 TITLE: How to Calculate an Affordable Car Payment CONTENT: It's important you know how much you can afford to pay each month before you go car shopping. To figure this out, take into account all your monthly bills—such as your rent or mortgage, utilities and debt payments—as well as food and other necessary costs. After calculating all of your monthly expenses, take a portion of what's left—how much will depend on your lifestyle and income—and earmark it for your monthly transportation costs.\nAnother way to calculate how much money you'll have for a car payment is with the 50-30-20 rule, which is a popular budgeting ratio. With this method, you take your after-tax income and divide it into three portions. The first 50% goes toward necessities; the next 30% goes to things you want; and the final 20% is for savings.\nThe **50% for necessities** includes obvious items like your rent or mortgage, utilities, health care, food, debt payments, transportation costs and any other unavoidable costs you have each month.\nThe **30% for things that you want** includes entertainment costs, retail purchases and other spending for your enjoyment and quality of life. The key with this portion is to try to limit yourself as much as possible so that anything left over can be put toward savings.\nThe **20% for savings** is simple, and these funds can be allocated as you wish depending on your specific saving goals. Some could go toward a retirement account; some could be put toward an emergency fund; and some could be kept in a general savings account.\nFor most people, transportation costs are considered a monthly necessity, and using the 50-30-20 rule can help you figure out exactly how much this amount should be. Once you've taken 50% of your post-tax income, subtract all your monthly bills, and what you're left with can be used as your transportation allowance. Depending on your income, this leftover portion might be quite large. In this case, you don't have to use all of it for transportation; you can put any extra toward saving.\nRemember that owning a car means paying for much more than just the monthly loan payment, so be sure to account for all transportation costs when trying to calculate your car payment. END