Finances help {NEW JOB}

Alright guys I have been talking to my parents about things but I also want to get some outside opinions.

I am graduating college next fall and have just signed a contract where I will be making an annual salary of roughly 120k a year. Within 5 years I have a 65% chance to be bumped to a 180k salary.

I currently live in an apartment but I would like to build a house. The price of what I have right now was estimated at 250k-300k. I also would like to purchase a nice *flashy car that can maintain value over time. I already have an everyday vehicle that is paid off.

My questions:

1. Is the price of the home reasonable? I have always been told that you should not go over 3x your annual salary.

2. What is the price range of a car that I can purchase?

3. Should I wait on building the home and purchasing a car and save my income for a couple of years by moving into a apartment where I work?

If you answer 3 please answer 1&2 anyway. I would still like to know.

 

You're just starting out, you don't have a family, so you don't need the space that a house provides.

You're better off saving your money and staying in your apartment or upgrading to a nicer one.

Unless you want to be in debt for years, go for the house. You're going to have utility expenses, food, gas, clothes, all of that jazz. So in reality, you're not going to have 120k to spend on whatever.

Now for the car, Lexus retains the best value over the years. I can't remember the exact percentage that declines each year, but, my econ teacher always told us it was the lowest to decline.

Not sure on the price range, it all depends on how much you want to go in debt.

Personally, I would buy a nice, flashy car over the house.

But for your 3rd question, definitely save your money and purchase the house later down the road when you know you have financial stability and you still have a job. Even though you have a job now, it doesn't mean you'll have one down the road. Plus, you're going to be the newest recruit, so the first to go unless you have an amazing talent. But, then again, you'd be promoted in a few months or so.

 

Thank you for the advice, my job is almost 100% secure because I am one of few people to have the required training that i got through co ops. The training took 2 years alone. I am looking to start a family within the next 3 years.

What I am looking at right now is saving money for the three years by living in the apartment and driving the same car. After three years I should have enoug saved to easily buy a 75-80k car. After three years I could begin looking into building a home.

 

buy a cheap(er) house lets say 50G depending on your comfort zone to live in for 3 years. dont dump money into renting. During the 3 years pay off that house then when you move out either use it to rent out for extra income or sell it off and use that money towards the car you want.

 

Wow, What is your profession? That's good money!

 

Well, the area I am moving to, the bare minimum is about 117k for a house.

I finish my physics degree soon, I will be working for a nasa.

 

1. Is the price of the home reasonable? I have always been told that you should not go over 3x your annual salary.

The price of building the home is reasonable, but then again I am going by Sydney prices.

You also need to factor in the value of whatever LAND you are building on, because while a home's value decreases (and yes, it does decrease), the land should increase (especially in Sydney's economy, land value ALWAYS rises, which sucks for me)

2. What is the price range of a car that I can purchase?

Any car you get is going to decrease in value drastically overtime. For this reason, if you want something "flashy", I would buy a car that is slightly new but still second hand (which will still look good, but save you thousands or even 10's of thousands off of the original price).

For a brand new car, I would never spend over 55K, though.

3. Should I wait on building the home and purchasing a car and save my income for a couple of years by moving into a apartment where I work?

I would buy the house, because an apartment raises in little to no value overtime.

 

Speaking of home ownership saw on the TV that a 14 year old girl had bought a house for 12k. Right now is a market to buy a house, you can get a nice foreclosed home for cheap right now.

For a car I wouldn't go out and purchase a brand new jag. You could get a nice used BMW or Lexus for a fair price while still retaining value, but the car doesn't make the man is how I have heard it. In other words a nice car isn't going to make your penis bigger.

Building a house in this economic climate is financial suicide. You are better off buying one because right now prices for materials are up, but housing costs are down and it is generally just a bad climate for building.

 

1. Not sure where you heard this. I know in Canada 3x your annual salary is generally considered good because most major cities the average home is 5-7x annual income.

2. The 55k cap someone mentioned is pretty reasonable if you want a really nice car. Otherwise even around 30-35 can get something flashy.
They always say purchasing a vehicle is the worst investment you can make and its true. Buying used is the smartest thing to do if you don't mind that because driving the car off the lot is where the largest depreciation is.

3. This shouldn't really matter with the money you are making you can do either. It's more of a lifestyle choice, do you want a car and house now, and do you really want to be in an apartment.

 

Thank you for this, I am going to be living in Huntsville, Alabama the lowest tolerable price of a house here is anywhere between 100k and 200k. My dad is a contractor and electrical engineer, he built the home I lived in for 250k and it is valued at just under 1m. As of now I still am leaning towards an apartment, and with the money saved, by the time I have a family, I can have my father contract me a house for about the same thing.

It is the "Rocket City"(tons of engineers), most people are paid well over the 100k mark and the economy did not hit hard here.

 

Save and put a sizeable deposit on the house if you have the means. Paying the bare minimum will get you a house sooner, yes, but it will also mean a considerably longer time to pay it off. You would be stunned to find the difference in time paying off a mortgage if your deposit is only 5-10% larger than the minimum.

I think the grand scheme of things, if you're earning that sort of money, get a financial adviser. They are trained, we are not.