What proportion of your income should be spent on car payments ?
I was wondering what proportion of your income should be spent on car payments. If you should only spend no more than 25% and of your income on rent to be safe financially, I am assuming that no more than 10% of your income should be spent on car payments. Is this a good estimate of how much money I should spend on my next new car yearly?
Reena and David M both have answered you correctly.
What a relief to see that other people besides myself share this belief. I'm tired of grinding my teeth as intelligent people who make more than I do always say, "I'll always have a car payment", with long sad faces. I guess they will, as long as they always have to have expensive new cars.
Thanks to you both!
1About the only financial obligation that you should have is a mortgage.
Nobody needs to have a car payment as a "given" burden that we all need to suffer with.
Pay off the one you have and maintain it. Then you drive that paid off car until it falls apart and in the mean time you save about half of your monthly car payment and put it away so when the time comes and you need a new car…. you go and buy a one year old used car and save a bunch of money on the price and guess what… you own a barely used car out right without a car payment.
Now you have at least another 5 years without any car payment and then you can start saving up again for your next "almost new" car.
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