I loved my first vehicle, Old Blue.
It was a tired-looking 1994 Mazda B3000 pickup. Once, Old Blue also took me to Alaska at the age of 18. But because I was a student with no budgeting skills, I was not able to maintain it as if it was worth it.
It was a sad day when the mechanic called back. I had been doing repairs for years, and even though it went winky, it was gone – it didn’t happen until one day.
“I’m sorry, but the cost of fixing this thing is more than its price. You’re better off buying a new car,” said the mechanic.
Familiar? It doesn t have to be that way. If you know how to make a budget, then you are ready for anything to be ready, even before you buy a car until it is gone.
You can do this Think of budgeting as two separate things: Make sure you have Enough to buy a car in the first place, And then make sure you have Enough money every month for its ongoing cost.
We will tell you about the costs you need to think about first, and then plan to help you make a budget to buy a car.
Can you pay your auto loan?
Being able to pay your auto loan is the most obvious thing when you are making a budget to buy a car. And this is true; Unless you buy a real lemon of a vehicle, it will be your biggest cost.
You can use an auto loan calculator to play with the numbers and see your potential monthly payments and interest charges that you want to buy.
remember: Long term loans can give you small monthly payments, but you will remain in debt for a long time.R and you can pay thousands more in interest rates paid to the end.
Do not leave home without car insurance
After the car, car insurance may be your next biggest cost.
Before you pull the plug on that next vehicle, you can call your car insurance company to see how expensive the policy on that shiny new car can really cost you. It may surprise you how different it is from your current car.
Murphy’s Rules and Repair and Maintenance
When my vehicle breaks down, I am just as guilty as anyone who is caught. But here’s one thing: You know Murphy’s law, which says what can go wrong, what will go wrong? Your car will not be sound forever. Does not matter if This will need to be decided, it’s a matter of When.
You also know that it will require regular maintenance, such as oil changes, new tires and periodic servicing. These expenses are easy to see and predict. What’s not so easy is the random repair that will pop.
For these random expenses, Set aside some money every month So that when these conditions rear their ugly heads, you are ready.
My husband and I have earmarked $ 100 per month for our current car, and we do not have to worry about falling short with money.
You can not ignore the registration fee
You are really talking about unexpected expenses can do Hopefully, many people are also caught off-guard by registration fees.
If your state requires it, you may need to pay for emissions testing or other hoops to jump. It is easy to see these charges in advance.
Don’t forget fuel
Having a car is great, but what if you really can’t use it?
It is therefore important how much you expect to drive. Divide this number by the miles per gallon (MPG) of your potential car, and you’ll see how much fuel you’ll have to buy to get where you need to go.
How to plan your car buying budget
Most people think of monthly payments only when it comes time to buy a car. But now you know that monthly payment is only a small puzzle.
Instead, do this: balance yourself complete Monthly cost of owning a car. To recap, it will be yours:
- Monthly auto loan payment
- Monthly insurance payment
- Savings for repair and maintenance
- Oil prices
- Registration fee
For some of these things, like the registration fee, you will probably pay them only once per year. In that case, simply divide the annual cost by 12, so that you can get a good idea of the monthly cost.
Now, compare it to the rest of your budget. If you don’t have one, now is a great time to start. It does not visualize at the beginning: even a notebook will do a simple list of all your monthly expenses.
Now that you have figured out the true cost of owning your car, does it really fit your monthly budget? Is your income so high that you can cover all expenses related to your car, as well as food and rent and everything else?
If it does, great! If not, you may need to modify what type of car or even what type of financing you receive.
No more surprising: continue your budget every month
As I found in my twenties, one of the hardest things about budgeting for a car is missing all the expenses.
This is especially difficult with cars because there are a lot of expenses that do not occur every month. It is not your internet or electricity bills or your kind that you can reliably plan every month.
Easy to use budget programs
That is why it can be so easy to take care of your budget every month. I personally use and love YNAB. I enter it at least once a week to keep up with my budget.
You can also use programs like Mint, Quick. Another option is to simply create your own spreadsheet. At the end of the day, it’s about finding a system that works for you and sticking to it.
The big advantage of budgeting each month is that I know how much I set aside the repair and registration fees for non-monthly expenses.
I can log into my YNAB budget right now and see that $ 526 is set aside for my semi-annual insurance payment, $ 72 set aside for registration, and $ 915 set aside for repairs.
Your monthly budget can now see you ahead of your car
If you are fancy, you can also start saving for your down payment ahead car. that’s what I’m doing; Every month, I set another $ 100. So far, I have saved $ 5,600 towards my next vehicle, because I know that Big Red (my current truck) will not last forever.
If you do not have a budget, at least consider opening a separate savings account for your car-related expenses. That way, if the money is not set aside on paper, at least it is in its own account, so you don’t have the temptation to spend it later.
Creating a budget to buy a car in this way is a lifesaving. If you follow these tips, you will no longer have to worry about the stress of broken vehicles, keep the repairs closed until the car is junk, or until you are in debt.