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Will an engineer be able to afford a 100 k dollar car?

Im a chemical engineer in my senior year and I've dreaming of owning a nissan gtr. Ive been wanting to ask this question since i started this major lol How soon will i be able to get or will i be able to get at all?

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Matt’s Answer

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A rule of thumb is to only buy a car worth half your annual income at most. Following that logic you should be earning $200k per year to afford the Nissan GTR. (Sweet choice, BTW!)


In my experience there are a few engineers who earn that much money employed at a company. Google, Facebook, Amazon, Zynga etc. That accounts for total paid compensation, including annual bonus(es.) These engineers are literally "one in a million" and have specialized skills and experience that can demand that high salary.


Keep in mind that earning a high salary like that often means living in a place with a high cost of living. E.g. San Francisco Bay Area where the average rent for a one bedroom apartment is now more than $3500 per month.


Notice above I wrote "employed at a company." This is to differentiate engineers who start a company, join a young company or otherwise have significant equity (stock or stock options or restricted stock units) in a company. Being a founder / early employee changes the risk:reward equation. More risk, higher potential reward. Since you're young (I assume) you can likely afford to take more risks and search for the higher potential rewards. Consider starting a company or seeking to join an early stage startup to make your millions that way.

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Sumit’s Answer

Christian, I too struggle with how best to answer this question. The advice here already provided is solid and I would seriously consider the goal given the impact that GTR is going to have to your personal finances. Still, I also had similar goals when I was first out of college and as an engineer was also looking for ways to get myself into a nice ride (as well as a number of other fun activities). Here is what I did and perhaps you might be able to do the same... Out of my engineering program, I signed up with one of the Big 4 consultancies (e.g. PwC, Accenture, KPMG, Deloitte) and landed myself on assignments out of town. As I started traveling to locations without robust transit systems, ended up having to rent a car (sometimes a month at time). After a while, I started picking up the tricks at the rental agencies and found myself in various "fun" cars that they offered. These days, there are even some car rental agencies that offer high end cars, perhaps even the Nissan GTR? Consider looking into a career that has these types of perks and you'll see yourself in a GTR hopefully sooner than it takes to get to the half your salary rule.


Related: from a life perspective, I've learned that owning these luxury items before investing first in yourself (I.e. putting away money for 60 year old Christian) is dangerous. As a fellow engineer, I ask you to work the "retirement problem". How can you have the necessary fun today but still make sure you solve for taking care of you 40 years from now? Enjoy driving a rental GTR but let someone else deal with ownership headaches...

Thank you comment icon Great addition on the “save for yourself 40 years from now.” Matt Manuel
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Peter’s Answer

Christian:


You really get down to the particulars, don't you! Well, as a starting Engineer you could expect a initial salary between $45-$55k/year, I think. Assuming that you are really motivated and could save up to a third of your salary ($16k) for this expensive toy, It would take you six years to buy the car outright. However you might save enough for a down payment within 1-2 years.


This assumes that you are not married nor do you plan on supporting kids anytime soon (and that's fine...there's plenty of time later for that). Moreover, it assumes that you have no student loan to pay off and that you are not interested in putting money aside for a 20% down payment for a home of your own. And if you heart is set on a very expensive car, you probably won't be starting a retirement fund (401k) in your 20s. All these things are doable, but understand that an expensive car early in your life puts a lot of other things on hold, even with a relatively well-paying engineering job.


Pete Sturtevant

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Wilfred’s Answer

I am trying to make answering this question worthwhile for you, but honestly you got your future all backwards. Your dream car should be the reward of a long and successful career. If you buy one as soon as you can afford it then you likely skipped out on the investments you need to gain the wealth to buy what you truly can afford. I know, that was a tough one, but think about it. Pay off your debt first and establish a life. Do this while investing for your retirement until you have so much money that you can splurge (at least once on a awesome car).

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Salva’s Answer

Why not!? Once you have an engineer's salary keep living at your parents and save as much as you can. If you can save close to 100% of your salaries in two years you've paid the car!

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