I love having a nice car. I think everyone does. Unfortunately it always seems like the cars I want far exceed my wallet’s ability to pay. I think this is true for many of us. Here’s a plan that solves that problem forever.
This is a video that I wish I had seen when I was 16. Next month I’ll be making the final payment on my current car, a 2001 Mitsubishi Montero Sport with 176,000 miles. This will be the last car payment I ever make because I’m not going to borrow money anymore. Over the course of my adult life I’ve always had a car payment, and recently I did the math to discover that I’ve made about $81,000 in car payments. Some of those cars were great cars, but really what have I got for all of that money? A run down SUV…
A lot of people will question the interest rate. I’m sure that you could find a fund that will return12%. It’s not going to be easy, but if you look I’m sure they’re out there. Even if you were only getting 8% this still works. It just takes a bit longer.
The other thing that always caught me up on my cars was tires. When it comes time to replace them that is going to be a $400 to $800 expense. The easy way is to put $25 to $50 a month aside each month for replacement tires. Then when its time to change the rubber on your ride you’re ready.
Best wishes on your cars.
Good info Philip. Thnx for sharing.
This should be taught in every high school. It’s capitalism 101. The big problem is the mental cost and effort of finding a good used car.
Whenever you are thinking of replacing your old car, think: what is the alternative? $464 per month actually pays for a lot of repairs, or just plain maintenance.
=Matt (driving a 16 year old car, and whose wife drives a 15 year old car)
There is a lot to be said for someone who drives a 16 year old car. One of my buddies has a Jeep CJ that he bought used in 1978 that is still his daily ride. What I like about this is that it shows you how to get to a point where you can always have a decent trouble free car that’s paid for without having any kind of car payment come out of your budget. Build up the car replacement fund. I could also see value in continuing to pay say $50-60 dollars a month into the fund to build up for an even better car. Sort of a hedge against inflation and recessions.