My "New", Affordable Ride
By: Ethan Burton
My Costs of Living:
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.
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.
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.
- 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.
- I chose the 5 year loan, therefore I will pay a total sum of $26,356.80 over the course of the entire loan.