I have thought about this question a lot recently. You see, my car is a 2003 Ford Escape (great picture, right?) and I have owned it for 10 years.
My wife and I finished paying it off in October of 2007 in the midst of our debt snowball.
But you know with cars, something is always up; especially as they get older they tend to breakdown more.
My car has around 180,000 miles on it and the latest repair cost me about $500, which is about the same amount of a monthly car payment.
So here is the question for many people: as a car gets older and repairs are more frequent, do you breakdown and get a newer car with a monthly payment?
Or do you rely on your savings (emergency fund/car maintenance fund) to keep up with the occasional repairs?
I have to tell you, getting a newer car would be nice (here is the one I would like). But I am committed to a debt-free life style.
We have not had any consumer debt since February of 2008 and I intend to keep it that way. A monthly car payment is not an option for me.
We are working on paying off the house to eliminate our last debt. My goal is to finish paying it off by my 50th birthday (I just turned 46 in case you were wondering). And my goal is to pay off the house before I upgrade my car.
So I will continue dealing with maintenance and repairs. It’s not fun to pay them, but it is better than paying interest on an auto loan. A new car would be great, but a monthly car payment would get in the way of my greater goal of paying off the house.
So what about you? What are you willing to do to eliminate debt from your life once and for all?
- Are you willing to stop borrowing money? You can’t borrow your way out of debt. Raising your debt ceiling won’t cut it.
- Are you willing to live on a budget and spend only to the level of your income? You can’t keep relying on the banks to catch your slack. At some point, you will be too much of a risk.
- Are you willing to make the tough decisions and cut down on those items that are not basic needs? It will be painful and unpleasant, but necessary. Someone in your family will complain. Will you deal with it?
- Are you willing to sacrifice to generate additional income to accelerate your debt elimination?
Remember, you are the solution to your money problems. It’s your life, it’s your money, and it’s your decision on what happens with your finances.
What’s your decision?
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