Have you ever been given this advice?
“Buy your car with cash.”
Maybe you got hooked by those “End of Year Sales” a few months ago. But cars can definitely put a dent (ha!) in your financial reserves.
You have the cost of the car, the maintenance, the insurance, and of course, the fuel. It can easily add up to thousands of dollars within one year.
The first car I had was a hand-me-down. An old Buick Electra that my father drove until the miles were in the six-digit zone.
But he gave me a good piece of advice.
“Look at your savings. Whatever is there, no matter how small, use it as a budget for your next vehicle. Now instead of making a payment to the bank on your existing car, start making a monthly payment to yourself for you next car by putting that amount into your savings account.
When your next car is on its last legs, you’ll have a bigger budget for buying the next one. Then repeat this cycle. You may be surprised how quickly you’ll be able to level up your car choices over the years.”
Yep. Good ‘ol dad could give me some wisdom on occasion.
Buying with cash does require you to at times delay that urgent need to buy now. But your bank account will thank you later. Instead of paying off a high interest rate loan, you’ll be making smaller payments that you can afford.
We might not wear the same aftershave as your dad, but at Matson & Cuprill, we’d like to think we give similar good advice. Why not give us a call at 513-563-PLAN (7526) or book online? We’ll schedule a time to discuss your financial dreams and find a way to make it happen.
Dan Cuprill, CFP®