My Stupid Car Payment: Part 1

Who would take out a loan to purchase a car that takes years to pay off and adds unnecessary debt and interest to your financial life?

You should save up and purchase a vehicle that is below your means, obviously. But… that is NOT what I did.

I was fresh out of college, had no money saved, and found myself living in a state that requires a car to get anywhere. So, I did what any financially-illiterate millennial would do; look for a nicer car than needed, go to the nearest dealership, negotiate a 60-month payment that I could afford and walk out with a shiny new car!

If you’re not aware, this is one of the easiest ways to overpay and add a stupid amount of debt to your name.

Anyways, it was fun showing my new car off to friends and family for a month or so but once that new car smell wore off and I began making my $330 loan payment and $100 insurance payment each month, I knew a mistake had been made. I really hate my 23 year old self for this.

Fast-forward 3 years, a promotion, and a new job later, I am finally prepping to pay off that stupid car loan once and for all, nearly 2 years earlier than expected!

A couple of months ago, I decided to really buckle down and get my financial situation in check and my car loan was a glaring blockade to growing my wealth. Thankfully, I have a fairly decent amount of cash saved up that I’ve been looking to invest or put to better use (~7 months worth of expenses saved).

Instead of throwing this money towards an IRA or rental property, I decided I wanted to get rid of my car payment and increase my monthly cash flow. I called my lender and discovered I still had $8k left on my principle.

That’s STEEP!

I didn’t let that scare me though. Today I made my monthly payment of $330 AND payed an additional $4k towards the balance, bringing me to less than $4k to go.

Next month I will make another large payment and will be done with that stupid loan for good!

If you are smarter than I was or have enough money to purchase a car in cash, that’s awesome!

For those of you who were like me and took out a sizable loan, let’s work to pay it off!

With that monthly payment gone, we will have free cash flow to invest in something that actually provides a positive return or pay down other debt!

Part 2 coming next month!

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