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Financial Friday’s Tip V

Transportation can be a challenge, creates financial issues and environmental concerns with our carbon footprint. The environmental concerns are priceless and must not be overlooked. According to Experian data the average monthly car payment was $554 for a new vehicle and $391 for used vehicles in the U.S. during the first quarter

of 2019. The average lease payment was $457 a month in the same period. The cost is a financial undertaking and as such it is best to have a plan.

1) Pre-Shopping Activities:

Identify the problem, is it a transportation problem or is it that "I really need a car". If it is a transportation issue and you have access to a great public transportation system then by all means try your best to use it. It can be more cost effective than buying a car that may place a heavy burden on your budget. Many communities provide low (student discounts) or no cost bus rides. Trains in many communities with a combination of bus travel are another passage to your destination. Many communities have designated bike lanes for the safety and protection of one of the oldest forms of transportation. A bike helmet is recommended and this is another great form of exercise and a positive commitment to our carbon footprint.

2) Evaluate Alternatives:

If purchasing a used vehicle start to select and compare several vehicle options.

You will also need to start collecting information, using personal contacts, Media, Consumer Reports and Governmental Agencies: National Motor Vehicle Title Information System. These sources all help you to make an informed decision. Find out about the Automotive Program(s) at your school and the maintenance services they provide.

3) Back to the Budget:

Determine the purchase price you can afford before going anywhere. When purchasing a vehicle, pay cash. Invest in your vehicle the way you are investing in your education. If you do not know a lot about vehicles, take someone with you that does. Make sure you understand the concept of “buy as is”. Check out the Vehicle Blue Book values: Your strategy here is buy at a bargain and get the best quality. Also compare how you can budget for this goal to have the cash available. Start to see how your budget will change with this new activity.

4) Post Buying Activities:

Understand automobile operating costs:

· Insurance, Full Coverage and from a reputable company that has strong financial ratings in paying claims

· Registration cost

· Regular maintenance costs (brakes, tune-ups, tire rotation and replacements)

· Gas

· Emergency Savings on your cash flow and budgeting adjustments.

Did you know that Kappa Beta Delta provides scholarships? Check out the link below and apply for the Dr. Andrew V. Stevenson International Merit Scholarship. Application Deadline is March 1, 2020.

Maurice Lounds, MS, CFP®, AIF®

Ivy Tech Community College

Adjunct Instructor of Mathematics and Statistics

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