Money Management

I drive my cars forever and I think you should too. Will my reasons convince you to do the same? Find out here. [[{“value”:”

I do not buy new cars very often. In fact, I kept my last car for close to 20 years, and I’m planning to keep my current three-year-old vehicle until my two-year-old child goes off to college (at least).

My cars remain around for decades because I drive them into the ground. I won’t buy a new one until it makes absolutely no sense not to because the repairs on my old one cost more than the car is worth.

There are three big reasons why I’ve made the choice to do that — and they are such good reasons that I’m hoping they’ll convince others to drive their cars forever, too.

1. I don’t want a car payment

The single biggest reason why I drive my cars forever is because I do not want a car payment. For most people, sending money to an auto lender out of their checking account is a fact of life and something they do pretty much continuously throughout their lives.

In fact, on average, the longest period of time most Americans have kept a car is eight years. Since the vast majority (64%) of car loans are for 67 to 84 months, this means that most people will end up getting rid of their car soon after their loan has been paid off. Usually, this will mean they need to get another loan.

I don’t want to constantly get stuck with a monthly car payment, though. And driving my car into the ground makes it possible not to. See, after I paid off my first car three years into owning it (since I took a short-term loan), I kept making the car payments, but I made those payments to myself. At the time, I was paying about $350 a month, so here’s what happened:

After five years of making $350 a month in car payments, I had $25,200 in a savings account earmarked for car repairs or for the purchase of a new vehicle.I’d owned my car for eight years by then and I kept it for another 12. For that entire 12 years, I had $350 extra a month to invest in a brokerage account. Figuring a 10% average rate of return, that turned into close to $90,000. (Since the money went into an account with other investments, I don’t know the exact specifics.)While I had to tap into my repair/new car account a few times, I earned interest on the money over those 12 years, so I ended up with about $30,000 to buy a new car when the time came — with no payments.

Driving my old car, in other words, left me with over $100,000 in extra money for a new vehicle and other future financial goals. If you can keep your car forever and divert to making your car payments to yourself, you can perhaps have the same great outcome.

2. It’s less expensive to insure an older car

There’s another way I’m able to save by driving my car into the ground. It’s cheaper to buy auto insurance for an older car than for a newer one. For example, from one big-name insurer, the cost to insure a new Nissan Rogue for a 40-year-old female driver living in Pennsylvania comes in at $774 for six months, while the same coverage is $364 for a 2013 Nissan Rogue.

Paying car insurance premiums isn’t my favorite thing to do with my money, so I’m much happier to have an older, cheaper car to insure.

3. Car buying is a horrible process

Finally, the last big reason I drive my cars into the ground is I hate the process of buying cars. It’s a huge hassle, I don’t enjoy searching for one, test driving, or negotiating with the dealer.

Now, you may love to have a fancy new car, and if that’s the case — and you can accomplish your other personal finance goals while doing it — then more power to you. But unless it’s worth giving up a lot of money over time, you may want to drive your cars into the ground just like I do. An old car gets you to all the same places as a new one, but you’ll have a lot more money when you get there.

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It’s natural to falter on New Year’s resolutions. Read on for ways to meet your goals despite some initial hiccups. [[{“value”:”

The start of a new year is a great time to establish different goals, whether they’re financial or health-related in nature. But if you’ve been faltering on your New Year’s resolution so far this year, well, it happens.

Many people set goals with the best of intentions and don’t realize they’re setting themselves up for failure. So if you’ve already fallen behind on your resolutions, you may want to take these steps to get back on the right path.

Step 1: Make sure your goals are realistic

Maybe one of your goals this year is to boost your savings account balance by $10,000. That’s a great resolution to work toward. But if you bring home a monthly paycheck of $3,000 and $2,500 of that is already earmarked for essential bills, then a $10,000 savings target doesn’t seem so doable unless you somehow boost your income. And while you could get a side hustle to make that happen, if you’re already maxed out time-wise, it may not be feasible.

In a situation like this, what might happen is you stop making an effort to save money after a few weeks because you feel frustrated that your goal is so difficult to meet. So now would be a good time to reset your expectations a bit.

Maybe aiming for $5,000 in savings in 2024 is more realistic. If that’s a more palatable number, you may be more inspired to spend carefully and live frugally to make it happen. But you don’t want to put yourself in a position where you’re giving up different things you love only to still ultimately fail at meeting your savings target.

Step 2: Prioritize your goals

It could be that in 2024, you want to boost your savings, pay off your credit cards, lose weight, travel to see friends you haven’t seen in years, and start a side business selling baked goods. Yikes. Accomplishing all of that is a tall order.

If you’re falling behind on your New Year’s resolutions, it could be because you’ve taken on too many. So instead, set priorities and perhaps commit to only one or two goals this year. That way, you’ll be able to better focus without getting overwhelmed.

Step 3: Think small, not big

Whether you want to save $10,000, pay off $6,000 in credit card debt, or lose 30 pounds, these are all some pretty daunting numbers. So rather than focus on big numbers, focus on smaller ones.

Break your goals down into monthly objectives. It’s easier to wrap your head around the idea of paying down $500 worth of debt than $6,000. Also, if you set smaller goals, it’s a good idea to celebrate smaller wins along the way, as that’s really important for your morale.

If you’re already behind on your New Year’s resolutions, you’re probably in good company. But since we’re only in February, it’s definitely not too late to redirect yourself and get on the right track. And if you follow these tips, you may find that you’re in a much better place with regard to your goals by this time next month.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Maurie Backman has positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Falling behind on car payments is bad news. Read on to see why. [[{“value”:”

In 2022, the Federal Reserve started raising interest rates to cool inflation. That drove the cost of borrowing up across the board, from personal loans to home equity loans to auto loans.

Not surprisingly, auto loan delinquencies rose 2.1% in December 2023 compared to December 2022, according to recent VantageScore data. But falling behind on an auto loan could have serious consequences. Here’s what might happen to you if you don’t make your car payments when you’re supposed to.

1. Your credit score could take a dive

Any time you don’t pay a debt on time, your credit score gets dinged — a lot. Of the various factors that go into calculating your credit score, your payment history carries the most weight. A single late payment has the potential to cause a lot of credit score damage.

Once your credit score drops, a couple of things happen. First, it can become more difficult to get approved for a new loan or line of credit when you need it. Secondly, you might get approved to borrow, but at an interest rate that isn’t so favorable. Either way, you might lose out financially.

2. You could face late payment fees

Depending on the terms of your auto loan, not making your payments on time could subject you to late fees. You’ll need to read through your loan document to understand when those fees apply and how much they might amount to.

Now, it’s worth noting that if you’re late making an auto loan payment once, but you have an otherwise good history of being timely with your payments, you can contact your lender and ask for a reprieve. It may be willing to waive the fee for a first-time offense. But if you’re a repeat offender, don’t expect the same leeway.

3. Your car could eventually be repossessed

A single missed auto loan payment generally won’t result in having your car repossessed. But falling too far behind might subject you to that fate. And losing your vehicle could have seriously negative repercussions.

For one thing, you might lose your job if you don’t have a way to get there. You might also have difficulty functioning in general. Even if you live in a neighborhood with access to grocery stores on foot, hauling home several bags’ worth of food isn’t easy when you don’t have a vehicle whose trunk you can fill.

Speak up if you’re having trouble making your car payments

All told, not making your auto loan payments is bad news. If money has gotten tight or you’re in the midst of a specific financial hardship that’s suddenly rendered your loan unpayable, don’t stay silent about it. Instead, reach out to your lender, explain what’s going on, and try to work something out.

Your lender might agree to let you pause your payments for a period or lower your payments to make them more affordable. There’s nothing to lose by reaching out to discuss your options — but you have a lot to lose by blowing off those payments altogether, even if you’re doing so out of necessity.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*

They just revealed what they believe are the 10 best stocks for investors to buy right now…

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*Stock Advisor returns as of February 12, 2024

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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