This post at I’ve Paid for This Twice Already on “The ‘Can We Afford The Payments’ Mentality” got me thinking. Back in 2003, when Marc and I bought our first car together, we divided the responsibilities as follows: Marc did the technical research, deciding what kind of car we should get and what a reasonable price was; I handled the financing research.
I knew enough about car buying and money management to know that the most important thing was the total price of the car, not the monthly payment. So I repeatedly fended off the salesman’s efforts to get me to quote an acceptable monthly payment. Even though I knew I wanted a payment of approximately $350, I never uttered that figure to him. He was so frustrated when I told him for the third or fourth time that I simply wanted to know what the total cost of the car would be that I knew most people must not hesitate to say what monthly payment they can afford.
In 2003, when we bought the car, I thought we were doing pretty well when it came to money. We got a great price on the car, our good credit got us the extremely low interest rate of 1.9% on the loan, and our monthly payment was less than $365. The thing is, it never occurred to me to buy a car without a monthly payment.
Admittedly, back in 2003, we probably couldn’t have afforded to pay cash for a new car unless we saved for a couple of years (and we really needed a new car then). We didn’t want to buy a used car for reasons I’ve discussed previously. But it never occurred to me that we could buy a new car without payments until a few months ago, when I resolved to pay cash for our next car.
I guess over the last five years, I’ve abandoned the payments mentality completely. I suppose the only time I might go into debt is to buy investment real estate, although I don’t really see that in our future since neither Marc nor I want to take care of tenants. But otherwise, I don’t think we’ll be borrowing money again – ever.