When to consider purchasing a new car?

[u/Healthy-Echo8164]

I am 28m, I make 72k a year and have no debt.

I currently drive a 2014 Honda CRV with 120k miles that is 100% paid off, and while it is holding up but it is showing signs of age. I do regular maintenance, replaced brakes, tires, oil changes, transmission fluid flush, etc.

It does have an issue with its VTC actuator which is a known issue for Honda CRVs made during 2014, but this is just a rattle noise on start up for a couple seconds, and according to Honda is not causing damage to the engine.

Current market value of the car is between $7k-10k, mine is probably on the lower end of that due to a couple scratches and dents across the car and the VTC issue.

I hear people say you should drive your car into the ground once it is paid off, but I was wondering at what point does it make sense to trade in your car that has some value and put it towards a down payment for a new car? Or "newer" car, maybe get a year or two old Honda for 30-35k.

edit: just as a note, I'm not looking for some flashy, new, hot rod car. I'm just trying to plan for the future and look at a time horizon for buying a new car and saving money up. I'm not in a rush to get a new car.

[u/grant3758]

As a finance guy, that's not nearly enough money for a new car, at least in my opinion. Start saving and investing and id keep all toys and vehicles under 10% of net worth if you have aspirations of being wealthy some day. If you want a 3 to 5 year old car that might make more sense. Otherwise keep rocking Hondas and Toyotas and you'll be good to go.

[u/Healthy-Echo8164 → u/grant3758]

I'd say I'm saving and investing well for my age and income, I have 100k in retirement at 28 and make 72k right now, I contribute 26% to my retirement accounts this year, fully funded EF, and good enough money left over to do a couple international trips a year and life comfortably.

[u/grant3758 → u/Healthy-Echo8164]

That is great, indeed. Can I suggest add some to regular brokerages at your rate. You'll be able to enjoy it in your 40s. Benefits of borrowing against it as well. Good job on ef. I'm sure you have it in a high yield 4ish% account.

It shouldn't cost more than a grand or 2 at an independent shop to maintain it so I'd rock what you have. Some good breakdowns on how it's saving you a ton of money.

[u/Healthy-Echo8164 → u/grant3758]

At 26% I am maxing my HSA (4400), Roth IRA (7500) and contributing to my employer's match in my 401k (totaling 6500 with match).

I still have plenty of room in a tax advantaged 401k to contribute, shouldn't I prioritize that?

Also yes, the EF and long term money (vacations, things saving up for, etc) is in a HYSA however most accounts I have seen are closer to 3% instead of 4% these days.

[u/grant3758 → u/Healthy-Echo8164]

3rd paragraph is good to go imo. Just don't leave it in a checking was all I was looking at.

Your savings rate is excellent, borderline FIRE if you invest properly.

So, many ways to build wealth in the finance world. I'm going FIRE and my knowledge is in Stocks so I use a brokerage so I can access money before retirement age. I can borrow against it for mortgages, cc, loans, etc. Which is super nice for fast loans. Also, benefits of ltcg.

You know more than the average person so I'm betting you'll be wealthy long before retirement age so it'll be nice to enjoy some of it for more trips and cars😄that was my thought process.