I hate the idea of milestones; they never live up to your expectations.
“Wow, you’re 30! What a milestone!” Except my 30th birthday felt like just another birthday and we’re edging on the unfortunate feeling that birthdays feel like just another day.
“Wow, you got your first salaried position!” Except it wasn’t the best salary, I still struggled with money and now if I work overtime I don’t get paid for it.
“Wow a new car!” Except now I have 20% of my paycheck going toward paying for it.
I think one of the worst things about growing up is realizing that milestones are just pebbles that are marking the trail. You grow up expecting them to be these huge deals, and in a way, they are! But in reality it’s just something that had to happen.
Yesterday I bought myself a car for my new job. I have a very good friend who is about 10 years younger than I am and through their eyes, this was a huge deal. I went out, picked a car I liked, bought it and now I have the freedom that comes with a car. Wow.
The reality of my car buying experience was a lot duller. I spent months researching makes and models to figure out which would work best for all of the travel I would be doing. I needed something reliable that could last several hundred miles and was good on gas. My bells and whistles are pretty basic: back up cam, heated seats, remote start up — all negotiable depending on prices. And I knew I needed to get a used car, so I wanted something under 100k miles, something with no accidents, regular upkeep and anywhere between 2015–2020.
I spent weeks sifting through all of my needs, deciding which things I was willing to bend on and which things I was not. I would find a car in my price bracket, only to realize that the miles were too high and I had to decide if paying a little more was worth the knowledge that I could get more use out of it.
In the end, I decided that a crossover was the best choice for me. A small SUV, typically good on gas, tall enough for me to not need to bend just to get in and out and plenty of space for possible transporting of large items.
I decided I needed either a Toyota or Honda; two of the best companies in terms of reliability and affordability. I realized that I needed something within 50k and 90k miles — yes I might pay more upfront but in the long run this was going to be a car that I needed to rely on for at least the next 5 years.
As my list became more precise and well researched, I found it. The absolute perfect car for me. A 2014 Honda CV-R. It has 70k miles on it, 1 previous owner and no accidents. It’s 35 hwy mpg, has an incredible safety rating and judging by comments online, has a 4.5 out of 5 star general enjoyment rating. And the car was listed for $16.5k where most of the similar stats I was finding were putting the car at 20k minimum.
I set up a test drive, went down and was not disappointed. I had done my research, remember, so the test drive was to make sure it started up properly, drove smoothly and was comfortable to drive. It was.
So I bought it. All said and done, my car payment and insurance payment come to 20.6% of my paycheck (not counting drive time pay and mileage pay). The recommended percentage for a car is 15–20% and I can’t find a definite answer on if that percentage needs to include maintenance and gas or not, but I am willing to bet that it’s better if it does include that — which mine does not.
It’s hard to guess my gas bill because there are going to be weeks where I travel 4 or more hours to work on Monday and then the same to get back on Friday. But there will also be weeks where I travel 15 minutes to work and back every day. My answer to this was to calculate the most I will possibly do and then divide that in two for an average. It’s still not accurate but for now, it’s the best I can do.
So based on those calculations I will be spending 32% of my check on my car. And that is not good. Now, I do need to keep in mind that I am paid drive time and mileage but even with that It’s still a little shy of 30%.
Now this had me freaking out a bit. This car is seriously one of the best deals that I’ve found and I’m not regretting it, because there’s nothing I can do about reliable transportation, but I’m now wondering if I’m being low balled on my pay (which is something I was already thinking to be honest).
But for now, there’s not much I can do about that either. The job market is kind of brutal and now more than ever, so I just need to deal with it, but then my mother reminded me of a rule that she was raised on: 10% of your paycheck goes into savings.
I am blessed to live with my mother and while I do pay the electric bill and 1/2 of the groceries, that’s nothing compared to rent. So all of my bills, including the new car bills my spendage comes out to 60% of my paycheck. That includes my phone, electric, groceries, car, and streaming services.
Is my car spending above the recommended percentage? Yes. But all said and done, I will still have 40% of my check left over at the end of the month. 10% of that is savings, period. 10% is for fun (buying games, video game subscriptions etc.) and that other 20% will be my cash flow — which is something that I think a lot of people don’t think about.
My cash flow is just that amount of cash that I want in my checking account at the end of the month leading into the next month. Instead of paying all of my bills and being at $0 on the nose, I’ll have a nice cushion that will lead me to my next check.
All of this nonsense to say: Sometimes when you look at your finances from one point of view, it looks like you’ve failed. I’m spending 30% of my check on my car and I should only be spending 20%. Fail.
But from another vantage point, you’re actually doing alright! I’ll be able to squirrel away 10% for savings and still have 20% as cash flow cushioning all while paying my bills and having money for enjoyment. Win.
So no, maybe buying a car wasn’t the most exciting thing in the world. Months of research, weeks of searching and hours of signing papers. But in the end, I bought a car that is reliable, works well for my needs and I can 100% without a doubt afford it and still not live paycheck to paycheck. I’d say that the real milestone here is realizing that I’m able to handle business without it destroying me. And I can’t pretend that that doesn’t feel pretty good.