Let's talk numbers. The transmission on my car went out. I'm talking out like...push on the gas and car stayed in one place kinda out. The estimate of the repair was the value of my car which was close to $6,000. Not a repair that was worth it to me. A few years ago I paid off over $30,000 in debt. That number included the balance on the car that now needed repair. The thought of going BACK into DEBT for another car made my stomach turn. There is a certain kind of freedom I envision for my children and their children and this debt thing is just not part of the plan. Yeah, I went to the dealership and took the car I wanted for a spin and it was fun and it was nice and it was "cool" but it's a car for another time. We didn't bring home the fanciest ride but we did bring home something that is reliable, in good condition and will get us where we need to go. My daughter rested well on our test drive this afternoon and I'll rest well knowing when I wake up tomorrow I'll still be debt free and for these things I am grateful.
Here are a few facts I learned through the process I followed to get out of debt. Once I read these I knew I would never finance a car again.*
- In 2003 the average car payment was $378 per month over 50 months.
- Most people pay off their vehicle and then trade it in and take out another loan for a new car - also known as never ending car payments.
- If you invested $378 per month for 40 years at 12 percent you would have $4,447094.01.
- If a you put $378 a month in a sock under your bed or a low interest-bearing account you'd have about $4,000 at the end of ten months. That's enough to buy a car outright with no payment.
- Keep saving at this $378 a month rate and within the next year you can trade up to an $8,000 car.
- A new car loses 60 percent of its value in the first four years. If you bought a $28,000 car at 0 percent you'd lose $17,000 over that time.
Let no debt remain outstanding, except the continuing debt to love one another, for whoever loves others has fulfilled the law. Romans 13:8
May your days be filled with compassion, your faith remain strong and may growth be your compass.
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*facts from The Total Money Makeover Workbook by Dave Ramsey