Trade The Journey

Trade The Journey

Decisions without Dilemmas, Is it possible?

Being that I work closely with my supervisor, I am privy to some of her current challenges. The challenges involve the typical daily dilemmas some preventable others not. The most significant problem she is currently facing is purchasing a new vehicle.

Like most, her budget can’t satisfy her real desire of owning the newest, fastest and best-performing car on the market. So unconsciously she has convinced herself to settle. She is married and let us assume that if she were to apply for a loan it would be at a decent interest rate.

Her budget is loose and there’s not much of a plan involved in the ultimate success of her financial future. When planning for a vehicle purchase she goes through the typical research phase. Her main goal is to make sure the vehicle is comfortable, affordable and stylish. There are a few vehicles that meet her requirements but nothing like the new Tesla fully loaded.

“This car has all the features”, “Imagine cruising in this car. I’d actually look forward to the long trips now” are some of the things I hear. The car of her dreams is currently wait-listed and in high demand. Its also modestly expensive.

Because of the increase in insurance, the car of her dreams may not be attainable. And then there’s the car payment. There are ways around this, she could extend the length of the payments and pay a lower monthly payment for the vehicle. Extending the length of the payments also means paying more in interest. She could lease the car, pay down the balance and hopefully buy within a couple of years at a lower price.

Purchasing the car at a lower price will allow her to shorten the length and decrease the amount in monthly payments. But how much more would she have paid if she just brought the car instead of leasing?

If she kept her older car with the higher mileage on it, she would allow herself time to save and prepare. But she has decided that now is the best time to buy it.

Should she really buy the car she would be most satisfied with even though it cost more?
Or should she go with what she can afford hoping to make the purchase of her dreams in the future?

Well, she could wait. The older car does have a significant amount of mileage on it, but the brand has a reputation for lasting. There’s no reason to make a large purchase on too little information especially when it isn’t needed.

Sometimes there’s nothing trickier to identify than the difference between needs and wants.

Analyzing this situation can be useful for preparing for real life. It can encourage you to brainstorm solutions to potential problems that have the best chances of long-term success. A suggestion given by an insurance agent was to rent the car first for a day and see if you like it.

Me personally, I went with the car I liked. It’s tempting to get the cheapest car available without regards to any other factors besides the price. But is this the best decision? Maybe not but it all depends on the person.

There are a couple of questions she could ask herself:

  • Could I make this payment if an unfortunate financial event were to occur significantly affecting my monthly cash flow?
  • How much will the monthly payments affect my cash flow now and in the future? Am I expecting to receive an increase in pay, what if it never comes through? Will I be ok?
  • Will I still be able to save while paying the car payments for future car emergencies?
  • What are the hidden costs of this vehicle?
  • Will I be happy in the long-run with the vehicle I am settling with?

These are some of the questions I would ask myself. However, my goal would be to create a situation in which I could make the payment without a strain on my finances.

Thinking about the ripples this financial decision could cause can help you make a better decision for the future.

I think She would be better off waiting and accessing her options.

Patience can often be a cure for financial ills.

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