Sometimes, you may deserve it, but can you afford it?
Captial Budget Strategies, LLC, Austin’s best money coach, wants to highlight the difference between “deserving” something versus “affording” something.
A neighbor’s daughter (let’s call her “Penny”) graduated from law school last spring and was hired by a big downtown law firm. We recently saw a new 2018 BMW 2 Series car in her driveway and investigated. When asked, Penny said that, “Because I worked so hard to become an attorney, I DESERVE a nice car!”
Yikes, guess Penny skipped that class on Personal Finance for First Year Associates in law school! Better yet, she should have contacted Capital Budget Strategies, LLC.
For only $149, Capital Budget Strategies, LLC, Austin’s best money coach, will sit down with you, your bank statements, your bills, your pay stub and any other financial statements you have and conduct a complete financial review. Our Austin money coach will work with you step-by-step to organize your finances once and for all!
Capital Budget Strategies, LLC, will help you set up a personal budget, an emergency fund and a Snowball Debt Repayment Plan. We will meet at your office, your home or any quiet place that has comfy chairs, coffee and a large table! Our Austin money coach will meet you during the week, on weekends or in the evening.
Give Capital Budget Strategies, LLC, Austin’s best money coach, approximately four hours of your time and we’ll change the way you think about your finances. Time to be an adult, sorry to say.
If Penny had asked, Capital Budget Strategies, LLC would have made the following suggestions: Do not change your standard of living, continue to live as a “student” for a couple more years! Living like a student means living way, WAY below your means and would lead her to the path of financial security.
We would have also suggested to continue to live at home for another year or get lots of roommates, continue to drive that old car, create a personal budget that pays off your debts ASAP and make a financial plan!
Trust me, it is much easier to handle living below your means as a 20-something, rather than a 50-something.
Doing a little internet searching, we estimate that Penny’s new car costs $52,000. With a five year loan, and a $5,000 trade-in, she will be paying approximately $850/month.
When your first job pays $75,000 that seem reasonable, yes? But let’s do some simple, math and look at Penny’s monthly expenses:
Gross Income: $75,000
Estimated Annual Taxes (28%): – $21,000
Net Income: $54,000
Monthly Net Income: $4,500
Monthly Payments:
Car Loan: – $850
Rent (with one roommate): – $1,500
School Loans: – $350
Food: – $500
Car Insurance / gas: – $300
Clothes / Dry Cleaning: – $200
Gym membership: – $50
Entertainment: – $400
Credit Cards: – $350
Total Remaining: $0
Note, there is no allotment for an Emergency Fund, retirement, vacation and travel, birthday and holiday gifts, saving for a down payment on a house, etc, etc.
Worst of all, Penny is paying 19% of her income for her car. That is way too much!
Imagine if Penny kept her old car and used the extra $850 a month to “power pay off” her credit cards and school loans. Within a couple of years she would be debt free then be able to use that extra $1,550/month (car loan + school loan + credit card payments) to start funding her retirement and save up cash for a new car!
Capital Budget Strategies, LLC, Austin’s best money coach, wants to help you obtain financial security. And the sooner you start, the easier it is!
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