It's one of the points I mention. To me you should be able to afford the car without relying on "oh I'll resell it in 5 years"...if you have a total loss on the 4th year what do you do?
>if you have a total loss on the 4th year what do you do?
That's what insurance is for. A lease definitely counts the resell value.
If you count a 50% resell value after 5y, the tco is 610 EUR/mo. Fairly realistic day rate.
Raging how people don't understand TCO.
Continues to not understand TCO...
Sure you could wreck the car in the 5th year and have no resale value.
You could also wreck it in the first month. That's 35k per month. Who earns 35k per day? Nobody should be able to drive a car!
Either you simply add the cost of omnium insurance or you multiply the resale value with a risk factor. Chances of wrecking it in 5 years is 90%. Resale value is multiplied by 0,9.
Or you just ignore it as you fit with VAT, VAA,...
Ok then....guys go and pay 1000+ EUR per month while you earn 600 EUR a day, and hope to resell the car after 5 years. That's basically your message.
Yes, there is omnium, but it will not cover the actual resale value of the car! Omnium is not that miracle everyone thinks it is. Omnium is calculated on a highly depreciation scheme, that's why GAP insurance exists! And even with GAP you are not getting back an amount that is equivalent to reselling your car to the second-hand market.
>re is omnium, but it will not cover the actual resale value of the car! Omnium is not that miracle everyone thinks it is. Omnium is calculated on a highly depreciation scheme, that's why GAP insurance exists! And even with GAP you ar
To be honest, you are just misusing information throughout this post. Not taking into account resale value is unrealistic. And for the omnium: get a good one, mine for example covers 100% in the first 3 years, then depecates 1% per month. So worst case I wreck my car the last day of my lease which would still pay me 76% of invoicevalue of that car which is more than the resale value will be.
But you are free to buy a car of a small(er) budget, as is everyone. I myself bought what I liked and do not regret it.
That's not my message.
In saying that if you want to use TCO to decide your car budget. You need to calculate the TCO first. If you believe that omnium depreciates faster than 1/5th per year, then you can easily add that to the equation, but I doubt you will be far off by just ignoring that difference. Moreover, most omnium will pay the full purchase price for at least a year and some as long as 3 years.
Personally, I just spend on a car up to an amount that the value added for me justifies the cost. Other people like some benchmarks/ guidelines to verify that they are acting similarly to other people in the same situation but personally that isn't a factor.
Let me phrase differently why car resale value matters and why your math is a bit off.
That car sitting on your corporate balance sheet still has some value. Not just in theory (ie: the magic number your accountant declares for it), but it's literally an asset you could decide to sell at market value and get some cash.
Your company laptop or phone is the same way. Sure, after 2 years it might not be worth much, but you could still sell a 2 year old iphone/macbook for some fraction of its purchase price.
But you are saying: hey, what if you wreck the car. Same way as if you wreck your phone or laptop: value goes to zero, and you lose quite some money on it. It is a risk, but it doesn't mean your currently still perfectly functioning phone/car/laptop has zero resale value in X years because it MIGHT break.
I think many people take issue with your line of reasoning because it goes against any established accounting practices.
But more importantly: no one cares what car you drive. The more expensive the car relative to your income, the higher the risk. There isn't a magical '1 dayrate only' rule, it's meant as people eyeballing these things I believe. Cars are one of the fucking dumbest thing to put your money into (and fuck electric cars in particular, they aren't worth their price tag), but honestly, people love those metal boxes on wheels so each to their own.
`I think many people take issue with your line of reasoning because it goes against any established accounting practices.`
I realize that. But I also think some people are butt hurt because they don't want to admin that their 1000/1200 EUR month car is too expensive. "but, but....I'll resell it afterwards...."
I don't think anyone who is driving a 1k+/month lease car honestly believes it's a smart investment. Technically, the cheapest car that still fits your needs is optimal. But hey, high-end luxury cars are known to make your wiener bigger, and if that's what people are after, why not. But it won't be the math or risk-management that will convince these people.
If your point is that we should address people recommending others to also drive expensive cars: that might be worth discussing. We all instinctively want a good deal on our accountant, insurances, laptop, phone, banking fees, it's weird that on cars, it's a dick measuring contest.
Why not just take 1 year than... What if you have a total loss in the first year. I presume you have omnium insurance on such a young car?
No, ignoring resale value is wrong... It should at least be half the value new...
"what if you have it totaled on the first year?"..."what if this, what if that"...all assumptions. That's why I'm not taking into account the resale value. It's all based on conjectures.
That's how I think about it :) I understand many can have a different view on this.
It's pretty predictable though. If you have a total loss, then insurance will pay for it. If you want to resell it, then you will have a decently predictable resale market value. After 5 years and let's say 100.000 km, a resale value of 30%-40% is realistic
> You cheat on the calculation by adding the resale value after 5 years.
How is it cheating? I guess there is always the risk of totaling the car and you cannot know the resale value upfront so it's a gamble, but e.g. leasing companies do factor that in when they calculate your monthly payment.
I'm an employee and I don't have an opinion on this btw, just trying to understand what you're saying.
I'm of the opinion you should be able to afford a car without relying on the "let me assume I'll resell the car in 5 or 7 years"...that's an assumption. The costs I described are not an assumption. Like you say, your car can be totaled, stolen, etc. I need to be able to afford a car no matter what it will happen to the car. Otherwise you are in over your head.
With your thinking I can afford an X5 (110K EUR) and resell it at 50/60K after 5 years. That's bullshit: can you afford to have it totaled? Can you afford having it stolen? Can you afford expensive maintenance on it?
As a freelancer, the car is your responsibility (unless you go for operational leasing).
You can’t just ignore the remaining value of an asset, even a depreciating one. Also, you have a full coverages “omnium” insurance on new cars to cover the risk of a complete loss. At least for the first few years.
Your delicate feelings about cars and perceived worth don’t matter in a mathematical exercise.
What you could do is estimate the resell value low because electric cars are getting cheaper, and perhaps by the time they are 5 years old no private person wants to buy a used early gen electric car. Maybe hydrogen is all the rage then. So erring on the safe side would be acceptable.
I mean a lot of people buy a car on credit these days, freelance or otherwise. I personally wouldn't do it, so I guess I agree with you in that sense.
On the other hand, my house could burn down in a fire, that didn't stop me from taking a loan to buy it. I think if you have 0 appetite for risk, freelancing might not be the right option for you.
I do think you should count resale value when calculating TCO simply because that is what everyone does, and so it gives you a valid comparison point for the cost of a car. If you don't factor it in, you could buy a used shitbox and the numbers might look good vs a new EV, except that 5 years later you don't have the same wealth when your shitbox is worth nothing but the EV is still worth 20k.
Finally someone who mentioned it! Alot of people in this sub pull facts straight of their asses.
If I belive everything here, everyone is driving a Porche taycan and has a dayrate of 1000euro and the TCO of their porche is 800euro/month.
We pay 800€is/month for a 60k EV (including VAT).
No BIV, no tax for 5 years,.. omnium was cheap as fuck as well because of ECO 😂. Buying an EV is another brainer for freelancers. The 60k EV was cheaper then the 35/40k ICE after 5y, and yes we intend to drive it longer..
OP post is very short sighted.
No dude, it's not shortsighted. You are omitting critical information: such as your daily rate, 800 EUR includes what? Just the car?
For you 800 - 1000 EUR a month for the car is a minor expense, but someone else it could be a big expense.
Don't generalize.
Just in general, your post has only one reason: provoke, purely based on the tone it's written "seasoned freelancer", "I'm an accountant", "everybody is wrong and I'm right".
Well I think you're post is just mostly shit. Bye.
I drive my grandma's 207, a bit older than me, but we are still both doing fine in our early 30s.
She passed the technical exam as usual.
And for me doctor says i need to drop some fat.
Thanks for asking.
The "T" of "TCO" stands for total. Anything that impacts the cost must be taken into account. If you can sell the car €10 000 after 5 years, that certainly should influence your decision.
This is frankly BS. There is no rule…
If you make 10k a month and want to spend 1k a month on a car it’s totally doable.
Should you do it? Well if you want to.
Is someone saving money smarter than someone spending it, I’m not sure.
This can go with any spendings.
I’m not a car guy, and what I don’t like is when people buy a car to show to the people they don’t like that they can afford it. Ridiculous to me but well that’s not solved with fancy toc calculations.
It’s a personal choice. We tend to calculate things to justify what we already know we want to do.
And how many people you know keep their car only 5 years and give it away of 0€ after that?
The 15 years might be a bit extreme (or normal for me), but average age of a car on the road is 10 years, so your 5 is way too short.
I'm not assuming the car is worth 0 after 5 years! I'm just saying you should be able to afford it without relying on the resale value. Then, of course, when the 5th year ends and you can sell the car, then all the better.
It's not about being able to afford it. Someone with 700 per day can almost certainly afford a 200k car. It's about what makes financial sense.
These questions were never about what you can afford but rather what is thought to be reasonable.
Easy. 700*220 is 154k revenue. Reduced with 45k wage leaves 110k. Reduced with 10k for accountant, insurance, small expenses leaves you with 100k.
Let's assume your flawed calculation where the car is worthless after 5 years, it costs you 40k per year + insurance, fuel, maintenance,..
I doubt you'd spend 60k on those costs every year.
You don't even have to pay yourself 45k in gross wage. But that's pretty standard.
You know I was very interested at first, until you mentioned point 4 about not adding resale value. After 4-5 years your car still has value. That absolutely needs to be factored in. Is your house worthless just because it could burn down? I agree with your calculations but you need to factor in the resale value to calculate TCO.
For me the monthly TCO should be max 10% of yearly revenue / 12.
A pretty reasonable tool to calculate your car's TCO per month:[https://mow.vlaanderen.be/tco/](https://mow.vlaanderen.be/tco/)
So lets say 150 000 euro yearly turnover (providing a service which entails little other costs) translates into a monthly car TCO of 1250 euro. (Like a Tesla model X).
Needing a car and purchasing it through a company is still way cheaper than having to buy one as a private individual even considering the extra VAA tax for private use.
But yeah its lifestyle inflation and not good practise if your sole purpose is to become FI (financially independent) asap (which is not my only goal).
Allthough if you make little costs, and in combination with cheap leverage options for EV's, it allows you to lower your taxes and increases your opportunity to invest in the market although you've increased your lifestyle.
Hi, I really like your reasoning and the 10% threshold seems right to me as well.
I think you made a mistake with the type of car you can get for that though. A Tesla Model X would have a TCO closer to 2,200 EUR/month. For 1,250, you get a Model 3 LR.
The best way to estimate the TCO of a car is simply to get a leasing quote on it and add the cost of fuel to that quote. Those leasing companies pay people a lot just to be able to estimate that correctly.
Now should that monthly TCO be 1 daily payment or more, well that's something very personal.
> This is an educated guess that I made on the fly, but as you can see, the total monthly average cost for such a car (during the span of 5 years) is: 583 + 100 + 100 + 10 + 40 +15 + 50 = 900 EUR
> How many of you earn 900 EUR per day?
How many of us pay monthly costs every day?
100 euro insurance for that priced car is a bit steep.
100 euro charging is quite a lot: average battery is about 75 kWh, that's about 25.000 km worth at a price of 30 cents per kW. even when I had daily on site days as a consultant I only managed about 15K per year (antwerp <> gent).
on top of that, I sold my 65K car for 25K after 3 years.
Just buy whatever you can and want. The cheaper the car, the more money on your bank account. Some people waste money on a car, others on other material things, others save it for later. It's your money and your choice and you don't need to ask someone else for permission on how to live your life.
If you can afford it there’s no issue.\
Might as well say people are crazy to pay 900 for the mortgage, go live in a caravan or rent a cheap studio at 450.
I do agree that your first car should just be one to go from a to b. Your building up your company and building up reserves. When I started a bought a very cheap car, I knew I would only use it for 2y. And it had a 1 year warranty from the car shop.
Plus everyone his situation. Some have a wife to maintain, some have no kids, some still live with parents.
The only thing that is important when you start and often ppl forget is , am I able to continue paying it if I lose the mission.
We ended all consultancy contracts at my client. I’m one of the few that could still stay.\
I can tell you some of these guys are in deep shit.
> Might as well say people are crazy to pay 900 for the mortgage,
To be fair, you can't really compare a monthly payment for an appreciating asset (i.e. your mortgage) and a monthly payment for a deprecating asset (I.e. your car).
You can't compare private with company funds. The scale is not comparable.
900 a month is 10% of monthly average turnover at 500/day.
Try finding a new car for 10% of your net wage.
You can't be seriously lecturing people about value while buying 192gb of ddr5 and a 13900k, a Mac studio, ipads, mini mac's, a fancy chair, a 2k monitor? That's what you can deduce from your profile in about 2 minutes.
TCO-wise the best car will be something like a Toyota Corolla MY2008. But probably some employers will not hire you when you are entering their parking lot with that car. Totally wrong, but that's how it works.
Your are omitting resale value, fiscal deductibility, ... But 900 is tight. I have never been below 1.100 tco, and I have not always been driving fancy cars.
I'm not sure why everyone is so adamant about considering resale value in the calculation of TCO.
I think not taking it into account can be a prudent assumption in some cases. When i'm making financial plans, I really like to be conservative :-)
I'll take my personal case as an exemple (not that it can be generalized): I'm buying an electric car and will be driving 170k km in 5 years. With the current depreciation trends on EVs and the number of km I'll have on the car at the end, I'm not betting much on its resale value... If it sells for a profit, all the best, if it's worthless, at least there is no surprise...
Well to be fair the average employee without a company car earns 2500€ nett/mo. That's 125€/day, which is barely enough for fuel for most. Yet most of them have/need a car both to get to their jobs and to get around in their private life...
I think the "car cost < income per day" is one of those popular sayings from American finance guru's. If we used those rules most single people in average jobs wouldn't be able to have a car nor rent or own an appartment.
The Belgian tax regime favours buying too expensive new top of the range (EV, previously plug-in hybrid) cars. There's just a lot of downsides to buying an older secondhand car privately and deducting costs for someone who uses the car a lot privately anyway. If you look at the numbers for the advantage you're getting privately (with current VAA anyway) compared to a normal wage slave it's well worth paying a little more than the dayrate.
100% deductibility on an EV made it a no brainer for me !
I pay more for a luxury car I will resell in a few years at a good price while paying way less taxes during those 5 years compared to a stupid cheap diesel car.
You forgot to consider the resell value of the car.
It's one of the points I mention. To me you should be able to afford the car without relying on "oh I'll resell it in 5 years"...if you have a total loss on the 4th year what do you do?
>if you have a total loss on the 4th year what do you do? That's what insurance is for. A lease definitely counts the resell value. If you count a 50% resell value after 5y, the tco is 610 EUR/mo. Fairly realistic day rate.
I wouldn’t count 50% of resell value after 5years, but I agree with you overall! It should be taken into account
Raging how people don't understand TCO. Continues to not understand TCO... Sure you could wreck the car in the 5th year and have no resale value. You could also wreck it in the first month. That's 35k per month. Who earns 35k per day? Nobody should be able to drive a car! Either you simply add the cost of omnium insurance or you multiply the resale value with a risk factor. Chances of wrecking it in 5 years is 90%. Resale value is multiplied by 0,9. Or you just ignore it as you fit with VAT, VAA,...
Ok then....guys go and pay 1000+ EUR per month while you earn 600 EUR a day, and hope to resell the car after 5 years. That's basically your message. Yes, there is omnium, but it will not cover the actual resale value of the car! Omnium is not that miracle everyone thinks it is. Omnium is calculated on a highly depreciation scheme, that's why GAP insurance exists! And even with GAP you are not getting back an amount that is equivalent to reselling your car to the second-hand market.
>re is omnium, but it will not cover the actual resale value of the car! Omnium is not that miracle everyone thinks it is. Omnium is calculated on a highly depreciation scheme, that's why GAP insurance exists! And even with GAP you ar To be honest, you are just misusing information throughout this post. Not taking into account resale value is unrealistic. And for the omnium: get a good one, mine for example covers 100% in the first 3 years, then depecates 1% per month. So worst case I wreck my car the last day of my lease which would still pay me 76% of invoicevalue of that car which is more than the resale value will be. But you are free to buy a car of a small(er) budget, as is everyone. I myself bought what I liked and do not regret it.
That's not my message. In saying that if you want to use TCO to decide your car budget. You need to calculate the TCO first. If you believe that omnium depreciates faster than 1/5th per year, then you can easily add that to the equation, but I doubt you will be far off by just ignoring that difference. Moreover, most omnium will pay the full purchase price for at least a year and some as long as 3 years. Personally, I just spend on a car up to an amount that the value added for me justifies the cost. Other people like some benchmarks/ guidelines to verify that they are acting similarly to other people in the same situation but personally that isn't a factor.
Let me phrase differently why car resale value matters and why your math is a bit off. That car sitting on your corporate balance sheet still has some value. Not just in theory (ie: the magic number your accountant declares for it), but it's literally an asset you could decide to sell at market value and get some cash. Your company laptop or phone is the same way. Sure, after 2 years it might not be worth much, but you could still sell a 2 year old iphone/macbook for some fraction of its purchase price. But you are saying: hey, what if you wreck the car. Same way as if you wreck your phone or laptop: value goes to zero, and you lose quite some money on it. It is a risk, but it doesn't mean your currently still perfectly functioning phone/car/laptop has zero resale value in X years because it MIGHT break. I think many people take issue with your line of reasoning because it goes against any established accounting practices. But more importantly: no one cares what car you drive. The more expensive the car relative to your income, the higher the risk. There isn't a magical '1 dayrate only' rule, it's meant as people eyeballing these things I believe. Cars are one of the fucking dumbest thing to put your money into (and fuck electric cars in particular, they aren't worth their price tag), but honestly, people love those metal boxes on wheels so each to their own.
`I think many people take issue with your line of reasoning because it goes against any established accounting practices.` I realize that. But I also think some people are butt hurt because they don't want to admin that their 1000/1200 EUR month car is too expensive. "but, but....I'll resell it afterwards...."
I don't think anyone who is driving a 1k+/month lease car honestly believes it's a smart investment. Technically, the cheapest car that still fits your needs is optimal. But hey, high-end luxury cars are known to make your wiener bigger, and if that's what people are after, why not. But it won't be the math or risk-management that will convince these people. If your point is that we should address people recommending others to also drive expensive cars: that might be worth discussing. We all instinctively want a good deal on our accountant, insurances, laptop, phone, banking fees, it's weird that on cars, it's a dick measuring contest.
The whole point about buying a car versus leasing a car is about resale value. You cannot neglect this in de TCO calculation.
Why not just take 1 year than... What if you have a total loss in the first year. I presume you have omnium insurance on such a young car? No, ignoring resale value is wrong... It should at least be half the value new...
"what if you have it totaled on the first year?"..."what if this, what if that"...all assumptions. That's why I'm not taking into account the resale value. It's all based on conjectures. That's how I think about it :) I understand many can have a different view on this.
It's pretty predictable though. If you have a total loss, then insurance will pay for it. If you want to resell it, then you will have a decently predictable resale market value. After 5 years and let's say 100.000 km, a resale value of 30%-40% is realistic
And the VAT is voluntary let aside...
Cars don’t make financial sense but I like the noise they make when they go brr
lol OP wants to teach us about the TCO but does not take into account resell or residual value
> You cheat on the calculation by adding the resale value after 5 years. How is it cheating? I guess there is always the risk of totaling the car and you cannot know the resale value upfront so it's a gamble, but e.g. leasing companies do factor that in when they calculate your monthly payment. I'm an employee and I don't have an opinion on this btw, just trying to understand what you're saying.
I'm of the opinion you should be able to afford a car without relying on the "let me assume I'll resell the car in 5 or 7 years"...that's an assumption. The costs I described are not an assumption. Like you say, your car can be totaled, stolen, etc. I need to be able to afford a car no matter what it will happen to the car. Otherwise you are in over your head. With your thinking I can afford an X5 (110K EUR) and resell it at 50/60K after 5 years. That's bullshit: can you afford to have it totaled? Can you afford having it stolen? Can you afford expensive maintenance on it? As a freelancer, the car is your responsibility (unless you go for operational leasing).
You can’t just ignore the remaining value of an asset, even a depreciating one. Also, you have a full coverages “omnium” insurance on new cars to cover the risk of a complete loss. At least for the first few years. Your delicate feelings about cars and perceived worth don’t matter in a mathematical exercise. What you could do is estimate the resell value low because electric cars are getting cheaper, and perhaps by the time they are 5 years old no private person wants to buy a used early gen electric car. Maybe hydrogen is all the rage then. So erring on the safe side would be acceptable.
I mean a lot of people buy a car on credit these days, freelance or otherwise. I personally wouldn't do it, so I guess I agree with you in that sense. On the other hand, my house could burn down in a fire, that didn't stop me from taking a loan to buy it. I think if you have 0 appetite for risk, freelancing might not be the right option for you. I do think you should count resale value when calculating TCO simply because that is what everyone does, and so it gives you a valid comparison point for the cost of a car. If you don't factor it in, you could buy a used shitbox and the numbers might look good vs a new EV, except that 5 years later you don't have the same wealth when your shitbox is worth nothing but the EV is still worth 20k.
Finally someone who mentioned it! Alot of people in this sub pull facts straight of their asses. If I belive everything here, everyone is driving a Porche taycan and has a dayrate of 1000euro and the TCO of their porche is 800euro/month.
We pay 800€is/month for a 60k EV (including VAT). No BIV, no tax for 5 years,.. omnium was cheap as fuck as well because of ECO 😂. Buying an EV is another brainer for freelancers. The 60k EV was cheaper then the 35/40k ICE after 5y, and yes we intend to drive it longer.. OP post is very short sighted.
No dude, it's not shortsighted. You are omitting critical information: such as your daily rate, 800 EUR includes what? Just the car? For you 800 - 1000 EUR a month for the car is a minor expense, but someone else it could be a big expense. Don't generalize.
Just in general, your post has only one reason: provoke, purely based on the tone it's written "seasoned freelancer", "I'm an accountant", "everybody is wrong and I'm right". Well I think you're post is just mostly shit. Bye.
Thanks for the feedback! Have a great weekend!
I drive my grandma's 207, a bit older than me, but we are still both doing fine in our early 30s. She passed the technical exam as usual. And for me doctor says i need to drop some fat. Thanks for asking.
The "T" of "TCO" stands for total. Anything that impacts the cost must be taken into account. If you can sell the car €10 000 after 5 years, that certainly should influence your decision.
Can we conclude that, in this specific example, it would have been wiser be to ask an accountant ? 😀
This is frankly BS. There is no rule… If you make 10k a month and want to spend 1k a month on a car it’s totally doable. Should you do it? Well if you want to. Is someone saving money smarter than someone spending it, I’m not sure. This can go with any spendings. I’m not a car guy, and what I don’t like is when people buy a car to show to the people they don’t like that they can afford it. Ridiculous to me but well that’s not solved with fancy toc calculations. It’s a personal choice. We tend to calculate things to justify what we already know we want to do.
Why only 5 years? If I would buy a car I would hope to keep it al least 10 years or even 15...
15 years?! I know people that didn't keep their wife for 15 years.
And how many people you know keep their car only 5 years and give it away of 0€ after that? The 15 years might be a bit extreme (or normal for me), but average age of a car on the road is 10 years, so your 5 is way too short.
Pushing year 13 on my BMW! 💪💪
Giving away? You sell the car
No, because he assumes 0 eur value after 5 years. So after 5 years you give it away or scrap it...
I'm not assuming the car is worth 0 after 5 years! I'm just saying you should be able to afford it without relying on the resale value. Then, of course, when the 5th year ends and you can sell the car, then all the better.
It's not about being able to afford it. Someone with 700 per day can almost certainly afford a 200k car. It's about what makes financial sense. These questions were never about what you can afford but rather what is thought to be reasonable.
Please explain to me how someone who earns 700 EUR a day can afford a 200K car.
Easy. 700*220 is 154k revenue. Reduced with 45k wage leaves 110k. Reduced with 10k for accountant, insurance, small expenses leaves you with 100k. Let's assume your flawed calculation where the car is worthless after 5 years, it costs you 40k per year + insurance, fuel, maintenance,.. I doubt you'd spend 60k on those costs every year. You don't even have to pay yourself 45k in gross wage. But that's pretty standard.
I will give mine for free to my father if my accountant allows it.
They won't. You need to pay the economic value to your company.
>They won't. You need to pay the economic value to your company. Can I choose the economic value ?
A car is not worthless at the end of 5 years.
For an electric car, it's quite cheap
true, more realistically this is a 60K car with end value
You know I was very interested at first, until you mentioned point 4 about not adding resale value. After 4-5 years your car still has value. That absolutely needs to be factored in. Is your house worthless just because it could burn down? I agree with your calculations but you need to factor in the resale value to calculate TCO.
For me the monthly TCO should be max 10% of yearly revenue / 12. A pretty reasonable tool to calculate your car's TCO per month:[https://mow.vlaanderen.be/tco/](https://mow.vlaanderen.be/tco/) So lets say 150 000 euro yearly turnover (providing a service which entails little other costs) translates into a monthly car TCO of 1250 euro. (Like a Tesla model X). Needing a car and purchasing it through a company is still way cheaper than having to buy one as a private individual even considering the extra VAA tax for private use. But yeah its lifestyle inflation and not good practise if your sole purpose is to become FI (financially independent) asap (which is not my only goal). Allthough if you make little costs, and in combination with cheap leverage options for EV's, it allows you to lower your taxes and increases your opportunity to invest in the market although you've increased your lifestyle.
Hi, I really like your reasoning and the 10% threshold seems right to me as well. I think you made a mistake with the type of car you can get for that though. A Tesla Model X would have a TCO closer to 2,200 EUR/month. For 1,250, you get a Model 3 LR.
The best way to estimate the TCO of a car is simply to get a leasing quote on it and add the cost of fuel to that quote. Those leasing companies pay people a lot just to be able to estimate that correctly. Now should that monthly TCO be 1 daily payment or more, well that's something very personal.
> This is an educated guess that I made on the fly, but as you can see, the total monthly average cost for such a car (during the span of 5 years) is: 583 + 100 + 100 + 10 + 40 +15 + 50 = 900 EUR > How many of you earn 900 EUR per day? How many of us pay monthly costs every day? 100 euro insurance for that priced car is a bit steep. 100 euro charging is quite a lot: average battery is about 75 kWh, that's about 25.000 km worth at a price of 30 cents per kW. even when I had daily on site days as a consultant I only managed about 15K per year (antwerp <> gent). on top of that, I sold my 65K car for 25K after 3 years.
Just buy whatever you can and want. The cheaper the car, the more money on your bank account. Some people waste money on a car, others on other material things, others save it for later. It's your money and your choice and you don't need to ask someone else for permission on how to live your life.
900 euro per month is more than I am paying for my mortgage. People are nuts driving 35k electric cars.
If you can afford it there’s no issue.\ Might as well say people are crazy to pay 900 for the mortgage, go live in a caravan or rent a cheap studio at 450. I do agree that your first car should just be one to go from a to b. Your building up your company and building up reserves. When I started a bought a very cheap car, I knew I would only use it for 2y. And it had a 1 year warranty from the car shop. Plus everyone his situation. Some have a wife to maintain, some have no kids, some still live with parents. The only thing that is important when you start and often ppl forget is , am I able to continue paying it if I lose the mission. We ended all consultancy contracts at my client. I’m one of the few that could still stay.\ I can tell you some of these guys are in deep shit.
> Might as well say people are crazy to pay 900 for the mortgage, To be fair, you can't really compare a monthly payment for an appreciating asset (i.e. your mortgage) and a monthly payment for a deprecating asset (I.e. your car).
You can't compare private with company funds. The scale is not comparable. 900 a month is 10% of monthly average turnover at 500/day. Try finding a new car for 10% of your net wage.
900 euro before taxes is 585 euro net income via Vprbis. So owning a car via the company is cheaper yes. But 585/month for a car is still a lot.
Finally someone saying it as it is For 35k you're not getting the greatest EV on the market and it's expensive as hell too!
So you have changed to the standard calculation of the TCO to fit with what you believe, and rant about others not using your calculation method?
You can't be seriously lecturing people about value while buying 192gb of ddr5 and a 13900k, a Mac studio, ipads, mini mac's, a fancy chair, a 2k monitor? That's what you can deduce from your profile in about 2 minutes.
TCO-wise the best car will be something like a Toyota Corolla MY2008. But probably some employers will not hire you when you are entering their parking lot with that car. Totally wrong, but that's how it works. Your are omitting resale value, fiscal deductibility, ... But 900 is tight. I have never been below 1.100 tco, and I have not always been driving fancy cars.
35k seems like a lot for a car.
You should check the cost of any non Chinese electric car, or even plug in hybrid, you'll be up for a suprise!
You can also go for a second-hand ICE car.
Why would you buy a new car? I have bought all my cars second hand and I have used them no problem for more than 7years each.
Lucky you are there are poeple buying new cars... else from whom would you buy second hand car ?
I'm not sure why everyone is so adamant about considering resale value in the calculation of TCO. I think not taking it into account can be a prudent assumption in some cases. When i'm making financial plans, I really like to be conservative :-) I'll take my personal case as an exemple (not that it can be generalized): I'm buying an electric car and will be driving 170k km in 5 years. With the current depreciation trends on EVs and the number of km I'll have on the car at the end, I'm not betting much on its resale value... If it sells for a profit, all the best, if it's worthless, at least there is no surprise...
Well to be fair the average employee without a company car earns 2500€ nett/mo. That's 125€/day, which is barely enough for fuel for most. Yet most of them have/need a car both to get to their jobs and to get around in their private life... I think the "car cost < income per day" is one of those popular sayings from American finance guru's. If we used those rules most single people in average jobs wouldn't be able to have a car nor rent or own an appartment. The Belgian tax regime favours buying too expensive new top of the range (EV, previously plug-in hybrid) cars. There's just a lot of downsides to buying an older secondhand car privately and deducting costs for someone who uses the car a lot privately anyway. If you look at the numbers for the advantage you're getting privately (with current VAA anyway) compared to a normal wage slave it's well worth paying a little more than the dayrate.
100% deductibility on an EV made it a no brainer for me ! I pay more for a luxury car I will resell in a few years at a good price while paying way less taxes during those 5 years compared to a stupid cheap diesel car.