Bought My Car with Cash!

If buying a house wasn't crazy enough...I also bought a car in the same week.

Now you may be wondering how I could afford a swanky new car with cash being of a modest means and a young age.

Well the solution is pretty simple: I bought what I wanted but adjusted my expectations to fit what I could afford. A 1999 Toyota Corolla for $2400, plus traded in my 2002 Ford Explorer for $500.
Walt at Auto Emporium in Hillard, Ohio deserves your business!
http://www.autoemporiuminc.com/

Generally, I would say you can buy a car that is equal to 10% of your yearly income(gross).
What! Yes you read that correctly...10%. However, I am a tightwad and went with 4.25%, because that is what I had saved up.

You are not your car, you do not need to keep up with the neighbors and you probable don't need a 4x4 SUV unless you live on a 40 acre mountain farm in Colorado.

Cars are expensive to buy, maintain, fuel and you probably don't know how to fix anything on it, so you need to pay $50/hr to some other person. I don't make anywhere near $50 an hour, this is not a good trade off. Don't even get me started on paying interest on a depreciating asset.

Here is how I did it:

1) Open up an investment account with Vanguard and put $1000 in the Star Fund. (Save until you can do this)
2) Fund it every month with whatever you are willing to pay for a car ( I did $100).
3) Drive your old car until it no longer makes sense (I had a 2002 Ford Explorer, because it was given to me) we are moving further out, so the gas cost would be way too much.
4) Research a car to fit your needs.
http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/
5) Find an awesome mechanic/dealer in your area or learn to fix your own stuff (Like Walt @ auto emporium) have them get you a great car at an auction and make the repairs.
6) When you find a good one trade in your old car or sell it on Craigslist and buy the new one.
7) Buy the car with cash that is in your Vanguard account and keep putting the payment in every month to fund the next car.

If you need to downgrade cars to do this, that is ok and probable. You can upgrade later, depending on how much you want to spend. However, I think you will come to like cash better than cars after a while.

If you have a car loan and can sell the car to pay off the loan, I would strongly consider it, especially if you can sell the car, pay off the balance of the loan and buy an old crappy car until you have money saved up.

A nice car doesn't make you somebody and unless you have millions of dollars your probably can't really afford a fancy car. Is a fancy car ever really a need? Transportation to work and school is a need, fanciness is an expensive word for whiny or a lack of self worth.

You are awesome, you don't need any kind of car to be awesome.

YOU ARE AWESOME! LISTEN TO THIS KID!
http://kidpresident.com/