We Want to Buy a Used Car

I'm a 25 year-old married woman with one toddler. I just graduated from college and was hired to work in a foreign company few months after that. We are currently still paying down our mortgage (Rp 1.8 million/ month). Although we currently have no savings, my husband wants to buy a secondhand car with a 3-year auto loan. If we take the loan, we will have to pay a monthly installment of Rp 900,000.

1. Why do you need a car?
A. My husband thinks it will be more practical than taking the train to work
B. My husband will need to juggle 2 jobs  
C. We don’t feel safe riding the motorcycle with our kid

2. Do you set a monthly budget?  
A. No, just go with the flow
B. Sometimes we record our budget on paper  
C. Yes, we have  

3. How many accounts do you have in banks?
A. We have one joint account
B. We have two personal accounts
C. We have separate bank accounts for savings

If You Score Less Than 50:

Wow, it seems that you still have a lot of debt. Since you don’t have any savings, the car loan would only add your financial burden. Don’t do it! Start thinking for the future and discipline yourself by saving 20% of your income each month before doing anything else. There is a huge difference between wanting and needing, and at this moment, you can’t afford a car --no matter how bad you want it.

If You Score Between 50 & 80:

What’s the use of having things that you can’t afford and living in debt? Old habits die hard; that’s why you have to start cultivating good habits. Save 20% of your earnings –around Rp 1.7 million—in a separate account and build your emergency fund. If you are disciplined, you will be able to secure it within less than 2 years.   

If You Score More Than 80:

It is good that you regularly create a budget plan for your family. However, the plan will be useless if you can’t stick to it. You can discipline yourself by setting an automatic debit which allows you to have your loan payment and savings automatically withdrawn from your payroll account. That way you will not be tempted to spend more than you should. Use LiveOlive's budget tool to make it easier. If you can maintain this habit for a year, then you can start thinking of buying a car.  

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