It’s no secret that many of us may “need” a car in order to get back and forth to work, school, and other places. However I must challenge you to ask yourself if you really need to finance or lease that car or is that simply a want? I developed a very simple but highly powerful way for you to both have your cake and eat it too. In other words a system which allows you to buy a car, avoid car payments, avoid high insurance premiums, avoid paying interest, and become wealthy in the process. If you can start off by sacrificing for just 24 weeks then I can put you on the path towards wealth. Ready to find out how? Keep reading…..
1. Start off by sacrificing for just 24 weeks (6 months) and make a decision NOT to finance or lease your car. Instead take the bus or the train, get a ride, roller skate or yes even walk! Who knows, you might even lose a few pounds.
2. Open up a savings bank account (separate from your normal account) and put $500 per month in it for six months. I hear you asking where in the world will you get the $500 from but don’t forget, if you had chosen to make the mistake of financing a car, you would have been paying about $500 per month anyway when you factor in the car note and your insurance payment for full coverage which is required when you finance.
3. Fast forward. Hooray…six months has passed and now you have $3,000 in the bank but hold your horses. You are not going to spend it all on your car. Instead you will only be spending $2,400 of your newly found money. This should allow you to get a pretty decent used car from an individual out of the paper. Make sure you use Kelly’s Blue Book to make sure you aren’t overpaying for your vehicle.
4. When you begin your search, you will call people who have their cars listed at $3,000 to $3,500 however you will be a super negotiator by refusing to pay any more than your budgeted $2,400. I know what you may be thinking, now you have $600 left over to party right? WRONG! Once you have finally located the car you intend on purchasing, $100 of that balance will be used to pay a good mechanic to check out your car from bumper to bumper to determine if anything needs to be repaired that you might have missed. If anything does need repairing then tell the owner you will need for the items to be repaired before buying or you will need for them to deduct the repair amounts from the purchase price. If they refuse then keep moving to the next one. You may have lost $100 but you will have also saved a lot more in repair bills.
5. OK, let’s assume the car checks out fine and you buy it. Now you have a $500 emergency cushion in case anything may need repairing in the future.
6. Now that you have your car you absolutely DO NOT stop saving $500. Why…you might ask? Because if you had financed the car, then you would have ended up paying that $500 per month for the life of the loan for the next 5 years anyway. The only difference is now you will be paying it to yourself instead of to the dealer.
7. Next you will be opening up a mutual fund for investments. Remember how you used to tell yourself that once you found some extra money you would begin investing? Well guess what? Now you have some extra money to invest. You are going to set up your mutual fund so that $250 is automatically taken out of your car fund bank account every single month and deposited into your mutual fund account. The other $250 per month will stay in the bank account and keep adding up.
8. After 12 months has passed you will now have $3,000 in the bank. ($250 x 12). If you choose to get rid of your (paid for) car and upgrade you simply have to sell your current car and add that amount to the $3,000. Let’s say you were only able to sell your car for $1,000. You now would have a total of $4,000 for your next car. You set aside $3,400 of that money for your next car. Remember, we always leave a $600 minimum cushion to cover emergency repairs. Next we repeat our steps from earlier. We look in the paper for cars in the $4,000 to $4,500 range and negotiate them down to our budget. Next we take $100 of our set aside money to get the car checked out from bumper to bumper just like before.
9. Once again we DO NOT stop putting $500 per month in the bank. Keep in mind that while we are doing this, $250 is still automatically being taken out and put into our mutual fund account every month.
10. All you have to do now is just keep repeating the steps and you will never again have to finance your car and you will be on your way to wealth and all it took was 24 weeks of sacrifice in the beginning to accomplish.
Note: After 5 years of putting $250 per month into a mutual fund earning on average about 10% per year you will find that your investment account has grown to $20,147. With that money you can buy a house, start a business, or invest in real estate and really get your wealth building into gear. Congratulations, you are now officially an investor instead of just a consumer.
Note: If after 5 years you stopped putting money into your mutual fund account and just let it sit there and grow at an average rate of return of 10%, here is what you would have:
5 years: $32,446.94
10 years: $52,256.13
15 years: $84,159.02
Remember, these numbers above assume that after the first five years you didn’t add a single additional dime to the investment. Welcome to the wonderful world of compound interest. Happy wealth building!
Article by Shaun Maddox from The Living Success Network. “Dedicated to helping you become the success you were meant to be.” For more great resources visit our website at http://www.LivingSuccessNetwork.com