The biggest goal of my entire debt plan is to get the car paid. It’s the biggest bill in my budget every month, so if I can get this out of the way, the rest of that money can go to my college loans or even to my credit cards later. A little over $300 a month going to those two bill categories? Can you see how those raindrops could become the river? Yeah, pretty sweet right?
Okay, so here’s the kicker. In order to get my car (a Dodge Stratus RT), I took out a 6 year loan. Yes, I know… six year loans are not the best thing in the world when it comes to car loans. However, I’m making it work. I got the loan in March 2009, and my first payment was April 2009, and the starting balance was approximately $16k and some change. The car loan total as of September 6th is $4,564.49. Not bad right? So you’re probably wondering how did I get all almost three-fourths of the loan paid off in almost 3 years right?
It’s pretty simple. The monthly payment is $250.51, and I put an additional $50.49 on the principle every month since I purchased the car. It’s killed the principle and the building interest of 6.5% at a considerable rate.
So what is possible in the future? Well, I’ve calculated according to this loan calculator and it will take only 16 more months to pay off the car. So according to my calculations, my last payment will be January 2014. That’s one year and 3 months ahead of my loan. How awesome is that?!
So, with that kind of motivation, should I consider some more money towards the bill to decrease the months in which I have to make a payment? Why not right? I can spare $20 a month. So, if I increased that payment just by an additional $20 a month, according to the calculator, it would be 15 payments… just one month less. Boo.
Although getting the payment out of the way is probably something that those like Dave Ramsey would suggest, I just can’t go with it. It’s only a one month difference, and honestly.. I can do more with the $20 to a different bill than the car payment. So, looks like I’m staying with my current plan.
Do you have a car payment? Do you pay minimum or put a little extra towards the principle?
Count those raindrops!