Vehicle Buying

Automakers continue to woo would-be car buyers with generous rebates and low interest financing on many popular trucks and cars.

Generous as these incentives are, they should be used only after careful consideration of financial obligations and goals. Student loans, rent and utilities can quickly gobble up an entry-level salary leaving little money to save, or pay off credit card debt. Graduating students have an average of $20,402 in combined education loan and credit card balances, according to recent studies. The average number of credit cards per college student is 4.25. Given this level of debt, it's not surprising that personal bankruptcy filings are growing fastest among people 25 years of age and younger.

If you're contemplating the idea of buying a new car, consider postponing your purchase until you're comfortable enough with your finances to save regularly in addition to paying your other bills on time. (You may also want to give some serious consideration to buying a late-model used car. It will be just as reliable as a new car and will cost much less.) The following are some goals you may wish to accomplish before you make your purchase, whether new or used.

Pay off your credit card debt

If you're saddled with credit card debt, set a goal for when you want your debt paid off, and figure out how much you have to pay each month to reach your goal. (You may wish to revise your budget to include larger monthly payments.) Have the money automatically deducted from your paycheck each month and deposited in a separate account. Don't use the account for anything else except writing checks to your credit card companies.

Establish an emergency fund

Once your credit card debt is paid off, you'll want to start building an emergency fund that's equal to at least three to six months worth of living expenses. You can build this fund in a hurry by depositing bonuses, tax refunds and Christmas and birthday money. Be sure to add to it as your expenses increase, as they are apt to do significantly when you buy a house, get married and have children.

Build your nest egg

Start contributing to a retirement fund as soon as you can, even if it's just a small amount. Consider starting a Roth IRA. This investment vehicle allows you to fund your retirement with up to $3,000 after-tax dollars per year ($4,000 in 2005). Unlike a traditional IRA, where your dividends are taxed, contributions to a Roth IRA are taxed but your earnings are tax-free and penalty-free provided you begin withdrawing funds after you turn 59 ½. If you consistently contribute to and manage this fund properly, you could enjoy an enormous windfall by the time you're ready to retire.

Improve your credit

Our credit history is inextricably linked to many facets of our lives. Our interest rates, auto insurance premiums, apartment rent, and even certain employment opportunities are all influenced by credit. If you don't know your credit score, order your credit report as soon as possible. You can order credit reports online from all three credit reporting agencies-Equifax ( www.equifax.com ), TransUnion ( www.transunion.com ) and Experian ( www.experian.com ). If your score is below 750, resolve to improve it by paying your bills on time and living within your means.

Commonwealth Credit Union is prepared to offer you competitive auto financing. To see our current rates, click here.

To apply for a vehicle loan, stop by or call us any time at 800.228.6420 or 502.564.4775, or simply click here to apply online.