Janice at the age of 25 thought buying a Land Rover with a $800/mo payment wasn’t a bad deal. She was single and debt free working a job that paid her $60k/year. In her mind, $60k meant she had arrived so she did what any other person her age would do, buy the truck of her dreams.
The company she worked for closed down and accustomed to her lifestyle, she found herself unemployed for quite some time in search of the same financial opportunity tied to her experience. After not finding it, she had to lower costs by looking for a more affordable place to live. The expenses on her car alone between her payment, insurance, and gas exceeded $1,200/mo. Her unemployment provided her with $1,800/mo less her truck expenses of $1200, she only had $600 to live on for rent, utilities, & food. Factoring all of your expenses and your lifestyle, can you live on $1,800/mo today?
She had 4 years to go on her car payments and could not find a buyer for her car. So the answer for her at the time was to move into a more affordable place. She applied for affordable housing and was unable to find a place that was open. Additionally, she was annoyed with people looking at her in judgement rather than not understanding that these things happen, she struggled and had to live out of her car for 9 months until she could find another job. Could you live out of your car for 9 months?
In hindsight, Janice says she would have saved more money while she was working. While we would never recommend anyone to purchase a car that was more than 1/3rd of their yearly income (hint: based on her income, the range rover was a bad idea for her to begin with), there are also a couple ways to protect yourself in the event this happens. Your car doesn’t have to be a $60k car, to have a big impact on your budget if you were to lose your job. Contact Us today to learn more.