Use This Chunk of Money To Buy?
What kind of car can Blake afford with his insurance money, and how much is too much?
QUESTION: Blake recently totaled his car. It wasn’t his fault, so he will receive $3,700 in insurance money. He lives just a few miles from home and is considering not buying a new car and just saving the money. Dave tells Blake why he should buy a car.
ANSWER: I would buy a $3,000 car, because you’re not being abusive or over the top with this. Don’t take the $3,700 and use it as a down payment on a $20,000 car. Just pay cash for a cheaper car. If you told me you had $10,000 in debt and were getting a $15,000 check, I might say pay off the debt and get a $5,000 car. But you’re just doing something basic, and it’s great also that you’re a young guy who is paying attention.