In October 2019 the lease ran out on my Hyundai Sonata, a car I’d originally gotten to commute and then to leave sitting in my driveway for 2.5 years after I started working from home. I decided to buy something cheap, old, and practical that I could work on myself if it broke. After a long search I found a 1987 Chevy C10 pickup for $4000. I paid cash.
So why did it take me a year to pay off my truck? Because for the last 12 months I’ve been making car payments of $400/month to myself. The benefit of this is threefold.
First, I now have that whole $4000 back in my money market account ready to be invested in something should an opportunity arise. I keep a six month emergency fund in this account, and I’ve also been stashing my budget for our backyard renovation here. It’ll be nice to have this $4000 cushion in case we overrun our budget on this project next year.
Second, I have staved off lifestyle creep by making myself believe I am still making car payments, and not having that money available in my checking account. This is important for everyone. Although I eliminated a car payment, it’s far too tempting to just leave extra money building up in a checking account.
Third, since I’ve proved to myself that I don’t need the $400/month, I’m going to continue to pretend that I have a car payment, and extend the automatic transfer indefinitely. Although I plan to keep this truck running for many years to come, if I continue to save $4800/year, the next time I need to buy a car I will have a very healthy budget ready to apply to the purchase.
To date, the truck has cost me four tanks of premium gas, one brake caliper, two brake lines, one pair of headers, five quarts of oil, and one bottle of brake fluid. All in all that amounts to about $446, with the headers costing $260 of that. The truck came with headers already on it, and when one broke it was cheaper and easier to replace one with the same part than it was to pay a shop to convert it back to an exhaust manifold.
Buying a 30+ year old car isn’t for everyone, but it can be educational and rewarding. It can also be dangerous and upsetting if your car dies or you get into an accident. If you can find a safe and reliable car for just a few thousand dollars and save as if you have a car payment the whole time, in just a few years you can find yourself in a really great financial situation.
Freed by 50 