Blog — Sisters for Financial Independence

And it all began with one small win.

This is a celebratory post. Back in 2014, my husband and I decided to purchase and finance a brand new vehicle, a Subaru Outback. At that point, we had been car payment free for around 2 years. I had lost my very first car (purchased 2 weeks after college graduation) on a freak accident. I was fine, but the car which I also painstakingly paid off a few months early was deemed totaled by the insurance company. After a lifestyle assessment, it turned out I didn’t need a car and I used the insurance payout to finally pay off my student loans and some credit card debt and invest. Win there!

Back to this Subaru. We put in a down payment of $5000 as we had started to set aside $500 a month as “practice” for the monthly payment. Something my parents taught me to do when I went back home post undergrad. Our loan then started at $26,997.91 as of August 2014. And for every month, starting in August 2014, we’ve had automatic deductions of $500 a month. That’s a hefty monthly payment outlay, which is why I am so glad it’s finally paid off and that monthly outlay can be used towards something else. In the past few months, I wanted to rush getting it paid off because were so close to getting it done. Yay for that monthly payment free feeling. ::dance:: ::dance::

Other Thoughts

Some other thoughts. The interest rate when we financed the car was very low, at .90%. Very low, almost negligible and we contemplated maybe not paying it off sooner, but the balance was so low that it was the easiest, low hanging fruit to tackle. I know when it comes to debt the option is either to start with the highest interest rate or the lowest amount, but at that point in time, we didn’t really have any other debt. We had no mortgage and my husband was still in school so loan repayment hadn’t kicked in yet.

I don’t regret going this route because even we were still able to maximize savings and investing in our other accounts (401K and IRA) during the time we have had this loan.

This was also the first purchase my husband and I made together as a couple. It was a financial decision that we heavily talked about. It has both of our names on it which to me was scary in the beginning. We both were responsible.

So for now, we are going to celebrate being car payment free. Woohoo! We hope that our Subaru lasts us awhile. Current KBB value has it between $11k - $14K so I’m now happy to move it into the “asset” column if it is a fast depreciating asset. Part of the reason why we wanted to buy the Subaru was that it can last a while so here’s hoping we can drive it to 300K. It’s currently at 77K.

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We are a one car household. This was easier when I worked in NYC and would take the bus to work, but once I started working from home, there were moments when I wished I had a car to do errands, but I’m glad we didn’t cave in to “needing” to get one just for that purpose. We’ve managed to live with one car and have really learned to consolidate errands, plus with the advent of ride sharing and opting to do things locally, it has allowed us to get this car loan paid off much sooner than anticipated. I’m also privileged to say that I am able-bodied and can walk and get to places easily. We also live in a town that supports lots of walking paths, a bike-sharing system and generally safe to walk around in. I know that a car is a necessity for most folks so it may be impossible to forgo a car, but just some thoughts in case you are trying to determine if a car is necessary. Perhaps that "#paymentfreefeeling can trump wanting a car that barely gets used.

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