As a new grad nurse entering their new job in the ICU making $40 an hour, how should I approach a vehicle?

Question

I am a new grad nurse entering into the field in ICU, I have $12,000 in student debt currently, but start my 1 year BSN this fall which will leave me with an unknown amount of additional student debt. Luckily I qualify for PELL and other grants/scholarships that should cut that total. My pay will be $40/hour or roughly 5,700 or 4,100 after tax per month. My girlfriend makes approximately 5,800/month.

We currently rent for 2,250/month and have another vehicle bill of 650 per month. On top of this we are paying her parents for 500 a month on something else she has owed them for some time. Writing this out is starting to sound insane that I want a vehicle, but my new job will put me commuting 2 hours per day (rural highway) and my old junker of a car is not one I enjoy or trust driving that far.

She wants to purchase a boat for around 65,000 so we can take the 3 kids out during the summer. We are avid skiers who spend 1,200 to 1,500 a year for season passes and roughly 1,300 for a full season rental. I would would like to spend on re-gearing the girlfriend/myself and the eldest which would reduce the overall yearly rental price to just 2 kids or ~300-450 a year. I begin my job with a 10,000 bonus/year for 2 years, and 6,000 tuition reimbursement which will help pretty significantly with student loans or paying off/towards some things/down-payment.

I have 10,000 in savings in an account with 4.7% interest year over year. The job does 2 pay increases per year and any certification I accrue add a dollar up to $3 an hour pay increase. The bsn adds $1 an hour also. So by this time next year I should be making approximately $43 per hour +/- $1-2 an hour. We have other bills as well, water, sewer, garbage, that is roughly $300/month, and xbox/playstation for $100/year.

Car insurance for full coverage on the pickup is $100/month for her, mine will be more expensive (male with a knock or 2 on driving history), probably $150-250/month for full coverage if I get a shiny new vehicle, life insurance is I believe $150/month or less, triple A which is yearly (cannot immediately recall price), and rental insurance at $18/month. I feel like I should quantify all of this before I finish the post... the total is roughly 4,000/month +/- 500 for insurance and whatever tiny miscellaneous things I may not have mentioned.

We owe 30,000 on the pickup and roughly 13,000 to her parents. My plan was to add an extra 1,000 to the pickup per month, and an extra 500 to her parents. For a total of 1650/ month on the pickup, and 1,500/ month to her parents. For a monthly total of roughly 5,500ish +/- 500 so 6000/month to be safe. Our post tax income will be around 10,000/month if we don't work any overtime which I plan to do an extra shift/week if at all possible.

Feel free to bludgeon me with opinions/facts. After having written all of this out, the whole thing feels overly ambitious and absurd lol. The vehicle I would want would total around $750 a month pre insurance. But I factored in full coverage up top. Her career is extremely secure and as long as I do my best, my job is extremely secure as well. So career longevity isn't a large concern besides the fact I am just entering my field.

In sum we make ~117,600/year. Current debt/bills= ~ 72,000/year without paying on student loans or anything new (boat or car).

Left over after current yearly expenses is ~45,000.

I know there is a lot to sift through here... I apologize in advance.

Thanks any and all for sharing your thoughts, I look forward to hearing them.

Answer 1

I'll keep my answer pretty short:

Of course it is important to keep detailed tabs on your income/expenses, but I think that this boils down to a rather simple question: How much are you willing/able to limit your current lifestyle now in order to have broader options in the future?

It is true that inflation is through the roof right now, but the further you can dwindle your debt, the more money you will have in the future. Personally, my plan is always to save as much as possible in order to have the freedom to make big purchases in the future.

If you want to get some motivation on this, I would recommend heading over to investor.gov's investment calculator at https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator. You can plug in the money you could save and see how that will grow over the coming years!

Good luck and I wish you the best on your financial endeavors.

Answer 2

Normally I'd say do what most new grads do: buy an aging used vehicle. The price difference between a new car and a two-year-old car is normally huge, and if you're willing to go older than that price goes down further.

But right now, thanks to the ongoing aftereffects of unnecessary trade wars and COVID-19 supply-chain disruption, new cars are harder than usual to get and used car prices have been pushed up considerably. You might want to consider whether you can postpone buying for a while since things are starting to come back toward sanity. Or get something just good enough to hold you for the next few years.

Rambling, which might or might not be useful:

My first car, circa 1987 when I was making about $25K a year and still paying off my undergrad loans, was a beaten-up elderly hatchback that I bought from a co-worker for $300. It was ugly, but it ran reasonably well and that was all I asked if it. Biggest repair it ever needed was replacing the steering rack, which had gotten worn to the point where nobody but me felt comfortable driving it. I eventually donated it away, at about the same value, recovering roughly $100 in tax deduction and avoiding needing to pay a junkyard to take it.

My current vehicle, as a retiree with sufficient savings, is a 21-year-old minivan which still has less than 100,000 miles on it since neither I nor the prior owner's was using it for daily commuting. We were considering replacing it next time it needs major service, since the body rust is starting to be a concern, but have been holding off for the reasons mentioned above. We might actually be forced to buy new this time; that will cost too much, but partly because we're looking at hybrids.

Going back to an earlier point: Not everyone needs a car. You pay a lot for the convenience. If you don't absolutely need it for commuting or the like, and are in an urban-ish area, it's definitely worth considering hourly rentals like Zipcar (endorsement not implied), or ride-hailing services, combined with public transit as possibly being significantly less expensive. Before buying that first car I just rented a car any time I was doing a weekend trip. In some cities, eg Boston, it's not uncommon for people to go through their lives without even getting a driver's license.

So: Figure out exactly what you actually need a car for, then look at all the options to figure out what makes financial sense. If you need a car and all you can afford is ugly, buy ugly now and get something better later. Never discuss loans with a dealer until after the price is nailed down; do talk to your bank or credit union about what they can offer you on auto loans. If buying a used car, even from a friend, before committing take it to a trusted mechanic and ask him to check it out "as if his daughter was planning to buy it" and give you an opinion on what it needs and what a reasonable price might be.

Good luck.