Hi all,
Let me start by saying I got some really good advise about an auto financing decision from these forums last night. I agreed with some of the points and disagreed with some as well, but some of the knowledge shared really opened my eyes.
I did notice that the community on these forums is from a diverse financial background and history some good some bad, and geographical locations vary as well so we might have some conflicting understandings of certain figures such as how much is acceptable rent based on where you are located or age. I also think we have a much more mature croud here so alot of the thinking tends to be toward the long term goal of retirement, for some thats sooner than others.
So I came up with a potential budget for 2011. Keep in mind my goal is not an 850 FICO yet even though that would be nice :-) I would still be happy with maintaining a FICO 700 and some modest savings and a comfortable living situation for myself too. I work very hard so I believe in rewarding myself.
I have included my budget below. I am 26 and single. No credit card payments. Not saving for a mortgage yet. Located in Canada.
I also recieve annual bonuses and sometimes some freelance work, but that amount is always variable each year and has been excluded from my budget.
This is not a budget I would follow at an older stage in my life, so do consider that, this is relative to my current living situation and financial obligations.
Some people felt maybe 1000 a month was too much for a car, I like to think that depends, some people might enjoy dinning out or yearly vacations, so it makes sense to have such items as priorities in their budget. I on the other hand am a car enthusiast so I rather spend towards that particular interest instead.
| Budget Monthly | |
| Rent | 1300 |
| Car (60 months) | 1000 |
| Gas | 100 |
| Parking | 100 |
| Insurance | 275 |
| TFSA & Savings (10% of net) | 450 |
| Cell | 75 |
| Cable | 75 |
| OSAP Student Loan | 125 |
| Food & Groceries | 200 |
| 3700 |
| Salary | 55100 |
| Taxes | 10666 |
| Net | 44434 |
I would like to invite you all to give your take on it or maybe rate from 1 - 10. Conservatives or Liberals all welcome 
...
thnx.
I agree, there's a lot of missing stuff. You mentioned Canada, so I don't know if you are comparing Canadian dollars here or American, but note the following:
Car - $1000 is toooo high. I understand your love for cars and am planning on collecting myself one day, but you should pay cash first or you should have thrown a larger down payment first. You'll stuck with a ball and chain for 5 years at over 25% of your take home pay. That's too much. I suggest paying it off an be done with it. If you are an enthusiast as you say you are, then you know you'll have to fork out much more than that to keep up with the hobby.
Gas - I have to assume that it's not an economy car at $1000/mo. Assuming you aren't driving all the time to work, I think your $100 is way too low. I also see $4/gallon USD gas in the near future. Oil is approaching record highs once again and if you are really only spending $100, you should at least bump it by 25% to cover that added cost.
Savings - too low! You need to save a minimum of 25% of your gross pay. In the US, social security (6.2% of gross) can be factored into that, but less than 10% of your gross now is too low. If investing and retirement one day is important, you should start saving now. And start with 6 months worth of expenses in savings before investing.
Food - Way too low! That's less than $7/day for food. You can't prepare a health meal for $7/day.
Missing items - you should probably include the following (beamMEup got me thinking):
Car maintenance - If you are serious about your hobby, then know that it'll cost money to maintain it. You should at least include money for repairs, new tires, new brakes, oil changes, new parts, and so on. If this is a luxury car or more of a car than just driving from point A to point B, then you already know that it costs extra to maintain it.
Clothes - mentioned already. You should probably include that. I like nice threads, but also remember being single at one point and not caring as much. A 3y.o pair of sneakers on a new date probably won't win anyone over. Also, if you ever have to dress up for a date, biz appointment, God forbid a funeral, or whatever, you should probably throw in extra for dry cleaning.
Utilities not covered - any?
Dating - costs money!
Maintenance of other stuff - things break down like electronics, computers, etc.
Internet subscriptions - Free now? If anything budget for your FICO reports. 
Gifts - someone who cares about you may not be too happy come gift time if you aren't spending any on gifts.
Miscellaneous - We all have it....furnishings, coffee out, surprise expenses, broken this or that, administrative fees (e.g. license, property taxes, vehicle registration), hair cuts, hobbies, work-related expenses, medical costs not covered by insurance, travel costs, and so on. You should factor in extra for these. In fact, I bet if you go through your statements or checkbook, you'll see stuff in there not listed above. A $34 per year window isn't enough, IMO.
ETA....and I'll also throw in that there's nothing wrong with a $1000 car payment so as long as you have the savings and income to back it up. I think you should reconsider and factor in the above and figure out a way to increase your income to accomodate everything. Just out-earn your expense problem and it'll be ok.
Thank you soooo much, beamMEup for opening my eyes to this article about 50/30/20 by Pulliam-Weston. Because of these amazing myfico boards, my credit score is almost exactly where I want it to be. Now I'm going to be able to actually balance my money as I've always wanted to as well.
I really appreciate it - and the content on these boards. It's nothing short of amazing.
Libery, What knd of car do you own? Also, what was the price you paid for it as well as the interest rate you received. This may help to determine if the $1000 / month is worth it (even though it's too late at this point though).
@Anonymous wrote:
Libery, What knd of car do you own? Also, what was the price you paid for it as well as the interest rate you received. This may help to determine if the $1000 / month is worth it (even though it's too late at this point though).
Well I have not made the purchase yet, I am still shopping around for the next 2 - 3 months. More interestingly this is my first purchase, I have been renting only when I needed upto now ... [hides behind the couch and waits for a dont buy expensive for your first car lecture :-P ... i kid]
@Anonymous wrote:
@Anonymous wrote:
Libery, What knd of car do you own? Also, what was the price you paid for it as well as the interest rate you received. This may help to determine if the $1000 / month is worth it (even though it's too late at this point though).Well I have not made the purchase yet, I am still shopping around for the next 2 - 3 months. More interestingly this is my first purchase, I have been renting only when I needed upto now ... [hides behind the couch and waits for a dont buy expensive for your first car lecture :-P ... i kid]
No lecture needed as you already know! 
What I see to be a factor is listing $100 a month for gas. Any type of car I can think of at the cost of $1000 a month is more then likely not some economic car that saves gas.
Considering you are still young and want something that is nice and cool and impressive I can relate to that. I can not relate to having a car note for $1000 and it just sitting parked. So at minimum I would change your gas expense to $217 a month which is considered $50 a week.
Then I have to look at food and groceries and say $200 a month to live on? Average day at minimal cost would be $10 and thats eating sparingly. So using $10 a day on a minimal average would average $304 a month.
That is an additional $221 a month to your budget. which will bring will cut into your savings.
The worst part of all this is you are trying to live on your entire salary and are not going to be able to enjoy anything. No money to have fun, no money for dates, no money for that TV that broke and needs to be replaced, the tires that need to be replaced on the car, the oil changes needed (any and all maintenance on vehicle) etc etc...
Then the worst thing that could possibly happen is you lose your job and or have cut backs and have to take a reduction in pay. You will have nothing to carry you over until you find another job and or additional work.
You really need to think this through and I believe you realize it is stretching it a little to much or you wouldn't be looking for opinions.
Whatever you decide I wish you the best.