Imagine a life without repayments
[Image credit: Max Pixel]
Today I'm here to bust a huge myth. The myth that only geniuses can avoid having to make repayments. Plenty of people I grew up with just take it as truth that the only way to pay for something like a new car, is to get a car loan and spend the next 7 or so years paying it off. "The only people that can save for a new car ahead of time are 'numbers people'. It's impossible for the rest of us....." Sometimes a belief can be so common that we don't stop to challenge them. Not today! We're going to see if this belief still stands when challenged with a bit of maths. For this example we're going to use a common car loan scenario of $20,000 over 7 years, at 7.25% interest (per Canstar 2014 report). In this scenario, you will be paying at least $304 per month, more if you have loan fees to pay. By the end you will have paid $25,562!! If you can put aside $304 per month after the loan, why not put it aside beforehand? If you choose to put it aside in advance, you will pay the loan off in around 5 1/2 years. That's a saving of 1 1/2 years on the exact same car! Now here is the fun part... you don't need to be perfect. What I mean, is that if you're only half way there, then life hits hard, and you end up getting a car loan anyway.... you will only spend around 2yrs 10mnths paying off half of the loan. Isn't that amazing? Relax
You DON'T have to be perfect
You DON'T have to "do it all at once"
You DON'T need to live on weetbix for the next 5 years
What you DO need, is to remind yourself - if you can do this after getting a loan, then you can do it before! All progress you make is worthwhile.
"Progress not perfection"
Speak soon, Erika Gilbert
My Income Organiser