Money: Life Without a Car Payment

 

Flickr Photo Credit: Scion Driver

There’s no denying our automobiles are a necessary component to our lives. They are also one of the most time consuming and expensive.

While we have to participate in fuel consumption, fluid and filter changing, parts and tire costs, we have a choice when it comes to whether or not we finance our vehicles.

Not having a car payment can make a huge difference in your savings and investment capabilities. If you still have some debt to pay off, it can happen more quickly without automobile financing. This in turn will free up even more cash to save and invest. Skipping this bill also gives you more freedom during job transitions, financial emergencies, unexpected layoffs or additions to the family.

For those of you who think paying cash for a vehicle means you will be stuck driving something frightful, that is not necessarily the case. If your circumstances are extreme then yes, you may have to drive a bit of a rust bucket in the beginning in order to pay cash. But if you tuck away the monthly payment equivalent along with that year’s tax return and the sale funds from your initial vehicle, you should be able to upgrade in no time. Both of our second hand vehicles were purchased in cash for far below blue book. One of them had 50,000 miles and the other 30,000. Hardly overused.

If you live in an area with convenient access to decent public transportation, you may be able to bypass car ownership, or at least cut back on daily use. Many people who live close to work and shopping centers are able to bike or walk to their most common destinations. However you are able to accomplish it, eliminating a regular car payment from your budget will pay big dividends in the long run. Take the proper steps to make it happen. You’ll be glad you did.