How much do you pay in car payments each month? $300, $400, $500 or more??
What could you do with an extra $500 a month?? Probably a ton! That amount of money can make a HUGE difference in a monthly household budget. Is your car payment busting YOUR budget?
Stay with me. I know when you read that first sentence, your heart sunk. “Come on, don’t make me feel guilty about my wonderful, beautiful car!!” You may have become VERY defensive thinking about your car payment. I get it. You love your car! And you don’t mind making the payment in exchange for the awesome car you drive.
Keep an open mind and hear me out. Do you really love it THAT much? Is it worth however many hundreds of dollars you pay on it each month? Is it worth losing sleep at night because you stress about money and making payments every. single. month?
How would you FEEL if that payment just DISAPPEARED, but you still owned your car?!
Is there something more important to you that you could spend money on instead of a car payment?
Ponder that question.
What else could you spend $500 a month on? 
Write out your answer! And write EVERYTHING you think of!
How freeing would it feel if you could put those dollars in savings or spend them on something MORE IMPORTANT TO YOU than getting you from point A to point B?
Erick and I bought a new car our last year in college. We went to the dealership intending to buy a car, and wanted to purchase a used one within the budget we had set.
The salesman totally got us! We walked out (still within our budget, thankfully), but with a year-end model brand spankin’ new car AND a monthly car payment! As the months went by, we totally regretted the decision! Our car payment was busting our budget!!
Why did we regret buying this new car and having a car payment?
Because month after month we were making that payment, and the value had depreciated so significantly! Even just a year after purchasing, if we were to sell it, we wouldn’t get anywhere close to what we paid on it.
Immediate depreciation on a new vehicle, the car payment that felt like such a burden in our daily financial life, and the things in life more important to us THAT WE COULDN’T AFFORD TO DO made us totally regret that purchase.
What do you do when your car payment is busting your budget?
First, if you’re not sure your car payment is busting your budget, check out The Simple Step-By-Step Plan To Financial Success. Go through each step and if you aren’t at–or getting close to–step 8, it is highly likely your car payment IS busting your budget! So what to do?
1) Pay off the car as quickly as possible!
We decided to get rid of the payment by paying it off as fast as possible. Since it was a less expensive car to begin with, it didn’t take us long once we were serious about it. We continued sticking to a tight budget and watching our expenses so everything extra could go to the car. Boy, that last payment felt great to send to the bank! Car loan-free, baby!
2) Drive it for a while!
After the car was paid off, we also decided we would drive it for several more years to make up the difference in depreciation. It turned out to be a great little car. We did have one major repair during that time. It was under warranty, so it was fixed free of charge. Of course, that didn’t make up for the days WITHOUT a car while it was being repaired at the dealership….
If you DON’T want to work toward paying off the car and/or don’t want to drive it much longer–maybe you don’t really like the car anyway–or you know there is not much room in your budget to pay it off very quickly, there is a third option. Are you ready for it? Seriously, you may want to sit down.
3) Sell your vehicle—so the car payment busts your budget NO MORE!
The other option for getting rid of your car payment is, of course, selling your car! Now this doesn’t mean you upgrade to something more expensive with a higher payment (or even the ole “same payment as your current one” trick car salesmen like to use.)
If your car payment is busting your budget in a HUGE way, selling your vehicle and actually “downgrading” may be the best option! You need to get into a LESS EXPENSIVE vehicle! Even if you’re upside down, you can sell your current car for its top value, take out a personal loan for the difference, and buy a much less expensive, yet reliable, vehicle.
Selling your car and buying something you still enjoy that is less expensive will allow you to owe less overall, get you out of debt faster, and let you sleep at night without such LARGE debt hanging over your head! (Yes! Say goodbye to that car payment busting your budget!!)
If I sell my vehicle, how can I be more informed about what I’m buying next and make sure I get the best deal on my new (to me) vehicle?
Whatever you do, make sure you’re smart about buying and selling. 
Research it well. Use resources like Kelley Blue Book, Edmunds.com, and Consumer Reports (I buy the subscription for only as long as I need it, then cancel it and end up only paying the pro-rated price).
In all of the above resources, you can find the value of specific cars in your area so you know you’re making wise decisions when it comes to buying and selling. You can also find reviews on reliability for a specific make and model. This is VERY important when buying! We have stuck with Toyotas because they have a strong track record and hold their value well–even with 100k-200k miles 😉
What about buying a brand new vehicle versus one a few years old with higher mileage?
With a reliable, used car, you KNOW what you’re getting into. Most of the recalls have been taken care of at that point. Any problems with a certain make and model are likely to show up in Google search forums and other places, including the above-mentioned resources. You can become VERY INFORMED about the vehicle you are driving or planning to purchase.
One of the things that shocked me the last time I was looking for a vehicle was how many poor reviews there were on some of the new vehicles. Cars that were only a year old would have several problems that the dealership was having to correct. The electronics would go out. This means even the air conditioning won’t work! (Not good in 100 degree Texas heat!) Who has time to drop their car off at the dealership, leave it for a few days, and deal with these things?!
If you are still concerned older vehicles with higher mileage are less reliable than new, you can read more from Consumer Reports. This article talks about why a brand new vehicle may not be the most reliable.
What about repairs on a vehicle that is older and has higher mileage?
Erick and I are currently driving vehicles that are both 6 years old, with well over 100,000 miles on each one. One is pushing 200,000!! We have owned one for 5 years and one for 3 years. Between the two of them, we have had one repair on each (outside of regularly scheduled maintenance).
Wanna know the cost of those repairs?! $750 total between the two of them! That’s easily less than two months’ worth of car payments. In 8 years collectively with older, super high mileage vehicles, those are the ONLY repair costs we have had. We have never been stranded on the side of the road, and we’ve taken MULTIPLE road trips.
Think about how much money that has allowed for other things by not having a car payment every month! It adds up very fast and frees you to do the things in life most important to you!
Even if your reliable, used vehicle requires a few repairs here and there, it is going to be WAAAYYY less than your car payment each month.
Quick side tip on vehicle repairs:
Ask around and find a local mechanic with a great reputation. They will charge hundreds of dollars less for repairs than the dealership! Ours has even fixed a couple of minor things for free!
What happens when you don’t have a car payment anymore?
Whoa!! Pause for a minute! Do you realize how freeing that sentence sounds? Music to the ears! You can truly be free to focus on other things in life!! 
Once you no longer have a car payment busting your budget, save that amount (or save less, and keep some for fun money for yourself!!) to put toward your future car. Now, not only will you have the cash when it is time to purchase, but you can be earning interest as time goes by, instead of paying interest on your car loan!!
See, getting rid of the car payment busting your budget allows you to SAVE for the next car, NEGOTIATE the price on that next car, and write a check THAT day that makes you the one and only owner of your new (to you) vehicle!! Much better than risking it being taken from you in the future if (God forbid) you fall on some hard times!
We sold that little car in 2013 with right at 100,000 miles on it! At that point, we bought a super reliable, three-year-old used Toyota Highlander that has been paid for since Day 1 AND had money left over in our “Car Fund” (due to saving LESS THAN a car payment each month over the prior years!!) Now, THAT was a great feeling!
More than anything, I would love for you to know that feeling too!
Free at last from a car payment that busts your budget!!
Now that you know our story, you have a better idea of why having a car payment could be holding you back from your biggest dreams! A car payment is not something you have to live your whole life with. You CAN get rid of it if you are determined enough and have a plan in place to do so. Pay it off quickly or sell it and buy something less expensive so that you can say, “No way! NO LONGER is my car payment busting my budget!”
How do you feel about your car? Is it important enough to you to drive something newer and nicer even if your car payment is busting your budget? Do you prefer to drive something that reasonably fits within your budget? Or something that stretches your budget a little since your car is extremely important to you? Would love to hear your thoughts!!
And, as always, continue to steward your money and your life, intentionally.
Heather
P.S. Ready to gain control of your ENTIRE budget?! Whether you’re a first-time budgeter or need to fine-tune your current budget, the Penny Steward Mama Budget Challenge is for you!
To get a little more personal about money and life and have accountability to reach your biggest dreams, join the conversation in the private Accountability | Penny Steward Mama Facebook group. We would love have your input and encourage you in whatever life aspiration you’re working toward!
Great post, Heather!!! We have until probably 2020 until our Subaru is paid for, but reading this seriously makes me wanna get that done faster! You’re so right – people look at car and home payments as just “something you gotta pay for” in their lives! But why not make it a priority to pay off? Sounds good to me!! Thank you for this!!!❤️❤️❤️
This just totally fired me up! Lol! Such a great post! My truck is paid for and my husband’s should be by the end of November. We plan at that point to stack stacking money back to purchase a ‘new to me’ vehicle some time in the spring and either pay cash or put a very significant amount down. Cash is our goal though!! Thanks Heather for just adding fuel to our flame! 😊😊
Thanks, Heather.
We’ve done one step better – we don’t own a car!
My husband has an economy car from work. That’s not big enough to fit our whole family. So when we all want to go somewhere and need a second car, we either rent one (like when we took a family holiday during the summer) or we take taxis (like my husband did today, because I took the company car to run errands farther away from home – yes, we’re lucky that I can drive the company car at no extra cost).
Most of the time, many of us can get by with public transportation. There’s an added time-saving-benefit to that: since I don’t usually have the car, I’m not running carpool for my kids.