A recent discussion with my own children helped me realize just how much I don’t need much more than I already have. I don’t need a new car just yet and I can make due with the furnishings I have until I save for something newer. To purchase something on a credit card or buy a newer vehicle on credit just because I can only adds to my debt and feeds the lenders. Instead, let’s evaluate the real versus the perceived need and then add up the costs.
My current vehicle has 210,000 miles on it, and yes it is running a bit rough, but I don’t have a car payment and I have kept up the maintenance, so it will probably last another 100,000 miles. My budget for a used vehicle is only around $8,000 to $10,000 and paid out over 4 years, depending on the interest rate, I will probably pay closer to $11,500. Say it takes me two and a half years to drive 100,000 miles. That’s 30 months, and I put the equivalent of a car payment a month into an investment account where I earn interest; by the time I am ready to purchase a vehicle, I can pay cash.
Life doesn’t always work out the way I plan it, but it makes sense to start with this kind of plan than to decide today to purchase a different vehicle on credit and pay the interest to someone else when I can pay myself instead. The same goes for any other purchase I might make, like that couch or love seat I’d like to replace. The old one might look a bit tattered, but a slip-cover will work until I save up enough for something different.
Credit card companies and lenders are only too quick to say yes, they’ll lend just about anyone funds for anything. Part of that conversation with my children was a discussion about options for mortgages. Thankfully in their cases, the lenders said “not yet.” They are young and have many lessons to learn. The first lesson they’re getting is in saving; they have a long way to go before they’re ready for they’re own homes.
Talk to an AC Financial Adviser for more about securing your financial future. Call 877-435-2283 to find out more ways you can save for the things you want and need.
