Leasing vehicles is the worst way to own and operate a vehicle. Financing is the second worst. I know because I have financed 2 vehicles. My first vehicle was purchased in 2009 for about $25,000. I wrote a check for about $2,500 for the down payment and the car payment was $379.00. As I received promotions and pay raises, I capitalized on each monumental milestone in order to attack the 5 year loan. I would put 2X, 3X and sometimes 4X the amount of the car payment to attack the principal. I was not going to be paying a crazy amount of interest for the entire 5 years. I was going to own the deed to the car (pink slip) free and clear and do so as fast as I could. I paid it off in 3 years.
Fast forward 4 years later and I financed again (what was I thinking?) We were anxious in anticipating a new child and the vehicle my wife was driving was 16 years old (which it still ran great and we didn’t NEED a brand new vehicle).
So we wrote a check for $4,500 for the down payment (car was $31,000) and the car payment was $405.00 on a 6 year loan. We paid it off in 22 months. I took the same approach. Once the baby arrived, healthy with no implications, we started attacking the car note. 2X, 3X again toward the principal. He was about 14 months old when we were completely debt free. We owned both of our vehicles! We saved a lot of money on interest, but we were still stuck in the behavior of borrowing money we didn’t have. It was time to break the cycle.
Madsen Financial Coaching 