5 REASONS WHY YOU SHOULD NEVER HAVE A CAR PAYMENT

5 REASONS WHY YOU SHOULD NEVER HAVE A CAR PAYMENT

For middle class America, car payments are a normal way of life, everybody has one! I’ve even been told; “a car payment is a sign of being an adult”.

Yes most of us were raised to believe that this is the norm and that every car we own comes with a car payment! This does not have to be true! In fact, today more than ever before it shouldn’t be true! It has to change!

We all know that excess credit card debt is a bad thing and that student loans are outrageous today! But for some reason car payments (as crazy expensive as they are these days) get a free pass when talking about debt and money smarts.

There are many reasons why this is, for one it is because of the way it is constantly advertised to us. Second it’s because cars are necessary (yes for most of us a car is necessary, but not the payments J) and third is that we feel the value when driving a car and physically using it. That all being said, no car is worth what we lose when we have a car payment!

Car payments are stealing your money and here are 5 reasons WHY YOU SHOULD NEVER HAVE A CAR PAYMENT:

  1. Depreciating in Value

When something depreciates it reduces in value with time. Cars depreciate in value faster than almost anything!

We all pretend like spending $36,000 on a new car is acceptable! However; if we had that racked up on a credit card we’d be banging our heads against the wall!

Here’s where the problem lies in thinking the car payment is okay: What’s the big difference?

According to Kelly Blue Book the average new car price in January of 2018 was $36,280.

This means that half of the new cars purchased were more expensive than that!!!!

If I bought $36,000 worth of clothes on a credit card people would say that I have a spending problem (and they’d be right). Also, after some time of wearing those clothes (hopefully a long time for that price) they would no longer be returnable. Sure I could sell them in a garage sale and get some money out of them but never the full amount that they cost me when they were brand new.

Now let’s look at cars. If I spend $36,000 on a new car (below average) most people would find that perfectly acceptable. However the same thing happens to the car as it did with the clothes; each time I use it, the value of it goes down. I could never sell it for what I paid for it and as time goes on the value keeps going down.

 

5 Reasons why you should never have a car payment

 

In the meantime, I’m making payments each month (with interest) on something that I am wearing out faster than I am paying off.

Cars should be looked at as a necessary expense, but the payment isn’t. We spend enough on car maintenance and repair to not have a car payment to add to it! And it’s never worth it to buy a new car for how fast they depreciate in value.

 

  1. Opportunity Cost

The opportunity cost of money is basically the missed opportunity of what you could do with your money if you had not been spending it on car payments. Basically what are you giving up in order to make those car payments, 401k, vacation, investment, savings, buying a house etc.

Our car payments are robbing us from being truly wealthy and successful with money! The average new car purchased in America is $36,270 according to Kelly Blue Book and most people who take out a car loan and make payments on that for many years to come.

According to Edmunds.com:In 2014, 62 percent of the auto loans were for terms over 60 months. And nearly 20 percent of the loans were for 73- to 84-month terms.”

So not only are car prices getting bigger, but we are paying for them for a longer amount of time! Therefor taking away all opportunity that we had to put that money to better use! Also here’s a thought, after 60 months (five years) you have an “old” car on your hands…time to go get a brand new car and repeat the cycle.

5 Reasons why you should never have a car payment

 

-Leases are no better, you are just making a car payment for something that isn’t and will never be yours (again charging you an opportunity cost of that money).

Breaking down the car payment:

The average interest rate on an auto loan was 4.21% in 2017. That means many rates are higher than that! So not only are you making outrageous payments on something that is tanking in value but you are paying interest to do it!

So we have the average new car price of $26,270 and the average loan rate (remember this is average so half of them are higher! Scary!) of 4.21% over the average car loan term of 60 months….putting that into a payment calculator (google it) comes out to

Beep…Bop…Boop…..

CRUNCH:

$670 per month!

 

That is what the “average” American is spending per month on a new car! If you are not shocked by this think of this –according to the census bureau for 2016 the average household income was between; $57,000-$59,000 annually.

That is a take home pay after taxes of $3,900 per month! Are we killing ourselves with car payments here? Not to mention student loans, house payments, credit cards, and putting money away for when you finally get to retire!

What could you do with that extra $670 a month that is being wasted on a car? Is it really worth it?

 

  1. Interest Working Against You

The average interest rate on an auto loan was 4.21% in 2017. Sure that’s not as bad as some credit cards but it does add up over time, especially on $36,000. Instead of paying someone to spend money we don’t have in the first place we should be getting interest paid to us!

How do we do that?

What if we live with the car we have for a few years or buy a cheap car and start putting a “car payment” worth away in a money market or mutual fund account? This would mean that the amounts we are saving to buy our next car would actually being growing interest FOR us!

On top of this, when you go to a car lot with cash, you can always negotiate a better deal than if you are asking for a car and begging to be accepted for a loan in the process. Doing the latter puts you at the mercy of the car dealer (and they aren’t known to be merciful).

Check out Dave Ramsey’s 5 Tips When Buying A Car.

 

See exactly how this works:

 

  1. Save Your Payments

As explained above; if you were to save or invest your car payments rather than let the bank do it, you are gaining interest rather than paying it.

If you can be proactive with your money rather than reactive. You can live without ever having a car payment.

Being proactive would be saving your money for a car realizing that cars have a limited lifetime before they fall apart. Being reactive would be to wait until your car breaks down to think about needing to get a new one and not having any money to do so. This is what most people do.

Instead, be a proactive person! Think of your health:

A proactive person exercises and eats healthy in order to keep his/her body from getting sick.

A reactive person does nothing until they are laying in a hospital bed about to have an operation due to not proactively taking care of themselves.

The same is true about our financial health. We should be PROACTIVE in all our financial matters! It is how we are able to pay bills on time, take a vacation, and eventually retire!

Why should cars not fall under the category of things we save for? Because it’s easy to get a car loan? Because it is considered normal?

Being normal is being that reactive person on the hospital bed. Normal people do not run marathons and normal people do not become wealthy.

It is something that must be proactively worked on! It takes time but it is worth it! Financially successful people know these reasons why you should never have a car payment and they avoid them like crazy!

Which brings us to #5 which is one of the most important points about car payments that financially successful people always keep in mind:

 

  1. Time Adds Up

Spending 60 months on a car payment kills 5 YEARS of potential investing or doing ANYTHING else with that money. Instead you are left with a $5,000 dollar car and nothing in your savings or retirement from those car payments.

5 Years of paying someone else with interest is a long time! Not to mention the actual principal payment amount! Imagine putting that money into an investment every month or just under the mattress! You would have around $40,000 to do whatever you want with!

When it is spent on a car payment for that long, it is wasted on something that is really a luxury. If you can afford it and still put money towards everything else you want to in order to reach you goals (for example if you are a millionaire) than go for it!

5 Reasons why you should never have a car payment

 

For most of us however; it is foolish to waste that money over such a long period of time on a new car. And as stated before, after 5 years…you are left with no money and an old car, only to repeat the cycle again.

As explained in the video above; save your payment and start making time work for you! Ask anyone over the age of 50 and they will tell you that they wish they would have started putting money towards retirement earlier than they did…because time plus compound interest works miracles! But that’s another topic all together.

When it comes to money and looking back on what we “should have done” time flies by! Think about how you could have saved more for college or not spent so much on that last….fill in the blank. The same goes for your car payments.

The time will go by no matter what you do with your money, so do the thing that will benefit your goals and dreams the most!!!

So to recap 5 reasons why you should never have a car payment:

 

  1. Your Car is Rapidly Depreciating in Value

  2. It Robs You Through the Opportunity Cost

  3. Don’t Let Interest Work Against You

  4. It’s Better to Save Your Payments

  5. Time adds Up –Have Something to Show For It

 

For middle class America, car payments are a normal way of life, everybody has one! Is it our goal to be like everyone else? Do we want to achieve normal?

No if you are like me you have dreams and goals that sound scary when you mention them out loud! They get you tingly and excited when you think about them for 5 minutes! Don’t let the excitement of a new car rob you of what you really want for your life and your future!

I wish you all the success and happiness in your daily life!

Get Out of Debt Faster Without a Car Payment
5 Reasons Why You Should NEVER Have a Car Payment
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HOW WE PAID OFF $55K OF DEBT ON 1 LOW INCOME

HOW WE PAID OFF $55K OF DEBT ON 1 LOW INCOME

Debt is a horrible thing. It robs us of what is ours, it takes away opportunity, freedom and security. It keeps people awake at night and working around the clock.

I know because my husband and I have been up to our eyeballs in it since we got married.

I handed my poor young husband $22,000 of personal consumer debt the day we got married. And we proceeded to tack on $33,000 more through our early years of marriage. Shockingly neither of us have a spending problem! This debt was all average, run of the mill, everyday living debt. Cars, student loans, and of course children! None of that is an excuse just a description of the picture we were dealing with.

At first neither of us knew what to do. We didn’t know where to begin or who to turn to. Yet the dream of being debt free was the drive behind our fervor.

I remember coming across a success story of a woman with a large family, living on a low single income, and being debt free, AND SAVING MONEY!! I was obsessed with the notion. Part of me laughed at myself and thought

“of course she can do it…..but you can’t”

I had so many excuses for myself. Things like, “we can either be healthy, or debt free, but it’s impossible to do both.”

Or “I think it’s fine once we have things like a nicer car and bigger home, then we can really go crazy getting out of debt.”

These and many more I tried to convince myself of. They were all lies.

I would get angry when I wanted to buy something or update something and we simply didn’t have the money. I always snapped, “where the heck is all our money going?” But it was always going to the same place:  Debt

I finally had it with the whole idea of debt. Borrowing to get things we wanted just to be punished for the rest of our lives. Never getting ahead or being able to afford anything of quality. And never being able to move forward with dreams or goals.

So we did 4 things:

First: We Got Our Finances in Order.

We laid it all out. We wrote EVERY blessed thing down. And we made a budget. It started with understanding down to the penny what we made each month followed by exactly what we spent. this was somewhat unknown as we were not keeping track of any spending whatsoever at the time. it was painful and not fun at all the first few times we sat down to talk about finances. However, as time went on and we were incorporating better habits and seeing them work, it became very exciting!

Starting a budget is not easy and I recommend having a lot of patience when you do it with your spouse! A couple things to remember;

  • It’s not one person’s fault. -Finances are both your responsibilities and if they need help, it’s up to both of you.
  • A budget doesn’t last forever. -You will have to go back at least once a month if not more to change and update things in your budget!
  • This is a starting point. -It’s easy to get frustrated at past habits and mistakes but you have to take note and move forward with that knowledge of having control of your money.

See the fool proof way to budget even for non-tech people!

 

Second: We Got Rid of Anything We Couldn’t Eat, Wear, Drive, or Stay Warm With.

I’m talking everything. Magazines, cable, expensive cell phone plans, restaurants, movies. You name it and if it didn’t help keep us alive we removed it from the budget.

See what you need to stock a frugal pantry!

Third: We Consolidated.

We took all the different loans, credit cards, and car loans and we consolidated them into one low interest rate payment. I have heard different opinions on this. Personally, I wanted to take all that interest and diminish it as much as I could. I couldn’t think of a smarter way than bringing it all to one place and only having 1 interest rate.

Also, the benefit of this is only having 1 payment and one due date. Resulting in never missing a payment and never paying late fees. There are many consolidation companies that can help you get started with your debt-free journey. They are widely accredited and well known for their quality services. You would be putting yourself in good hands with them. However, do your due diligence and research what is a good match for you.

Fourth: We Put Our Heads Down And Powered Through.

After putting it all down on paper. Getting rid of excess. Putting the debt all in one place. We were set.It was simple, and it was hard. That is to say; it is not complicated but that doesn’t make it easy!

The process was easy, but the follow through took discipline. We put every extra dime toward debt.

See how we saved hundreds by changing this one coffee habit! 

We researched and figured out health meals on a budget and smarter ways to grocery shop on a tight budget.

I thrift shopped everything first. What I couldn’t find at the thrift store, I went to the dollar store for. After that the last resort was Wal-Mart or something as cheap.

For food it was the same concept. Aldi first, Wal-Mart second, but I dreamt of the day I could walk into a Trader-Joe’s and Target again. I knew I would, but the days felt long and tiring to get through.

See how we cut our grocery budget in HALF!

I decided to fall in love with the process. I decided to make it a game. As the debt started to melt away and we could see the end of the tunnel more and more it became exhilarating. Things became less important. Food was just food. It didn’t need to be expensive or fancy, only nutritious and satisfying.

We always kept the dream and focus in the forefront of our minds. It took a lot of “pain now for results later” mentality, but it worked! We turned our dreams into goals and used that as our motivation! This let us discuss our dreams over a nice cup of coffee while having the knowledge of knowing we were working our plan to get there and reach them! It has been a huge challenge and one that has to be done together if you are married!

I am so excited to be able to tell you that if we accomplished this challenge, if we climbed the mountain of debt to reach the top and find freedom so can you!

All it takes is these 4 simple steps, and the courage to see it through to the end!

I wish you all the luck in the world and all the financial freedom you deserve!

 

 

TOP MONEY SECRETS OF REAL MILLIONAIRES

MONEY SECRETS OF REAL MILLIONAIRES

When we think about “success” we think money. When we think money, we think of having so much of it that it no longer brings concern. Some of us may even think in numbers like millions or billions.

If you have any ambition to be successful at all, why not learn from the best?

I’ve studied millionaires for the past 16 years and becoming a millionaire has been a life-long dream of mine since I can remember! Although at first, of course; I didn’t have much of a plan. It was just wishful thinking; a dream rather than a goal.

Through the years however I have taken the wonderful advice of the ones I have studied and applied it to my daily life. After hard work and detailed application, things began to fall into place in ways that have taken my life and turned it around 180 degrees.

By applying the things, we learn; our lives can start to look like the ones we want to emulate. It’s so easy to read quotes, read books, and watch movies about other people’s success stories fiction or non. It’s so simple to then dismiss their success as a “fluke”, or just cracking it up to it being what they were “destined” for, but that’s not OUR lives. It safe to stay put. To not ever go out of our comfort zone. Safety isn’t success it’s average.

Here are 18 Things that typical millionaires have in common regarding good personal and money habits:

  1. Get Up Early

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You don’t have to be up before the sun. But being up before people start pestering allows for time to focus and get the most done. It also allows for Personal time. Spiritual time. Mental time. These 3 things are things the world and other people do not allow for you, so you must chisel time out for yourself. Being up before the world starts pulling you each and every way allows for that time.

  1. Get Self-Employed

This one seems like a no brainer, it also seems to be said a lot these days with youtubers and bloggers up the wazoo. It was background to me for a long time. Something I dismissed for some unknown emotional reason. Self-doubt perhaps. But this one is truly an important factor. Either by a side-hustle or full on business getting self employed allows you the freedom to bring in any amount you set for yourself. Start with a budget!

  1. Take Risks

Taking risks is so far out of most people’s comfort zones that they literally never will do it. Not even once in their lives. Millionaires however have all taken some risk. Either on themselves or in an investment. Learn what risks are practical, safer, and will yield a return and then start.

  1.  Invest Consistently

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Learn the numbers and get comfortable with it. Take a course, ask an advisor, do whatever it takes for you to understand what you are doing with your hard-earned money but then do it. Teach yourself how to make your money work FOR you.

Invest often. Don’t get scared and quit. Don’t sit on one investment. Invest often.

Invest early. It’s the hardest and most important phase for getting a foundation under your belt.

  1. Gratitude and Satisfaction

Millionaires are people who have had massive amounts of gratitude and satisfaction throughout the entire process. They learned early on to enjoy the journey. By being grateful in our present states and having satisfaction with the things we have and the achievements we have conquered we stop looking outside of ourselves for happiness. The happiest people have the most to offer the world.

  1. Cut Waste

Becoming a millionaire isn’t always about MAKING more money. Part of it is taking care of what you have and not wasting it. See: the best ways to start saving! That goes for time and resources as much as belongings. Cut the waste out of your life as much as you can and keep what you have and your life will see great returns. See the best ways to cut the waste out of your grocery budget!

  1. Be the Best NOW

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People who are successful are typically the best in their field or expertise. Be the best NOW!!! Don’t wait until the money starts coming in. Give the best of yourself. Show up. Excel at whatever you are doing but excel NOW. Be the best waitress. The BEST cashier. Smile. Bring Joy and value. Make people laugh. Be attractive and you will attract. If you hate your job, change it. If you can’t change it create a business, you will love. Just remember you can’t start a business tonight and quite your job tomorrow, it will take time. But the time will pass if you start one or not. So, you might as well start creating your future today. While you are at it though, be the best version of you.

  1. Figure Out Your “Why” First

If you don’t have a reason you don’t have much of a pull. How will you be willing to do what it takes if you don’t have a reason behind you. It doesn’t have to be profound or elaborate. Figure out what your reasons for stepping out of your comfort zone and into the unknown are. This will keep you going in the hard times. This will be the drive to get you to the top.

  1. Believe in Yourself

More times than not we sit on the sidelines watching. We are all afraid. Don’t be fooled. All the millionaires I’ve ever spoken with have had a point in their lives where they were afraid.

Most millionaires didn’t have parents who handed them a bank account after school. They came from where you sit today or worse. Also most of them were so scared and they didn’t know what to do, but they kept putting one foot in front of the other. You can’t run the race sitting on the bleachers. You have to get off the sidelines and start. Believe that you have something to offer that no one else does. The world is waiting for you!

  1. Start Small

Little sacrifices add up. Start small and slow. You don’t have to go all in. Just do 1 small thing each day that moves you forward. You want to build momentum. These millionaires didn’t get here in a day. They followed a process. They started small and slow and eventually they won the race.

  1. Plan B

It’s important to have a plan B. Otherwise we let road blocks get in our way. We set ourselves up for failure. Create a plan B to keep moving forward. There will always be road blocks and doors that slam shut. Don’t let it be discouraging.

  1. Don’t Purchase These 2 Things

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There are 2 things in life that we are programed to need, want, and continually buy. New Car’s and New Houses. Resist the urge as much as you can. As the money starts to come in remember that the Mazda you drove to get to class will still get you around. The house can be fixed and upgraded.

  1. Make Your “Millions” Come to Life

What does being a millionaire mean to you? It means something different to each person. There are no two people alike. A millionaires lifestyle to you will be a completely different picture to me. Paint your picture. Dream. Visualize. Sometimes when we think “millionaire” we think in money, but money has no feeling. Think about what a day in your life would look like if you made a 7-figure income. This is your million come to life!

14. Planning, Commitment and Perseverance

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Plan your money so you have plenty at the end of the month. By making more or cutting expenses, whichever you prefer. Create and commit to a plan, then persevere. The hardest part is perseverance through the hard times.

  1. Get Rid of Bad Debt

Learn the difference between good and bad debt. Avoid consumer debt at all costs, but don’t neglect the benefits of good debt. Good debt is a debt that is an investment that will grow in value and generate long-term income.  Purchasing a home would be an example of “good debt.” It is an asset that typically grows in value and is sold for a profit.

  1. Avoid Peer Pressure and “The Jones’s”

Its super easy to get sucked into the trends and what other people are doing or having. Social media makes it even easier to be constantly up to date with what everyone is buying.  This is where remembering your “million come to life” comes in very handy. Always having that scene playing out in your head of what your day will looks like after you achieve your goals is the perfect tool to keep you on track and let the Jones’s be.

  1. Learn How to Work 10% Harder Than the Average Person

  • The average person comes home and watched Netflix.
  • They get up in just enough time to maybe shower before work and head out the door.
  • The average person lives paycheck to paycheck.

Learn to work only 10% harder than that and you are bound to succeed. See the Habits of Successful People vs Unsuccessful People.

  1. Never Stop Learning

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Never stop reading, listening to podcasts, studying the people you want to emulate. Don’t give up on your dreams and always be working on reaching them. The minute you stop learning, is the minute you give it all up. If you don’t understand something you must research it until you do. And if you fear something; do it until you are comfortable. Never stay comfortable, because comfort is average!

Remember becoming a millionaire is NOT hard to do, but so it NOT becoming one. It’s a choice in the little things.

  • Working a bit harder.
  • Setting aside instant gratification
  • Being grateful for what you have and are experiencing
  • Stepping out of your comfort zone
  • Investing in yourself

Through my 16 years of study these 18 things ring loud and clear as common denominators. If you can implement them into your life now slowly but surely you will start to see a snowball effect of results.

Never give up on a dream just because of the time it will take to accomplish it. The time will pass anyway.”
― Earl Nightingale

Where will you be in the next 10 years? Will you risk your comfort, learn to work 10% harder, and ignore the Jones’s to be able to give your advice for making 7-figures?

 

 

9 Things Debt Free People Do That Will Change Your Life

9 Things Debt Free People Do That Will Change Your Life

Becoming debt free takes time, commitment and good habits! The things debt free people do are a way of life to them only because they have made them habits. We are not born winners with money and you can be debt free too if you follow these 9 things debt free people do all of the time in order to win with their money and stay away from debt!

1. Live On Less Than You Make

In a world of “Joneses” it can be hard to live within your means. Debt free people have mastered self-discipline in their belongings. By living within their means debt free people can manage their money to work for them, not be fighting against it. When we are satisfied with what we have we are content enough to not need to go buy things we don’t need, resulting in saving our money. Continue reading 9 Things Debt Free People Do That Will Change Your Life