March 11, 2009 • June Walbert
Q: I am a reservist and a full-time college student. My car is falling apart and I am looking to buy a new one. I refuse to buy a car that I don't love. However, the one I want is looking to cost $375 a month, but I only make $900 a month. Well, at least while I am in school. I guess deep down inside I know I shouldn't buy it but I really want to. Do you have any ideas how to help make this purchase more affordable, especially lowering the APR?
--Stephen, Pittsburgh, Pa.
A: Follow your instincts! Throughout life and your military career there will be times and situations that demand that you dig-in, stick to your guns, or make some difficult changes and choices…refusing “to buy a car I that I don’t love” is not one of those. My recommendation is to fix your car or buy an affordable replacement and start socking away money so that you can put down some cash and be able to afford the car (and the payment) of your dreams later on. By the way, a lower APR helps but stretching your car loan out 7 or 8 years is not the answer. Keep in mind, a vehicle is typically a daily depreciating asset. Too many people give up too much financially by stretching their budget with a car payment. There are a lot of competing interests for our money: rent, food, utilities, entertainment, gasoline, saving for various goals. Here’s an idea: start setting aside your reserve pay each month once you graduate and get a higher paying job. Your service to our nation can also be the path to your next vehicle. So in the meantime, take good care of your credit score to get the lowest APR available. Be sure to make all payments, such as credit cards, on time every time and keep balances low or at zero!
About USAA
USAA or its affiliates do not provide tax advice. Taxpayers should seek advice based upon their own particular circumstances from an independent tax advisor. The information is provided for informational purposes only and is not intended to substitute for obtaining professional financial advice. Please thoroughly research and seek professional representation before acting on any information you may have found in this article. This article is in no way attempts to provide advice that relates all personal circumstances.
Examples given are hypothetical illustrations and not an indication of the benefits or features of any USAA product. You should seek policies and advice based upon your own particular circumstances. Sample loans are for illustration purposes only and are not a rate quote, pre-approval, or commitment to lend.
June Walbert is a CERTIFIED FINANCIAL PLANNER TM practitioner with USAA Financial Planning Services, one of the USAA family of companies.
USAA Financial Planning Services® refers to financial planning services and financial advice provided by USAA Financial Planning Services Insurance Agency, Inc. (known as USAA Financial Insurance Agency in California), a registered investment adviser and insurance agency and its wholly owned subsidiary, USAA Financial Advisors, Inc., a registered broker dealer.
Certified Financial Planner Board of Standards, Inc. owns the certification marks CFP® and Certified Financial Planner TM in the United States, which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
USAA means United Services Automobile Association and its affiliates. Banking products provided by USAA Federal Savings Bank. Credit cards provided by USAA Savings Bank. Both Banks Member FDIC.
I have a child ready to go into college and I am sorta short on cash. Should I use my credit card to get him started in school?
Posted by: Allen | March 13, 2009 at 01:18 PM