This morning I went to look at a desk I saw on Craigslist. As I got closer to the seller’s address, I got a little disheartened for I noticed I was driving into a bad neighborhood. When I turned into seller’s apartment community, I saw a sign placed by a landlord that said “Freezing Temperatures – Leave Heat On. Let Faucets Drip.” Which tells a lot about the living situations of these residents.
However, what really caught my eye was parked in front of one apartment – a brand-new yellow Mustang GT, which looked out of place. (You knew there would be a car involved – after all this is a car blog). Why would someone buy a $45,000 car, while living in a shabby apartment?
Here’s the thing, no matter what your situation, buying an expensive car, even if you can afford the payments, puts a crimp on your future.
Let’s assume a $36,000 a year job, for now. It brings home around $1700 a month, so a $500 car payment isn’t that far of a stretch. However, let’s look at the big picture. Over the term of a 4.9% loan, that means $6,000 in interest. Imagine throwing away $100 a month every month, for 5 years, and you get the idea.
Here’s another way to look at it. Would you work at your job for one year in exchange for a car? If you drive a car that costs as much as your annual salary, that’s exactly what’s you’re doing.
Put quite simply, if you can’t pay cash for a car, the universe is trying to tell you something. BING BING BING!! You can’t afford it. Don’t ignore the signs – buy a $1000 clunker. Put aside the $500 a month you’d spend on a car payment until you can afford a better car. Then keep trading up.