All the Personal Finance blogs tell us not to buy a new car. I never planned to myself, but when I could not find what I wanted used, I took the plunge and made the splurge. I bought a 2014 Hyundai Accent in April 2014.
Not only do I feel safe and secure in my new car, after years of driving hazardous beaters, but I am also in the best financial shape I have ever been, ever.
Before I bought the car I scrutinized my budget spreadsheet for weeks. If you know how often I do this (at least once a day), you would know that this is a big deal, since I had the spreadsheet open for hours each day, moving numbers around. The only way I could afford the payment was to be radical with each category, to make room for the new purchase.
Once I became comfortable with the changes, I bought the car. Since my intention was to pay it off in 3.5 years instead of 7, I stopped spending everywhere else. I still put money in the grocery account, and the gift account (for christmas and birthdays), but I did not go to Sephora, or the shoe store, or go for take-away, and I certainly have not spent any money online since I bought my car.
Instead I squirreled every penny I could into a savings account, with the intention of making extra car payments. Within a few months my savings accounts were greater than they have ever been. I have never saved this much money before, ever.
I could go to the bank today and pay off half of what I owe on the car. Doing so would make my car an asset, since it is worth only about $12 000 since I drove it off the lot.
A couple of weeks ago, this is exactly what I was going to do, but then Partner (now-ex) told me he is moving out at the end of the month. So I have saved my money, because big new plans are in store.
1. Why it is so important to be on the same financial page as your partner before you move in together.
2. How to make two big purchases in one year as a single mom.