robbonds

earns approx $175k US

im looking for the research peice...

Think this sounds about right for $100k cars ?

boolala

Edmunds used to have demographic data for their reviewed cars. I can't seem to find it anymore but one thing I do remember is that the average annual income of SL500 owners (an 85 - 90 K car at the time) was 250 K per year. Seems 911 buyers tend to stretch their resources much more than some other luxury car buyers.

A "rule of thumb" is that one should spend no more than about 4 months gross income on your car. That would amount to 58 K for 175 K yearly income. many people spend much more than this.

Le Chef

That means I'm going to have to cancel my order and just put 911 badges and colored wheel crests on my forthcoming KIA...

robbonds

:-) yeah me too

rotthaus

I was never very good at following “rules of thumb.”

Greg
2005 Carrera S Coupe, Lapis Blue Metallic, Carrera Classic Wheels, PCCB, Bose, Sport Shifter, Sport Seats
Rennlist member #050419-5832

boolala

I'm sure that's true for a lot of people here.

That's why we are seeing nearly new 911s for sale. Some people tend to stretch their budget to buy cars and then find they can't reasonably pay for them without making some painful sacrifices.

Soulteacher

That number is probably from the 2005 JD Power Combined Light Vehicle Media Report. Porsche owners' average household income leads in both the car and truck categories:

Cars: $187,705 (with Mercedes in second at $162,824; top-10 average at $146,065)
Trucks: $199,733 (with Hummer in second at $150,026; top-10 average at $161,781)

Another interesting piece, but a bit older (and you may have seen it already): Ten years ago, a study classified U.S. Porsche buyers in accordance with their psychographical characteristics. Here are the quick results again:

Top Guns (27 percent of owners): driven and ambitious; strong desire to be noticed; consider power and control to be important.
Elitists (24 percent): old money; a car is just a car, no matter how expensive, and not a representation of one's personality.
Proud Patrons (23 percent): ownership is what counts and an end in itself; car is a trophy and a reward for hard work; being noticed is unimportant.
Bon Vivants (17 percent of owners): thrill-seekers; global mind; car increases excitement in life.
Fantasists (9 percent): car is a form of escape; some guilty feelings about owning the car; try deliberately to avoid impressing with the car.

If you are interested in figuring out your own value and lifestyle profile (not Porsche-related), take the survey at http://www.sric-bi.com/VALS/. I have my students do this every semester and it's kind of fun.

Edgy01

..and what's the rule of thumb for housing expenses? What percentage of your income?

We in Southern California would love to practice THAT!

Dan

robbonds

im a combination of all except elitists

jjl

My household income for '05 was approximately five times Porsche's target household income for the 911, but i still don't feel i can comfortably buy a 911 quite yet... I won't buy the car until i can afford it without hesitation. Granted, I live in NYC with a wife and daughter and have to deal with NY's high cost of living..

boolala

Mortgage, interest and insurance should be no more than 28% of gross monthly income. Recently some lenders have pushed this up to 33%. Also interest only loans which look attractive but are a time bomb are becoming popular as housing prices escalate.

I paid cash for my house and cars. That's just the way I do it. Many would not be able to do this. I can see mortgaging a house but taking a home equity loan to buy a car is dangerous and just plain irresponsible (and I've heard that advice given on this forum).

S4to911

My rule of thumb...don't buy a Porsche unless you feel like you can pay cash for it. That doesn't mean you have to do it, just that you have the stable resources to do it.

Like many, I have quite a bit of home equity. I thought (briefly) of tapping a home equity line of credit, then thought the better of it, and paid cash.

Could I have done a bit better tapping the LOC and trying to get at least a 10-12% pretax return on the $$$, thereby making money on the spread? Sure.

But that's not the point. For me, like many of us, this is an extravagance. Better to feel the pain upfront to remind you of what you are doing, then enjoy the next 5-10 years...

OCBen

Hey Boo, you must not live down here where housing is just simply ridiculous. If you do, you're better off than most of us here. We're in the process of buying a $1.25M tract house (2 car garage) in a packed-like-sardines development that anywhere else would go for less than $500k easily. My tiny 2 bdrm condo which I'll be selling in order to be able to buy the house will probably fetch $450k easily.

That rule of thumb simply doesn't apply here. Wish it did.

boolala

True I live in the midwest where there has been some housing appreciation but nothing like the coasts. I just don't know how long this housing inflation can continue until it totally prices out first time home buyers. But, in my mind, taking out riskier loans is not the solution.

Soulteacher

Along the lines of previous comments, “household income” is one of these measurements that is fundamentally flawed unless you take into account moderating factors such as the number of household members that have to be fed with it. A single person earning a household income of $90,000 may very well have a higher discretionary income than a four-member household with an income of $250,000. Once you look at this and also start factoring in regional cost of living and other variables, it becomes obvious that indicators for your ability to afford a Porsche should be determined on the basis of other variables (such as current equity/debt ratios, etc.).