Buying a new car ranks among our most daunting tasks. They are expensive; a necessity in so many daily tasks and the variety seems endless. Oh, and we tie up a ton of ego into our vehicles; we think they say so much about us that what we drive has become a personal statement.

Still, coming out with the best possible outcome hinges on employing a methodical, rational approach, beginning with how much money can you spend on transportation?

Don’t panic: This is fairly straightforward math.

First, determine how much money you can put toward a down payment. Your budget and savings account passbook will give you that answer.

Second, how much money you can afford to put toward a monthly car payment. Your current household budget will give you that answer.

Third, visit the Kelley Blue Book Web site to find out how much a local dealer will likely give you for your trade-in, assuming you are trading in the old car. The Web site will also tell you if your old car qualifies for the Cash for Clunkers program.

Now, stay calm: It’s time to do some math.

Take the amount you can afford for a monthly car payment and multiply it by 36, 48 and 60 months, which allows for a three-year, four-year and five-year loan on your new car. Now, add in your down payment amount. If you have a trade-in, take your Kelley Blue Book value and add it in, too. Now, add together seven percent state sales tax plus the interest rate your loan provider will charge for borrowing its money.

Then multiply the sum (expressed as a decimal) by the amount of your monthly payment. Subtract that amount from the amount of your monthly payment. That leaves you with the amount of money you can afford to spend on a new car.

Take a look at the formula in action: Assume these factor: Down payment: $4,000. Monthly payment: $350. Trade-in value: $1400. Cash for Clunkers: Does not qualify.

• Monthly payment times 36 months: $350 x 36 = $12,600.
• Monthly payment times 48 months: $350 x 48 = $16,800.
• Monthly payments times 60 months: $350 x 60 = $21,000.
• Three-year loan plus down payment plus trade-in: $12,600 + $4,000 + $1,400 = $18,000.
• Four-year loan plus down payment plus trade-in: $16,800 + $4,000 + 1,400 = $22,200
• Five-year loan plus down payment plus trade-in: $21,000 + 4,000 + 1,400 = $26,400.

Assuming the sales tax and interest on your loan add up to 13 percent, we end up with:

• Three year loan: $18,000 x .13 = $2,340. $18,000 - $2,340 = $15,660.
• Four year loan: $22,200 x .13 = $2,886. $22,200 - $2,886 = $19,314.
• Five year loan: $26,400 x .13 = $3,432. $26,400 - $3,432 = $22,968.

And that means this car buyer needs to negotiate a deal for a car that costs between $15,600 and $23,000.

After those computations, you are ready to begin thinking intelligently about what kind of new car you want.