There are all sorts of rules of thumb about how much you should spend on a home, but what about that other major expense in your life — your vehicle? Have you ever wondered how much to spend on a car?
I've thought about this question before, but never really considered that there might be an answer. (Well, no answer other than “as little as possible.”) But the folks over at BeFrugal have put together a car calculator that lets users figure out how much it makes sense to spend on wheels.
You enter the amount of time you spend at home, the amount of time you spend driving, and the amount you spend on your house (or apartment). The calculator spits out a figure that tells you how much (proportionally) you could spend on a car.
BeFrugal offers these caveats regarding their calculator:
This calculator assumes that you get equal satisfaction from having a nice car as that you get from a nice home. It only takes into account the information that you filled in above. Here are some things that are *not* taken into account:
- Since we are only calculating how much you should spend on the car, and not the house, this calculator assumes that you have made a good (and frugal!) choice with your home.
- A newer or more expensive car is likely to be safer in an accident.
- A newer or more expensive car is less likely to leave you stranded.
- A hobby car cannot be evaluated using this calculator, as the purchase is based on enjoyment value, not utility.
How useful is this? I don't know. I still think the best advice is to determine which model (or models) suits your needs and then shop for a good used vehicle.
As for myself, I'm happy with my used Mini. It's one of the best purchases I've ever made. Still, I know it can't last forever, so I'm diligently setting money aside in my Mini Replacement Fund so that I can buy a new Mini when this one dies. (Except that I did raid my Mini Replacement Fund to pay for next year's trip to Africa. Time will tell whether that was smart or stupid.)
Author: J.D. Roth
In 2006, J.D. founded Get Rich Slowly to document his quest to get out of debt. Over time, he learned how to save and how to invest. Today, he's managed to reach early retirement! He wants to help you master your money — and your life. No scams. No gimmicks. Just smart money advice to help you reach your goals.