A Sneaky Powerful Way to Determine if You Can Afford That New Car

Written by Erin Lowell  |  on


Before I share this magical little trick with you all, I must give credit where credit is due. Credit for this idea comes from one our teachers, Dave. He’s really good at coming up with unique ways to use your budget to help you. So kudos to Dave for this great idea.

Let’s talk about buying a new car. You know it’s coming, you can feel it and the car repair category shows it. You’re due for a new car soon. You’re trying to hang on as long as you can because maybe you aren’t sure if you can afford a new car payment.

That’s the agonizing question, isn’t it? Here’s how to totally nail it down.

If your car is not dead yet, you’ve got some time for a very cool little experiment. This is the best kind of experiment because there is literally no downside. None.

Let’s say you think the car payment will be about $400 a month for five years.

Create a category in your budget for the new car payment and add a monthly funding goal for $400.

(By the way, if your car insurance will go up as a result of this purchase, apply this experiment to that category too. Start budgeting for the new insurance amount.)

Budget to this category for 3 months. Here’s the key part:

Do not buy the car.

Not yet…

That means you won’t be spending any money from that category. Do not move the money out of there! Hands off! No spending or moving for three months! Pretend these are real car payment dollars going out the door.

Just keep on budgeting! Add $400 to that category for three months. At the end of the three months, you’ll have this.

Now ask yourself the million dollar question:  Do you want to keep doing that for next five years?

Sneaky powerful! You’ve lived with the car payment for three months. You’ve dedicated real dollars to this category that you could not use anywhere else in your budget.  You know what it feels like to live with this car payment.

But you are not committed to the loan…not yet.

You can still decide not to do this.

“Woah, that was painful, I don’t think I can afford that for the next five years.”

Now you have information, and information is power. By artificially creating some scarcity, you have clarity.  It’ll be super clear at this point whether or not you can afford this payment long term.

But here’s something else you have:  $1200.

Even if you decide that payment amount is too high, you now have a down payment and can revisit your options.  Maybe you’ll look at used cars more closely. Or, maybe you try budgeting $300 for the next three months. Give it a try and see how that feels.  By then you’d have $2100, and that gives you options my friend.

By the way, you can apply this sneaky little trick to any spending you’re considering.

Let’s say you’re currently paying $40 a month for the basic internet package and you’re thinking about upgrading to the “Premium Gold TV Package” that includes ALL the movie channels your heart desires for the low, low price of $150 a month.

Start budgeting $150 a month.  In three months the question is just slightly different:  Do you want to keep paying that amount every month FOREVER?”

Possible answers:

  • “Heck yeah! I barely felt that increase at all. Sign me up!  We’re movie people in this house and this is cheaper than the movie theater”
  • “Hmm, I can afford it just fine, but I think I want those extra dollars in my ‘Trip to the Bahamas’ category instead.”
  • “Nope.  We flat out cannot afford this.  Now we know.”

There’s no wrong answer there folks.  This is just a great little exercise in gut checking your priorities and gaining clarity on that all important question that pops up in all our lives regularly:  Can I Afford this?

Good luck and budget on!


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Budgeting is not restrictive. You won’t be spending less, you’ll be spending right. So what do you have to lose? Except all that debt and stress?