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# Dave's story: Balancing saving, spending, and paying debt

With his new job, Dave makes \$3,200 every month after taxes. His dream is to buy a new sports car. At the same time, Dave knows he should start saving 10% of what he makes. Right now, he has no emergency savings at all.

Dave’s question: Can he really afford the dream car today, and also save money? Or should he buy something less costly and save more?

First, Dave goes over his budget. He sets aside 10% of his pay for savings. Then he adds up all his other monthly bills: food, rent, clothing, phone, hydro, and so on. Lastly, he estimates the cost of getting a loan to buy the sports car and running it. Here’s how Dave’s numbers work out:

Dave’s monthly budget

Income
\$ 3,200
Savings (10% of his pay)
\$ 320
Expenses

Rent
\$ 1,000
Other monthly bills
\$ 850
Estimated cost of running car
\$ 430
Estimated cost of car loan
\$ 600
Total monthly costs, including savings
\$ 3,200

What Dave learned: If he sticks to his plan and doesn’t take on any other debt, he can get the car he wants and save 10% of his pay. Dave will have to be careful, though. His budget is tight. Also, he will be spending a lot of his income on his car – and a car is not something that will last.