My degree is in engineering so I like to work things out to the decimal, but I'm new to finance matters other than being a super saver on principle. We don't believe in car payments, which isn't anything we thought up ourselves. Most money advisors are going to say buy the car you can afford and get by with that. That's what we do, without really calculating what it saves us. But I did it this morning and I am amazed. I bought my Subaru for $1300 three years ago, and have had some minor repairs on it. On the order of a hundred bucks, certainly not much more.
My insurance is $13 a month. I just pay the whole amount for six months at a time, but that's the monthly equivalent. It goes slow up steep hills, has rust, dingies, you know - a clunker.
So I looked up the average price of a new car and it was around $31K. The average interest rate is 4.88%. I got a finance calculator that says the monthly payment on that for five years is going to be $588. The average insurance payment per month in the USA is $150, a whole lotta that for collision. That amounts to a monthly payment of $738 just for car and insurance. As compared with $13 for me. So the difference is $725 per month.
I can hardly believe my eyes, but that's what the math says if you are buying the average new car at average interest rates and paying average insurance. Over top of what I am paying. That's about our monthly food budget for a family of four.
Sometimes people tell us they don't want to have repair bills. They want a warranty. But when you are saving $725 a month you can afford an awful lot on repairs and in fact you can buy a car like mine every two months if you wanted to. No need to fix them. Astonishing, really.
Of course, if you can AFFORD to, then go lay down cash for your $4.5 million Lamborghini Veneno Roadster. Google says that was the most expensive car last year.
My insurance is $13 a month. I just pay the whole amount for six months at a time, but that's the monthly equivalent. It goes slow up steep hills, has rust, dingies, you know - a clunker.
So I looked up the average price of a new car and it was around $31K. The average interest rate is 4.88%. I got a finance calculator that says the monthly payment on that for five years is going to be $588. The average insurance payment per month in the USA is $150, a whole lotta that for collision. That amounts to a monthly payment of $738 just for car and insurance. As compared with $13 for me. So the difference is $725 per month.
I can hardly believe my eyes, but that's what the math says if you are buying the average new car at average interest rates and paying average insurance. Over top of what I am paying. That's about our monthly food budget for a family of four.
Sometimes people tell us they don't want to have repair bills. They want a warranty. But when you are saving $725 a month you can afford an awful lot on repairs and in fact you can buy a car like mine every two months if you wanted to. No need to fix them. Astonishing, really.
Of course, if you can AFFORD to, then go lay down cash for your $4.5 million Lamborghini Veneno Roadster. Google says that was the most expensive car last year.
Put the internet to work for you.
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