Car Payment Free: You should and can do it too!

On Wednesday, January 6, 2016, we paid off our 2010 Toyota Corolla!  I drove to the bank and told Benaiah what we were doing.  He put the cash in the plastic container and I put it in the sucking machine. Lol.  And we are finally free of the slavery that is a car payment.  I drive a 2002 compact SUV and had paid cash for it about a year ago.  We officially have two paid for cars! Whoo hoo!

We first purchased our Corolla impulsively after our only car kept breaking down.  Fabian drove a motorcycle at the time. We had no credit scores and the only debt we had was student loan related.
Like many people, I wanted a nicer and newer car that, let's face it, I didn't need. When our car kept breaking down, it was the excuse I had been wishing for.  Instead of taking $1,000 to fix it, we went and got a car payment. We put $1,000 down and got a ridiculously high interest rate. I did eventually get it refinanced to less than half of the initial interest rate. We financed our car for $15,000.  Paid around $18,000 including interest payments over the course of 4 years.  Our car is now worth around $5,000.  Can you say, "Ouch?!"

 I share these things so that others will think deeply before getting a car payment, and hopefully not make the same mistake.

The average car payment in America in 2015 was $482 for a new car and $437 for a used car. Ours was $350 for a used vehicle.

When a car is bought and driven off the lot, within the first year the car loses 25% of its value.
That's why car dealerships make SO much money.  The consumer purchases a car for $20,000 and by the end of the year and as the next model is out its already worth $15,000.  Yet, the consumer probably still owes close to between $17,000 and $15,000 (depending on the amount of car payment and interest rates). It's like throwing money or in this case $5,000 out of the window just to drive a "newer" nicer car.

Leasing cars is the most expensive way to "own" a car.  Not a good idea in any form. Consumer reports says, "Although leasing has lower monthly payments, once you factor in that you won't own the car at the end, leasing ends up being more expensive than buying with an equivalent loan."  Again throwing money out of the window.
Instead of financing or leasing a car, save cash to purchase a simple car. And/or keep driving that little old thang!  A car is used to get you and passengers from Point A to Point B.  It does not need to be fancy, {especially} if you're broke. Just buy what you need.  Take it from my experience.  I love my 2002 compact SUV! The driver side window doesn't roll down and someone backed into it in an HEB parking lot. However, I prefer driving it compared to our newer/nicer car as it is easy for toting babies around and fits the stroller better! The AC works and it drives. That's what counts.

What could you do with a $350 worth of car payment a month? It's money to pay off other debts.  It's money to save to buy a home. It's money to invest with so we can retire. It's money that we can use however we please because it's ours and not the banks. That's financial peace at its finest. Knowing that we are in control of our money.

When I say, "We're Car Payment FREE!!" I mean it.  We're free.  Our kids are free and will never know the bondage of debt. We do this all for them!

Stewarding God's money, His way, and for His glory that's ultimately what doing this journey is about.

Love,
Leah

"...borrower is slave to the lender." Proverbs 22:7


"Anyone who does not provide for their relatives, and especially for their own household, has denied the faith and is worse than an unbeliever." 1 Timothy 5:8

"A good man leaves an inheritance to his children’s children..." Proverbs 13:22
Resources
http://www.usatoday.com/story/money/cars/2015/03/04/new-car-loan-record-payment/24363041/
https://www.daveramsey.com/blog/the-truth-about-car-payments/
http://www.consumerreports.org/cro/news/2011/04/resurgence-of-car-leasing-may-not-be-good-thing/index.htm