![]() No, it’s not, because that new car starts losing money the instant you drive it off the lot.įrom the first month of ownership, you’d owe more on your car than it’s worth. ģ Bad Excuses for Having a Car Payment 1. You’ll find more money than you thought possible in just two weeks!Īlright, still not convinced to pay off your car? I’ve heard every excuse in the book from people who want to justify a totally ridiculous car payment. For extra motivation when you’re saving up for a new car, try out my free 14-Day Money Finder. I don’t want you to even consider a car loan as a possibility. Add a new line item to your budget so you can start saving money in a car fund. Depending on how much you drive, you may replace cars more frequently than other people. ![]() We all know we’ll need to replace our cars at some point. Make saving for a car a new habit, even if you don’t need a new car today. If driving a 20-year-old Camry for a year or so now will enable you to drive whatever you want in the near future, it’s worth it! I know that sounds terrible, but it’s just temporary. This may mean that you have to drive an older, $1,000 car around for a while. At that point, you’d just buy a cheap, reliable car with cash and start the savings plan from there. If you owe more on it than it’s worth, you could sell it and take out a small loan for the difference. If you have a car payment currently, it’s time to either pay it off with the debt snowball or sell it. Keep following that same formula over and over for the rest of your life. Drive that car for five years, while continuing to save for the next car, and you’ll have $33,000 for the next one, and so on. Keep adding that would-be car payment of $550 to your car-replacement fund every month for another two years, and you’ll have over $13,000 to pay for your next car. Pay off debt fast and save more money with Financial Peace University. You probably won’t even mind driving your current car a little longer while you save cash for your next car! Once you start seeing results, you won’t want to go backward into debt for a car payment ever again. The thing about saving money is, it’s totally addicting. That’s two years of time when you could either throw that cash at other debts or pad your savings account. Paying off your car will not only save you money in interest, but it’ll also get you out of debt sooner! Using our previous example, if you doubled your car payment, you’d shave over two years off the life of your loan. So yes, absolutely-you should pay off your car! There are so many good things you could do with that money, like throw it at other debt or save for the next car. If you attacked your car debt like crazy for the next year and doubled your payment, you’d save over $1,100 in interest. You guys, just the interest costs more than some people spend on their whole first car!īut let’s say you’re one year in to having the car and making payments, wondering, Should I pay off my car early? You’d have roughly $16,500 left on the loan. That’s why I say car debt is the dumbest type of debt.Ī $20,000 car loan at a 6% interest rate would cost you $3,199 in interest over five years. Paying interest on something that’s worth less and less every month is a terrible idea, no matter how much money you have. ![]() That means a few years later, you’d still be paying the brand-new car price even though the vehicle is worth half (or less) of that. So, let’s talk about why you should pay off your car as soon as possible!Ī car goes down in value the second you drive it off the lot, but your payments are based on what it was worth while sitting in the showroom with only five miles on the odometer. Making payments on a car is the fast track to financial mediocrity. ![]() But you don’t need to be in car debt to have that. We all want to drive a car we love and one that’s safe and reliable. You don’t want to drive around in something you aren’t proud of or that feels like it’s going to break down every time you drive it. Most people want a nice car, and I get that. I mean, I like my car too, but not that much! If you invested that much money every month for the next 40 years, you would have $5.2 million. Over the past decade, car debt has gone up 60%, and the average car payment is now $545! 1, 2 Paying off your car might not be the first thing that comes to mind when you look at your budget, but if you have a car payment, it’s really stealing from your income. If you’re living paycheck to paycheck and feel like as soon as money comes in, it goes right back out, it’s time to ask yourself: Which payments can I get rid of first?įor starters, you might want to look in your driveway!
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |