It is not a secret that owning and maintaining a car is a great commitment, especially financially. You must consider the costs of refueling, car insurance costs and maintenance fees.
Many people absolutely need a car for their work or a variety of other reasons when public transportation is not an option for them. However, many people do not realize exactly what they are getting into.
They can provide the initial costs of the vehicle, but then they have a rude awakening when the time comes for an unexpected repair.
Meanwhile, 40% of US adults do not have the funds available for an emergency of more than $ 400, which means that any unexpected cost of more than $ 400 must be charged to a credit card.
That’s a pretty considerable number of people who can be construed as people who do not realize the magnitude of the costs associated with owning a car. Or, in other words, a high percentage of Americans underestimate the cost.
Now, returning to 40% of American adults who have to charge unexpected costs to a credit card … Why is this so bad? Honestly, it’s not so bad … if the credit card holder can pay the bill at the end of the month.
However, many people are faced with the problem of not being able to pay the bill. This means that you must pay interest while you can not pay them. Consequently, that means that you will end up paying a lot more for the repair of what you needed, you run the risk of incurring credit card debts and you risk damaging your credit score.
So, how to avoid this snowball effect? The key is to create an emergency savings account that experts recommend accumulating approximately 3 to 6 months of living expenses. This may seem like a lot, but it will really accumulate if you earn $ 100- $ 300 per month. In addition, it is possible that some vehicles end up needing repairs before others, so you will want excess funds before burning them.
Financial experts also advise to review your budget and find small areas to cut corners so that this amount of savings is made. You may need to eliminate some luxuries from your routine or even look for an additional job to have money that is not yet allocated to go somewhere else in your budget. Save as much money as possible, that also means gifts.
Therefore, do not let your personal vehicle get you in debt. It can be prevented whenever you are proactive, taking the right steps to save money that you can use when you really need it. Remember to consider how much the typical car repair actually costs and you will surely be prepared to handle most of the costs associated with the vehicle.