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How to Save for a Car without Scrimping

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Saving up for a car is smart. But how to save for a car may not be obvious, especially if your budget is tight. Are you willing to pack your lunch every day, get a part-time job — or both? Here are are a bunch of options, both small and large, to help you save for a car.

Set yourself up for success

Saving up for any large expense — a home or your college education — is always a good idea, but there’s one reason why saving up for a car is particularly important, especially if you plan to buy a new car: depreciation. AAA estimates that depreciation accounts for 40% of the cost of owning a new vehicle. Still, new or used, remind yourself of your goals by setting a photo of your desired car as the background of your phone or computer. Saving money now can mirror what it’s like to make actual car payments and, ergo, help you figure out what you can afford.

Set a budget

How much to save for a car depends on its cost and your goals. Are you going to pay cash for a car or are you saving up for a 15% down payment? If you know how much you need to save, you can set a goal, which can help you stay motivated. LendingTree offers specific budget advice about how much car you could afford.

You could also check out 10 tips and tricks for first time car buyers or play around with a free auto loan calculator to see how much your payment would be based on the price of a car you like or, conversely, the car price you could afford based on a payment you could handle. One rule of thumb is that your car payment should be no more than 15 percent of your gross monthly income.

Use a budget app. If sitting down at a kitchen table with paper and pencil to figure out a budget isn’t your thing, consider a budgeting app. There are a bunch of free ones available; you can check out the best budgeting apps of 2018.

Pay yourself first

In the best-selling personal finance book “Rich Dad Poor Dad,” Robert Kiyosaki recommends that before you pay rent or anything else, pay yourself first — which is to say, put money in your savings account before you spend any of it. And if you don’t have enough, go make more. (If that sounds easier said than done, we give some tips below.)

Make a separate savings account

Accelerate your savings by setting up a separate savings account, so you’re not tempted to spend the money on other things; you may even be able to label it “car fund.” Online banks almost always offer higher interest rates than brick-and-mortar ones — check out MagnifyMoney’s best online savings accounts of 2018 or for more information (both MagnifyMoney and DepositAccounts are subsidiaries of LendingTree).

You could even use an app that will move money to the account for you. For example, you can set up a custom rule with Qapital, which will send a certain amount of money to the savings account, according to a rule that you make. You could decide to send $2 to the savings account every time you get gas, or have the app automatically round up all of your transactions and send the difference into your savings.

Spend less

There’s the saying, “it’s not what you make, it’s what you spend.” If you make $100,000 a year but spend it all on luxury items, you might be living more paycheck-to-paycheck than someone who makes half as much.

Find alternatives

There are probably cheaper ways to still do what you like.

  • Entertainment. Instead of going to the movies, invite friends over, make popcorn and see a movie at home. Instead of paying $10 a drink when going out, pregame. Do you need that $80 a month unlimited data plan for your phone, or do you mostly use the wifi at work anyway?
  • Threads. Consider clothes shopping at a consignment shop, like a Goodwill or a Salvation Army. The best ones are usually near more affluent neighborhoods, as you’re more likely to find a wider range of brand names.
  • Food. Pack your lunch. For three years running, Americans have stepped up the amount of money spent on eating out. Fight the trend and save by taking a sandwich, chips and soda to work instead. Miss the social aspect of eating out? Eat your homemade meal, but tag along with your coworkers and order a coffee or a side dish. Trim your grocery expenses with one of these best grocery rebate apps.
  • Makeup. There are literally hundreds of YouTube videos about makeup “dupes” — less expensive brand name makeup products, or even drugstore versions, that work just as well or better than the expensive ones. For example, you could spend $15 on a highlighter palette that’s a dupe of a $46 one.
  • Working out. If there isn’t a large penalty, consider canceling your gym membership. You could jog in your neighborhood or local park for free. Or, if you need the motivation that comes from organized exercise, consider an online fitness subscription service instead.
  • Where you shop. Discount stores in your area may offer some of the same products you shop for at a regular retailer — only much cheaper.
  • Cancel subscriptions. Recurring expenses can add up. For example, $15 a month for Audible adds up to $180 a year, but your local public library probably has a selection of audiobooks you can check out for free. Trim is an app that can help you identify and cut monthly subscriptions.

Turn common expenses into rarer treats

Love your expensive coffee? Can’t live without a weekly Amazon shopping spree? Make these things occasional treats. Stop for that expensive coffee once a week, not every day; get your daily caffeine fix with a 99 cent coffee or homemade brew instead.

Find deals

You probably have to buy things. Why not save money doing it?

  • Use coupon apps. Apps such as Honey, RetailMeNot, Groupon and SavingStar are all free and do the work of finding discount and promo codes and coupons for you. For example, the Honey app brags that it will automatically apply the best coupon code at checkout whenever you’re shopping online.
  • Use paper coupons. Yes, these things still exist. Check online or in a newspaper for coupons for the stores you already visit.
  • Look for sales. Do a quick internet search to find out if there are any sales going on for stuff you already buy or something new you want. Many grocery stores still have sales circulars in their main entrance area. Meal planning around the circular specials is an oldie but a goodie to take advantage of the store’s loss leaders that week.

Make more

Sometimes working a few more hours during the week can make a difference.

Side hustle

There are gigs aplenty, from babysitting and dog walking to seasonal jobs shoveling snow or working retail. You could take surveys for money, become a private tutor or do freelance work. The site TaskRabbit posts work gigs like a one-time cleaning job or waiting in line to get tickets for other people. Whatever you can do, there’s probably a gig job out there that can suit you.

Sell your stuff

This can be a get-cash-quick deal or a sustainable small income stream, depending on what you sell.

  • Stuff you already have. Got clothes you rarely wear in great condition? Sports gear you don’t use? Sell them to a consignment shop or on sites such as Craigslist, Ebay and Facebook Marketplace.
  • Stuff you make. If you are an artist or crafty type of person, consider making things to sell. Whether you draw, knit or do woodwork, sites such as Etsy and Society6 could be platforms on which to sell your things.

Game social media

If you have a passion or deep knowledge in something, share it with others. There are people who make money on social media by posting videos and photos of themselves playing video games, of their live reactions watching scary movies, of playing with their cats. Instagram, YouTube and Twitch are all possible platforms you could use. Be aware, however, that it may take some time to build up viewership and get ad money or sponsorships.

The bottom line

How you spend less or make more (or both) is up to you. Remember you’re doing all of this to make your goal, not to punish yourself. Don’t completely cut out everything you enjoy.

That said, car ownership is expensive — in fact, AAA estimates that the average cost to own and operate a new vehicle in 2018 is $8,849 per year. You could use a tool like Edmunds’ True Cost to Own to calculate the costs of a specific model — new or used.


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