Step 6 – Pay Cash For Vehicles
After you’ve paid off all credit cards and other unsecured debt you want to get to the point where you are paying cash for your vehicles. In our example above you’ll have an additional $710 a month to put toward vehicle loans. This will typically mean you can pay off a 4 year auto loan in less than two years.
If you have two vehicles you can pay both of them off in 4 years. Look at driving them for 8-10 years. If your car payments were $400 each plus the $710 that you were paying on credit cards that is $1510 a month you can save toward replacing your cars. In three years after paying them off you’ll have $40,000 towards two vehicles when needed.
Buy used cars until you are very financially secure. A new car loses about 15% of it’s value the day you drive it off the lot due to the profit margin built in, salesman commissions, etc. They don’t build those big, fancy dealership buildings from nothing.
