Cars percentage of net worth?

[COcheesehead]

I used to read Financial Samurai years ago. He has some good ideas, but also some wacky idea’s IMHO. He lives in San Francisco and spent some years flipping houses in that inflated market. He was worth a couple million in 2013, and remember how he fretted about buying a new car when his old SUV worked fine. I think he bought a new subcompact Toyota, and was amazed it only got 25 mpg when driving around SF - those are big hills. His mpg wasn’t that good - I think he sold the new car.

In my opinion, if you are retired, then buy whatever car or cars you want. You’ve won the game. Don’t try to justify every expense like a car or a vacation - it will make you crazy. Live your life the way you want.

I am also pretty sure he crashed and burned at some point. That is when I stopped reading his blog. I was initially attracted to his work when he developed a piece on the net worth of above average people - college educated higher earners. It was a multiple of the averages most often reported. I found it interesting.

 

[Time2]

I don't include our 3 vehicles, under 0.6% of our net worth. I also don't include our home.

 

[Ronstar]

Wow - just did some math. I had $12 and a $150 car when I got a job after junior college. So my car was 93% of my net worth at that point.

 

[FlaGator]

Three drivers, one of which is a kid still at home, and more toys than I regularly use.

Three cars, a golf cart, and a new motorcycle, maybe 2.5 to under 3%. Ignore the 4 bicycles, one of which was the price of a solid used car a few years ago.

Included in a liquidating, by-the-book NW calc, but never as anything to live off if the chips were down.

Some of you will be horrified, some relieved[emoji2]

 

[DJRR]

2% for me with my 2019 Honda. But I like their thinking. Only $1.2M to go until I can get that Porshe Targa I was drooling over. Need to start talking about this logic with my wife

 

[OnTheBeach]

less than 1% - 3 cars - 2015 infiniti SUV, 2019 Porsche Cayenne, 2020 BMW 3 series

 

[Jerry1]

About 4% but, both cars are relatively new and given the current used car market, they are holding their value very well. I don’t consider my vehicles in my NW, but since I expect to keep them for awhile, it will go down as a percentage of my net worth as time passes. Then, at some point when I replace them, it will go up. Not something I’m concerned about. Further, one of my BTD splurges is vehicles. If I’m ever not happy with my cars or I just want the newest model, I’ll get it. I don’t think I’ll consider what impact it has on my NW.

 

[marinauser]

Much less than 1% but I am not a car fanatic or collector.

 

[Cobra9777]

Our two cars are 0.7% of NW... 2001 Chevy Suburban and 2019 Subaru Forester. But if I include our 2022 Pleasure-Way Ontour camper van, it's 5.4%. Slowly learning to BTD after decades of LBYM.

 

[skyking1]

something less than 1%.

 

[jollystomper]

2 cars, worth less that .6% of our net worth. Not that we have ever tracked that.

At some point we will add a 3rd car. According this we could spend over $100K on that car and still be well below the guideline. Is it still considered BTD if we choose to spend <$30K?

 

[RobbieB]

we count the value of our vehicles in our NW. lessee...4 vehicles with an estimated total value of $125,000. that's roughly 0.16% of our NW. the primary vehicles are 20 and 13-yrs old. my "toy" is 77-yrs old. and we're selling, and not replacing, the motorhome so the % number will be significantly less. you might've guessed that we're not 'car people'.

Wow, 78 million! High times, congrats -

 

[MarieIG]

What do I think reasonable?

Less than 1%; paid for in cash. (Yes, even if the interest rate is low, I don't want another monthly bill.)

 

[Jimonlimon]

We have 3 cars with a combined blue book value of about 0.2% of our net worth. If we buy a new car it would jump to about 1% of our net worth.

 

[TheWizard]

What matters is if you can pay cash when you buy a new car without impacting your retirement savings, if working, and without exceeding a certain withdrawal percentage, if retired.

While you could compute a net worth metric, that's mostly irrelevant...

 

[Sunset]

Very age dependent, when young my first $300 car was probably over 50% of my money.

For us it's tiny, I would consider for a retired person 5% to be a huge percentage.

I do count it as part of net worth, but not part of what we can live on or use for spending, same with our house, since we don't want to move to a tent.

 

[captain3d]

Car 0.06%.
Whisky 1.12%

There is one bottle worth more than the car. Cheapskate car BTD whisky. Seems balanced

 

[W2R]

I guess my 2009 Venza is worth about 0.02% of my net worth. My point of view is, so what, it's reliable and gets me from Point A to Point B.

 

[FLSUnFIRE]

I don't count my car as an asset nor include it in my NW; it depreciates and costs me ~>$2,400 a year on average in care and feeding beyond the cost depreciation. It is most certainly a liability. In fact, I even track the accumulated depreciation as a liability against my NW for planning purchases as I'll eventually replace it. That said, at acquisition it was worth about 2.3% of my LNW at the time and is worth about 1.4% of my current LNW now 3.5 years later*. KBB had it more valuable than I expected and I took the low end since I'll get dinged for an accident on its history if I were to sell it (plan to drive it long enough not to matter). The collision was only sheet metal with no frame or mechanical worries but still resulted in a claim against the idiot's insurance and was recorded.


* I bought a new vehicle as my 18 year old truck would have to be street parked and eventually hit by a drunk driver on the busy street (and hassle of moving it for special events). Since I was approaching my FIRE date, I bought a new vehicle that fit in my garage and with warranty to keep my early expenses predicable. The truck was worth about .001% of my LNW and I sold it right before used cars appreciated for the first time in my life! It's market value went up about 2.5x in the 8 months after I sold it.

 

[FLSUnFIRE]

Very age dependent, when young my first $300 car was probably over 50% of my money.

True, at 28 when I bought my first new vehicle (full size truck) it was 41% of my LNW (ignoring home equity which was my down payment having bought my first house a few months prior). If I bought the truck first it would have been about 29% of my NW adding back in the down payment.

 

[NW-Bound]

I guess my 2009 Venza is worth about 0.02% of my net worth. My point of view is, so what, it's reliable and gets me from Point A to Point B.

Wow, a decamillionaire.

As for me, my 3 generic cars and an old motorhome don't add up to 1% of NW.

 

[frayne]

Unless you are a car collector it's meaningless

Exactly my thought as well.

 

[DrRoy]

Absolutely not. About 1% for our last car (SUV) and that was almost double what we had ever spent before.

 

[Andre1969]

Maybe 3%, if that. And yeah, it definitely depends on your age. I bought a new 2000 Intrepid in the fall of 1999, at the age of 29. That car was $22,389 out the door. My invested assets might have been around $50,000 at best, at the time. So, the car was about 45% of what I had invested. Or, if you counted the car's purchase price into my net worth (which I don't) you could fudge it to about 31%.

Fast forward a few years, to September 2012, and I bought a new, leftover 2012 Dodge Ram, for about $20,750 out the door. Invested assets were around $770,000 by then, so by this time that truck was around 2.7% of that. Or, again if I combined the two, 2.6%.

Now that I see it typed out, I suddenly feel a bit silly balking at the idea of paying $20-30K for a newer car now. Just two months shy of my 53rd birthday, and invested assets around $2.37M. Even $30K would only be around 1.3%. But instead, a few weeks ago I opted to put around $800 into an aging 2003 Regal that's been at death's door for some time now, but just won't ring the bell.

Oh, as for my 3% estimate, that includes the Ram that I still have, the Regal, and a few antiques. But, I don't include the value of the cars in any kind of net worth/invested assets calculations that I make.

 

[mrfeh]

What do you think is reasonable? Financial Samurai says 5% https://www.financialsamurai.com/net-worth-rule-for-car-buying-guideline/.

Sorry if this has been asked and answered. I did try to search.

Depends entirely on one's age. When I was 22, it was probably close to %100.

Today, it's less than 1%.