I think it is very hard to come up with a formula as to how much a person should spend on a vehicle. Some of the key variables that I think should be considered are: income, net worth, and age but it is not as simple as suggesting a certain % of net worth or salary. For instance if a 25 year old guy who has not much of anything in the way of assets has managed to save up $100k and wants to blow 60 of it on a new truck he would be blowing 60% of his net worth on a truck. Is that any worse than the 50 year old who has managed to accumulate $300k of net worth and wants to take out a loan to purchase that same $60k truck? He would only be spending 20% of his net worth. A wealthy person might consider it crazy to spend 1% of his net worth on a vehicle. As well if you are retired living on 60k per year with your house paid for and a million dollars tucked away you might be able to easily afford spending 60k on a truck....100% of your annual income. However, if you are 25 with a young family, paying rent and making 60k per year, buying a $60,000 truck might be considered a pretty foolish thing to do.
