I never buy a car I cannot pay cash for. I paid $150 for my first car but a battery in it and drove it for 3 years. It didn't get me any chicks but I was able to save up for nicer cars because I didn't have payments. This year I paid $11k cash for a fully loaded car that had less than 30k miles on it. I also bought my first rental property this year after saving for only 8 months.
I just want to jump in here and say man you are inspiring. At such a young age getting your future planning started and being aware of everything involved. Keep it up!
$450/month x 12 months gives you $5400 in savings at the end of the year.
Have you looked into how much your insurance payment will increase each month with a newer car?
If you're only making $25K a year $450 is a huge monthly expense unless you're living at home and not paying rent, which is great.
What's the interest rate on your dad's loan? If you are set on getting a newer car look into getting a used car loan from your bank or local credit union. I've seen interest rates as low as 2.8% on USAA. It might make more financial sense to get a 3-4 year loan in your own name to buy the car outright and see if you can get the monthly payments down to $200/month allowing you to put that other $250 in savings and build up credit.
It's great to see someone young who's already thinking strategically about their financial future. Most people do not think this way so you have a head start. I say do not take over your dad's car. $450 a month is a lot for you're income level. If you need a car for work look for an older model that you can buy cash and is not a gas guzzler. House hack to get your first property, something closer to your work. Working at a property management company is a great place to get experience, work hard there and look for opportunities for advancement that will allow you to earn more money. And focus on your monthly expenses. Budget, keep track of every cent that comes in and goes out. Understand your current situation and be frugal. I've learned so much from the BP community in the past year. I wish I would have known about this community when I first started in REI 7 years ago. You're on your way to success.
The car payment is way too high on your income. It will destroy your DTI and limit your ability to save for a house. Do not accept your father’s offer of help because it will only harm you despite his best intentions. Your credit score should be high enough as it is for a mortgage. If you want to build credit and can’t qualify for a regular credit card, then apply for a secure credit card. Be sure to not build up debt though and just use it for bills you are already paying and can afford to pay off each month (gas for your car, Netflix, cell phone bill, etc.).
I would also suggest trying to make do with your current car until you are able to save up to pay cash for a car in the $4000 to $5000 range. Hopefully you can also get something for your current car too if you sell it.
Considering your age and lack of income think about what you could do to improve your income. Perhaps community college or some type of vocational program to learn a trade? Or another line of work with potential advancement? Or perhaps getting a second job or working a lot of overtime at your current job until you figure out what field of study or career would be more lucrative and enjoyable for you. Saving money to invest in yourself such as for community college or a certificate program could also be a good use of your savings.
When you are able to afford it starting out with a duplex or a home where you could rent out additional rooms could be a way for you to own your home while also making income from tenants. This would be ideal if you are able to afford it. Work on increasing your income so that you can reach your dream of home ownership.
@Sebastian Lee thanks for the support and comment!
@Joe Splitrock thanks for the support and comment! You were the first to support me getting the job there so I appreciate that I don't feel so dumb for doing so now haha!
@Jordan Moorhead Thanks for the comment! I appreciate that and I know house hacking seems like the way to go for me!
@Ben Graves thanks for the positive and encouraging message man I really am grateful for that! I believe I am going to buy a used car like you said and for a third line of credit I'm thinking of taking over my phone bill or something so I can get more depth to it like you said!
@Michael Guzik Thanks so much for sharing with us your ideas, I wish I had someone to ask this when I was on your age, on that time I was happy buying cars that delay my investments, If you goal is to buy a property next year please be prepare and not add expenses that you no really need
@Bryan Huntington thanks for your comment and for bringing that different perspective! I really do agree with you but the only thing that I can't argue with their point is it bringing down my debt to income ration even more:(
@Treyan Doss thank you so much for the comment and encouragement! I appreciate and value your advice! I really am considering the military but after you said that it confirms my fears that I wouldn't be able to do both...
@Joe Villeneuve thank you for the different perspective! It really is hard to get into that mentality since I have no one around me that thinks like that but you are 100% right I need to have that mindset at all times thank you!
@Richard Jones no it's a silver Suzuki SX4 2008
Ten four. If it was a Samarai Id say sell it to the 4x4 enthusiast.
@Thomas Robb Thank you for the input Rob! I know your pain I tried to always avoid picking up girls because of the car now haha! However that's a short term sacrifice for a long term gain like you said!
@Lauren Messenger Thank you so much Lauren I really do appreciate that it means a lot!
@Casey Shultz Thank you for the comment! I know looking at it logically you are 100% right. I am lucky that my parents still let me live here so I do save a decent chunk of every paycheck now. The insurance is what killed me, I was able top show my Dad kindly that this wouldn't work out. The insurance would jump up to 375 a month on top of the car payment making it over 700 a month which I told him was way too much. He did have a great interest rate of 1.75% though to answer your other question! The sad thing to your last point is I only have about 4000 in my savings as of now which I had been saving to use for the FHA loan down payment.
@Jennifer H. Thank you so much for the positive message I appreciate it! The bad thing about being young and having time is that no one believes in me or even listens much less tries and help me so I feel like I'm all alone. It really does help to have this community and people like you to help me out and give me advice so thank you!
@Amy Beth Thank you so much! I am looking into that but I don't know what career or trade to get into that would be a wise use of money... I really don't like the idea of college debt because it won't help me either way.
I stopped reading at $25k/year.
Really no further advice needs to be given or taken until that is adequately addressed. Not trying to knock you down at all even if it comes off that way. I’m heavily rooting for your success here and I admire your ambition.
Gotta get back in school, pick up a second job AND hustle harder in your current. This is what’s really holding you back.
These other issues will disappear when you start making double what you are now.
For a car to get to and from your new jobs, buy a dirt cheap “reliable brand” car, and learn to DIY asap.
Look for deals on older cars with low miles from solo owners, esp retired folk who only used em to get groceries.
My family has traded in a few cars for $1-5k with just 60k miles on the clock and no real issues with them other than just being older cars. I recently traded in my BMW with 80k miles on it for $4k to one dealer, which then got auctioned and sold by another dealer for $8k! (Tracked the VIN).
Many other individual owners out there doing the same, check local Craigslist.
@Carlos Zapata Thank you for the comment and encouragement!
@Aaron Hunt thanks for the comment and the advice I appreciate it!
Just to clarify my earlier comment I am not recommending college debt. Especially since you do not currently have a specific college goal. College is worthwhile when you have a career goal which requires college and to attend college just to go without a specific purpose would not be a good idea imo.
I was suggesting to find a low cost way to either attend a certificate program or community college with the idea that you save up to pay for it and would be able to then secure a higher paying job. That would require working a second job or finding a primary job with a higher income to pay for it.
@Amy Beth Don't worry I know what you meant, for me it is just trying to find said program and figure out which one if for me and which will benefit me the most.
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