Now that you've digested all that, you can better understand why it's so difficult to answer the following question:
“I recently graduated from college and want to set up a budget. I'm trying to decide how much I can afford to buy a car. Do you have any rules of thumb?”
Well, no, unfortunately. There's really no good guideline for auto purchases, as there is for housing costs, which generally shouldn't exceed 25% of your gross income.
Some debt counselors suggest that you keep your total debt load to 35% to 40% of your gross income. (Most include housing costs in that figure, even if you're renting rather than paying a mortgage.)
The problem with that advice is that it focuses too much on monthly payments ...