I won’t stop now, cause it’s Ford cars for life

If you have been reading my posts, by now you know I think the worst waste of money by far is a car.

Money and relationships 3-2-1

A car and nothing more

If you want to be wealthy drive a Ford

Life is good without a car payment

This is my latte factor. I call it the fancy car syndrome. If it’s shiny and new, people want it. Especially, if it’s a car. People can waste a couple hundred-grand just to be able to drive from the corner store and back home. I think people should examine the amounts spent on buying and leasing cars over a lifetime not just over the next 36 to 72 months.

What I drive. I personally own a Ford. I have driven one for over 13 years. My car has over 150,000 miles. It has a dent in the side and costs a minimum of $1500 to fix a year, but I still drive it. Why you ask? It’s simple. I used to spend $450 a month on a car note. Now I don’t. That’s $5400 a year. I was able to direct that money into savings and debt repayment.

Let me give you something to think about it. Two people walk into a car dealership. Customer A decides on a low-cost model car with great gas mileage for $15,000. Customer B goes for the fancy BMW that costs $50,000.

Two customers. Customer A is frugal, cuts expenses and pays off the car in 3 years. The money they were paying per month got rerouted to savings. After 2 years, they save $10,000. This is added to the additional $5000 that was in emergency savings. Approximately, $5000 is used as a down payment on a FHA home loan. They have over $100,000 in a current 401(k). Within a few years, including making extra payments on the mortgage, the home has $15,000 worth of equity. Customer A has a net worth of $125,000.

Customer B likes to live for today, increases expenses, and takes 6 years to pay off their car. No money is going to savings and they have $500 in an emergency fund and $7000 in an old 401(k). The warranty on the BMW runs out as soon as the car is paid for and repairs cost $3500. This expense goes on plastic. After a 2 years, the credit card debt has been repaid. They take out a personal loan to go vacation and pay for additional auto repairs. They have to treat themselves for denying themselves a vacation while paying off the car. Carpe, diem! However, because of high fixed expenses, they continue to rent and are unable to afford to save for a home down payment. Customer B has a net worth of -$10,000.

Over a decade with my Ford. Over the years, a few people have laughed at me for driving an old Ford. Those same people have had money issues for years. Not that I have not had any but because I do not have a car note to worry about my money goes toward other things like vacations, retirement savings or an emergency fund. I have been growing my nest egg for years. While I have watched some of those same people go broke. Now, I’m the one whose laughing, all the way to the bank.

Not only are Ford vehicles affordable, but because they are American made, it is easier to find parts and cheaper to fix. My average repair bill is $500-$700. The lady I knew whose spouse’s BMW was sitting on bricks because he couldn’t afford the repairs had a repair bill of $8000.

Since, my car is relatively inexpensive to fix, I can save more. I also was able to lower my insurance due to not needing full coverage. However, I would not go this route with an expensive car. If the cost of repairs and the value of the car is a high variance, you could end up with a totaled car and still have a balance owed.

Let’s say my Ford had this issue, then I may owe a balance, but it could be more like $1500 I have to pay out of pocket. In contrast, the Beemer might be something like $7000.

My car may be getting older but at least I own it and can afford the repairs without having to go into a ton of debt to fix it. So, if a car salesman walks up to you and tries to push you toward a fancy expensive car, by saying things like just try it out and if you don’t like it you can stop. Just say no. And walk towards the Ford vehicles instead. They may not get as high of a commission, but you get to keep your shirt and the house does not win.

How to save $100,000 dollars for retirement

They say the first $100,000 is the hardest. Believe it. It takes the longest amount of time to get to when you start investing because it’s the longest hill to climb.

After you get through this hurdle, the rest is a lot smoother sailing.

The trick is to save consistently over time and to not cash out.

If you invest $5,500 annually or its equivalent of $458 per month, then you can have $100,000 dollars saved in ten years with an investment return of 8 percent.

Basically, you would need to max out your Roth IRA or contribute to a company 401(k).

You could have even more invested if you get a match.

The Rule of 72.  You can determine how long it will take your investment to double by taking the number 72 and dividing it by the interest rate.

Years required to double investment = 72 ÷ compound annual interest rate.

For the example described above that would mean 72/8 = 9. Therefore, it would take 9 years for your $100,000 to become $200,000.

Getting over the hump. This takes time. Once you start to save, then you have to commit.

There are no easy routes or shortcuts. The path to wealth is a journey. It truly is a marathon and not a sprint.

Build $100,000 in retirement savings by age 40

Build $100,000 retirement savings    
$100,000  account
Starting Age Daily savings Monthly savings Yearly Savings
20 $5.48 $167 $2000
25 $9.59 $292 $3500
30 $17.81 $542 $6500
35  $43.84 $1333 $16000

Make saving a priority and you can amass huge sums of money just by slashing expenses.

The biggest expenses by far are housing, transportation, and food.

If you can move into a smaller home, sell your car, and live off rice and beans you could save a small fortune.

Be that as it may, I would still suggest starting with a budget you could live with so that you will not feel so deprived.

The reason for working on the goal of saving $100,000 is to have this in principal and let compound interest do the rest of the work for you.

Since you have already done all the heavy lifting of saving a hundred grand, now you can concentrate on other goals you may have in addition to saving for the future.

Here is some food for thought: $100,000 over 30 years at an 8% rate of return can grow (thanks to the magic of compound interest) into $1 million dollars!

That’s right. You’re a millionaire. Now when they ask who wants to be a millionaire you can say your well on your way!

Life is good, without a car payment

Ah yes, I can feel it in the air. Early spring. Home and car buying season.

The dreaded car note. The average car payment is now hovering around $400 or more per month.

Here’s what you can do to get rid of your car payment and where you can put that money now that it’s not being spent on a car.

Get a shorter term. Many dealerships offer 72 month terms. I see this advertised all the time whenever I research or look at purchasing a vehicle. Hogwash. You can get a car loan for less than five years. If you want to be out of debt sooner rather than later, buy a less expensive car and finance for four years or less. Preferably three as once this year comes up and is marked off the calendar you can’t stand writing out the check anymore.

Use a zero percent deal. There are dealers and credit card companies that offer 0% financing deals. The catch is that you have to pay it off with 12-15 months on average. However, if you start here, you pay less interest over the life of the loan. Better yet, if you can pay it off during this time, your done and can tell the car company to honk that horn where the checks don’t shine.  

Save up and pay cash.  I know what you’re thinking. Can’t be done right. Well, it can be. It just takes time and discipline. For instance, pick out a car, write down the price, and set a goal of 5 years. Do the math and figure out the how long it will take to save up the money monthly. For example, a $20,000 vehicle will require you to save $334 a month for 5 years. Then you can walk into the dealership and pay cash!

Invest your money in stocks instead.  Now that you don’t have a car payment, you can put that money to work. Check out some IRA’s and mutual funds with an investment company. Money not spent can become money that interest is earned upon.

Beef up your rainy day fund. It’s a jungle out there. Anything could happen so you best be prepared. Take that $334 and start socking it away in savings. Do this for three years and you will have saved $12,000! That could be a down payment on a home.

Donate.  There are many organizations and people out there who need help. You can decide to feed the hungry or become a genie and grant wishes or set up a scholarship fund. No matter what you decide it can make a difference in someone’s life. The best part is that when it comes from the heart you feel good too.