Transportation
Many Americans are driving a better automobile then they can afford. Here are some signs that this may be the case with you.
1. You bought a new car and did not make a down payment because you could not afford to.
2. Your family has two car payments.
3. You had to stretch your loan out to five or more years in order to afford the payment.
4. You are living paycheck to paycheck and you paid more than $20,000 for a new car.
5. You have to have a new car every few years to impress your boss, co-workers, family, or friends.
The two best ways to reduce auto loan payments is to keep your cars longer - several years after they are paid for - and to simply drive less expensive models with less options. All models of automobiles will continue to look good even as they age as long as they are maintained properly. Follow the manufacturer’s recommendations for waxing and invest in a professional detail once a year. A mobile auto appearance technician can touch up paint chips and scratches, and dents and dings inexpensively. A well-maintained car will look good up to 150,000 miles or even longer.
As an automobile gets older the maintenance costs will probably increase, but that doesn’t necessarily mean it is time to get rid it. Actually, it is usually much cheaper to keep the older vehicle. For example: Joe has a seven-year-old automobile that is paid for and he spends $500 twice a year in repairs. That is equivalent to $83 a month in automobile repairs. Compare that to a car payment of several hundred dollars a month. (Routine maintenance like oil changes and new windshield-wiper blades should not be considered because you will have these with a new car too.) It is easy to see that it is far more beneficial to stick with the older automobile.
One problem that many families have is that they have two car payments. This can put a real strain on the budget. Make it your goal to have only one car payment at a time, or better yet, no car payment. To reach these goals follow the advice in the previous paragraphs.
Don’t skimp on mechanical repairs and maintenance. If your budget is tight it is tempting to ignore warning lights and leaking radiators, but a $200 repair today can become a $1200 repair if not taken care of promptly.
Because new automobiles depreciate significantly in the first year, let someone else take the depreciation hit – buy a well-maintained used automobile. Dealer demos are often good buys. You might be able to get a lower price by buying the auto direct from an individual, but if you buy from a dealer you often get a warranty that will protect you if you have problems. Frequently individuals sell cars because the owner knows of a problem and they do not want to pay for a repair. Before you buy a used automobile go to the Kelly Blue Book web site – www.kbb.com – and find out what the automobile is worth. Also, no matter who you buy a car from, have it inspected by a trusted mechanic.
Another way to save on transportation expenses is to drive vehicles that get better gas mileage and to find ways to conserve gas. Aggressive driving – fast acceleration and quick braking – wastes gas. Maybe you could carpool with a co-worker. Ride Finders (www.ridefinders.com) is a free service that will match you with someone in your neighborhood to carpool with. They will even pay for your taxi ride home if your driver had to unexpectedly leave work early and you are stranded.
If you have public transportation in your area you could use it at least some of the time. Even many rural areas have puplic transportation that you may not be aware of, such as small buses or vans. Call your local government office to inquire about the availability of these types of service.
Many people drive nice cars as a status symbol. They feel they have to maintain a certain image. If you want to drive a status symbol drive a small automobile - everyone will think you’re intelligent because you don’t waste money on gas and you’re a good citizen because you are conserving energy!
Your driving record affects your auto insurance rates, so don’t rack up a lot of traffic tickets. Every couple of years you should shop around for auto insurance, to make sure you are getting a competitive rate.