Post a Comment

How We Paid Off Our Car Loan

By: Green Panda | Date posted: February 23, 2009 (3:58 pm) | Write a Comment (15 Comments)

As I mentioned in last Friday’s post on automating your finances, we sent our last car payment in. It feels good to accomplish a goal and mark it off our to do list.

Our Financial Goals For 2009

  • Debt: We would like to pay off my car loan by March 31, 2009.
  • Spending: We’re going to limit eating out for dinner to twice a month.
  • Frugal: My husband would like to bring his lunch to work at least three times a week.
  • Savings: We want to have 6 months in the joint account in addition to building our house fund.
VW's last car payment has been sent off

VW's last car payment has been sent off

Next week when I’ll review February’s progress on our financial goals, we might have another goal in its place, most likely something long term.

Tips On How We Paid Off Our Car Loan

Paying off the car loan didn’t happen by accident, we came up with a plan and followed through.

Developed a realistic budget

Having a joint budget gave us a clear picture of where our money was coming and where went. I think the key for us with budgets is to make it easy to use and easy to change, so we use a Google Spreadsheet. We budgeted a car payment slightly higher than the required payment.

If you’re having some trouble with creating a realistic budget, here are some tips on getting started.

  • Track what you spend in two weeks. It’s hard to cut back if you don’t what your weak points are. Having a little notepad or PDA with you and write everything you spend for 2 weeks.
  • Withdraw from your bank’s ATM once a week. Take out money you need to eat out, tolls, parking fees, etc. If you run out of money, then make peanut butter and jelly sandwiches or bring leftovers for lunch.  Do not go back until the next week!
  • Use you cash, not credit cards. Don’t defeat the previous step by switching over to your credit card. This will help you to stop acquiring new debt, which in turn can drain your savings. National average for standard, variable cards is around 14%, so eliminating new debt will help you.

If you want to see how much a little extra can go when paying off your car loan, try using Money’s debt reduction calculator. Not only are you paying it off quicker, but you’re also reducing the interest paid on the car loan.

Snowflaked extra payments in the car payment schedule

We wanted to pay the car off faster, so we started making extra payments. It didn’t matter how small it was, we went ahead and used our bank’s Bill Pay feature to send in an extra $50 or $100 to the car loan in between payments.

Where can you find some money like an extra $50, $100 or more? Considering looking at some of your expenses to find a deal.

  • Look at your package deal for cable, phone, and Internet. Sometimes the deal they advertise on TV isn’t the best deal. Call your cable provider to see if they can give you a better rate. It works sometimes, but if they don’t, consider cutting back on the cable package or create a bundle yourself. You may not notice a big difference and keep the change. Either way you can save $30-50/month for this and that’ll help with your fund.
  • Examine your cell phone plan. Can you change your plan? With Alltel you can change it without getting an extension on your contract. I’m sure about the other plans.
  • Look at your land line plan. It didn’t make sense for my husband and I to have a land line AND our cell phone plans. So far, so good. If you must have a land line and a cell phone, you may want to take off long distance with your land line.
  • Compare insurance companies for auto insurance rates. I saved $50 a month on car insurance for the same amount of coverage. Shopping does pay off. Just make sure you’re given a policy that can comfortably cover you and your situation.
  • Go during happy hours when you decide to eat out. I know that many college students hang out as a part of the cultural, so it would be impractical to tell you stop going out, but at least save money while you’re there. There a great place down the street that offer 50% drinks and has 50 cent tacos. So we plan our eat outs around that time (4pm-7pm). It’s still just as fun, but a lot cheaper.
  • Get others’ opinions on how to tackle it

    I’m grateful for this blog’s readers who have been kind enough to share their ideas. We used our economic stimulus check on paying down the car loan based on some feedback from Green Panda Treehouse readers. Thank you for your advice and support! We also followed personal finance tips from other bloggers.

    If you want to read how others have reached their debt elimination goals and learned to pay cash for cars, here are some great posts:

    checkbook

    Another bill bites the dust...

    What are we going to do with the car payment money now?

    The money will be redirected to our emergency fund in a high-yield savings account. Our ‘car payments’ are going to help build up our cushion during these rough times.

    Photo Credits: Rojer and lemonjenny

    Blog Traffic Exchange Related Posts
    • loanLending Money Can Make You Lose Friends and Family   Lending money to friends and family is a tough situation. Perhaps you want to help someone with a geniune need, but you're not sure if they'll actually pay you back. Both parties are put in a tough spot. How do you handle it? Since I think most people......
    • Pay Student Loans Off5 Steps to Get Rid of Student Loans Anyone with student loans understands the importance of paying them off. Student loans will linger on your financial mind as you try to save up for a mortgage, plan a trip, or try to start a family. This is why it's important that you try to pay your student loans......
    Blog Traffic Exchange Here are Some Other Great Thoughts
    • Man vs. Debt has posted the Marathon Carnival (UPDATE 5/10: Dang, I forgot the link again!  Sorry about that!) Thanks to Man Vs. Debt for hosting this week's Carnival of Debt Reduction!  His picks for this week: Ask Mr. Credit Card interviews Tricia from Blogging Away Debt following her elimination of $37,614 of credit card debt! Money Ning......
    • interestThe Dangers of Long Term and Interest Only Loans There are two new trends in the banking world that may actually be very dangerous for consumers. Long term personal loans and interest only loans are gaining in popularity, especially in the wake of the housing crisis. While these may seem to be a great option at the time, there......
    15 Comments
    1. Comment by the weakonomist — February 23, 2009 @ 6:24 pm

      Welcome to the club. I sent the last payment off for my 2008 Accord in December! It feels great!

    2. Comment by Kate Kashman — February 23, 2009 @ 7:25 pm

      Congratulations! What a wonderful accomplishment. You should treat yourself to a car wash.

    3. Comment by Green Panda — February 23, 2009 @ 8:20 pm

      @Weakonomist: Thanks for letting me in the club. I’m excited about it. Great job on paying the 2008 Accord so early!

      @Kate Kashman: Thank you. Once the weather improves, I just might do it. It could definitely use it. I live in my car. :D

    4. Comment by Mr. ToughMoneyLove — February 24, 2009 @ 12:30 am

      Congrats on the car loan payoff. You might want to start accumulating a car replacement fund with your extra cash flow.

    5. Comment by Green Panda — February 24, 2009 @ 7:39 am

      @ToughMoneyLove : That’s a good idea TML. We’re going over our budget this weekend and we’ll decide what to do with it after we pad the emergency fund a bit more. having a car replacement fund would make sense given the ages of the cars.

      »crosslinked«

    6. Comment by LAL — March 1, 2009 @ 7:44 pm

      CONGRATS!

    7. Comment by Green Panda — March 1, 2009 @ 8:23 pm

      @LAL : Thanks! We’re very happy. Now we just have keep them running. :)

    8. Pingback by 180th Carnival of Debt Reduction — March 2, 2009 @ 9:03 am

      [...] Panda Treehouse talks about  How We Paid Off Our Car Loan. Congratulations and great [...]

    9. Pingback by February 2009: Progress Update — March 2, 2009 @ 5:17 pm

      [...] did it! Both are cars are paid for and as a bonus we also switched our car insurance and cut our bill in half. The total monthly [...]

    10. Pingback by Weekly Round Up: Mint Edition — March 8, 2009 @ 12:02 pm

      [...] of Debt Reduction #180 was by Living Almost Large. My post on paid Off Our Car Loan was [...]

    11. Pingback by Pet Care | Ways to Save — March 21, 2009 @ 9:02 am

      [...] we have spent more money than we saved from paying off the car loan and switching our car insurance. The truth is we love our pets and make sacrifices to take care of [...]

    12. Pingback by March 2009: Progress Update — April 1, 2009 @ 7:04 am

      [...] reached our goal! Both are cars are paid for and we were planning on using the car payment for the joint savings account but it go redirected [...]

    13. Pingback by Learning From Failure — December 27, 2009 @ 5:49 pm

      [...] was really psyched to go ahead and knock this car loan off as soon as possible. I felt like Rocky going against Apollo Creed. I was planning on giving a [...]

    14. Pingback by » Saving Money on Car Insurance? — March 9, 2010 @ 7:01 am

      [...] If you have a car loan, most lien holders will require collision, but it’s optional once you pay the loan off. Since collision typically pays up to the value of the car, having coverage for my husband’s [...]

    15. [...] of support and advice. After listening to some thoughts from readers, we were able to pay off our car loan faster. I really believe you can pick up some useful information by chatting with others and seeing [...]

    RSS feed for comments on this post.

    Sorry, the comment form is closed at this time.



    This blog uses the cross-linker plugin developed by Jan Hvizdak, owner of Aqua-Fish.Net