Financial advice for a 22 year old recent graduate, time to pull the trigger on my dream truck?

Best 3 word advice here. Although you may not have enough now, don’t let it discourage you, start saving so by the time you’re 30, you can have something to put down on a house. If you do t plan on renting forever that is. Plus you get a major tax break and money back on property tax and mortgage interest. So with time your salary goes up, and you’ll have more to allocate, even though you have a mortgage payment.

You need to factor this in, but also factor insurance, fuel, spendings for going out, gifts for others on holidays, mods whether you like it or not, you’re on TW now baby! You need a cushion because I doubt what you outlined are your only expenses. If you have a girl friend then that will also need to be factored in (seriously). Going out with friends or lady friend isn’t cheap. I try to keep my extra non essential spendings a month around $1200, but that’s hard to do too...$500 is not going to cover it, I promise you that. You need to change that from $500 to $1000 to give you wiggle room or else you’d be doing yourself no justice by living tightly...you are also in a high tax bracket because you have no major write offs. I’d say the max monthly you could spend on car payments is $500 based on your salary. This is coming from experience as that was pretty close to my figures out of college.

 

Until we get some nutcase ready to push the big red button, and your house falls to the ground...

The only thing left after a nuclear detonation will be cockroaches and Tacoma's.

All jokes aside, buying a house would certainly be the best financial move. But at this stage in my career I'm not sure if I really want to have a house and all the responsibility that comes with it yet. I'll definitely be renting for at least the next 2 years until I figure out where my job takes me.[/QUOTE]

My son is in the same position as you except he has his BSME and will have his MBA by August of this year. He is 22. My advice to him? ENJOY! Don't be in a hurry to become "me," an adult that has his own home and vehicles and kids and and and and... Enjoy this part of your life. Sure, you gotta have a job and such but, and listen closely, you will never ever be in this same position again. You will never be as young as you are. You will never physically be as fit as you are (unless you are not fit at 22) you will never have as little responsibility as you have now and you will never feel as good as you do now and you will never be as worry free as you do now.

Your whole life has been striving for "what's next." Can't wait for middle school, can't wait for high school, can't wait til I drive, can't wait til college, can't wait til I get my degree, can't wait til I get a job, etc.

If you want a truck, get it, but don't get in a hurry. Enjoy this time in your life!

 

First off - nice job. You got a good degree that actually has use in the real world, don’t have debt, have nice savings, and your expenses are reasonable. That’s not good for a young person, that’s good compared to the vast majority of Americans at any age so nicely done.

I personally think it makes the most sense to buy something that’s a couple years old that’s alrwady taken the biggest depreciation hit but is still new enough you don’t have reliability and wear concerns. That said, you’d be hard pressed to find a better option for a brand new vehicle than the Tacoma for depreciation. You have a good head on your shoulders, so do what’s right for you and don’t worry about what other people think.

 

I would have to strongly agree. But if I was 22 again I would buy a house than a truck. House payments won't go up. Great return on investment.

 

Even if you move you can always rent the property, now you have a home that pays for itself.

 

My opinion is stick with what you have for now. Wait at least 6 months. If you still want the Tacoma, I'd go for it! You seem to have your head on straight financially. The thing I found out of college was that priorities change fast. "I'm single with cash to blow" can turn into "I'm dating and would like to get a much more expensive apartment, go on vacations together, etc" real fast and you will be glad you put that much money into a truck right off the bat.

 

I wouldn't buy a house yet. I'd take some time to figure out what I want to do, where I want to live.

I knew what I wanted when I was 25, but that has changed a good bit in my 40s. I would stay flexible for a bit. With your degree, you are starting off good, but being flexible will allow you to move around and increase your salary. The only down side is that interest rates probably won't stay this low forever.

I myself wanted live in the South and build hot rods when I was younger..... now I want to live in the mountains in a much smaller place.

I'd probably try to buy the truck outright and start saving again. Good job on saving what you have so far..... keep a little in reserve for emergencies.

 

Granted, but at least he’ll have a tax right off each year and if he needs to move, he’ll have an opton to rent his place out as an investment property.

 

I agree. We have never had a car less than 10 years. Take care of it and it will pay off on the "free" usage once the loan is gone. I have a 17 year old Saab that looks immaculate inside and out despite ski trips, mountain biking, and a kid.

 

If you are serious about being frugal and looking it at this from a financial perspective, then you should read the book "your money or your life" by dominguez and robbin. excellent book. then you should buy things that appreciate in value, not depreciate in value like a truck. Single family homes are not an asset for most people but a money pit unless you plan on staying in that house for a long, long time. Also, you should only buy a vehicle you can pay all cash for, from a frugal, financial perspective.

 

Not to single out any commenter, but I strongly disagree with the notion to just rent out your house if you get a new job. Never become an accidental landlord. If you want to become a landlord, do that squarely and directly. Multifamily properties are almost always superior to single family homes. Also, while there is a mortgage tax deduction, it still costs you money to have a mortgage, you just get to use "pre tax dollars" instead of post tax dollars like on your rent. Tax deductions is not somehow simply free money - advantaged, yes. And if you are going to do it - good. But it is not enough of a reason to switch. Google "single family home is not an investment" and read the contrarian advice. We are all told buying a home is an investment but do your research to see if you actually agree with that common advice.

 

Still got another year of school. After that I plan to (hopefully) start my career, save for a down payment, then buy.

 

You sound like an accountant.

 

OP - You’re thinking too hard. Buy the truck. If you end up thinking it’s a mistake in a year or three you’ll get out of it just fine. I wouldn’t put all of that $18k down personally, but that’s just me. There’s also nothing wrong with finding a clean 2nd gen and paying cash. That’s probably preferable honestly. I love buying new however so I get the desire to have something that’s all yours.

You can live in your truck but you can’t drive your house to work nor use it to move across the country. If my rent was only $500 I wouldn’t be in any sort of hurry to buy a house... but for me at 22 there were too many places I wanted to go do and see to get that kind of tied down.

 

It sounds like you thought it over enough . Go get your truck and enjoy life.

 

OP. if you really want a truck buy a truck. My only advice is consider used instead of new. You say you like research so hunting for a good deal on lightly used Tacoma will be almost as much fun as driving it. It took me 2 months to find my Taco but it saved me about $7K over new. It is a 2016 with 15K miles I paid 30K for it. This was about 3 months ago. The hunt would have been a lot faster if I’d have been willing to compromise on the color. Good luck in whatever you decide

 

If your not looking to buy a house and set roots, then I say get the truck. These trucks hold their value,so if it needs to go, you can dump it pretty quickly. The truck will serve you a long time if taken care of, and by the time you’re ready to buy a home, the truck will be paid for. Get what you like and can afford. Enjoy being young and carefree while you can!

 

Personal Finance questions are just that personal. Only you know what you can afford.
I bought my truck when I was 23 making a similar income as yours. I currently make $65k and I have no regrets.

I thought back saying I could have purchased a house by now with a 20% down payment if I didn’t buy this truck. It may have postponed my homeownership status since I am still renting a 2 bedroom 2 bath townhouse. The place fits my needs well since I am single and it comes with an attached garage to work on my taco and do my wood shop work.

Just know what your priorities are and go with your gut feeling if you feel it’s right to pull the trigger.

 

I have no regrets buying a nice clean used truck. I was 24 three years ago when I bought my Frontier Pro-4x for $19,900. Financed it for 36 months at 3%. Could have bought it outright but invested the money instead. Sold my worn out rusty 2nd gen Tacoma for $11,500. Nice having the cash available for a down payment when I eventually buy a home.

When I bought my Nissan it had 30,000mi, a year of factory warranty remaining and was immaculate. It's been a great truck and I haven't had any desire to drop $36k+ on a new Tacoma to replace it. I'll wait a couple years until some nice used 3rd gens or 5th gen 4runners hit the $25k mark or so and upgrade, Might even buy another Frontier.

 

Not going to give you advice on the truck, but....

Count me as impressed by your financial situation at 22 years old. I didn't have a Roth or 401k or even much savings to speak of until I was in my 30's. Good for you for getting ahead of the game. Keep it going.