Total cost on truck?

Are you buying outright or going with a note? Reading it I assume buying outright.

Dave Ramsey's advice is not to own vehicles more than 50% of your net pay i.e. own vehicles totaling less than $25,000 on $50,000 take home.

Financial Samurai's advice is to not buy a vehicle that costs more than 10% of your salary i.e. $5,000 car on $50,000 income.


My recommendation is to not buy a vehicle that exceeds a certain percentage of your liquid assets. I think this is a better way of looking at vehicle costs than the percentage of income methods I mentioned earlier.

Spending a liquid asset on a depreciating item like a vehicle needs to be as cost effective as possible, especially since you're saving to buy a home.

If you have $25,000 cash on hand and invested that toward a home purchase for 3 years, let's say you stand to earn $2,000-$5,000 on it.

If you spend the $25,000 on a truck you stand to lose $10,000-$15,000 in the next 3 years on the value of the truck plus opportunity cost.


If I was in your shoes, I would make a list of things you need the truck for or need the truck to have. "Need" meaning you cannot accomplish your 3 year goal without it, i.e. if you don't need a high tow capacity to earn your living you don't need to spend money on tow capacity. Then I would buy the least expensive vehicle that will cost-effectively fulfill those needs for as many years as possible.