Last year I shared on Money Saving Mom, how we paid cash for our van. Since buying a van we have purchased another car for cash. I know these days having a car payment seems like a way of life, but let me encourage you, not having a car payment is an even better way of life.
Do we drive brand new cars- No
Do we drive reliable, clean, and paid for cars- Yes
If you want to rid your life and your budget of a car payment here are 5 simple ways (or not so simple) to make that happen.
Pay Off Your Current Vehicle
When we owed money on our vehicle we started adding extra money every month to the payment. To make sure we paid extra we made the deductions automatic. Any extra money that came in went to the payment.
When Your Vehicle is Paid For, Keep Driving It!
After you pay off your vehicle, don’t trade it in for a newer model, keep driving it. According to The Simple Dollar, the average American family spends $300 a month on a car payment. If you drove your paid for vehicle for 2 years and saved that car payment money you would have over $7000 CASH saved for a new vehicle.
Sell Your Current Vehicle and Buy a Clunker
Last year we started looking for a “get around car” nothing fancy, just something for my husband to drive to work. We researched the most reliable older vehicles and narrowed our search. After looking for a few months my husband found a car for $500! This was in the D.C. area, where prices are not cheap. Since purchasing the car we have put another $300 into maintaining and making repairs. We have owned the car for 10 months and spent a total of $800. That equals an $80 a month car payment, which is significantly less than the national average of $300. Even if this car lasts us a year or two we have accumulated a large savings for another vehicle.
Drive Your Vehicle Until it is Ready for the Junk Yard
We never had new cars growing up. My dad’s philosophy was to drive a car until you have to pay someone to take it out of your driveway. That meant we would have the same car for years. But it was years of not having a payment. Yes, there were repairs (although my dad always found inexpensive mechanics) but they were less than payments. By the time our cars were ready to be towed out of the driveway (and yes, this did happen) my parents had saved enough money to replace our vehicle for cash.
We bought a two year old minivan in 2000. We took out a loan (we didn’t know any better then) and paid it off in 3 years. We continued to drive this car for 6 more years. During those six years we were able to save our $250 car payment. When we finally sold the van (for about $1000) we had saved around $18,000 for a vehicle. Do you know that you can buy a really nice used car for $18,000? I know this because I am driving it right now. While our minivan wasn’t the prettiest thing to look at we kept driving it because it worked, and it was paid for, and we were looking towards the future.
When I wrote about owning only one vehicle a few years ago, people told me it just wasn’t possible. I still disagree. For years we were a one car family, and I have many friends who are still a one car family. Can it be inconvenient, yes, does it require sacrifice, yes, will you miss out on things, probably. But if you need to get your finances under control this is one way to do it.