"I'll always have a car payment"
You might even be someone who has said or thought this. You might be asking "What's the big deal of having a car payment if I can afford the payment?" The "big deal" is...I happen to think people who are winning with money don't have car payments. Next, you might ask "So how do I not have a car payment?" Here is the real deal: you may already know that a new car loses about 25% of its value the instant you drive it off the lot. After four years, your car has lost about 70% of its value. What does that mean? A car that was valued at $26,000 brand new after six years is worth maybe $6,000. On top of that, a six-year loan on average you might have paid almost $33,000 for that $26,000 car! That's not a good deal in my book.
Here's a different approach. Suppose you bought a $2,000 car just to drive around for 10 months. Then you take the average car payment of $475 and save it every month. After 10 months of saving, you will have $4,750 to use for trading up in car. Add that to the $1,500 you could get for your current car and you have over $6,000. You just traded up in car and you own the car, you don't owe the bank! This doesn't have to end here. If you keep consistently putting the same amount of money away, 10 months later you would have another $4,750 to put toward a car. You could probably sell that $6,000 for about $5,500 in the 10 months-meaning you now have over $10,000 to pay for a car, just 20 months after you were driving a $2,00o car.
What could you be doing with that $475 if you weren't saving for a car in a 10 month period? Well, anything you want. You could take a VERY NICE vacation, all the expenses taken care of. Just think of the places you could visit on $4,750. Or you could remodel a room in your house. If you find a great deal, this could be all the furniture in the room. You could even invest that money. Whatever you decide to do with the money, it is now yours instead of giving it to the bank for a car payment. The less money you are spending on a car payment every month, the more money you have to put into other more important things like your kids college or your retirement.
If you just live without a car payment, you'll be able to do more in your life and it will change your life.
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