Wednesday, October 26, 2011
I remember in my early 20's, when I still lived at home rent free, I bought a shiny new red sports car right off the lot. I had an astronomical car payment that shackled my finances for years. In fact I never paid that thing off I just traded it in when I got married because my new giant husband couldn't fit in it.
All through our early married years we had car payment after car payment after car payment.....until finally we decided to just put all our energies into paying off what we already had and driving it until it died. No more replacements or newer models until we actually needed one.
We haven't had a car payment in 7 years. Both cars are paid for. I can't even tell you the freedom that brings to my budget and my stress level. Yes, both of our cars are from 1999 (a volvo and a suburban) but the fact that I'm saving around $600 a month in car payments makes them feel like that first shiny red sports car I used to drive.
But lately I've been aware that their days are numbered and I've been faced with the possibility of a car payment once again. The volvo will probably last me another 10 years if I keep up with maintenance and repairs. I love that car. But MAN, I don't want another budget busting payment when my suburban keels over. And at almost 13 years old, it's coming whether I like it or not. We don't have enough saved up to buy another reliable car with cash, so I came up with a plan. I decided I was going to be proactive and make a car payment to myself. As I drive the cars we now have into oblivion I'm going to start making a car payment to my savings account of about $200 to $300 a month. Hopefully before an urgent replacement is needed I'll have saved enough to pay cash for the next one.
Making a car payment to myself will require some self discipline but will also save me so much money in the long run. There are no interest fees to this car payment and much more of a grace period than if I were paying a bank. And OH! The satisfaction of paying cash for that next car and continuing with the tradition of being car-payment-free.
So if you are still saddled with a car payment I would encourage you to pay that puppy down. Even if all you can add is another $20 a month you'll be speeding up the process immensely. And I can't even tell you how much flexibility it will give you in your budget to be able to put that car payment towards something else....like a vacation.