DOING something about debt

One of the really stupid things we did with our money was we bought two new cars within a year apart and financed them both. This added about $900 to our monthly expenses. We both were driving cars that were completely paid off at the time.

Car #1 was bought in 2007 and that's a prime example of being dumb with money. I'll talk about Car #2 since it got me on the path to becoming debt free.

In early 2008, we bought a Smart car for commuting to work. The reason was logical, to save on fuel and to save on parking costs for me at work. Our city was offering 50% off parking for more eco-friendly vehicles at the time. The Government was also giving financial incentives for purchases of cars of this category. This of course was minutes before the financial crisis and the world (well, at least my city) was a lot “greener”. 

Then, all doom and gloom hit with the financial world. And it opened our eyes and made us look at our personal finances.

Here’s where I started to do something! As mentioned, having the Smart car meant that I saved money on gas and parking. The thing is that I wasn’t doing anything with those savings. I was just spending and not really accounting for the extra money at all. I actually didn’t feel any better off financially because I was really only saving a few dollars per day. I forgot about the savings very quickly. I was just wasting money and not benefiting at all from the "savings". I wasn't saving money at all even though I thought I was.

I decided to actually DO something with the savings!

I use a financial institution that doesn’t charge me per transaction. It also allows me to set up bill payments online for no cost. So, every day that I saved money on parking I pretended that I had to pay the full amount like I did before and I would pay that amount online to the financing company. A few dollars here, a few dollars there. Sometimes even just $1! This was on top of our regular monthly payment so the money went right to paying off the car – not to interest.

Admittedly, it’s not the most conventional method of paying off a car, but it worked! Little by little, it worked! It was amazing to get the letter from the finance company saying that the car was paid off!