I’m going to go at today’s blog post a little different. Today we’re going to talk about automobile expenses and why a plan is necessary when you have one. My brother often says that a car payment is something you will always have. In many ways this is true, once you pay off one, it’s time for another. Automobile payments can be like revolving debt if you don’t have a plan.
Planning is something that ordinary people do not do. They need a new car so they just go out and get one even if the price is heavier than their budget can bear. Planning simply means you take into consideration what’s best for you and your circumstances. For example, you might have one auto loan, but you don’t have to have two.
I understand you need your car, and have to have one, but how can we make the best of it, is why I’m writing this post today.
How Much Is On You?
Do you really know how much you spend on that car? I bet it’s much more expensive than you think. For this reason, Pamela and I find ways to isolate these expenses in our budget. When we have an auto payment, we use a separate account to make the monthly recurring payment. We need to get this money out of our normal spending account because an auto payment is generally larger than most bills. We’ve also concluded that we will never have two auto payments at any given time. The rule is before we purchase one, the last one must be paid in full. At first, this added detail to our plan seemed undoable, but in all actuality, it has been doable. For this reason along, you need a plan.
Auto Expenses is More Than Just A Car Note
Here’s something normal people don’t consider. What are your annual auto expenses? Normal folk will only think of their car payment when they discuss automobile expenses. Your auto expenses are more than just the loan. Don’t misunderstood, the loan is a big piece of it, but even if you didn’t have an auto loan, you would still have auto expenses.
For example, the insurance payment. Every vehicle at least in my state must have some type of auto insurance which in most cases is a monthly payment. Now add that to your auto loan payment and see how much the car takes out of your budget.
What about the cost to register an automobile (a.k.a. Tag). Each year you have to renew your auto tag. Have you considered these expenses? For us, it’s a few hundred dollars. We save monthly so that we have what we need when the tags are due. Now add this to your monthly payment.
Oh we can’t forget the auto servicing and repairs. It would do you well to add this up every year and add it to your monthly auto expense total. You’ll be amazed at how much that car eats into your budget. Lastly, add in the fuel costs.
These expenses will happen. The question is are you prepared for them?
Today is Friday!
Do you have a plan for the various auto expenses you’ll incur? They’re coming. Everyone with a car deals with them, but will you deal with them smarter or will you continue to operate like “normal” people?