Debt free step 4: Your car

If you don’t own a car, congratulations – you are already saving loads of money, and should move onto the next step.

If however, you are driving a car that you don’t own outright, then you need to read this.

Cars come hand in hand with enough monthly payments (insurance, fuel) and other costs; you don’t need to pay someone else for the depreciation of the vehicle. You can guarantee that if a business is eager to sell you a payment deal, then it’s a great deal for them, not you.

We bought our car in March; a 2007 1.6 litre mid size car, for £1200, and we spent about £300 fixing a few things on it. We saved the money we needed for the car before we bought it, and so the ongoing costs (not counting fuel on longer trips) are about £20 to £30 a month. We have since used it to go on 5 holidays, in the UK and France, and it makes visiting family and picking up cheap gumtree finds easier.

We could easily have found a slightly cheaper car, but my boyfriend really enjoys driving it, and if he’s happy, I’m happy.

We also bought it pre-dented! You could see this as a bad thing, but to me, a small cosmetic dent on the front of a perfectly good car is great – the price of the car is far lower, and I also don’t have to worry about keeping it in immaculate condition. We still keep the inside clean and tidy and do maintenance, but essentially, the car will still keep its value, but we had to pay out less for it. If you can find a second hand car with a good, working engine, and some dents (for which you should most definitely lower the amount you offer to pay) then you are onto a winner.

If you don’t own your car outright, regardless of the barriers and the difficulties, I would recommend selling it on or giving it back, and using any money you have left over to buy a car you can afford right now. If you wouldn’t be able to afford a car in that scenario, then I would recommend getting a bike. On Gumtree.

And if you say you need your car to commute to work because it’s more than 15 miles, then I would say, either move closer to your work, or find a job closer to your home. This may seem radical, but these are the things you should be considering if you want to escape from under that pile of debt. And having a shorter commute will make you happier, and less stressed.

Debts for big ticket items like cars or motorbikes can easily spiral out of control, so it’s best to cut it short as soon as possible. If you are currently locked into a PCP, here’s some more info on how it works and how to get out of it.

 

Debt free step 5 will be up on Thursday.

 

 

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