College Connect: A financial milestone: paying off my car loan

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By ALEX BACA

I’ve waited for a long time to write these words: my car is paid off. At the beginning of February, I paid the remainder of my loan and gave myself a pat on the back.

My car loan wasn’t scheduled to be paid off for another year or so. But when my parents told me I had to take over the loan obligation after I graduated college, I vowed to pay back the loan as soon as I could.

Why? First, I wanted to pay the loan quickly to avoid paying more interest. Sure, I might pay less each month, but in the long run, I’d pay more the longer my loan was active.

Second, I simply don’t like having debts. When I have debt, I question every purchase and worry about my budget for fear of never being able to pay down my loans. For me, debt hangs over my head, reminding my of my perpetual “broke-ness.” And I don’t like that feeling.

I budget on a month-to-month, or sometimes semester, basis, and every extra dollar I could afford went to paying down my car loan. Any freelance money I earned went straight to the loan, and the same with a percentage of any money I received as a gift. When I’d want to give up and splurge on new shoes or clothes, I’d remind myself how great I’d feel when I was free of monthly car payments.

I’d also read personal finance blogs, such as MintLife Blog, Get Rich Slowly and And Then We Saved. Reading about others in similar financial situations helped me stay motivated and focused on what I was trying to achieve. Blogs are also a free way to learn more about personal finance.

Now that I own my car, I essentially have an extra $200 back in my pocket each month that I was previously giving to my bank.

I’m not completely debt-free, though. I’ll likely have between $10,000 to $15,000 in student loans when I graduate with my master’s degree in May. My student loans are going to be bigger than my car loan, but I plan to approach my payments in the same way: with a focus on my bigger goal of a no-debt lifestyle.

Alexandria Baca is a graduate student at the University of Missouri.

 

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