Create a Good Budget to Save Money from Car Payments
From the title of this article you can see that I am annoyed with the idea of car payments…TOTALLY! Personally, I am still feeling bad about the decision that I made last year to finance a car. I must admit that it was out of my distress that caused me to shop for a new car and to finance it. Avoid my financial mistake by joining the 31-Day Budget Challenge.
My Last Car Payment Was Over 10 Years Ago
Before 2015; I believe it was about ten years since I last purchased or financed a car. Today while preparing my budget, which reflects a few financial variances, has caused me to look for methods to free up cash so that I can eliminate a few some bills as quickly as possible. As I reviewed my personal budget, the $435 per month car payment stuck out like a sore thumb! Please don’t judge me on the $435 car note; I thought that a needed car seemed to be the best solution at the time. There is no doubt that car payments are a major hit to personal budgets.
Managing a Budget Closely Has It’s Benefits
However, as I have become more focused on my budget, I have become more calculated in my personal budget by analyzing and reviewing every penny and to look for ways to free up valuable cash. In fact, adopting a mind-set to attract money has helped me in my quest for financial freedom.
Budgeting Reality Check
Today, I logged into the bank’s website that financed my car and requested for a payoff statement and realized that I still owe the bank $20,000 to pay off my car. Keeping track of finances and understanding that checkbook registers don’t lie can save you hundreds and maybe thousands of dollars per year.
Hence, taking an intelligent approach to managing my finances, I thought to myself “I should sell the car”. After reviewing the value of my car, I note that I could only get $12,969 if I sell my car. This suggests that I owe over $7000 more than what the car is worth today. I write this article as a warning to all those who are considering a car payment and I caution you…DON’T DO IT! Starting a new journey of financial awareness and financial freedom is valuable to your personal budget.
3 lessons I have learned from my car payment:
- Car payments prohibit your ability to build wealth. In my case, $435 per month did not appear to be a lot of money at the time. However, as a result of doing research, I am $7000 in the red.
- Take Public Transportation: If you are like me and live in a major metropolitan area, it makes sense to take public transportation. Looking back, I should have used the subway system and saved enough money to purchase a car.
- Be Inconvenient, strategically: There was always the option for me to car pool with my husband; this would have been an inconvenient solution since we have different schedules. However, this strategic decision could have saved us car payments and additional cost for auto insurance. Be not only wise but strategic in this decision by looking at the intended goal.
While reviewing my personal budget and considering the creditors that I currently owe. I know that it was a lack of using good financial judgment that has placed me in this financial situation. I now know that to be better, I must do better. I must also be a better steward over my finances by managing my money efficiently and effectively. I love to hear about your bad financial decisions that you have made in the past. Like me, you can have this moment to internalize this feeling and honestly say, I have learned and move to the place of fixing it!
- Learn the Fundamentals of Budgeting
- The Dreaded “B” word…BUDGET
- This Is How We Budget Guide to Budgeting
- Wikipedia: Budgeting
Please share the steps that you had to take to free yourself financially.
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