The following post is by MPFJ staff writer Travis, who blogs at Enemy of Debt where he candidly shares his family’s financial struggles, failures and successes. As a father and husband, he provides a unique perspective on balancing debt, finances, and family.
My son recently started his first part-time job at a grocery store. We told him that he could have this first two paychecks to buy whatever he wanted, after that we would talk about  how much of each paycheck he would save towards his own car as him using one of ours is inconvenient at times.
I want him to have the right perspective when it comes to buying a car, so he’ll be required to have cash in hand to purchase his first car. I also wanted to set his expectations correctly as to what kind of car he would be able to purchase, so we sat down together and ran some numbers.
He’s currently working about 20 hours a week, or 40 hours a pay period. Making $9.75 an hour, after taxes his paychecks are about $330. We agreed that he would save half his paycheck. Thus each paycheck will inject $165 into his savings account or $330 per month.
We discussed when he thought he would like to buy his own car, and together we targed September of 2016, which is the beginning of his senior year of high school. Saving $330 a month for 15 months would give him $4950 to go car shopping.
I knew exactly what question he would be asking next; What kind of car could he buy for about $5000? I searched some of the car dealerships in my area, and found some cars available that he could theoretically afford:
- 2003 Silver Ford Focus with 124K Miles
- 2005 White Pontiac G6 with 167K Miles
- 2007 Blue Kia Electra with 87K Miles
- 2008 Silver Chevy Cobalt with 191K Miles
- 2005 Maroon Pontiac Grand Am with 95K Miles
Next, I wanted to show him what kind of car he could buy if he upped his savings just $50 a paycheck, or $100 a month. By doing so, he would raise his car budget to $6450 and significantly upgrade the type of vehicle he could afford. Here are some examples I found that fit within the recalculated budget:
- 2007 Metalic Honda Civic 167K Miles
- 2008 Silver Chevy Impala with 132K Miles
- 2007 Black Ford Fusion with 128K Miles
- 2005 Black Volkswagon Jetta with 134K Miles
- 2009 Yellow Pontiac G3 with 102K Miles
The hardest thing about paying cash for a car is finding a way to save up enough to pay cash for a vehicle. For my son it’s fairly easy because he doesn’t have many expenses, and he can just use one of our vehicles until he can afford his own. But for the rest of us it’s difficult to save a significant amount of money each month in addition to all the other financial commitments of every day life. But by following a few steps, it can be done.
Dump The Car Payment
If you currently have a car payment, consider selling the car if you can get at least as much as you owe on it. By getting rid of the car payment, you instantly have extra income to save.
Buy A Car
If there are proceeds from selling your existing car, buy one using only that cash. A friend of mine did exactly that, driving the completely paid for car as they saved up to buy a new vehicle with the time was right.
Buy a Clunker
Another friend of mine bought a $300 car that he drove around for 4 years before it finally died on him. It gives you transportation, and doesn’t cost a lot. If it requires major repair, junk it and find another.
Utilize Public Transportation
I was surprised to find out that the city bus goes right by my home that I could use to get to work, or virtually anywhere in town.
I want my son to start off right financially with his first vehicle. I wanted him to follow the same methodology that anyone would do that wants to get in the groove of paying cash for their vehicles.
- Eliminate any current car payments
- Find an alternative mode of transportation whether it be buying an older vehicle with cash, or using public transportation
- Determine how much to save each month and stick to it
- Determine how long you want to save before you buy a vehicle
- Be realistic about what kind of vehicle you will be able to afford
Even if some of these steps don’t apply to my son right now, we discussed them as well as the advantages of saving for your next car as opposed driving something technically owned by the bank, and paying interest on it.
How about you all? Do you finance your vehicles or have you taken the steps to pay cash?  Have you ever thought about what it would feel like to pay cash for your next ride?
Share your experiences by commenting below!
