If you are like most people, you have a casual idea of how much money you bring in every month versus how much you spend. The word budget is one of those things that youd prefer to avoid, even though you know its kind of important to keep track of how much money you have to spend on necessities, plus the things you want. When it comes to buying a car, your attitude might be that you have your heart set on driving a certain make and model and, therefore, are willing to skimp over the specifics of how exactly youre going to pay for it.
After all, youve been waiting a while to get this dream car and you saw one at the local dealership that is in the exact color you want. It also has that cool GPS system that you know will help you out when driving to out of town destinations. Even though youve got your hands full with other bills that keep a roof over your head, the electricity turned on, puts food on the table and streams entertainment into your home, you keep thinking that you can make some room in your personal finances for this particular car.
But can you?
The line between needs and wants often gets blurred when it comes to selecting the right car that fits your current situation. Hey, it would be nice if everyone could just traipse on down to the car dealership and pick out whatever car they wanted without worrying about having enough money to cover the monthly payments. Unfortunately, for most people, this isnt realistic and there comes a time when you have to sit down and crunch the numbers on how big of a car loan debt you can afford to take on right now.
People tend to let their emotions get involved when selecting a nice car to drive. Going down to the dealership to look at cars can make you feel like a kid in a candy store. There are so many cool vehicles that call out to you – buy me. Yet, if you are being a smart consumer, you will have already taken a serious look at your current budget and figured out you cant afford any car loan payment thats over $295 per month. In other words, you can kiss that cool car with the built in GPS system goodbye.
Yes, it really sucks that you cant afford to get your dream car right now, but this doesnt mean you wont be able to get it sometime in the future. The fact of the matter is, youve got to choose the car that fits best within your budget, meaning, you know that youll absolutely have that $295 each and every month to pay out on that car loan debt. On the other hand, if you ignore reality and pretend that you can pay $385 a month, even though it will cause you a lot of financial difficulties, this type of thinking is going to lead you towards possibly defaulting on your car loan, or struggle to pay other bills down the road.
Whenever you make large purchases, such as buying a car, always keep in the front of your mind how much this new payment is going to impact your monthly budget. Remember, circumstances can change, which could make it more difficult to make those payments. Also remember to include the cost of insurance, maintenance and gas in your calculations. Get the car that you know you can afford right now and youll stay in good financial shape.
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