Some weekends, I miss having a car. In college, I had a 15 year old Camry that I named Renee. A few years ago it seemed like every one of our couple friends had a car. I felt bad always asking for a ride, but at least I had gas money. In New York City, car ownership can be very expensive in terms of money and time. In addition to regular maintenance, you can spend a ton of money parking your car in a lot (read: $$$) or spend literally an hour or more looking for a parking spot. Some of my deepest prayers have come from looking for parking in my neighborhood after 8pm. My ears because extra sensitive as I listen for any hint of an engine revving up. My boldness has increased as I’ve asked complete strangers, “Are you coming out?”
But back to my story. Mr. H&H and I are a rarity among friends in that we’re a couple where both of us know how to drive (#relationshipgoals?). Family members were asking if we were going to buy a car. To be honest, I was jealous of the easy of being up to get up, go, and escape the city/do grocery shopping/get home without dealing with fellow New Yorkers on the train like my friends with wheels did. So we talked about it. Should we get a car?
Eventually we decided against it, but these are the steps that I went through to figure out whether or not we should get some wheels. However, these steps can be applicable for any big purchase.
Do the Math
I wanted a car. I could have talked myself into needing a car. I could have even spiritualized the decision: We could help so many people! Give rides after church! Teach others how to drive! But first and foremost, I had to run the numbers without emotion.
To calculate whether or not it made sense to get a car, I got a lot of data points. The cost of parking in my building. I asked friends how much they spent on car insurance. I looked at the price of used cars (‘cause new cars are generally foolishness) with the make, model, and features I was interested in. I considered gas prices, which at the time was around $4 a gallon. Result? (Drum roll please.) I figured out it was cheaper to take a cab from every place we would potentially drive to and fro then it was to own a car. Math doesn’t lie.
If you need to decide whether or not to make a big spending decision, step back for a minute and run the numbers to see if it makes sense for your family. Too often we can make a decision based on fear (if I don’t send my children to private school, they’ll never be successful), jealousy (I want a house like she has), or without considering the full costs (I can afford the monthly payments, so I’m good).
Determine Your Financial Priorities
That being said, we still could have afford to get a car but we had to consider what we would have to give up in return. For example, most friends who had a car didn’t have cable. Mr H&H and I love to travel, but looking at the budget we could not do both. So we decided to pump the breaks on car talk.
When deciding whether to add a new expense into your budget, you have to determine whether it’s in alignment with your financial goals and priorities. If your goal is to get out of debt but you’ve never met a sale you didn’t like, you are not in alignment. If you want to take a dream trip, yet you eat out all the time, you aren’t living your priorities. Unless you are Warren Buffet reading this, we all have limited resources and need to prioritize what’s most important in our current life stage
Plan for the Future
Of course, our thoughts on car ownership may change if we ever get around to having kids. Likewise, you might have a purchase that might not be needed now, but may come up in the near future. This is where sinking funds come in. We could create a Car Fund to save a little each month for the eventually purchase. If you’re dating someone and it’s looking serious, why not start a Wedding Fund?
In the meantime, I’ll set aside some gas money.
What about you? Any other thoughts about how to make a big purchase? Leave a comment below.