Your car(s) as a percentage of your total assets?

[RAPID_BA]

Hi

I was wondering how much people spend on cars as a total of their entire assets.

we are all different but I wonder what we all think is acceptable?

Rent a house but own a fg fpv gt?

Own your house but drive a el with 200,000km?

When calculating this percentage consider the equity in your cars and divide by the equity in all other assets. As if you sold everything paid any finance companies and what cash is left cars vs other.

Whats the percentage? Is there an ideal %??

[fat4D]

apart from small things it is my only one, that and my motor bike. But then again the bank owns about as much of the car as i do

[XARATE]

Car 75%
tools 10%
furnature 10%
Two purebred dogs 5% (purchase cost not value)

[RAPID_BA]

Hey,

Not expecting you to list out as a percentage but contribute to the poll and then post some general comments.

[GT0132]

I don't think there's any acceptable percentage. It's all to do with what you're comfortable with and I think the percentage decreases with age.

For example when I was 19 my car represented around 90% of my total assets (The other 10% my hi fi system and album collection). Now in my late 40's my car is only a small percentage of my total assets - Real estate and my super balance making up most of it.

[WarNerve]

More than 50% right now.
me and the missus got newer cars (b series) a couple years ago for the reliability of a new car and i got moved out of home for work.
at this point in time as i am renting the car is my biggest asset but hopefully i can buy a house in the new year, once i am a home owner i wouldnt expect it to be higher than 15%-25%

[302 XC]

So you wanna know how much a depreciating item is classed as an asset
Or how much your depreciating item is towards your total money invested
5 nissan patrols , owned
4 fords owned
5 acre land owned
Whats the cars worth in the big picture ,probably 25 % plus


edit
Most people with new cars would be shocked if they knew what they still owed and whats it now currently worth market value

[Lotte]

Hz Pano and BF ute make up almost all of my assets. Hurray for being a Uni student!

[new2ford]

Shouldn't you be asking what percentage of your bank's assets your car is?

[RAPID_BA]

The point im coming to is many can afford a new ford FPV or whatever but hold off buying one. As we get older do we become more astute?

Your total net wealth depreciates with a new car on the books as opposed to other items like cash or real estate. Sure you need a car but it comes down to how much can you afford to throw away?

If someone buys a FPV GT today $80000 and I hold onto a 200,000km AU which is worth $3000. In 10 years time when we both go to sell

The FPV GT sells for $20,000 and the AU is thrown away...

Lets ignore maintenence as the FPV guy is probably also behind here as well but in 10 years time does the FPV guy dump $50,000 where the AU guy dumps $3000?

The same $50,000 put towards a mortgage and with interest saved is effectively turned into $70000 by the AU guy during the same period?

A $67000 swing?

[flappist]

Originally Posted by HULK_BA

The point im coming to is many can afford a new ford FPV or whatever but hold off buying one. As we get older do we become more astute?

Your total net wealth depreciates with a new car on the books as opposed to other items like cash or real estate. Sure you need a car but it comes down to how much can you afford to throw away?

If someone buys a FPV GT today $80000 and I hold onto a 200,000km AU which is worth $3000. In 10 years time when we both go to sell

The FPV GT sells for $20,000 and the AU is thrown away...

Lets ignore maintenence as the FPV guy is probably also behind here as well but in 10 years time does the FPV guy dump $50,000 where the AU guy dumps $3000?

The same $50,000 put towards a mortgage and with interest saved is effectively turned into $70000 by the AU guy during the same period?

A $67000 swing?

There is no logical reason for anyone to buy a new FPV ever.

It is always an emotional decission so whether or not you can afford it is a personal choice.

The big picture.......Kerry Packer and Mahatma Ghandi both have exactly the same amount of money, assets and performance cars.

Life is not a dress rehersal.........

[KITBAG]

Originally Posted by HULK_BA

The FPV GT sells for $20,000 and the AU is thrown away...

The AU will have close to a million km AND STILL BE GOING STRONG

[GT0132]

Originally Posted by HULK_BA

Lets ignore maintenence as the FPV guy is probably also behind here as well but in 10 years time does the FPV guy dump $50,000 where the AU guy dumps $3000?

The same $50,000 put towards a mortgage and with interest saved is effectively turned into $70000 by the AU guy during the same period?

A $67000 swing?

Yes but the FPV guy has had the life experience of having owned the nicer car even though he may be $67k poorer in cash terms. The good thing about life is that you have options. The FPV guy could have paid the $50k off the mortgage, or used it to invest elsewhere , but chose not to. It's teh same as why do some people buy expensive Parker furniture when the stuff from Fantastic Furniture is adequate, or why go on a $20k overseas holiday when a cheap camping holiday up the coast will provide the same degree of relaxation....It's all to do with preferences and if you can afford to do it, why not?

I can't see the sense in accumulating large sums of money while living a frugal life by driving an EA , eating baked beans on toast every night and drinking crap wine - then die only for your kids to get it all . Life is to be enjoyed. You're only here for a short time so you may as well make it a good time.

[dimka100]

Cars are money pits, and sadly many people do not realise that … these days especially credit is given out to just about anyone and sadly people get trapped into high interest cars loans taking them years to repay a car.

For young people I would say your car should be worth no more than 5% of your asset worth, Ideally it should actually be 2% – 3%, and your money should be invested into stable investment (one option being property) with consistent growth.

For middle aged people up to 10% is ok as your life is most likely already established and your home should most likely be paid off by now, hence you can afford to spend more money on luxury things in life, however children and other family commitments may stretch the “nice to have” budget.

For the older generation I would say up to 20% is ok as we can’t take our money to the graves and it’s important to enjoy what you have been earning all your life, but it’s also important to remember that retirement is not cheap and to find yourself in a position of no money for basics is not a nice experience, hence good money management is still important.


Myself personally I fall into the young generation and my FG is 2% of my assets worth …

[GT0132]

Originally Posted by dimka100

For young people I would say your car should be worth no more than 5% of your asset worth, Ideally it should actually be 2% – 3%, and your money should be invested into stable investment (one option being property) with consistent growth.

Myself personally I fall into the young generation and my FG is 2% of my assets worth …

So under your model of 2-3% , assuming the young person can save $100,000 (near impossible for most in teh short term ) they would not be able to buy a car for a price in excess of $3,000, leaving $97,000 invested in other assets ?

In your situation, your FG is valued at 2% of your overall assets so, assuming your car's worth $30,000 (I don't know for sure as your FG could be anything from an XT up to a S/C GT-P) then you must have total assets of $1.5M which is a great achievement for someone so young . However you'd be well and truly in the minority.

[IDT]

Originally Posted by dimka100

Cars are money pits, and sadly many people do not realise that …

So are houses and everything else that needs maintaining and has associated fees. The only assest that truely appreciates in value is land that you own outright and the cost of ownership is less than the growth in value and located someplace where it won't depreciate because of the decisions of others. Consider a 600sqm block of land. You pay the mortgage interest rate, maintainance (mowing, rubbish removal etc) council rates etc etc. Does this cost you more than the land is worth? Then the government builds a block of public housing units next door. What is your land worth now?

You work hard and you pay your tax's. Do what you want with whats left over... The opinions of others are only worth anything if written on a $100 note.

[Auslandau]

Originally Posted by dimka100

Cars are money pits, and sadly many people do not realise that … …

Yes they are money pits but for you to assume that many do not realise this is sad ....... if someone wants to pour their hard earned into a hobby, passion, lifestyle, interest .... whatever it may be I do not regard that as being sad. To me not doing what you really want to and then realising one day that the time has now passed is pretty sad.

[Rodge]

I agree that the percentage should change significantly as one gets older, there shoud be some serious head scratching if a 50 year old had more than 50% plus of their assets in a vehicle(s).

For me it depends if the assessment is done based on the cost price of vehicles or estimated realistic market value of same compared to market assessment of other assets. Which would you like ?

[BrisVegas]

All my money is in my house. My car, sadly, is a tiny proportion of my assets. Car is owned outright and cost me $14k. Equity in my house around $400-500k. Contents and super etc another $150k.

Car/other assets = 2% !!

I'd like to have a nicer car, but am more interested in buying another house currently.

I'm in my mid-30's with two young kids and a wife re-entering the workforce. When I was 25, however, I had a nice new car, motorbike, stereo and not a care in the world!

[Rodge]

Conventional investment wisdom has it that one is best not to have more than 5% of assets in a type that depreciates quickly. ( I don't follow this theory and am proud to say I never have).

If a significant amount of your entertainment / lifestyle enjoyment comes from having nice vehicles and other depreciating toys and you can comfortably afford it, I say why not indulge a little ?

If for example one is in their mid life stage, has their home paid off or well on their way to doing so and some money beginning to be tucked away for retirement, and can comfortably afford a new FPV, why not ? Life is not a dress rehersal.

[Gobes32]

My car equates to around .08 of my net worth, but I own it, so it's all relative.........

[Ben73]

About 75%. But I am 21 and do not have a house yet. So That percentage will be dropping when I buy a house next year and all that.

I am reasonably sensible with my money, but I do like to spend it on stuff I like. Even if some people may consider it a waste in the end.

It's no fun being the richest guy in the graveyard.

[XBROO]

Just one car or all of them? All my cars and bikes would be over 50% of my house is worth.

[Uncle Niceguy]

im fortunate in the fact that i can and will be living at home until i have enough money for a house deposit, i drive a **** EA and thankfully have minimal living expenses although my goal is to be outta home by this time next year if not sooner and in case ur wondering I'm 21 a future uni student and real lucky.....after all life is not rehearsed

[TheSneakiness]

More than 50% but simply cause I cannot afford a house and will not be able to until the car is gone. Simple as that.

*Ponders why he replied in a HULK_BA thread*

[Giant Cranium]

we need a 0% option. company car

[Powdered Toast Man]

My car used to be about 50% when I bought it. More like about 20% now and dropping (bloody depreciation). My other assets are my house contents and some savings which accounts for about another 25% of my total assets. I dont own property (yet) or investments (yet).

I didnt include my super.

Hey dimka how about a loan mate? (joke)

I'd be thinking about 10% is a good percentage IMO. But thats my own personal opinion, people can buy what they want, it's their money.

[Rodge]

^^ The Op was clearly referring to net equity in your other assets in his original post i.e. the realistic equity you have in your property assets after deducting the portion the bank holds a legal charge over by way of mortgage. Whether you acknowledge it or not, you don't "really" own, (have unemcumbered title) over that part.

[Rodge]

Footnote: your not a millionaire if you own $1m in property and the bank is owed $990,000.

classic..

And for other dog obsessed owners such as myself, much as i'm tempted too, revaluing your 3 dogs that cost $1,000 each to being worth $1m each bacause they're infintly cute doesn't count either

[Rodge]

Hulk, I agree in the most part with what you're getting at BUT its also unwise to assume houses always go up. There's also the matter of having fun while you're young with your mates and for that matter attracting the right "mate" Lets be honest, a good car does your chances no harm whatsoever in that regard.