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Looking for a bold stroke to change your finances in 2024? Try this: Rethink your vehicle purchase. Instead of making your budget fit the vehicle, buy the car, SUV or truck that fits your budget.

In a column several months back, I looked at how the average monthly vehicle payment was alarmingly close to $1,000. High interest rates are a big part of the story, but so is a huge run-up in vehicle prices.

The average new vehicle price has risen to $52,900 from just over $40,000 in 2019, according to DesRosiers Automotive Consultants. More startling than the magnitude of this increase is the level of acceptance we’ve shown. November marked the 13th straight month of year-over-year sales growth.

DesRosiers says prices have been rising due to a shortage of semiconductors that limited the number of vehicles being built, as well as broader inflationary pressures and a shift in buyer preference to more expensive SUVs and trucks. There’s also the growing market for pricey electric vehicles.

There’s still some pent-up demand for new vehicles as a result of pandemic shortages, which suggests the possibility of further price increases. However, growth in broader consumer spending is starting to fade, just as you’d expect after two years of high inflation and large mortgage payments.

You know how people are cutting back on restaurant spending, entertainment, subscriptions, home improvements and more? Apply some of that cost-cutting mentality to vehicle purchases. If buying used isn’t your thing, then figure out how much car you can comfortably afford and resist being driven higher in the showroom.

All vehicle manufacturers offer “build and price” functions on their websites. The numbers cannot be considered definitive, but they do help convert today’s prices and interest rates into monthly payments. Make the payment fit your budget.

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Rob’s personal finance reading list

When Charlie needs surgery

A review of various options for pet insurance, which has taken on more importance since the pandemic pet boom. The Stress Test personal finance podcast looked at the cost of pet ownership recently. I didn’t just make up Charlie as a pet name – it’s apparently the most popular name for male dogs.

Two takes on Pierre Poilievre’s housing video

Conservative Leader Pierre Poilievre made a 15-minute video about Canada’s expensive housing market called Housing Hell. The Globe and Mail’s Tony Keller offered his take on the video, and B.C. publication The Tyee did a fact-check.

An investing rule-breaker

A U.S. investment writer talks about the rules he’s breaking in his own portfolio. He makes an important point – aim for a good, not a perfect, portfolio.

The Manulife One experience

A Reddit discussion on one of the most unique financial accounts available in Canada, Manulife One. Think of it as a hybrid of a mortgage and a chequing account that allows highly disciplined people to reduce the amount of interest they pay on their mortgage and get out of debt sooner.

Ask Rob

Q: We are considering selling our house and renting. We are mid-70-year-olds looking for advice on where to invest our funds from selling the house to accommodate our rental costs. Our pensions will cover all other costs.

A: Dividend growth stocks are an option, if you’re comfortable with occasional extreme ups and downs in price. The benefit of dividend growth is that it can help offset rent increases from year to year. For now, while interest rates remain high, money market funds, high-interest savings account exchange-traded funds and investment savings accounts are safe options for generating income. One more possibility is a monthly income ETF or mutual fund, which pays out a mix of dividend income and bond interest. In non-registered accounts, dividends are more tax-efficient than interest income.

Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.

Today’s financial tool

How Canada compares with other countries on the cost of mobile data.

The money-free zone

One second from every episode of Seinfeld. You know you want to.


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