My Car Broke Down And I'm Broke: Should I Buy A Car?

A friend asked for my advice regarding what they should do in their situation. Here are a few things they're dealing with today:

• Compromised credit

• Personal Loan Debt

• Student Loan Debt

• Credit Card Debt

• Low income

None of these factors make up the ideal situation to purchase a car.

So what should they do?

My first thought: Don't buy a car.

But what if I need a car?

It is important to define what a NEED truly looks and feels like for you.

Do you need the car for work, school, or family obligations or to run simple errands and complete leisure activities?

One is evidently a higher priority than the other.

If you don't need a car to work, gain employment, or perform duties that result in income, then there might not be a need for a car unless you need to physically drop kids off to and from academic and extracurricular activities or physically drive to get groceries or other obligations that are a necessity to your life.

What about medical and health appointments? 

If you're not consistently attending appointments requiring a car, catching rides will likely save you money while you work on improving your financial situation.

Batch your medical and health appointments into similar locations. Also, try to find places that can help with multiple things. For example, my dentist and primary doctor operated from the same facility at one point.

I Don't Live In A Walking City

The best thing about walking cities is that you don't need a car. But many don't live in walking cities. If this is the case for you, ask yourself the following questions:

Can I get by without a car?

If so, for how long?

If not, why so?

Other Options

Family and friends' vehicles

I used a family vehicle for quite some time until I purchased my own car. It saved me money and gave me a form of transportation while I saved up for a car. It wasn't a pretty nor the best-functioning ride by any means, but it got me from point A to point B.

Dirt cheap but functional, used vehicles

A married couple needed a commuter car and bought a used vehicle for 2–4 grand. The husband happens to be a mechanic, so he was able to check out the car and ensure it was good to go for long commutes. The car cost them virtually nothing. It runs extremely smoothly, and they got it for a steal.

Uber or Lyft 

An entrepreneur friend doesn't drive at all and uses Uber and Lyft everywhere he goes.

You can set a budget for how much you want to spend and rely on these services.

Switch to virtual

If you're in school, therapy, extracurricular activities, etc., switch to as many virtual events as possible that don't require transportation.

Get it delivered

Instead of going to stores, get things delivered. It's cheaper (in the short term) than buying a car.

It's temporary

If you don't have a car now and are financially struggling, it doesn't mean this has to remain your long-term situation. It's all temporary. The little sacrifices you make now will easily add up to elevate you to a higher financial position.

The ball is in your court

You have the power to shift your financial situation. There are no limits in place for you outside of the ones you set. 

I got my first car a bit later in life and held onto it for over a decade. There is always a way to get by without a car if you need to prioritize getting your financial situation to a healthy place. Don't rush to buy a car because you don't have one. Assess if it's a genuine need or not; you can likely wait, get creative, and do some damage control on your finances first.

The 10% or 1/10 Rule of Car Buying

According to Financial Samurai, he recommends that you spend no more than 10% of your gross income on a vehicle. What does this mean for you?

If you earn 100k annually, spend no more than 10k on a vehicle. 

If you earn 25k annually, spend no more than 2.5k on a vehicle.

If you follow the 1/10 rule, you will avoid a lot of financial stress that comes along with purchasing a vehicle because you will ensure you're not overspending on a depreciating liability.

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Don't rely on one stream of income. Use your skills to create income.

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.