I got angry when I realised that the majority of people who commute by car do so because they are employed. I can at least deduct the miles I drive for work, but employee commutes are not tax deductible.
So, as an accountant, I was interested in how affordable owning a car was for the typical worker. To be honest, when I started totalling up all the expenses involved in maintaining a car, it did not make sense. The automobile payment comes first; the $474 average car payment does not account for the conditions. The length of the loan has been extended by consumers in an effort to reduce the monthly car payments. Therefore, the average loan period is now 66 months, or 5 and a half years, rather than 60 months, or 5 years. If the $474 payment were reduced to the industry standard that was established years ago, it would cost $515 a month for five years. After the warranty expires, consumers are forced to continue making auto payments for years. Can you image making a $474 monthly car payment and then receiving an unexpected $800 or higher repair bill?
Car insurance is also not inexpensive. I'm not sure how much complete coverage will cost. One benefit of paying cash is that you are not required to purchase full coverage. Being a careful driver, I decided to save thousands of dollars by forgoing collision and comprehensive coverage when the car was new. Obviously, that is a decision for you to make. If you have a car loan, the bank will insist that you have complete coverage. Your insurance payment will be determined by your driving history, your age, the car you drive, where you reside, and other criteria. My guess for a reasonable insurance cost would be $150 per month, assuming you have a clean driving record and have been driving for years.
Thus, $624 is the total every month. Oil changes, upkeep, registration, a few car washes, and no repairs are included. Without taking into account gas, it comes to about $700 per month. Since the $700 is after taxes, you actually need to earn around $850 in gross income to have the $700 available for spending. That might be your rent.
Let's now examine employee salaries to determine whether this is affordable. Consider a single person with an annual income of $30,000. You deduct 7.35% for income tax and, conservatively, 7.65 percent each for social security and Medicare taxes. This amounts to 15%. Let's not even consider the withholding for health insurance, which for many people might easily reach $2,000 per year. Therefore, 85% of $30,000 equals a yearly nett income of $25,500. You receive $2,125 when you split $25,00 by 12. You have $1,425 to live on per month after deducting the cautious $700 car carrying cost.
You now have $1,425 to pay for everything else. A reasonable one-bedroom, 1.5-bath rental apartment in Florida, where I currently reside, will run you roughly $1000 per month. The $425 that is left over won't be enough to pay for the energy, food, gas, phone, and other expenses. Like I already stated, it does not add up. Extending the payments will simply make the pain worse. The payment period must be reduced, not extended. The more time passes, the more likely it is that something unforeseen will happen and you won't have the money because your car used it. One of the main causes of the millennial generation living at home is this. They are also affected by the high cost of cars.
The cost of owning a car has skyrocketed over the last several decades. In my example, $30k annually is significantly more than many occupations earning at or close to minimum wage (Florida's is $7.93 an hour or $16,495 annually), even if you are making a respectable salary. The typical car payment is simply not an option.
This understanding enrages me. Despite your best efforts, you can find yourself in a difficult situation. This essay should help put the struggles that households and workers face on a daily basis into perspective. Know what you're getting yourself into before you sign on the dotted line and pledge to pay $474 per month for the next five and a half years.""" - https://www.affordablecebu.com/
