If you are looking to cut your monthly expenses, we have discovered a tried and true method for holding onto your money each month.
It sounds radical, but we don’t have car payments. In fact, we haven’t had one since 2010.
Admittedly, we never had car payment of $500 a month. But according to this article in 2017, that was the average car payment in America last year.
It seems funny to me how nuts people are about cars. We have this idea built up in our head about what is needed vs. what is wanted, and those get confused a lot. At the base, a car (a term I’m using interchangeably as “all automobiles”), has one main purpose: to get from Point A to Point B, then back.
Safety is a concern for many people, but that can get taken too far, too. Let your mind fantasize every worst-case scenario, and you’ll quickly find yourself paying for way more car than you need.
Let me introduce you to my car, a 2003 Toyota Corolla.
Would you look at her? She’s got failing paint, pits in the hood, and the shocks are starting to wear out. When I go over bumps I hear a gentle knock. But this little car has been very good. We purchased this car in 2004. It had around 25,000 miles then, and now it has more than 214,000 miles. I researched the crap out of cars before settling on this one. I think it’s been in the shop only twice for minor repairs since 2004.
I don’t remember exactly when we paid it off, but it was sometime around when my oldest daughter was born in 2006, so let’s say 2007.
She’s not a pretty as she used to be. The paint has really started to wear in the last few years. My youngest daughter says the car’s “skin is peeling” just like a sunburn.
Oh, OK, fine. She’s a piece of crap. But she’s a paid, reliable piece of crap. She just happens to be aesthetically challenged.
Our other vehicle is even more precious. I found this one in 2009. The kids have called her “Rosie” for years (I really don’t know why). When I found Rosie, she was a one-owner car with around 69,000 miles on her. She’s around 150,000 now. Rosie was unique because her miles were relatively low for her age, and when I found her, I just had to make her part of our lives.
Because she’s older, she has had a few more maintenance issues here and there. Thankfully, none of them have been major; just little annoyances that require keeping up on. But she’s perfectly safe enough. We’ve had many good memories with her. She has plenty wrong with her still, but nothing to hold us back from our everyday adventures. Rosie has been paid off since 2010.
It’s not to say that we don’t want updated, nicer vehicles. We certainly do. But all of this is to plant the seed that perhaps your money could be better spent not wrapped up in car payments for years on end.
So since this is about a debt snowball journey around Dave Ramsey’s plan, what does Dave say (besides buy with cash not using debt)?
Dave recommends the total of all the things you own that has a motor in it should not exceed half of your annual income. Our cars total about $2,500, so we’re doing great by that rule.
We will update our vehicles after we’re done with this step. Given my short commute these days, I have considered just getting a paint job and driving my car until the wheels literally fall off.
But for now, we’ll stick with what we have. We will stick to the plan, curb our desires, and with each month we’ll kill this debt for good.
And then, we will upgrade the kid hauler — with cash.