My amazing friend Elle is guest posting today to share her family’s incredible story of how they got rid of their car loan! Her new book, Jumpstart Your Marriage and Your Money just came out so make sure you check it out!
One of the best moves we made as a couple was getting rid of the car loan. We originally were trying to improve our cash flow and dump some debt. We discovered, though, that having no car loans has give us more options with our time and lives.
Burden of Debt
When we were first married, we had plenty of love, but also debt. Long story short, I took the idea of getting a reliable car and signed up for a car loan. Looking at my income, it was a huge weight on my tiny budget.
Even when we combined our money, it became obvious that the best option for us was to get rid of car loan. We knew that finances can be a huge stress on marriage. We believed having more wiggle room in our budget would reduce that weight on us.
Funny thing – as motivated as we were to get out of debt, neither one of us was looking to live like a pauper. To meet both of our goals, we made a few key choices that not only helped us pay off our car loan much faster, but gave us a path towards financial freedom.
Kept All Essentials to One Income
At that time my husband had his first full-time job while I was a full-time student with a part-time internship. While good pay, I had no idea how long it would last. We decided the best course would be to keep our essentials (such as rent, food, transportation, and utilities) under his take home pay. That meant when we were hunting for an apartment we skipped most of the newer places with bells and whistles and went with a small one bedroom place in a small building owned by an older couple. It wasn’t fancy, but it was across the street from the Chesapeake Bay. Scenic and we could hang out by the beach for some cheap fun.
How about you? Could start building a buffer by living on one income? Housing is a major expense, so making a change here can save you big bucks.
Used the Second Income to Build Wealth
We were about to squander my income. Instead, we used it to help pay down the car loan, build savings, and fund some of our dates nights (gotta have some fun!). It was an internship so we weren’t rolling in dough, but man, we felt rich because that income had a specific purpose.
Next time you guys have a chance, see if you can break up your budget so you have dedicated funds to dump your debt faster. It’s a psychological hack that has helped many couples.
Found Cheaper Alternatives
Neither one of us are huge TV watchers, but we still had some shows and games we wanted to keep tabs on. We began looking for alternatives to the huge cable bill. Nowadays there are some affordable options like Netflix, SlingTV, Amazon Prime, and Hulu.
We also became master negotiators with our cable company. We had dumped the cable packaged, but we used their Internet service. Every time a promotion was up, we went on the phone to see what deal we could get.
I’m going to date myself, but back then cell phones were a nice to have bill. Nowadays, they’ve become essential for most people. However paying a ton of money for them shouldn’t be required. There are smartphone providers like
Republic Wireless, Ting, and Freedom Pop that can cover your needs. I’ve been using Republic Wireless for my personal and business lines. With their refund plan, I pay about $37/month for both! So it’s been awhile, start looking at cheaper smartphone options for you.
Finally, we knew all the happy hour, college specials, and free events around town. We scheduled dates around events where we could score 50cent tacos and half-price drinks. We grabbed our friends and went to festivals downtown and around the area.
These sounds like small changes, but combining them allowed us to knock off time with our car loan. We paid it off early and you better believe we celebrated!
How We Buy Cars Now
Of course, no car last forever, so to keep away from getting another loan, we began a car fund. Instead of sending money to a lender, we’re keeping that money in savings where it can grow until we need it. It’s awesome because it allows us to save up without stressing out. If we had a month of big expenses, we skipped on the fund (rarely happened, but it was nice to have that option).
When we had to replace our cars (accident for my husband and a family car when the babies came), it was a pretty fun experience. Having the money up front allowed us to get better deals on the price!
My second income is used for other goals like retirement, trips, and paying down the mortgage.
Thoughts on Dumping the Car Loan
I’d love to hear from you about your wins and struggles. How many of you have paid off your car loan? How many of you are in the process?
New to my site?
I love writing about my family's journey towards financial freedom and about ways to optimize your life, save money, and live well! Here are a few more ways you can save money:
- Cook at home. During our debt-free journey we NEVER went out to eat because we honestly couldn't afford it, and now, even though we could afford it, we still don't go out to eat that often. But I'll be honest, meal planning was such a struggle for me during that time, but it totally saved our budget when I did it effectively! I ended up using a meal planning service for about two years which helped me not only meal plan better, but also helped me to create wholesome, healthy, and delicious meals for my whole family! You can see all the details and try different meal plans based on your preferences here .
- Earn gift cards. A simple way to earn a little extra money from home by using the Swagbucks site instead of Google for searching. I actually still do this to earn Home Depot gift cards for all our home projects. You can also do surveys and a few other things to earn points, which you redeem to purchase gift cards from them. Swagbucks is what we used to earn Amazon gift cards to help pay for Christmas or cash through PayPal to help pay off our debt faster. You can sign up for Swagbucks here.
- Switch Cell Phone Providers. One of the best things we did on the debt-free journey was to switch from our super expensive $150+ a month cell phone bill to a much more affordable plan! In fact, my cell phone bill is only $30 a month (my husband's plan is paid by his business)! Check out Mint Mobile here to see if you can save your family some money!
- Create a budget. It took us a while to figure out a budget that works well for our family, but the two things that we have used over the years and still do (and still love) are my Budget Binder and Personal Capital (online budgeting software). You can see my Budget Binder tutorial here and check out Personal Capital here.
Elle Martinez is the founder and host of Couple Money. Her new book, Jumpstart Your Marriage and Your Money, is designed as a four-week guide to help couples build their wealth together!
We’ve actually bought our car with cash, wanted to avoid loans at all costs! It did take us a while to save up though, and fit wasn’t easy (except for the occasional windfalls we put to good use 😀 ). It was totally worth it though and I sincerely recommend it to anyone not looking to buy a new car (ours is used).
Yes Adriana! We’ve been buying our cars upfront and it has been so freeing!
Sometimes, I think the idea of used car = lemon keeps people from exploring their options. There are some fantastic used cars that don’t need a ton of money for upkeep.
It’s a bit of work to reach the right car for you, but it pays off so much.
One thing my husband and I did when we were first starting out was, if you have to get a car loan go to your bank or better a credit union and get the loan first. Some have special car loan deals. We would walk into a dealership with the check in our pocket and they gave us much better deals and didn’t haggle!! Plus we felt in control and the experience wasn’t horrible as it can be sometimes when you are forced into bad deals with huge loans. Sharing on FB. Thank you for sharing on Merry Monday! Hope to see ya next week!
Kim