Avoiding Car Debt: Advice from an Expert
We all make financial mistakes from time to time. Most of the country has a least some credit card debt, occasionally we might make a late payment, or something will break down and we don’t have emergency funds to fix it. Preventative action is key to ensure your car doesn’t lead into a financial crisis for you and your family. We were able to chat with the owner and founder of DebtDiscipline.com, Brian, about how he budgets for a family of five and stays out of debt. Before launching into our Q&A, he shared this story:
The first and only new car I purchased was back in 2002. After 3 years of making payments and money going tight, I rolled the loan into a consolidation loan with some credit cards. Not changing my spending behavior, I incurred more debt and prolonged the car repayment past the 5 year originally term. I finally broke my bad habits with money and paid off all my debt in 2014. Going forward I only plan on paying cash for cars.
Now, Brian lives debt free and shares advice for all consumers to do the same. Here’s some tips he has about saving on car costs.
If you could tell our readers only one thing about saving money on their car, what would it be?
A perpetual car payment is not a way to a successful financial future.
Did you buy cars new or used and what would you recommend?
I purchase a reliable three year old car and paid for it in cash. I would recommend you buy gently used cars, because you can save a ton of money. Cars depreciate at a high percentage rate in the first 1-3 years. So, buying used and paying for in cash is the best approach.
How do you budget your recurring expenses such as gas, oil, etc..?
It’s part of my overall budget. If unsure of the amounts, track your spending for 2-3 months to get a good estimate.
Check out our last post about maintaining your car on a budget.
How you plan and budget ahead your maintenance costs?
Sometime you have to use a bit of guess work, but generally if you know how many miles you drive you can figure out how frequently you need oil changes, new tires etc. and can plan accordingly.
What do you do by yourself to save money on your car?
I had leverage when negotiating the car’s price when buying used and with all cash. I was able to saving an additional $2k off the asking price, because I had cash. You need to do you research, and make sure you understand the value of the car before talking price. There are a number of online tools like Kelly Blue Book that are useful.
How do you choose a mechanic and what are the things you must check before you go?
I often use local family run mechanics. I have found husband/wife shops are the best, where the husband is the lead mechanic and the wife runs the office. In my experience they have been the most honest and reliable. I’d asked up front what their labor rates are, what type of parts do they use (new or used) and if they have references.
According to Brian, buying a new-to-you used car is one of the biggest things you can do to save major money. Don’t forget to budget car expenses with the rest of your expenditures, and be sure and shop around for maintenance to get the best deal. With a little work on your end, you’ll be able to find good deals, cheaper vehicles, and relieve the stress of dropping tons of cash on your car.
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