The Johnsons Decide to Buy a Car

After three years of riding a bus to work, Belinda finds that she can no longer do so because her employer moved to a location that is not convenient for public transportation. Thus the Johnsons are in the market for another car. Harry and Belinda estimate that they could afford to spend about $10,000 on a good used car by making a down payment of $2000 and financing the remainder over 24 months at $355 per month.

(a) Make suggestions about how the $355 might be integrated into the Johnsons' budget (Table 3-6 on page 87) by making reductions in certain expense categories.

(b) If they cannot make room in their budget for a $355 monthly car payment, would you recommend they finance a vehicle for 36 or 48 months? Why or why not?