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Guy A:
I want to buy a car but my elder brother keeps telling me how expensive it is. He even worked out the depreciation. All in, about $12K a year. I think that is OK.
Guy B:
$12K a year in Singapore for a car is quite normal. My car is about the same.
Guy C:
Can be lesser than $12K a year lah but that is OK for most families.
Is it a good idea to lose $12K a year to own a car?
Hey, having a car definitely improves our quality of life. It is worth it!
Sure or not?
Cannot find an unoccupied seat on the train or bus?
What?
Cannot even get on the train because too crowded?
What?
Train broke down? Again?
Alamak.
All these issues are magnified if we are on an outing with children and the elderly. Stop for a moment and imagine that.
I get exhausted just by thinking about it. Shudder. Yes, we have a finite amount of energy too.
Of course, like many people have pointed out, having a car also helps to save lots of time used in travelling. Time is precious.
Here is a something from a fellow blogger whom I respect:
"Financial bloggers are more conservative than the general public. My advice to all financial bloggers is this:
"Just live life a little."
Read his blog here:
What's good about owning a car?
In my retirement, I don't need a car but I have a car too. It definitely helps to make life more comfortable.
Now, before some start building castles in the air, we really should be asking other questions before we buy a car. I will share two questions in this blog but before I ask them,
Guy A takes home an earned income of $40K a year.
Guy B takes home an earned income of $40K a year and has passive income of $12K a year.
Guy C has no earned income because he is unemployed but he has passive income of $120K a year.
So, what are the questions?
1. Are we using more than 10% of our total income for the car?
Why 10%? For an average young worker, spending $200 per month on transportation is pretty normal, riding mostly on mass transportation and with taxi rides on certain days. Assuming a monthly pay of about $2,000 a month, $200 is about 10%.
2. How much of our total income depends on us holding a job?
Of course, regular readers would be familiar with this line of thought. Try not to consume with our earned income. Instead, invest to have passive income and consume with our passive income.
If being jobless means we have to cut back on our consumption drastically, we might want to think twice about that car.
There are some other things I would consider and if you are interested, please read related posts at the end of this blog.
(This blog was inspired by an email from a reader and my subsequent reply.)
Related posts:
1. Buy a car with 4D winnings.
2. AK learns to embrace YOLO.
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| https://www.gov.sg/microsites/whatsyourplan/finances/can-you-truly-afford-a-car-in-singapore |
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