Over an amazing Thai dinner in the SOMA district of San Francisco, a group of friends caught up. As we paid our bill, it was time to split up. We embraced each other and said our goodbyes, stopped to take one group picture, and then we walked in groups to each parked car (safety first!). No one walks alone. I happened to be the only one in this group who currently lives in San Francisco and rode the Muni bus. Kindly, everyone offered me a ride. I had my clipper card ready to be used and the bus was coming in 7 minutes. No need to have anyone go the extra mile.
As I walked with two friends to their car, I was telling them that if I did not have to commute to work, I would sell my car. My car has been paid off, but yet I still have expenses:
- Monthly parking
- Insurance, tires, oil changes, maintenance, car washes, etc. etc. etc.
I remember someone telling me that they bought a new car and when I heard what the monthly payments were, I had a feeling this person could not afford the car. I remember having monthly payments of $283. I made every payment on time, but what I realize now, is that I never calculated the TRUE value.
The true value of your expenses should always be calculated. Our monthly rent is not the true rent cost. Keep in mind of your PG&E bill, cable, internet – all of the little things that add up to just LIVE there. I now evaluate my true costs to my purchases.
If I had a car payment of $200 per month, I need to change the fact that I can afford $200 to this true amount:
- Insurance: $60 at 12 months = $720
- Gas: $50 at 52 weeks (1 year) = $2600
- Oil Changes: $50 x 4 (Quarters) = $200
- Car Washes: $20 x 12 (Once a Month) = $240
- Registration: $250
- TOTAL: $4010
- $4010 divided by 12 months = $334.16 + $200 = $534.16
The true cost of having your car is about $534.16! So, the question should be can I afford $534.16? And not a response of “I can afford a monthly payment of $200.00.”
This can be used in all aspects of your life. List all things related to the house (furnishing, cleaning, light bulbs, etc). List all annual events you know you have to spend to realize what you really can afford (anniversaries, birthdays, employee recognitions, baby showers, weddings, etc.). I have also realized that I have shorter legs, so the true value of the pants I buy come with the costs of hemming!
Being true to your spending habits can take you a long way. As I waited for the #47 Muni bus to arrive, a car full of 20-something year olds stopped for the red light. They offered me a beer. With a smile, I declined. The bus came and on the bus ride home, I stared out of the window along Harrison and up Folsom. We routed back onto Van Ness and in 10 minutes I was home. Thankful to have my car in the secured parking structure and that a $2 bus ride can get me back so quickly.