Not Made Of Money

Imagine for a moment how much easier your financial life would be if you didn’t have to shell out $500 each month for a car payment. “Sounds great,” you say, “but that’s not going to happen. I have to have my car.” What you may not realize is that it really is possible to eliminate car payments from your life forever.

Granted, you won’t get rid of your car payment tomorrow. Instead, you’ll need to approach this process as a long-term plan. However, with a little dedication to the plan, you’ll soon be able to pay cash for your next car.

First, you’ll need to pay off the car you’re currently driving. If your budget allows you to pay extra on the loan, by all means, do so. Otherwise, just continue making your regular payments. The magic of this plan happens when you’ve paid off your current car loan.

Once you’ve made your last payment, the trick is to continue making the payment to yourself. Open a savings account and deposit the money each month. If you can automate the deposit, that’s even better. Since you’re already used to making this payment out of your monthly budget, you shouldn’t have any trouble keeping up with it.

As you continue to save, you’ll build a fund for your next car purchase. But when you shop for that car, you’ll be safe in the knowledge that you’ll avoid all of those costly finance charges in your new purchase. You’ll be paying cash.

You may ask yourself how making monthly payments to yourself is any different than having to make payments to your auto finance company. However, there are two big differences. First, you will earn interest on your monthly payments rather than having to pay interests. So, your money will be working for you rather than someone else.

In addition, making monthly payments to yourself will allow you to enjoy much greater flexibility with your money. For instance, if, after saving your car payments for a year, you need to skip a payment to pay for some other unexpected expense, you won’t have any problem. No auto financer, however, would be kind enough to let you skip a payment because you’re experiencing financial difficulties.

Although it may take a great deal of time and commitment to work your way past a car payment, once you do, you’ll be glad you did. Within a few short years, you can kick car payments out of your monthly budget and enjoy the luxury of paying cash for your car.

• How to Pay Down the Mortgage
• Easy Ways to Save Up for Your Health Savings Account Deductible

• The Saver List: What Kind Of Saver Are You? Sometimes The Weakonomist gets distracted with current events and needs...
• Your Savings Account is Costing You Money We know that not everyone is the best with money,...