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Practice Makes Perfect


So, maybe over the last six months or so you’ve been contemplating a rather large purchase…let’s say a vehicle. You have saved some money and have not been affected financially by COVID-19. You filed your tax return and got back the money you overpaid to the government in 2019, and you pocketed the stimulus (that will be taxed…don’t forget that). You are ready to go car shopping!

Hold on–do you have enough cash to pay for it outright? I suppose that depends on what type of vehicle you’re buying, if you’re buying new or used, and how much money you were able to save. Are you planning to make payments (not the course I recommend, but I digress).? Do you know how much you think you can afford monthly? Before you get out there and find the car you think you can’t live without, I have a suggestion: practice making the monthly payments to yourself.

But, how?

If you think you can afford a monthly car payment of $450, then actually take that $450 every month for at least six months and put it in a savings account that you will not touch. If you do need to get into that money to live on, you obviously cannot afford $450 a month. If you don’t trust yourself not to spend it, then find a trusted friend of family member and give it to them to hold onto for your training period. At the end of those six months, you’ll have an additional $2700 to put toward your car, and you will prove to yourself that you CAN make those payments.

Maybe you will see how much better it is to save and pay cash instead of financing it. Maybe you will decide to keep on saving that way from here on out, even after you buy your “new to you” car. Maybe you will invest that money wisely and watch that money grow. And maybe the next time you need to buy a car, money won't be an issue.

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