My "New", Affordable Ride

By: Ethan Burton

My Costs of Living:

I receive $60,000 annually at my job.

Housing, at 35% of my income, costs me $21,000 per year, and $1,750 per month.

Taxes, being 25% of my income, costs me $15,000 per year, and $1,250 per month.

Transportation:

I can use a total of %15 of my income on this.


  • %10 of that 15% is for the payment, and I am able to spending $6,000 per year and $500 per month for my car.
  • The other things that go along with owning a car, such as gas and maintenance, will cost me a total of 5% of my annual income, at about $3,000 per year, and $250 per month.
%15 of my income is also spent on food, so about $9,000 per year and $750 per month.


I try and save %5 percent of my income, which totals to about $3,000 per year and $250 per month.

My medical costs, such as health insurance, cost me $1,800 per year and about $150 per month.

I am able to use %2 of my income on other things, such as entertainment, so about $1,200 per year and $100 per month.

So What Can I Afford?

For the three year payment plan, I am able to afford a car that costs $16,999.34.

For the four year payment plan, I am able to spend $22,254.51 on a vehicle.

And for the five year payment plan, I am able to afford a car that costs $27,326.56.

The car that I found and must have costs $23,998.

Monthly payments:


  • 3 Year Plan: I could not afford this because it would cost me $705.85 per month, and my budget is only $500 per month.
  • 4 Year Plan: A lot closer to my goal of $500 per month, at a total of $539.16 per month, but I would have to cut back on other things like the money I use for entertainment, which I do not want to have to do.
  • 5 Year Plan: Finally, I can afford this vehicle. With the 5 year plan, it will cost me $439.28 per month, which is less than my actual budget, and I can put the extra money towards things like customizations for the vehicle.
But how much will I end up having to spend on it now, over the course of the loan?



  • I chose the 5 year loan, therefore I will pay a total sum of $26,356.80 over the course of the entire loan.
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