It’s no secret that vehicles are depreciating assets. The second you buy a new car and drive it off the lot, its value plummets. Even though everyone knows this, it doesn’t stop most Americans from overspending on their vehicles. After all, we all want the nicest things so we can keep up with the Joneses! Well, I was in the market recently for a new (used) car, and made a promise to myself that I would pay for this vehicle outright in cash. And I’m proud to say, here’s how I bought a car for cash.
I Set a Budget
First thing’s first: I set a firm budget.
For some reason, large purchases make it especially tempting to disregard your budget. After all, you are only going to buy a car once every few years, making it easier to mentally justify additional costs. But by setting a firm budget, I was able to ensure I had enough in savings to pay the car in cash. If I went above my budget, I would have needed to pull money from my other savings accounts, such as my emergency fund, to pay for it (or take out a loan for the difference!)
I Set a Monthly Savings Goal
Once I set a realistic budget, I determined how much I needed to save per month. I calculated how much I needed to save per month by taking my budget and dividing it by the number of months I had to save. Obviously, the longer you give yourself to save, the less you will need to save per month. If you have a tight monthly budget, you’ll want to make sure you give yourself plenty of time to save!
I Cut Back and Saved Even More
Buying a car for cash has always been a goal of mine. So, I was super motivated to accomplish it. Because I was motivated, I found it easy to cut back and save more money each month.
When your eye is on the prize, you can really reevaluate your spending decisions. When I was saving for a car, I knew my desire to pay for a car in cash was strong. I realized I would truly rather save money instead of buying things that didn’t mean as much to me.
Keeping connected to my goal helped me purchase a vehicle months ahead of schedule, because I was willing to sacrifice.
I Found the Car with the Best Value
Lastly, and perhaps most importantly, I shopped around for the best value. I asked family and friends if they had a dealership they recommended. Upon doing so, I eventually found a family member who was looking to sell their own car. It was exactly the type of car I was looking for, and I knew it was well-maintained. In the end, I skipped the dealership and wrote my family member a check for fair market value. We both got more bang for our buck versus going through a dealership, so it was a win-win overall!