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Car & Money Question

by BMead
13 replies
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Hi all, I'm Brian

Unfortunately, this is my first post! I've read around the forums for a little while now, just getting the grasp of everything it has to offer. Anyways, I have a small predicament in reference to buying a new car(I sold my old one, it was having too many problems)

I'm 24yrs old, just graduated college with a Telecommunications(Video/Audio) degree, I have a job that rolled over from an internship I was in. It's contract work, and I get paid $10/hr and at the moment 28hrs a week(plus an extra 6 for HS football season on Fridays) -- around $250/week. I figure this is a good foot in the door to get some experience on my resume. I have plans to open a photography business and I want to get into internet lead generation and some of the things I see on this site sometime soon.



I have around $2k saved up in my checkings account, and $12k in my savings. No student loans(paid off). -- So in total I have saved $14,300. I'm going on a cruise in January, and that will cost $2,500

So I have about $11,800 (for now) available that I was thinking of spending on a car. So my questions are these:
  • How much should I be looking to spend on a car? I want something affordable and reliable.
  • Should I take out a loan to help me buy a car? I realize I need to have money in my bank in case anything happens


I don't pay rent (I live with my mom still) and end up saving around $720/month I need a car, I drive about an hour to work each day and an hour home.

I'd appreciate any advice on this. I wanted to spend about $7000 on a car, but my mother insists I take out a loan (she'll help me if I need it, to cosign, etc) and buy a car for around $12,000 so that it's more reliable and will last longer. I don't like the idea of a loan though, and $7000 will get me a decent car that I figure will last at least 3 or 4 years and hopefully with little to no problems.

If you can help me, I'd appreciate it! Thanks!
  • Profile picture of the author lanfear63
    We have a Toyota (hybrid) Prius, two in fact, 50 miles to the gallon. Superbly built and stylish. They are turfing out there 2015 models (all sizes) at the moment so price reductions abound.

    We bought lease purchase so everything taken care of for three years. I don't believe in buying second hand.
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    • Profile picture of the author AprilCT
      You might be okay purchasing a 2nd hand car. My husband and I both had purchased, lightly used, low mileage 2nd hand cars and both were great for a long time. However, both totally died within a month of each other, one at 13 years and one at 15.5 years. Sometimes you do very well and other times it is a big mistake.

      Even a new car can be a big mistake, so do your research first before you finally decide. I suggest you check out reviews on the Net and never just dive into buying something. If you buy used from a reputable dealer, some will have certified premium used cars available. They will cost a bit more.

      Besides the price of the car, new or used, there is a cost to own. The CTO can include such things as higher insurance costs if the vehicle is preferred by thieves, miles driven to work, alarm system, gas and oil, and maintenance. Driving an hour each way will put quite a lot of wear and tear on that vehicle, upping your maintenance costs, and especially for tires.

      If you decide to buy new, get competing prices from dealers via their internet prices. You should know beforehand what the dealer has to pay for the vehicle so you can bargain effectively. Some dealers will give an extra discount for first time, new car buyers that recently graduated.

      At $10 an hour with 28 or 34 hours a week, even with a good down payment, this isn't going to be easy. I'd like to suggest you talk to some large local employment agencies to see if they have any worthwhile direct hire clients looking for someone with your abilities for a lot more, and a lot closer to where you live. Note that changing jobs might have some impact on the loan. Talk to different lenders and see what terms they are willing to give you, then compare that with the terms at the dealer.

      Also, unless you have employment contract restrictions, don't wait to start your photography business. Talk to local organizations, churches, clubs, friends, etc. and ask if they could hire you on your off hours,

      You are going to have to toot your own horn to get started, so get busy, get creative and remember that social media is your friend. Learn to "dance out in front" a bit and get some word of mouth happening for you. Do some charitable work for costs at places like animal rescue shelters and your name as photographer. An online portfolio to sell your services is a necessity as well.
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    • Profile picture of the author positivenegative
      Hello Brian, and welcome to WF.

      It's your lucky day my friend. As it happens, the wife and I have a much loved car we're looking to sell as we're buying new. Perish the thought of you spending $7k or $12k as you'd planned. You can have this little beauty for just $5k.

      Tell you what; if you shoot me a quick PM and arrange the money transfer now, I'll arrange delivery with you and even throw in an Ohio 1940 road map and a pair of size 12 galoshes for free. How's that!


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      • Profile picture of the author Cali16
        First, I think it's very impressive that a 24 y/o who just spent the past few years in college has somehow paid off his student loans and has over $14,000 in savings.

        While paying cash for everything and not having a loan is nice, the advantage of taking out a car loan is that it will help you build your credit. And that's something you need to be thinking about at your age. A credit card, that you use regularly and pay off in full each month, will also help build your credit.

        Personally, I'd say forget the cruise. The car's a lot more important. Use that $2500 as a down payment on a good, used car and, if you can, take out a small loan for the rest. You can get a very reliable used car for $4,000 to $5,000 (even less) if you do your research. Your current income might make it difficult to get approved for an auto loan, though, so perhaps your sister will still co-sign. I do think her recommendation to finance a $12,000 car is absolutely foolish on your current income.

        As for used cars, older Hondas are usually very good cars. Good gas mileage, and if you take care of them, they'll last for well over 200,000 miles. Before you buy a car though, have a good mechanic look it over first, just to make sure there aren't any red flags. I've had inexpensive used cars last me for several years with minimal maintenance.

        I'd also suggest finding a second part-time job to increase your income, and then start looking for a full-time job in your field that pays better than your current job, and doesn't require 2 hours of commute time. That's a lot in gas and wear and tear on any car. Especially for a low-paying, part-time job.

        Just my 2 cents!
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  • Profile picture of the author Kurt
    Although the OP seems to have abandoned this thread, I suggest considering buying a used pick up. Pick ups can be used to make money in a number of ways, from doing odd jobs to Craig's List arbitrage where you get things for free/cheap on Craig's list, then sell them for a profit.
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  • Profile picture of the author Jason Kanigan
    @BMead,

    DON'T get a loan. Buy cash (for under $10K, so you don't have to do explanatory paperwork). Don't lease.

    Get Dave Ramsey's "Total Money Makeover" book. You're already doing several of the smart budgeting things he suggests. It will fit well with your approach.

    Even if you need to do some repairs occasionally (and every car needs repairs, including ones you buy new) the amount you spend on repairs every couple years will be far less than the money you blow on buying a more expensive car or on loan fees.

    Back in Canada, the equivalent of AAA offered a service where a tech would come out to look over a used car you were considering buying. See if AAA has that for you in Ohio because for $100 or $200 or whatever it is, it could be the smartest little investment you make.

    Really think this stuff through.

    Does a car with slightly better gas mileage really make up for the increased sale price? I'll bet you can drive around a long time on the difference.

    Be logical, not emotional. It's hard to do when you're buying a car, I know, but this is one of the most significant investments you're going to make in your life (home being another).

    People make these car buying decisions like they're buying a new set of clothes and that's so dumb. This is a long term financial decision ... 4 years possibly if you're getting the loan ... and yet people jump into car purchases like they're candy.

    That's how dealerships make so much money.

    Take your time.

    Be deliberate.

    Be smart about it.

    Keep yourself free of ongoing debt. Getting into a situation where you have to come up with that $250 or whatever every month for the next 4 years when you could just buy outright is dumb.

    And nothing against your mother, but is she a financial expert?

    Money is one of the most important resources you have. Take direction on its use from an expert.

    Realize this is a multi-year commitment whichever way you slice it. Either you can be free of debt or you can have it lording over you. And believe me, having to make that payment when you're unemployed will NOT be fun.
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    • Profile picture of the author BMead
      Originally Posted by AprilCT View Post

      Also, unless you have employment contract restrictions, don't wait to start your photography business. Talk to local organizations, churches, clubs, friends, etc. and ask if they could hire you on your off hours,

      You are going to have to toot your own horn to get started, so get busy, get creative and remember that social media is your friend. Learn to "dance out in front" a bit and get some word of mouth happening for you. Do some charitable work for costs at places like animal rescue shelters and your name as photographer. An online portfolio to sell your services is a necessity as well.
      Thanks for the suggestions. I'm in the process of making a website so I'm hoping that'll help once I get started, that way I can show people some of my work and have a server to host their pictures on.

      Originally Posted by Cali16 View Post

      I'd also suggest finding a second part-time job to increase your income, and then start looking for a full-time job in your field that pays better than your current job, and doesn't require 2 hours of commute time. That's a lot in gas and wear and tear on any car. Especially for a low-paying, part-time job.

      Just my 2 cents!
      I appreciate your reply! I'm taking all of the information everyone gives me. I'm considering a waiter job because I feel like it will help me with my communication skills (and I love being pushed out of my comfort zone/thrown into a situation) and they will like that I can work weekends.

      Originally Posted by Kurt View Post

      Although the OP seems to have abandoned this thread, I suggest considering buying a used pick up. Pick ups can be used to make money in a number of ways, from doing odd jobs to Craig's List arbitrage where you get things for free/cheap on Craig's list, then sell them for a profit.
      Sorry for the late reply, I was out with some friends last night and didn't get home till late. Anyways, I considered pickups but figured it would be inefficient for me to drive as far as I do in a pickup that gets low MPG

      Originally Posted by Jason Kanigan View Post

      @BMead,

      DON'T get a loan. Buy cash (for under $10K, so you don't have to do explanatory paperwork). Don't lease.

      Get David Ramsay's "Total Money Makeover" book. You're already doing several of the smart budgeting things he suggests. It will fit well with your approach.

      Even if you need to do some repairs occasionally (and every car needs repairs, including ones you buy new) the amount you spend on repairs every couple years will be far less than the money you blow on buying a more expensive car or on loan fees.

      Back in Canada, the equivalent of AAA offered a service where a tech would come out to look over a used car you were considering buying. See if AAA has that for you in Ohio because for $100 or $200 or whatever it is, it could be the smartest little investment you make.

      Really think this stuff through.

      Does a car with slightly better gas mileage really make up for the increased sale price? I'll bet you can drive around a long time on the difference.

      Be logical, not emotional. It's hard to do when you're buying a car, I know, but this is one of the most significant investments you're going to make in your life (home being another).

      People make these car buying decisions like they're buying a new set of clothes and that's so dumb. This is a long term financial decision ... 4 years possibly if you're getting the loan ... and yet people jump into car purchases like they're candy.

      That's how dealerships make so much money.

      Take your time.

      Be deliberate.

      Be smart about it.

      Keep yourself free of ongoing debt. Getting into a situation where you have to come up with that $250 or whatever every month for the next 4 years when you could just buy outright is dumb.

      And nothing against your mother, but is she a financial expert?

      Money is one of the most important resources you have. Take direction on its use from an expert.

      Realize this is a multi-year commitment whichever way you slice it. Either you can be free of debt or you can have it lording over you. And believe me, having to make that payment when you're unemployed will NOT be fun.
      This reply really resonated with me. I guess these are some of the things I "knew" but hearing this reassured me.

      I went around and looked at cars the other weekend, and found some Hondas/Toyotas that I may be interested in. Being in NE Ohio it's hard to find a car with a clean frame/rust free. I have a mechanic neighbor that is always there to help, so I think I'm going to look up some of these cars at these dealers and stick with the $10k price limit. I'll definitely check into that book, also. Also no my mother isn't a financial expert by any means, she is just very generous towards me and my siblings (I tell her I need to do this stuff on my own) and she insists I stop being so full of pride and let her help me purchase a car (she's already purchased my first car)




      I'm very grateful for all these replies. I wasn't expecting that much help on this thread. I'm most likely going to purchase a car (cash) for a limit of $10,000 and get a Toyota/Honda that my neighbor inspects.

      I look forward to joining this community and learning some of the information it has!

      - Brian
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  • Profile picture of the author DURABLEOILCOM
    Originally Posted by BMead View Post

    Hi all, I'm Brian

    Unfortunately, this is my first post! I've read around the forums for a little while now, just getting the grasp of everything it has to offer. Anyways, I have a small predicament in reference to buying a new car(I sold my old one, it was having too many problems)

    I'm 24yrs old, just graduated college with a Telecommunications(Video/Audio) degree, I have a job that rolled over from an internship I was in. It's contract work, and I get paid $10/hr and at the moment 28hrs a week(plus an extra 6 for HS football season on Fridays) -- around $250/week. I figure this is a good foot in the door to get some experience on my resume. I have plans to open a photography business and I want to get into internet lead generation and some of the things I see on this site sometime soon.



    I have around $2k saved up in my checkings account, and $12k in my savings. No student loans(paid off). -- So in total I have saved $14,300. I'm going on a cruise in January, and that will cost $2,500

    So I have about $11,800 (for now) available that I was thinking of spending on a car. So my questions are these:
    • How much should I be looking to spend on a car? I want something affordable and reliable.
    • Should I take out a loan to help me buy a car? I realize I need to have money in my bank in case anything happens


    I don't pay rent (I live with my mom still) and end up saving around $720/month I need a car, I drive about an hour to work each day and an hour home.

    I'd appreciate any advice on this. I wanted to spend about $7000 on a car, but my mother insists I take out a loan (she'll help me if I need it, to cosign, etc) and buy a car for around $12,000 so that it's more reliable and will last longer. I don't like the idea of a loan though, and $7000 will get me a decent car that I figure will last at least 3 or 4 years and hopefully with little to no problems.

    If you can help me, I'd appreciate it! Thanks!

    http://www.mitsubishicars.com/mirage

    Best vehicle for you.
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  • Profile picture of the author derekwong28
    Since you are young, I would recommend that you take out a loan on the car. You don't when you may need to use your savings.
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    • Profile picture of the author Jason Kanigan
      Originally Posted by derekwong28 View Post

      Since you are young, I would recommend that you take out a loan on the car. You don't when you may need to use your savings.
      Are you INSANE?

      Obviously you don't understand how money works.

      A loan is RETAIL MONEY.

      IE. Money you buy as a commodity like flour or salt at a premium (the interest rate).

      Debt is dumb.

      If you, say, become suddenly unemployed, it is FAR better to have that car paid off in full and own it free and clear, needing to pay exactly $0 on it every month...

      ...rather than your situation, in which you have to come up with the loan payment.

      Yes, the OP should have savings. We all should have savings. But given the choice between having a necessary, reliable asset that is fully paid off...or a debt that's actually digging me deeper in the hole because of the interest I'm paying on it...

      ...I'd be paying off the debt immediately with the savings as soon as I found myself unemployed, anyway! So it's pointless to get the loan in the first place.

      Please, please, learn money works.

      Learn what the interest rate is. Learn how compound interest works.

      A loan is not a FAVOR.

      It's someone selling you money as a commodity and making a profit on their profit (because they already made you a sale, on which they're making a profit.)

      And those "Same As Cash" offers?

      All that happened there is selling company has sold their revenue at a discount for cash today or a discount on the goods from the supplier. It may seem cool that you don't have to pay for 30 or 60 days, but that is still a debt out there and it doesn't mean you never have to pay it. Beware getting into those situations as well.

      Pay cash, pay immediately, and get a discount for paying in full, in cash, up front.

      Basic Business Concept: "A dollar today is worth more than a dollar tomorrow." You paying now is more valuable to the seller than you paying next week or next month. Make sure you get a discount for doing so.

      This kind of comment frustrates the hell out of me, because it shows how shiny and flashy things bamboozle people all the time.

      A loan is NOT a gift.

      "X Days Same As Cash" is not a gift.

      Leasing is not a gift.

      They are money-making actions the seller is taking. Additional money beyond the profit of whatever they sold you. And that money is being made off YOU.
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  • Profile picture of the author Dan Riffle
    Jason, I get what you're saying, but there's an element here that could make a loan - a small one - beneficial. The OP is young so the assumption is he has a limited credit history. A small loan now paid on time will help in the future.


    For most people, credit is unavoidable. I don't know many who can buy a house by dropping off a bag of cash to the title company. The interest paid now can be more than offset by the lower interest rate on a house in the future.


    What you've said is great advice, but complete debt avoidance can come back to haunt you. Smart debt management is where it's at.
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    • Profile picture of the author Jason Kanigan
      Originally Posted by Dan Riffle View Post

      Jason, I get what you're saying, but there's an element here that could make a loan - a small one - beneficial. The OP is young so the assumption is he has a limited credit history. A small loan now paid on time will help in the future.


      For most people, credit is unavoidable. I don't know many who can buy a house by dropping off a bag of cash to the title company. The interest paid now can be more than offset by the lower interest rate on a house in the future.


      What you've said is great advice, but complete debt avoidance can come back to haunt you. Smart debt management is where it's at.
      It's true, however, a car is one of the two biggest financial investments a person will make (the home being the first.)

      So it isn't a "small" loan, right?

      I think everyone should be a lot more careful and more educated about what money is and how it is used and abused.

      Some people go to Rent-To-Own places and think they're getting some kind of deal or favor on a "pay us weekly" furniture or entertainment package. In fact, they're paying in total twice or more the price of buying it outright.

      The facts are that most people, me included, waste money tremendously.

      We buy cars like they are emotional, short term, transactional decisions like what movie we should see at the theater. Yet this is a multi-year, large financial investment.

      And here people are thanking the dealership for renting them money at high rates (which is what leasing and loaning is.)

      I don't disagree with you about having some credit history. What I am saying is know your foe and pick your battles. The world is set up to fleece the consumer, not help him or her. And if we walk around in complete ignorance of how money works, then we're ready to fall victim to being ripped off every single day.

      Dave Ramsey has some content on how to buy a house without credit. And it is amazing how much cash you can sock away when you don't have a car payment, furniture payment, entertainment payments and so on all adding up every month.
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      • Profile picture of the author David Beroff
        Originally Posted by Jason Kanigan View Post

        And it is amazing how much cash you can sock away when you don't have a car payment, furniture payment, entertainment payments and so on all adding up every month.
        And in the OP's case, rent. He's putting away 3/4 of his income each month, and that's with a minimum-ish-wage job. Plus he clearly knows how to write well, and presumably express himself with photographs as well, so I can see him doing very well, once he decides to start putting these skills to use.

        Sort of reminds me of a guy I knew fresh out of college thirty years ago, with his first professional job, and still living at home, rent-free. After three months, someone from Finance came by his desk, asking him if everything was ok. Apparently he'd been putting every single paycheck (physically) into a drawer each week, not realizing that they'd expire after a certain amount of time, (never mind the concept of earning interest).
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