I've had the pleasure of using the last few blogs to walk you through my journey to becoming financially fit. I've talked about finishing my Master's degree, achieving freedom from debt, establishing an emergency fund, and living abroad. I would not be surprised if the question on many of your minds is "where are you now?"
The answer to that question is...once again living with my parents. I said that being financially fit was freeing, not that it was glamorous. For those of you who aren't millennials, feel free to bring on the millennial jokes.
My initial plan in moving to Spain was to live there for two years. Through my program, I lived with a host family, and my goal was to do the program a second year, or get hired independently, and live alone. While both my program and the school I was working at wanted to hire me, they were not offering me enough money to live alone in Spain. I took that as a sign to move home because I knew I could make more money back in the United States. My plan shifted to moving home in June, working back at the gym for the summer so I could enjoy the summer, and then getting a full-time job late-August, early September. Those plans all worked out great. I was thinking that after working a few months, I could move into my own place by December/January. That was where my plans went awry.
Living in Boston is expensive! As I was taking my host family from Spain around Boston (they came to visit me in August), we passed a tour in the Boston Commons. The tour guide, dressed as a pilgrim, said that Boston was the third most expensive city to live in. I haven't fact-checked that, but I was certainly shocked at the prices for apartments in Boston and the surrounding areas. I needed to be near public transportation (I don't have a car), and in a relatively walk-able area. I also wanted a washer and dryer in the unit as well as air-conditioning, which is not required by law in Boston. These few stipulations probably added to the cost, but it was still more than I was expecting. Apartments were ranging from $1,400 (more reasonable, but with a 1-1.5 hour commute to work) to $3,000 and some change. Most of these did not include utilities. Although I was certainly making more money in Boston than I would have in Spain, I didn't want to be spending more than a 1/3 of my income on rent. Needless to say, I had to reassess my plans.
I decided to buy my first car. I have never owned one and there was less pressure with saving up to buy a car vs. ensuring that I had an astronomical amount of rent ready every month. Buying a car before getting an apartment also meant I could live a little further out and not pay as much in rent.
I want a Hyundai Sonata Hybrid SE 2016-2018 or something equivalent. I believe the Sonata Hybrid just came out in 2018, so I'll probably be getting a regular Hyundai, but we shall see. After talking with a car dealer, I decided to save up $25,000 to buy the car. I've already expressed my views on being debt-free and I am not about to have a car payment when I can wait patiently (or, more often the case, impatiently), and save up to own my car.
My opinion on buying a car is this: buy a used one. There are several reasons to do this:
It is usually cheaper.
The value of a new car depreciates significantly once you drive it off the lot.
If you're buying a brand-new car, especially if you're buying it the year it came out, you'll probably have to deal with the kinks of that car. If you buy a used car, recalls and any kinks that occurred when the car first debuted have probably been dealt with to some extent.
Buy a car that is practical for your needs. You don’t need a luxury vehicle to go to work every day. You also don’t need a new vehicle to get you to work every day. You just need something that is comfortable, reliable, and realistic for your budget.
Along with buying a car comes the need for car insurance. This is a new area for me because, as I previously mentioned, I have not owned a car. I did some light research (more hefty research to come as I'm closer to purchasing car insurance) and discovered that there are a lot of things to think about when buying car insurance. Simple Dollar conducted an analysis of 15 different car insurances to determine the best one for 2018. They assessed 86 different features that they neatly put into 12 categories. 86! How many features do you consider when looking for car insurance? Both Simple Dollar and Good financial Cents, which also did an analysis of the best companies, let you shop by zip-code.
Of course, when you decide to buy car insurance, you might be considering one feature as more important than another. Which is the best insurance company can be pretty subjective. That being said, here are a few general things to consider as you're shopping around:
Don't just choose the cheapest. It could be the cheapest now and the most expensive when you have an accident.
Look at what's available where you are living - smaller local companies may be a better option for you than some of the national ones.
Consider how easy it is for you to make a claim. If your car insurance is cheap, but it’s a hassle to file a claim and get your money back after an accident, maybe it isn’t the best one.
If you are shortly going to be buying a house or renting an apartment, consider what bundle options are available for each agency.
Check their ratings for customer service and if they have standard discounts (see the Simple Dollar link above).
And lastly, you should reassess your car insurance every two years.
Sometimes in our financial fitness journey we need to bite the bullet and make sacrifices that are financially sounder, such as me living with my parents. We also need to be flexible in the sense that we may need to reevaluate our plans. Are they feasible? Given new research can we accomplish this plan? If the answer to those questions is no, then take a look at some things you can do right now, that will support your overall goal or move you closer to achieving the ones you may have put on hold. My buying a car was not instead of moving out on my own. It’s a preliminary step to moving out that will hopefully save me money in the long run. Even if the eventual goal is delayed a bit, there is always some way you can be moving towards it. Decide what those ways are and get to it.