So a few weeks ago I actually had a deal worked out on a new car. I currently have a 2006 Honda Civic which has been paid for for a number of years. It has 212000 kms(131000 miles) on it but it still drives like new. Well almost. Not a squeak, rattle or clunk.
So why would a even think of getting a new car? This is something I said I would never do again. It is a fools game. As we all know a car is not an investment. An investment makes you money. A car costs you money and of course depreciates in value.
After my marriage various things came to light and let’s just say that my interest rate on a new car would be 4.9%. On a used car it would be in the teens or higher. This surprised me. So this is why I was even considering a new car.
My current car is a standard transmission and Tyler will be 16 in January. We have been out a few times on some back roads and while he has been making out okay I am terrified about him being in traffic on his on and with friends in the car.
So the deal was done. The monthly payment was 365$ per month. And then I pulled the plug on the deal.
I sat down and figured out my monthly budget. Here it is. It is based on some standard spending percentages as suggested by various financial blogs and websites.
I make about 2300$ per month net.
Housing- 650 month rent= 29%
Utilities- Electric/High speed internet/Phone- 160$= 8%
Transportation- Insurance/Gas- 175= 8%
Food- 300$= 13%
Personal- Coffee/Misc= 100$= 4%
Savings- 300$= 13%
So yes, based on this I could, on paper, “afford” the car payment.
But I realized that it is not about just being able to afford it. I have to be comfortable with it. And the thought of making that payment every month for 5 years just did not add up at this time.
I would absolutely have to stay at my job for at least 5 years. Not sure that will happen.
Tyler graduates in a couple of years and after that Maybe I would like to volunteer somewhere in the world and actually do something good and meaningful.
So what I am planning to do here on the blog is post every week exactly what I spend. I figure that this will help to keep me accountable and will allow me to see where I spend(waste) money.
Would love to hear what you have to think about the budget I have come up with.