How to save for a car and your first apartment.
Buying a car or renting an apartment may seem like an impossible dream if it took longer than you expected to find a job after graduation, or if you’re still job-hunting. But, even in a recession, it’s possible to achieve your goals. The key is to be patient and take a disciplined approach.
Here’s how to get there.
Buying a car:
- Understand your options.
If you buy a new car, it’s going to be in mint condition, but the sticker price and insurance costs will be higher than for other options. A certified pre-owned car is less expensive and insurance costs will be lower but you may have to deal with repair costs. With leasing, the car will usually be a late-model vehicle and the leasing company will handle any needed repairs. This may be less expensive if you need a car only for a short period.1 But, if you intend to hold on to the car for longer than a typical car loan, buying a car may save you money.
- Consider your financing options.
If you buy a car, you will either have to save the entire purchase price or get a loan, which means coming up with a down payment and paying monthly installments. Find out how much you’ll need by researching the purchase price and required down payment at local dealerships. Then, have automatic withdrawals made from your checking account and deposited into your savings account each month until you’ve saved enough.
- Before you sign a contract for a car.
Make sure all of the costs of car ownership—including monthly insurance premiums, gas, parking and maintenance—fit into your budget. Public transportation may be a better option for right now.
Savings Tip #3
If you live in an apartment in a city where rental prices are dropping, your landlord may be willing to give you a better deal so you'll renew your lease.
Getting a place of your own:
- Decide if renting or buying makes the most sense.
For most people just starting out, renting is more affordable. It’s also a good way to check out a community without making a long-term commitment.
- Keep costs low.
Living with roommates may not be ideal, but it can help you save on rent.
- Do your homework.
Research the cost of apartments in your neighborhood where you want to live by looking at advertisements so you’ll will know when the price is fair. Also, look at a minimum of five apartments to be sure you’re in the ballpark for the proper price.
- Understand your rental agreement.
Take the time to read it carefully, so there are no unexpected surprises later. Does the cost cover utilities? How long is the lease? How much is the rental deposit? What are the requirements for getting it back when you move? How much notice do you have to give? Are there any rules about painting the walls, having pets or making noise?
Take action now.
The first step toward buying a car or renting an apartment is to figure out the cost so you can start saving for them. Take the first step today by setting up automated deductions from your checking account.
What's next? Managing the cost of banking