Saturday, October 30, 2010

Bad Habits: Kick That Car Lease Out.

NAPERVILLE, IL - JUNE 19:  Cars sitting in the...
When your on your way to straighten out your finances one of the hardest things to do is get of the car lease habit. Getting that new car every 3 years is quite tempting. You fool yourself by saying you deserve it. You remember when you had that old jalopy and how often it broke down. You need a reliable car and your going to pay for it. 

You know the right thing to do would be to purchase a good used car and pay for it in cash. You must prepare for this purchase by saving money. If you have $5000 dollars you can get a good used car. That lease car is costing you a payment of $500 a month, so save that much for 10 months and get yourself a car. Remember after the 10 months you'll have that $500 monthly payment to keep in your pocket. You can use it to save for a more expensive car or put it toward your emergency fund. 

You have to stop thinking the car purchase as a $500 payment. You believe, no problem, you can swing that. Think of it as what that will be in five years if you save it. We're talking $30,000 after 5 years. After another 5 years you will have $77,600 at 5% interest. I think I'd rather have the money. Most of us made our first car payment as teenagers. We got on that car loan merry-go-round and never got off. The best ways to lower your transportation costs is get that used car and drive it for many, many years. It's not easy to leave that new car smell. But if you want to have some money when your old, you have too.

1 comment:

  1. For better or worse, I pay cash for my cars and keep them for at least 10 years to make sure I get my money's worth.


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