Could I afford a $250k house and a $200k Ferrari if I make $120k a year?

Answer 1

It's possible - but alot will depend on the details of your situation. $250k is on the very low side of things for a home (at least in all markets I am familar with... and wouldn't buy an outhouse here in CA), while $200k for a car is on the high side. And while a Ferrari will retain much of it's value, unless you are purchasing an Enzo or limited edition, it will not appreciate as the house or other real estate will... in the end you'd be better off investing and buying the expensive toys with the profits.

But, let's look at it at just the Ferrari for a moment. Assuming you could make a $20k down payment on the car, you'd be left with a monthly payment of about $3800 on a 5 year loan. Insurance would add another $500or so a month... and on going maintenance and upkeep on the car would add (very conservatively) $400 a month, for a grand total of $4700.

Now, additionally, a Ferrari is not a car that can be used as a daily driver... or you could if you wanted to devalue it with excessive milage and the cost of running it (which you can't afford). So you must have another car, with insurance and upkeep. Assuming you will go with something very very cheap, we'll consider you can average this out to $300/month, bringing us up to $5000/month.

a $250k home, assuming $25k down, and a overly favorable interest rate will be $1500/month. Insurance and property taxes will bring on another $400/month. Bringing our total now to $6900/month.

You are making $120k/year... the government tax schedule works out to about $27k for that much... and lets figure an round $3k in state tax: that's a nice $90k/year net, and $7500/month.

Which leaves you almost $150/week in which to buy food, gas, clothing, or anything else you may want. If you have internet access and a phone, and eat out at Denny's as a treat once a week, you will be able to maintain a happy lifestyle of canned catfood and a Ferrari! But you will not have any money left over to buy clothing (or gas for the Ferrari).

The picture gets really bad though when you consider any change in your employment will leave you with nothing to show for a stretch when you made a good salary.

Answer 2

You could afford the $250K house, but not the Ferrari.

I know this b/c my hubby made $190K last year. We have a $315K mortgage and our two (normal) cars are paid off. We are quite comfortable but we are not rich by any means.

You could get the $250k house, but if you get a car that costs more than $30k or so you will just be living to pay the car payment. It's a bad investment b/c the value will go down, while the home is a good investment b/c the value will go up.

Of course, the amount of property taxes you pay gets added to the monthly payment on the house, and that can be pricey. Our taxes are $8800 a year.

Plus Uncle Sam will take about a third of your paycheck, leaving you with only about $80k a year.

Btw, $120k in Texas or Kansas will get you a lot further than $120k in NY where I live!

Your best bet is to live as cheaply as possible (buy a condo) and then use your savings to buy rental properties that will give you positive cash flow, and buy your Ferrari with your investment earnings!

Answer 3

Maybe but it depends on what your other assets are, how they are invested, what your credit rating is, whee is house is and what is the debt/equity on it, and if you are paying cah for car or getting a loan on it. Also you need to see what KNID of income is the 120K a year, what your taxs are and how they can be structured to best lower your overall tax rate.
You MIGHT be abe to afford both but the REAL question you should be asking is,...."Is it smart to earn 120K a year and then throw that income down the drain by buying a 200K vehicle that will cost me thousands of dollars a month just to "look cool".
Tell me WHY you think spending 200K PLUS expenses on something with 4 wheels is a GOOD use of money. Is this a collectors item that you will NEVER drive or is it something just to stroke your ego? IF you didn't buy the stupid car then where can you INVEST that 200K that will earn you enough cashflow to let the cashflow buy the car?

Answer 4

Put simply.

House-Yes, it's a decent price, you can afford it, and on top of that, the value will go up, so that way when you sell it (if you do) you will end up getting more money.

Car-No, why? It's too much, you would have a tough time paying it off, and not many people own Ferrari's and live in 250,000 dollar homes. So i say ditch the Ferrari and get yourself a BMW or something. That way you have a nice house, a nice car, and a much better budget to work with.

Answer 5

Yes. If your credit is good and you are willing to do an Adjustable Rate Mortgage (ARM) on the house, you might be able to swing the car payment on the Ferrari. I do not know if they lease Ferrari's, but if they do you could definitely swing an ARM and a car lease on $120K. Then all you would need was a hottie beside you in the passenger seat with a rich Daddy.

Answer 6

1. You cant afford both. Talk to suze ormar fo r that.

2. It's uncommon for someone to have a 200 K car if you have a 250 K home. I belive you can finance a 250K home and a 40K car.

Answer 7

What a sad state of affairs when someone has to come onto Yahoo answers to ask if they can afford 450K with a 120k income..........

Even sadder that one advises to call Suze Orman to make simple financial decisions. People......can we not make edukated dissions without our televisin? wow.

Answer 8

Buy a house, forget about the Ferrari until you can pay cash, and not miss it.

Answer 9

Yes but the loss on the car will offset any gains of the property. Try a new mercadies instead.

Answer 10

Sure. Got a gun so you can rob the 7-11?