As I mentioned yesterday, we were able to pay off our car loan less than two months after we bought the car. One reason we were able to achieve this is because we were setting a substantial amount aside in savings each month specifically for the car purchase. But now that the car is paid off, I thought I’d mention some of our other financial goals and how we’re going to get there.
The first thing we are going to do is continue saving for a new car. That might sound strange, considering that we just bought one. But we’ve decided that we never want to take out a car loan again. Every car we buy from now on will be paid for with cash. Our next car purchase should be in about five years, and we’ll probably spend about the same amount of money. Saving $325 per month for the next five years will give us $19,500 plus interest. We should be able to pay the remaining cost of the car with the trade-in value of our current car and additional savings. I’m not contributing more to the car fund because . . .
I am also significantly increasing the extra amount that we pay on my student loans each month. At this rate, my loans should be completely paid off in less than two years.
Finally, I am increasing the amount we put into “regular” savings each month. In addition to what I have budgeted, I’ll be snowflaking all extra income into our savings. This savings is money that will pay for our vacation in Las Vegas in the fall (we’re going for a relative’s wedding), as well as any other unexpected expenses that arise. Once we’ve saved a substantial amount, I’ll use the money to make a large principal payment on my student loans, and then we’ll start over with the savings. (Note: This isn’t our emergency fund, which will remain untouched.) While I could put this money toward my student loans to begin with, I like having the extra cushion in my savings account. (Especially since we have talked about installing a new air conditioning system, which would run about $3500.)
Once my student loans are gone, we’ll be debt-free except for our mortgage. I’m really looking forward to celebrating that milestone!