paid off within a few months.

    • Save Medicare on 08/04/2018 - 17:59

      Thanks for the advice. Unfortunately I'm legally (not just contractually) prohibited from taking on additional work in my field until 2019.

      I'm currently working anywhere between 40-55 hours a week and getting paid the same regardless of hours because my industry has a very bad overtime culture where you're seen as bad at your job if you claim overtime. I'm also taking a masters by distance on the side so a few more hours a week evaporate there.

      After reading your response and he others in this thread I'm thinking I might actually do what you're saying and just try to save up as much as I can and see how much I end up with at the end of the year, and possibly bridging that gap with a loan if it's reasonable at that stage.

      • RandomNinja on 08/04/2018 - 22:00

        Fair enough, gotta suck it up and do the hours when your career is just starting out. Just be certain that the payoff will be there as long term you really don't want to be working up to 55hrs a week with no additional compensation!

        Well, the only other advice I can offer would be to focus on the savings goal of $30k rather than the car as your priorities may change over the next 9 months (eg: maybe travel will become more important or woops, I'm a dad)

  • [Deactivated] on 08/04/2018 - 17:05

    you got no money and you want to trade your Camry. LOL. Just be thankful that you already have a Camry. Do a defensive driving course to learn how not to get in a crash with your camry.

  • djmm on 08/04/2018 - 17:34
    -3

    So OP, let me get this straight, you're Asian, you're in mid twenties and yet you still earn 51k p.a. only?
    You bring shame to your family.

    • Save Medicare on 08/04/2018 - 17:39
      +1

      My family is actually really proud of me and my $66293 pretax as per my award.

      It's a job everyone has to do to get through in my industry but the salary increases on average 10k/yr each year for he next 4-5 years.

      • djmm on 08/04/2018 - 17:46
        +5

        You mean you're not a dentist? Your parents raised you wrong.

        • Save Medicare on 08/04/2018 - 17:48

          I wanted to do whole body stuff and not just the mouth

        • happyhappyland on 08/04/2018 - 18:22
          +1

          @Save Medicare:

          I’m guessing your an intern right?
          Why don’t you look into novated leasing? You can get new mx5. NSW Health employees have a pretty good deal with novated lease. Most of my friends on intern/resident salary leased 25-30k cars

        • Save Medicare on 08/04/2018 - 18:52

          @happyhappyland:

          From what I've read because of fees novated leases are really only beneficial when you're making 100k+. Definitely something I'll be looking into in the future though

        • May4th on 08/04/2018 - 21:04
          +1

          @Save Medicare:
          pick up shifts? based on those figures you'd be a nswhealth intern. your earnings will be more than 51k post tax due to rostered overtime so expect 10-20% on top. if you pick up more shifts of which it shouldn't be too hard you can potentially make 50% on top of base extra.even if you can't take OT for one rotation there will always be opportunity later in the year

          i would take advantage of cheap car loans offered to medical profession - you should be able to get it down to 4-5% or less with medfin or boq specialist.

          tbh money won't be a problem as much as you think so enjoy it if that's what you really want, you are the poorest you will ever be at this point.

          i personally still drive a 9yo corolla and see no need to upgrade but each to their own, money is there to make you happy

        • Save Medicare on 08/04/2018 - 22:17

          I've been thinking of taking extra weekend shifts but I don't really feel confident enough to do so yet. I'm still quite new and I'm worried that I'd be out of my depth covering half the hospital (although obviously my colleagues have been doing it so I'm sure it's just a steep learning process the first few afterhours shifts).

          What you're saying with regards to enjoying money is exactly what I was thinking before I made this post, but literally everyone else in this thread is telling me I'm an idiot for thinking this way and wanting to spend a little beyond what's ideal to get something nicer.

        • slipperypete on 08/04/2018 - 23:25

          @happyhappyland:

          From some comment OP has made on a different post
          https://www.ozbargain.com.au/node/360883?page=2#comment

          That sounds particularly arrogant considering I'm an actual doctor.

          You might think you're special for being a med student - we probably all did at some point - but once you get out of the classroom I think you'll find that that kind of attitude won't get you very far.

        • Oz8argain on 09/04/2018 - 11:31

          @Save Medicare: Thai Massage

        • May4th on 09/04/2018 - 20:04
          +1

          @Save Medicare:
          well what you do with your money is nobody's business. people on this forum will tell you what the sensible thing is to do for your long term wealth but they can't tell you what will make you happy. and your income will be much higher in the future so you can afford to set yourself back a bit financially short term.

          on the other hand, what you have to decide is whether it's money in the bank and being able to splurge on shopping, eating out and holidays is worth more than a fancy fun car. it's all opportunity cost really

          in terms of confidence, nobody has it especially at the start, really. and if you have too much you would have a problem. take the 1st term to settle in, read the on call book cover to cover and then put your hands up for some shifts. it will be daunting at the start but you will learn more on the job as well as rewarding financially

        • Moneyneversleeps on 10/04/2018 - 01:08

          @Save Medicare: do you salary package? Nsw health staff should have a cap you can utilise for novated leasing.

        • Moneyneversleeps on 10/04/2018 - 01:11

          @Save Medicare: btw that is not true. I suggest speak to your salary packaging department so they can provide you with analysis of cost with novated leasing.

      • supersabroso on 08/04/2018 - 20:39

        What is your actual job and company?

        • Save Medicare on 08/04/2018 - 22:13

          I'm an intern at NSW Health

        • supersabroso on 09/04/2018 - 04:58

          @Save Medicare: You've done well. Government jobs are the best, especially if you can get into a position with overtime then you're laughing. My rule is don't buy anything you need to borrow money for (unless it's a house), but I think that if you compromise and try to only loan half the money then you'll be OK. No point living off instant noodles for the next 3 years and no need to regret not having that one piece of unjustified fun thing in life you've been wanting. Once you have kids, you have a commitment and you definitely can't do anything as financially irresponsible as buying a car like a Mazda MX5 (you'll be too busy dealing with a mortgage and a wife that stays at home most days).

          If you are convinced that she's the one. Make sure she doesn't also have something that isn't kid friendly, otherwise you'll both be very sore when one of you has to waste money by selling your fun car. Only one of you can afford to have a fun car, even then, it's hard because it means that only one car can fit a baby seat with pram. My wife's brand new Suzuki Swift is useless for the baby (bought 2.5 years before the baby came).

  • Bills22 on 08/04/2018 - 17:36

    An Investment motor vehicle? Never heard of such a thing unless you're a pimp.

    Does anyone have any quick tips on how to save more money in 9 months?
    In the short run - here's a suggestion. Just take up a second job or a side job to build up your cash flow. Simple. You'll potentially have enough cash come end of year and borrowing capacity if you do need to. Trade in your lovely '98 Camry and spend your hand earnt cash on nothing over 10k.

    Do not take out a loan on a motor vehicle. Been there, done that - you'll shoot yourself with how much you may lose - In my experience, 17k in 7 years for value of the vehicle itself and not to mention interest paid on the loan overtime.

    You do the math.

    • Save Medicare on 08/04/2018 - 20:40
      +1

      I'd want to take a second job but I'm kind of time poor as well as money poor.
      I'm working 40-55 hours a week with no paid unrostered overtime (either RIP my career or RIP my wallet because the moment you claim overtime you're considered bad at your job and once it spreads around the workplace your career is going nowhere fast). I'm also doing a masters on the side which takes up a few hours a week. Adding to that, I'm not actually legally permitted to work in my industry without senior supervision so I can't really moonlight on the side unless I start delivering pizzas or something.

      Anyway, I'm not really looking to take out a loan on the entire cost of the vehicle. Maybe $10-15K depending on how much I've saved up at the end of the year? Which I would hopefully be able to pay back the subsequent year? According to my calcuations at 7% the interest would only be $1.5k or so if I manage to pay back the principal in a year?

      • [Deactivated] on 09/04/2018 - 10:44

        You should be able to claim overtime. We claim 20-25% OT salary as overtime as does everyone else. Must be specific to your hospital.

        • May4th on 09/04/2018 - 20:09

          very specific to the department and hospital, you can't fight it unfortunately

      • Bills22 on 09/04/2018 - 12:46

        Sorry OP. After perusing a bit more and a few more responses later, I only just noticed you are in NSW Health and that suggestion of taking side/second job may not be suitable.

        I can only suggest to save hard and put away the cash straight away into a savings account and not touch it (minus your outgoings obviously).

        Budget your weekly and monthly expenditure and if you are time poor and money poor then you'll need to address this as well. You should be able to put away 2-3k easily (without knowing your situation fully) into a savings account monthly and go from there.

        When I say budget, I mean really budget hard and watch every dollar and outgoings. My parents are Asian as well and they've always said - First learn to earn money. Second, learn to save money. Third, learn to spend money wisely.

        Good luck buddy.

  • DonWilson on 08/04/2018 - 17:48
    +3

    The MX-5 isn't "high yield" in terms of anything but feeling good about yourself for a little bit. It'll be a pretty short dump of joy too - hedonic adaptation will kill those yields quick.

    ETFs are generally considered a minimum 5-7 year investment. You could roll the dice and try them now but most would consider now a more risky time than ever to try this for a short term profit. Markets and sentiments are much more bearish right now. And again even when things are generally bullish the recommendation is at least 5-7 years.

    On saving more, given that you've ruled out working more (even a side gig?), your only option is to reduce costs.

    You say you're spending $30kpa so you can only save $8.2kpa. $30kpa isn't living the high life or anything but it is technically reducible.

    • You can live off of < $20 per week, food & drink wise. Drink: water. Food: always eat at home and base everything around flour, potatoes & rice.
    • You can live in a less desirable place, rooming with your girlfriend, in a share house uncomfortably packed with people. You can go to the extreme of communal living. On AirBNB you can get shared rooms (not houses, rooms) for $13/night.
    • Ditch the car altogether. If you AirBNB near your work you can walk/bike there. You don't just kill fuel costs but tires, services, insurance, need for parking.
    • Teatotal. Quit smoking. Reduce weed budget. etc.
    • Kill any subscriptions you have. Gym? Kill it, do bodyweight workouts/real world cardio. Foxtel? What the hell you doing with Foxtel. Phone plan? Kill it, get a $150 Xiaomi and a Kogan sim.
    • Reduce your entertainment budget. Having a beer at the pub or meal at a cafe with friends/girlfriend is entertainment budget. Switch to house parties or be the guy who doesn't eat/drink when out with friends.

    These are all obviously extremes. You can do far less harsh versions of them and save more money than you are now. The point is you can save more if you want to. You just have to want to.

    And wait until you can pay for it outright and buy a $8k 2011-2014 Hyundai with < 50k on the odo.

    • Save Medicare on 08/04/2018 - 21:20

      Hi Don

      Thanks for your insight. I thought that ETFs were meant to be pretty reliable but you're right - looking at the vanguard ETFs they're really only profitable in the mid to long term. YTD returns for all but a few are in the negative. That's not good. If I were to save up the full amount within the year I'd be living on probably 1k/month. Rent would be 740 of that so I guess completely out of the question. Luckily no cigarettes or drugs to kick and only very moderate amounts of alcohol for me. We do end up eating out and getting takeaway a lot though. Both of us frequently get home at 8-8:30 and it really takes away the will to cook. I guess meal prepping on weekends might be in our future but I did work 8-7:30 yesterday.

      You do raise a good point about hedonic adaptation however. Is there any way to bypass this and keep being happier and happier or am I doomed to be moderately happy as I currently am, no matter what?

      • DonWilson on 08/04/2018 - 22:09

        Experiences tend to resist hedonic adaptation better. Most people when they think about the great things in their life rarely go to objects. They think about things they did and people they did them with.

        Plus you don't have to do the same experience day after day for years. Get tired of holidaying in Bali? Try NZ. Not digging rock climbing? Try MMA training. You can't really do this with things like cars, 'cause you constantly use them and it's impractical and expensive to frequently change them.

        Now there are people who absolutely love cars but that is rarely for their day to day transport. They tend to have one or more non-day to day vehicles and work on them, race them, modify them, vlog about them etc. I didn't get the feeling you were that sort of obsessive level where you might be able to justify the cost that way.

        Your description of your work also suggests you won't get much joy out of the car. Working 10+ hour days you're probably just going to be driving it back and forth to work, wearing it down for a dull task.

        I saw in other replies that you're looking at decent raises over the next four years and have a partner earning a similar amount. I'd certainly be more focused on getting in cool experiences than cars, sounds like you'll be able to afford the car later and have the time to actually use it for enjoyable things.

  • OzzyOzbourne on 08/04/2018 - 18:52

    You should always borrow money for investments, it'll make the government proud of you!

    • Save Medicare on 08/04/2018 - 20:47
      +1

      If only I could pull my deposit from my super eh?

    • DiscoJango on 08/04/2018 - 21:30

      our beloved leader chairman malcolm.

  • djmm on 08/04/2018 - 21:05

    All asians invest in Baccarat. You are really not good being asian eh?

  • yamborghini on 08/04/2018 - 21:08

    Hey OP in a similar situation here actually, been working for a few months now and slowly saving up after deciding to upgrade my car.

    Looking to upgrade from a hand-me-down 04 toyota Corlla to a used 370z. Looked at loans and they are such a hassle and you still need to pay a huge amount for them. Too cheap to pay the interest

    Firstly as an Asian, don't do it for you family, do it for yourself and look at your financials before doing it and deciding what to do. My parents want me to buy a new car because they think it's gonna last longer but I personally don't want to watch the depreciation rate of the car go down at an insane rate as a new car. Also they are too expensive haha.

    There are a few ways you can make extra cash, I work on Saturdays (with penalty rates) to have my living cash. Then everything else can be put into my car. I also try to flip cheap stuff that I find online.

    I've gone the share trading route to invest/gamble the cash that I currently have. My plan it to swing trade shares of my industry that I have some knowledge about, until I have enough for my car. If you want to learn crytpo and are willing to take risks, that is another way of making money. It is volatile, but if you know what to do you can make a lot of money.

    Have you thought of another car? Personally I'd grab an older BMW Z4 which you can get for about 15k if you cant afford a newer mx5 and you want it in 9 months.

  • DiscoJango on 08/04/2018 - 21:30
    -2

    $38k a year i reckon maccas drive thru would even pay more than that

  • b2tf on 08/04/2018 - 22:08

    My recommendation is invest in education so you earn more than 50k

    • Save Medicare on 08/04/2018 - 22:21

      I'm trying to smash out a masters at the moment but it'll take a few years part-time by distance. I don't think it'll actually help increase my salary though…. just add extra letters after my name

      • DonWilson on 09/04/2018 - 02:17

        Do you love the subject of your Masters? Not much point spending time and money on it if you get nothing out of it.

        • May4th on 09/04/2018 - 20:10

          you kind of need one to get a training job in pretty much anything nowadays

        • DonWilson on 09/04/2018 - 22:13

          @xbai: hey, he's the one stating "I don't think it'll actually help increase my salary though…. just add extra letters after my name", maybe reply to him.

        • May4th on 09/04/2018 - 22:15

          @DonWilson:
          i just click the first reply i see, not directed at anyone in particular :) the medical industry is a sorry affair at present, nobody really does any degrees or research because they are interested. it's more a one upper on the CV in a mad scramble for jobs

        • DonWilson on 09/04/2018 - 22:36

          @xbai: Oh damn, OP is a medical doctor? And is going for a… Masters?

          Is my understanding of medical doctors all messed up? I thought there were specific training slots you needed to apply and beat out a bunch of people to obtain to get into a specialisation and a Masters from a tertiary institute was kind of irrelevant to that?

        • May4th on 09/04/2018 - 22:41

          @DonWilson:
          every man and his dog will have a masters and research papers to get onto a competitive training pathway..so whilst it's not prerequisite for the job you feel like you will miss out if you don't have one as the standard of applicants will be high and you want to differetiate yourself or at least not fall behind. a phd is now standard for a consultant specialist job. more $ for the unis

        • DonWilson on 09/04/2018 - 22:55

          @xbai: well damn. A 6-8 year education + practical "supervised" education and a desire to learn a specialty isn't enough.

          It technically makes sense in a flooded doctor market but damn, that sucks.

  • DBBROS on 08/04/2018 - 22:15

    Maybe move out of Sydney? You will save a significant amount of money

  • Matslurpee on 08/04/2018 - 22:38

    Don't spend over 20k on a car.

  • Aceboy884 on 08/04/2018 - 23:18

    Mods should do more to ban trolls

  • [Deactivated] on 08/04/2018 - 23:23

    Troll?

    Unless you spend 150 - 200k on a car, it's not an investment. Even then, you need to know what to look for and how to maintain it.

    Invest in school, save your money, buy a 2005 Camry, etc. All of the above suggestions are good.

  • Bbbbbb12 on 09/04/2018 - 00:06
    +2

    Just want to share my personal story.

    Three years ago I was about the same age as you (mid 20s), I took a loan and bought a Toyota 86. The car was 30k. I paid a deposit of 10k and took a loan for 6 years, and my monthly repayment is around 400 something (similar to your situation). I was on a salary of 75k annually.

    After driving the 86 for 2 years, and switched 3 different companies, my salary is double now. I just sold my 86 about 9 months ago and bought an Audi SQ5 without loan. If you ask me, I will say I am happy with my decision. The 86 brought me so much fun. However, I am scared. I am lucky that I am kind of gifted at my job. I don't know what would have happened if I got fired or stuck at the same job three years ago.

    So, the first question to ask yourself is, what do you think you will be in 3 years time? If you are confident that you are going to grow quickly, just take the loan and buy it. But if you think you are just average around your peers, you really need to think about it, maybe you shouldn't but something that beyond your ability….

  • aznbob on 09/04/2018 - 04:21

    Plenty of great comments so far. I recently did a bit of research online about how much to spend on a car. So here is a shameless promotion of my blog I started a few days ago.
    (http://www.financialsharpy.com/how-much-to-spend-on-a-car/)
    OP, it sounds like you have a stable, predictable and progressive carreer. Congratulations on your graduation. I was in the market for a fun car not long ago. I settled on an Abarth 124 spider, which I enjoy very very much. So I'm probably a little biased here, but I would get the mx5. Look for an older model or more km, spend about 15 to 20k and pay with cash. Try not to get into bad debt like I did :)

  • FeRGan on 09/04/2018 - 06:31

    $30000 for a car… A waste of money, imo.

  • braskic on 09/04/2018 - 08:01
    +1

    How to get free cars for life: https://barefootinvestor.com/money-management-buying-a-car-n…

    TLDR; Find out how much it is to finance a new car per month. Instead of buying the car put that amount per month into your savings and keep driving your shitbox for a couple more months. In a couple months I upgrade to a slightly better shitbox and keep saving that money. In two years trade that in and get a slightly better shitbox etc.

  • kindra on 09/04/2018 - 08:21

    Hey mate,

    Since you work in a government job they usually offer salary packaging or salary sacrifice, you could salary package your car and pay less tax on your salary.

    • Save Medicare on 09/04/2018 - 21:08

      I packaged my rent from uni but since the cap is $9000 and the company takes 50% of the savings it's really only a 1.5k saving per year. Definitely not something to sneer at but not a windfall either

  • Kunalk222 on 09/04/2018 - 08:27

    based on your salary do you really want to spend 30k on a car??
    I am pretty sure you have kids who can use that money in activities or learning new skills.
    Do not invest in shares if you cannot afford to loose it.
    The intent of getting rich quickly will hurt you when something goes wrong.

    DO not invest in new car as it is a deductible…if you want to invest in car then start a side business where you can claim car as deductible expense on tax…

  • greater mimic on 09/04/2018 - 09:12

    Don't listen to your parents they're talking shit. Just ignore them. Having financial stability is better than buying a car you can't afford

  • ilikeverycheapstuff on 09/04/2018 - 09:13

    dude……dont get a loan for a car…..
    There are plenty of respectable 2nd hand cars which you can have fun in for a lot less and reliable if you choose the right one…
    save up your financial mistakes for a investment home instead!

  • mezje on 09/04/2018 - 09:20

    MX5, investment vehicle… Lol.

    Honestly mate just save up until you can buy something outright. No chance you should be getting out a loan with kids etc for a car like an MX5.

    Investment cars exist but you have to do a lot of research and get lucky I guess. Hard to predict supply/demand with cars.

    MX5s are not uncommon and there are still plenty around. NAs will hold value but will never become "investment" level expensive.

    You just finished paying off a 5k overdraft, maybe learn how to budget and live within your means mate.

    I was thinking of doing the same thing but ended up just saving and I am thankful for the advice I got here. I know you probably want the car and are thinking of anything to convince you to throw down the loan but resist, just save.

    • Save Medicare on 11/04/2018 - 06:28

      I seem to be copping a lot of flak for the overdraft. It was 5k at 7%pa for a few months from around the end of uni to 2 months after I started working. Very common among people I know and work with and very cheap. Maybe paid $200-300 in interest to drastically improve my qol in that time.

  • theHMASfriendship on 09/04/2018 - 09:39

    Do it.

    Consider some of the small hot hatches too, like Fiesta ST/Polo GTI/Renault Clio RS/Skoda Fabia RS. Just as fun (+ much more power) but you actually fit other people in things in there. And you can pick up a good 2-3 year old one for closer to $20k.

    Probably a part cash part loan would be the way to go, places like CUA or Suncorp will give you a secured car loan at around 6% comparison rate that you can flexibly pay off.

    Some manufacturers (not sure if Mazda do it) have finance offers with very low rates on new cars (e.g. VW currently have some 1.8% offers on some cars, I once used a 0.9% finance offer on a Nissan Navara, and I've seen Ford advertise 0% finance before), which might be worth keeping an eye on.

  • OzzyOzbourne on 09/04/2018 - 10:40

    Op since you work in government, you should have enough spare time at work to take on a second job to boost your income and get an investment Audi

  • [Deactivated] on 09/04/2018 - 10:51

    The MX-5 depreciation is very minimal. I've been waiting for the ND's to drop since they came out and the've held their value very well. Better priced than an 86 IMO. You've got the most secure job in Australia with over 10k in pay rises each year. Just do it.

  • elf888 on 09/04/2018 - 11:07

    Parent car loan will be the best and you have flexibility for repayment option……

    • Save Medicare on 09/04/2018 - 21:07

      The option's on the table but I'd feel so bad for continuing to mooch off them…

      And I'd feel even worse if I were borrowing for them to buy a fun car instead of a 5 year old corolla/mazda3/golf etc

      • RandomNinja on 10/04/2018 - 08:27

        Assuming your repayments include an interest rate that's better than whatever they're getting, it's shouldn't feel like mooching as they will likely come out ahead. In fact, my parents insisted that I do it this way for my first car loan (also Asian parents here)

  • Dreamcast on 09/04/2018 - 11:11

    McLaren F1.

  • Oz8argain on 09/04/2018 - 11:32

    come back and post in 2 years mate

  • Piranha2004 on 09/04/2018 - 12:02

    I thought this was a joke thread based on the 80k investment banker but Ive been proven wrong again. Seems like an awful lot of your salary will go towards making the repayments on the car. I personally wouldnt do it but it depends on your financial situation.

  • Dr Techno on 09/04/2018 - 12:07

    If it was me, I would keep your current car, get the workshop manual for it and learn how to fix it yourself
    You can save a significant amount of money once you acquire these skills. Save up for a homeloan instead. but I do acknowledge DIY might not be for everyone, and if your not a DIY person then year newer car makes sense when factoring maintenance.

  • portard on 09/04/2018 - 12:23

    How long have you been working? How do you only have $100 in the bank?

  • shamid202 on 09/04/2018 - 13:06

    CRINGGGG

  • Cave Fire on 09/04/2018 - 13:07

    Hi everyone, please give me financial advice, even though it is probably illegal in your state or territory.

  • Ti94 on 09/04/2018 - 13:44

    My advice is don't buy that sport car brand new. You will regret it later…

    I am using a Suzuki Alto 2014 at the moment which I got secondhand for around 8k. Still run perfectly fine just the engine is a bit too weak. I am about to start a job in west sydney which is 90min drive from my home. Despite the urge of changing into a newer and better car which I can afford due to my pay rise with the new job, I still drive my old suzuki for the time being simply because it still can work! Also, I would want to be more settle down with my new job first (passed my 3 months probation), then if I really need it for the long drive, I can consider to buy a better car (still 2nd hand though).

    The money you save on a car can be used in so many more beneficial things, such as your family, relationship, your life outside of work, go out, movie, entertainment, future investment (real estate?).

    Like a lot of people said, buy a brand new car when you are more financial secured or in my case, when I know that I can have enough for the deposit of a house!

  • DemocracyManifest on 09/04/2018 - 13:55

    Don't do it. If you can manage, get rid of a car and use public transport and take the occasional taxi/alternatives, or just get something for under 5k or so.

  • [Deactivated] on 09/04/2018 - 14:51

    Life is too short. For a mx5, i'd do it. Just earn more.

    Dont worry about yield or houses.

    Mid 20s is still young and you have plenty of time to fix your mistakes in the future 😇.

    Different case if you were 70 in your situation. Not a lot of time left to fix mistakes..

  • HeWhoKnows on 09/04/2018 - 15:57

    Some thoughts for OP
    1 "I'm thinking of upgrading from my 1998 toyota camry to something more high yield ….. saving up for an investment vehicle"
    Well there is no car that I know that gives any rate of return so get out of this mind set….It will just get you in trouble.
    Cars are not an investment unless you buy a Rolls Royce or Ferarri and keep it in the garage.
    They are a PURE COST item! All just suck away your money either slower of faster.
    2. As many here have said already in this or other posts. Only buy what you can afford in cash. Never borrow to buy a car. Its already a losing proposition so why add to the cost?
    3. Best way to save money in the short term is very simple. CASH IN BANK.
    There is no magic money making machine. Buying Shares and ETFs in the short trem is just a gamble with costs attached
    Its like asking if you should bet your money on horses or the dogs….you win some, you lose some. You might come out ahead if you are lucky or you might not.
    So just put your hard earnt cash in the bank and watch it grow week by week.

    Food for thought.
    There are plenty of good cars for sale in the $4,000 to $6,000 price range.
    Based on your salary if you are serious about saving it shouldnt take you more than 2 or 3 months

  • Gorodemon on 09/04/2018 - 17:14

    Could you move back in with your parents so you won't have any rent to pay? In addition, you could also leech the food from your parents and ask your mum to wash your laundry so you would have zero expenses for laundry, food and utilities.

    Forget about having GFs, they're totally over rated and a money pit. If you have the urge, just go to your local butcher and get a piece of homebrand filet mignon and cut a small hole in the middle and use it to satiate your needs. Play a few erotic videos while you're at it to get a better stimulation.

    If you follow my tips, I guarantee you would be able to save 95% of your take home salary and in return, be able to purchase an $ 80k high-yield investment car like C55 AMG 2005.

  • Lucky13 on 09/04/2018 - 17:35

    I guess take in all the helpful input from everyone on the thread, but ultimately you know what's good for you. You've got a good job now. If you think you can afford it and want to reward yourself for all those years of study with something you really want, go for it. Definitely make sure it doesn't negatively effect you financially and if it doesn't it should be ok, right?

  • DiscoJango on 09/04/2018 - 20:58

    op sounds like amg kid #2 in the making

    amgeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee

  • serpserpserp on 09/04/2018 - 21:29

    I'm so tired of the unfunny retreads of the 80k investment car thread. If you are going to re-do a classic OZB thread, make it actually funny.

  • Tally-Anne OConnor on 09/04/2018 - 21:41

    Whatever car you're going to own, it's going to sit in the hospital car park whilst you finish off your 25 hour work day, 8 days a week. Just buy something within your means for now. As an intern, you would not want to take extra shifts anywhere, otherwise, you'll be considering another career very shortly. Ever considered a motorcycle? Save on parking, twice the thrills, four times the risk, but still… 10% of the price.

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