I was taught to set goals that are challenging but achievable. Accordingly, I set a goal to keep a car for 12 years before burying it.

1. Get Ahead of Vehicle Debt by Staggering Purchases
Use the Savings to Speed Past Other Debts
I was taught to set goals that are challenging but achievable. Accordingly, I set a goal
to keep a car for 12 years before burying it. A few decades ago that would have been
unrealistic but thankfully today’s vehicles, if properly maintained, can run for 200,000
miles or even more.
This is good news for the frugal. It enables us to lower our car costs and free up cash
flow by spreading out and staggering vehicle purchases. For example, if you live in a
2-car household, here’s a schedule to consider following (it’s the one my wife and I
follow):
• Now through year 6: Household member 1 buys a car, takes out a loan and pays it
off in 3 years.
• Year 6: Household member 2 buys a car, takes out a loan and pays it off in 3 years.
• Year 12: Household member 1 replaces 12-year-old car with a new one; takes out a
loan and pays it off in 3 years.
• Year 18: Household member 2 replaces 12-year-old care with a new one: takes out
a loan and pays it off in 3 years.
• And so on…
This allows you to spread out new car purchases every 6 years. And because each car
is paid off in 3 years, you never have more than one car payment to make, and 50%
of the time you don’t have any. If we assume an average loan or lease payment of
$400/month, every 3 years when you have no payments you can save $12,000, or
$24,000 in a single 12-year cycle.
Of course if you’re a 1-vehicle household this approach wouldn’t apply, but the
principle remains the same. Buy a vehicle and pay it off quickly, then start saving.
So take financial advantage of advances in automobile technology. Change the oil
regularly, free up cash flow, and use it to get further ahead on other debts.
P.S. Remember: Don’t buy an unnecessarily expensive car. “Worst” asset types should
be functional, not lavish!

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