My situation...car, mortgage, savings...etc.

[merm]

I am 28 years old and anticipating going to grad school in the next few years. I make about $35k and have just been offered a new job that pays $45k. I max my Roth out every year, in addition to contributing 5% to my 401(k). I have a $60k mortgage on a fixer-upper; I'm planning to finish the basement and resell in the next year. This is the last year of the fixed rate on the 3 year ARM. My profits on the house will likely be small ($10k). Besides this, I have no credit card/other debt except a student loan on which I pay about $80/month. My modest savings - including 401k and IRA - amount to about $15k. My car is a 95 Saturn with 150k miles on it, and it was a gift from my dad when I turned 16. So, I'm shopping for a car for the first time on my own, and I'm considering a used Honda Element (under $16k).

The new job offer came from a friend for whom I already work as an independent contractor. I'm not thrilled by the offer, and if I accept, I plan on only keeping it for a year while I save some money to help pay for grad school and perhaps do some traveling before school starts.

My main question is whether I should choose a different car, something older with more miles, and whether or not the difference (between the Element and an older sedan) of $6,000 or so that I could put in my savings will amount to enough to be worth postponing buying an automobile that I think I will enjoy. If I accept the new position, it will likely require out of town travel up to three times per month, so while I am thrifty enough to consider keeping the Saturn, for my own safety I'd prefer to replace it. But I'm open to considering it and any other advice you can provide for getting me to the point where I could take off and travel for 6 months or so next year and head to graduate school without feeling that I'm falling behind with my retirement savings.

Thanks for your help!

[Tree0164]

How is the Saturn running? I would keep it for a few more months and save aggressively for a new car.

If you know you won't be working while in grad school, don't take on a car payment. Buy something used-an older Honda or Toyota.

Don't take a job just for the money. You might be better off just continuing where you are and be happy.

[MoneyMoney]

sounds a good advice for me as I am looking more advice on financial planning as well!

[hawkster]

I'm not thrilled by the offer, and if I accept,

First off I know it's not part of the question and I think I am going to show my age here by saying this but by all means get a job you like, a job your passionate about. The only thing worse than having a job you don't like is having to keep a job you don't like to pay for an element you just bought because of this job.

That said, I'm with Tree0164, keep the Saturn as long as you can up until you have to start traveling. This will allow you to sock away a nice down payment for it as well.

Finally, make sure you totally research the car thing, gas milage, etc. $16,000 is a lot to spend on a used car, granted its a Honda but if it were me I'd consider something a little less expensive. I make really good money now in my job, my peers are driving SUV's, BMW's, Lexus...then there's my car....a 2001 Ford Focus!!!! For me it's more of a thrill to see the $$$ goign into my 401K or something else than spending on a car payment.

Good Luck, by the way what are you going to school for?

[jIM_Ohio]

Will graduate school lead to higher earnings in future years?

My experience suggest grad school is not worth it if paid by the student in many fields.

professional certifications are worth much much more for earning power. What field are you in?

[Jaun22]

I would stay simple as long as you can. That way cost are down and you have ability to have more disposable income.

[InDebtInDC]

Your Saturn won't likely fetch much money on the used car market. Maybe $1-2k at most. It may be worth your time to invest in simple maintenance and keep it running as long as possible.

If it's good shape, there's no reason why 150k miles should be the end.

$16k is a good amount. You realistically need maybe half of that for a good used car.

I agree with not spending money on stupid cars. There's no point if your used car is safe and reliable to drive.

[Scanner]

I'm not normally a "trade-in" fan, even when many here often suggest, "Why don't you sell the new car and get an old clunker?"

But in this case, at 150K, I think you are running into the possibility of a major repair, more than the value of the car. This is probably a car best sold to a teenager as a first car, your Saturn that is.

So, I do think now is the best time to act vs. later.

I think you just have to consider that you really don't need to spend $16,000 to get a good used car.

I bought my 1999 Ford Taurus in 2005 for $5000 (including tax) with 57,000 miles on it. And that was from a dealer with a nice second-hand lot (cars averaged $4000-10,000) Not the best MPG (about 19 MPG) but it has not given me one lick of problem (knock on wood), other than the window leaks a bit.

Yeah, Hondas and Toyotas are great cars (I own a Toyota Matrix so I'm not knocking them) and I see the forum recommend them a lot here but I think you are often paying for a name when you buy one used, especially a "certified one."

[InDebtInDC]

But in this case, at 150K, I think you are running into the possibility of a major repair, more than the value of the car. This is probably a car best sold to a teenager as a first car, your Saturn that is.

As I said above, simple maintenance = oil, brakes, tyres. If anything major starts going then it's time to ditch.

[merm]

Thank you for all of your responses! I appreciate each one.

jIM_Ohio, my B.A. was in English, the field I'm in now is Sales, and it would be nice if another degree would increase my income, but that remains to be seen. I had planned on being able to apply to grad school this fall, but I'm still undecided as to which kind of program to enroll in (pursue something that will allow me to write and be creative, or get another bachelor's in nursing that may still allow that room to pursue interests on the side?)

Hawkster, I particulary appreciate the advice to give up the job if I'm taking it just for the money. The money is a nice change, and it would be more flexible than most jobs in corporate america, but it certainly isn't fulfilling!

Scanner, while I agree that I could run into some major issues at any point with the saturn, I think I'll research my options in the used car market and hang onto my Saturn a little longer. Thanks again for all the advice! Keep it coming!

[InDebtInDC]

Thank you for all of your responses! I appreciate each one.

jIM_Ohio, my B.A. was in English, the field I'm in now is Sales, and it would be nice if another degree would increase my income, but that remains to be seen. I had planned on being able to apply to grad school this fall, but I'm still undecided as to which kind of program to enroll in (pursue something that will allow me to write and be creative, or get another bachelor's in nursing that may still allow that room to pursue interests on the side?)

Hawkster, I particulary appreciate the advice to give up the job if I'm taking it just for the money. The money is a nice change, and it would be more flexible than most jobs in corporate america, but it certainly isn't fulfilling!

Scanner, while I agree that I could run into some major issues at any point with the saturn, I think I'll research my options in the used car market and hang onto my Saturn a little longer. Thanks again for all the advice! Keep it coming!

May I ask why you declared English as your major?

[merm]

I made the decision to change to the English department (from pre-med) while overseas. I spent a lot of time writing and received some positive feedback when I returned to the States. My alma mater had a good English department, so I was happy with my decision and really enjoyed my classes.

[deca]

I also have a 95 Saturn with nearly 170K miles that still runs great. Virtually no maintenance costs other than oil/tires/wipers. I would enjoy a newer car but not enough to spend most of my savings on one.

Merm, if you take this job and have to travel sometimes, do you have to drive your own car? At my job for any out-of-town trips the employee has the option to drive their own vehicle and get the standard mileage reimbursement, or just rent a vehicle on the company's dime.

[Scanner]

Here's the thing though and this is a major financial planning error I make.

Let's say the car DOES die (I know everyone here thinks their car will run forever) - do you have a Plan B to get one?

Or do you do like me? Freak out because the car died (2 cars ago - the head gasket blew @ 110K) and usually ending up having to finance a new one at least 50%?