The opportunity to not have any debt is appealing and challenging at the same time. There is the win-win of not owing anyone anything–yes, total freedom to do whatever you’d like with the income that you earn.

But it’s a process and in order to get there, there is the challenge of applying discipline which is a requirement of every saver.

So in the meanwhile, what do you do when waiting to save enough cash to pay for a car doesn’t fit your time frame? Do you jump ahead of your plan and just finance the purchase?

I Remember It Well

We were feeling the worst of the recession and a significant lost of income. We learned to do without a lot of things–but our cars were not in that category.

At the time, my hubby and I carried two auto loans through our credit union which both totaled $706 per month–that’s an average of $353 per vehicle. A low monthly payment with a low interest rate by a lot of standards.

While I knew that carrying debt was bad, I also knew (pre-recession) that we had a high and stable income, excellent credit and we had financed the smart way by using our local credit union.

Listen to that…a classic example of excellent marketing by the credit industry. Just borrow money from us, pay it back with interest and if you default, don’t worry, we will help you. Just do it the smart way by using your credit union. Smh.

Never Expected This

When we fell behind on those low car payments, I remember the collection letters that we received from the credit union.


Source: Getty Images

Source: Getty Images


If you are not able to bring your car payment current soon, we will be forced to begin repossession procedures.

Never in one million years did I expect to receive mail like that. Never.

After all, I had always been responsible by borrowing low amounts of debt at low interest rates (thanks to my excellent credit score) which showed how responsible I was at constantly borrowing money. Smh.

I specifically remember reading one of those letters and thinking to myself, “Wow, where is the loyalty? We have paid on time and more than the minimum payment for almost 4 years and as soon as we need a little understanding, there was none.”

At that very moment the scripture came to life for me.  The borrower is slave to the lender.

As the borrower I owed my creditor a payment with no excuses and they owed me nothing. Zero compassion and zero understanding. My car note was my promise to pay them back on-time every month with no excuses.

If at anytime that I could not pay them back, it was my problem and not theirs. That’s the slave and lender contract–you work until your debt is repaid, nothing less and nothing more.

Does Size Matter?

That’s another problem with the monthly payment–regardless of the amount it’s contractually required.  Unfortunately we lull ourselves into thinking that we will always have the ability to repay it.

Should the credit union have not pursued their asset, i.e., my car, because the payment was just $353/per month? Should they have only hunted down borrowers who owed $500 or more each month?

It’s a financial game of Russian roulette that we play each month by only looking at our ability to make payments especially considering our inability to save. Your income should be viewed for its ability to grow and to increase wealth. Consumer payments deplete our income which is an opposing wealth building activity.

This must be a major part of your commitment to get out of debt and to remain free of it.

Fast Forward to Some Good News

We paid off my car in April 2009 (and my husband’s later that year) and I have not looked back since. A car payment is one debt that most people faithfully pay for years without considering how it reduces wealth opportunities.

The New Norm: 6 Year Car Loans

Consider it…Most Americans are adding low car payments to their monthly debt by stretching out the loan period. Experian Automotive recently reported that over the past several years, 72-month loan terms have become the norm for auto financing.

The norm?

Use 6 years of your income to pay off a depreciating asset?

I say, let’s do better and take a more common cents approach.

Take 1, or even 2 years to save each month the payment that you were willing to make and at the end of your savings period, pay cash for your car. Cash…Yes, CASH!


You can do it!

On the winning team,