Broke Ass Financial Coaching: Should I Buy a Car or not?

While being young, broke and beautiful is all well and good, some people’s finances are more jacked than others.  That’s why we’ve invited Betsy Crouch (aka Coach $izzle) to come onboard and dole out some much needed advice.  She is a professional financial coach after all.  If you’ve got a question you’d like answered please email her atcoachsizzle@brokeassstuart.com.  Maybe your question will be the next one answered.

Hey Coach Sizzle, should I buy a car or not? -KT

I am extremely passionate about giving advice on buying cars.  Why?  I have made many mistakes namely leasing new versus buying used.  At one time, when I was 24 years old I was not only leasing one vehicle, but two vehicles.  Wow.  Really?  What an ass!  Ok, well at this point now, I have not owned a car for almost four years and I am super ecstatic about it.  I hate to brag and everything but I ride San Francisco’s public transportation system, Muni, and I flippin’ love it.  I don’t even buy a fastpass because I know that I spend less on fares individually based on how much I ride.  I am all about being efficient and getting a good deal.  I can hop on and ride anywhere in the city for a few hours for only two dollars!  I can have a couple drinks while I am out, read whatever I want, and look out the window.  I don’t need a car to get anywhere.  As a back up I have a Zipcar membership so that if I needed a car, I could go online and get one in my neighborhood immediately.

This may not be true for you. When I lived in Michigan and New Jersey there really was not a question of whether I should or should not buy a car.  I needed a car to get to work and to do anything.  Some of us live in a 'œcar culture'/LA/Suburbia and some of us don’t.  For those of us who do not haftahava car, on what do we base a decision to get a car anyways?  Money?  Convenience? Environmental impact? Independence? Cultural norms/pressures?  Make a list of all the factors involved. For many of us money will be one of the most important factors to consider.  Take the three most important factors to you and look at them through the lens of buying a car and of not buying a car.

'œMoney lens'
Buying a Car:

This is a calculator of 'œthe real cost of car ownership,” from Bikes at Work Inc.  It calculates what you could achieve financially if you put the money towards education and retirement savings, for example, instead of a car.
Also, don’t get caught in the trap of just focusing on the monthly payment, 'œoh I can swing $300 per month,' look at the total amount you would be spending, over the course of years.

In order to come up with amounts for the 'œreal cost' calculator above you need to choose the type of vehicle you are thinking about buying and then go through the following steps to predict your expense.

1.    Price of the vehicle, check out Kelly Blue Book.
2.    Financing, use Bankrate.com for research on rates, see sf rates here.
3.    Insurance, Bankrate car insurance quotes.
4.    Registration, DMV info.
5.   Fuel cost
6.    Parking space expense
7.    General Parking and Tolls

Alternative transportation:

What expenses would you have if you didn’t have a car?
1.    Public Transportation, Google Maps produces a projected expense with directions.
2.    Taxis '“ Green Cabs in SF
3.    Rental Cars
4.    Car pooling expense
5.    Bicycle expenses
6.    Car sharing '“ CityCarShare and Zipcar for occasional driving needs.

Write down your prediction for how much you would spend on a car versus what you would spend on alternative transportation.

Then look at your other factors:

Environmental impact: Would you drive alone?  Carpool?  Buy a hybrid vehicle?
Time and Convenience:  How long would it take you from point a to b to drive and park versus ride?

If you decide to buy a vehicle, please watch this video called, how to buy a car without getting screwed.  It is designed to help people who are going to buy a new car, but the principles can be applied to buying a used car from a dealership.  Buying a car can feel daunting and scary if you haven’t done it before.  You can buy a car without getting screwed.

I can say that I am a much happier not owning a car than owning a car.  Go into your heart, what is true for you?  Are you willing to spend more for convenience and freedom?  If so, could buying a car be an opportunity to help others by carpooling?  Or can you experience the convenience and freedom you desire without buying a car?

I say if you buy a car because you want it and you don’t need it, buy a used hybrid, drive all of your friends around, and just be at peace with it.  If you are going to do it anyways, you may as well enjoy it!

Questions? coachsizzle@brokeassstuart.com