If I could pick the number one thing that I see among young adults in their 20s and 30s that keeps them in the financial hole, it is spending way too much money on car expenses. My advice to you is to be sure that your car expenses, which includes a car payment, insurance, gas, maintenance, and anything else that it costs you to own your car, under 10% of your gross income. So if you make $3000 per month, your car expenses need to be $300 per month or less. Yikes! But for many young people the car insurance alone is $150 per month. Gas is another $100 per month. That is $250 already! We haven't even talked about a car payment yet. This is why I talked earlier about paying cash for everything you want so that you can be sure that you can afford it.
Most people who start tracking their spending, paying themselves first, and resolve to stay out of debt begin to buy used cars. They realize that there just is not enough money to go around to buy everything that they want. Let's look at the numbers for a minute so you can see why I recommend that you keep your car expenses under 10%.
Gross Income 100%
Taxes 25%
Savings 10%
Housing 25%
Car expenses 10%
Everything else 30%
Everything else includes clothes, vacations, gifts, medical expenses, child care, pet care, entertainment, insurance, education expenses, and unexpected emergencies. If your income is $3000 a month, that means you have just $900 per month for all of these "everything else" items.
If you decide to spend more than 10% on your car expenses, then you need to decide whether you want to spend less on housing or whether you want to spend less on this "everything else" category. What happens instead is that most people just spend more without thinking about it, and then the 10% that they need for savings has been eaten up. Of course this is why I always say pay yourself first by funding your savings first thing, and then decide that you are going to live on the rest.
Storage For A Car
My husband and I once owned three motor vehicles, a jet boat and two snowmobiles. We were always paying insurance, getting tune-ups and repairs, and buying fuel. Oh how I used to dread waiting in that rinky-dink motor vehicle office getting our license plates renewed. When I think back on the math, I estimate we spent over five thousand dollars a year on our cars!
Everything changed when I got pregnant and had twins two years ago. Our children, a boy and a girl are now the center of our lives. John took a job in Chicago for more money, and we moved our family into a luxury townhouse in the Meadows off Racine. And although our new three bedroom condominium is exceptionally beautiful, with a fireplace and two balconies, we have only street parking, and sadly we were forced to sell all but one car. Obviously that meant no car for me, as John would of course use the remaining vehicle for his daily commute.
On one hand, this was a terrific relief; now I could stay home with our children and really focus on being their mother. My husband surprised me with a beautiful ‘twin stroller’ so I could take them out, and we could explore the city together when he was away at work.
But on the other hand, this was all slightly terrifying. What if something happened? What if I needed to go somewhere fast? For young mothers, cars are more than just a convenience – they’re shelter in a rain storm, and security at night.
I wasn’t going to be another stay-at-home mother.
It was time to get smart about the situation. As a responsible adult, I knew I needed an improved urban methodology - my management training taught me that I should implement any available improvements now, to make my evolution to public transit easier and shorter. A world of buses, taxi companies and the mysterious ‘L’ train, with lines that converge in a giant downtown "traffic circle" called The Loop, awaited me. I’ve wanted to see a baseball game at Wrigley Field since childhood, and now I knew it was possible. I just needed to familiarize myself with ‘how’.
My action menu might be helpful to you, if you are adjusting to life in a big city without a car.
1. Safety First: Plan for emergencies in advance – post all medical phone numbers, fire, police, relatives on the wall beside the home phone, and program a special list of these critical numbers into your cell phone.
2. Post public transit resources and maps on the wall by the front door. Be sure to post a bus schedule. It’s been my experience that buses are generally on time and knowing those times is very helpful.
3. On your personal computer, find a decent local search program. Your city will probably have evolved its own such software, and this might be worth investigating, but the best local search services harness Yellow Pages data. I use Poynt (http://mypoynt.com) on Microsoft Live Messenger to find all necessary staples for myself and my children within a five block radius of our apartment. Plus Poynt has a handy map that lets me plan a route and search for cost variables at different parts of the journey. It’s a trip.
4. Meet your neighbors. We live in a very green community and because I’m always ambling about with a car, our neighbors see me as active environmentalist. Most of these folks have also shunned cars and use public transportation to commute to their offices. The message board in the lobby contains a car pool, as well as environmentally safe dry cleaning promotional coupons, and other green services (including a woman doing cloth diaper cleaning!) and grocery orders and deliveries services.
5. Buy a backpack. This is probably the best piece of advice that every young mother already knows. There’s nothing handier than having a back pack full of toys, wipes, books, medicine, groceries, spare keys, lipstick and water. I have a mock Volkswagen emblem sewn on the pocket of mine, and that’s kind of how I’ve come to think of this apparel.
Last but not least, remember, for extraordinary ‘out of the loop’ travels, you can always take a taxi, and still be ahead of the game
Both Jeff Beale & Rob Campbell are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.
Jeff Beale has sinced written about articles on various topics from Marketing, SEO Search Engine Optimization and Marketing. Jan Dahlin Geiger, CFP?, MBA, is the author of Get Your Assets in Gear! Smart Money Strategies. Currently, she is the money expert for Wedding Television Network's Love and Money show, broadcast on Comcast Cable. Numerous media have also quoted Jan, incl. Jeff Beale's top article generates over 110000 views. to your Favourites.
Rob Campbell has sinced written about articles on various topics from Parenting, International Film Festival and Outsourcing. Tanya Blaise lives in Chicago and uses to navigate the world outside her posh condominium.. Rob Campbell's top article generates over 5400 views. to your Favourites.
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