Just a small update on achieving a personal milestone… at 27 years old, I am free from a monthly car payment for the first time in my adult life! My car loan only having a few payments remaining was the motivation last week for writing “Cars: My Biggest Financial Mistakes and Lessons Learned“. Well, my third-to-last payment posted on the first of this month, and today I made the decision to kill off the remaining balance of $1,046.88.
As I’ve stated in the past my car loan was at 0% interest, so mathematically the best choice was not to pay it off early. However, I decided to do a quick calculation to figure out the opportunity cost of front-loading those last two payments… a whopping $1.04 in interest earned in my savings account. I’ll take that hit to celebrate an early victory.
I now own a 2015 Toyota Prius (with approximately 155k miles) free and clear. Here’s hoping she lasts several more years without any major issues so that I can enjoy a juiced savings rate for quite a while. So far so good, as I’ve only had to do preventative maintenance!
In my updated monthly budget from my latest biannual review, I budgeted for $2844 in monthly spending. Getting rid of this $523.51 car payment represents an absolutely massive 18.4% reduction in expenses. I can’t wait to see the effects of this on my savings rate and the growth of my investment portfolio!
Additionally, I’m so close to being completely debt free! My only remaining debt is one student loan with a balance of $3,453.61 at an interest rate of 3.30%. Unfortunately I don’t think I’ll get to that one until next year, since most of my cash flow went towards saving for a down payment this year. Also, it’s already September and I still have to contribute $6,000 to max out my Roth IRA for the year. I imagine that it’s a great feeling not to owe a dime to creditors, so paying off that last student loan is definitely on the goal list for early 2021.
As for the upcoming holiday weekend, I’m going to take some time to celebrate hitting this financial milestone. Maybe I’ll have some further thoughts to share on this matter in a few months, after I’ve actually had a chance to experience life without a monthly car payment hanging over me. Stay tuned!