Many of you who know me know that I am a complete geek when it comes to personal finance. I spend an inordinate amount of time managing our finances and researching the best ways to invest, save, and achieve our financial goals (when I say “our”, I mean my soon-to-be wife and myself). Thankfully, we’ve been able to have a very frank and clear discussion on this before the wedding, and go over our budget and financial spreadsheet at least once a month.
Some would say I spend too much time on this – but I enjoy it. I manage our finances with the same zeal that many people play fantasy football. Same prinicple, different results.
Anyway, one thing we’ve come to learn is the fallacy that you need to have a car payment in life. In fact, once we have her car paid off, we don’t intend to ever have a car payment again. How do you accomplish this? I could go in to it, but there is a much better option – watch this video from Dave Ramsey.
How to drive cars for free and retire rich (click here to go to the video).
It’s a shame that we’ve gotten into a situation where it’s “ok” to have a car payment just because you can afford the payments. When I bought my car in 2007 (which was 4 years old at the time, and was paid off in 14 months) – the salesman kept focusing on how much I could afford to pay each month. Why? Because they could sell me a higher priced car if we maxed out my monthly payment. I knew how much I was willing to invest on a car I plan on driving until the wheels fall off. That’s what I based my purchase on.
Our next car purchase will hopefully be coming in 2-3 years when we have kids and need a “family” ride. You better bet we’re following Dave’s advice from the video and saving at least that car payment every month. Why? Because when we make that next car purchase, it’s going to involve me writing a check and driving off.