Financial Guidance

[dpb]

It's done. The amount has been paid in full and will be posted by next Monday. I've also paid my annual renter's insurance premium and 6 month auto premium. Combined, that will save me over $410 each month. Also, I will have saved over $4,000 in interest over the course of the loan (assuming minimum monthly payment at the financed APR).

Now it's time to open up a Roth IRA and max the contributions for 2010 and 2011.

[clintdavis]

Absolutely! With living expenses of around $1800, and $40,000 sitting in the bank. i would pay off the car tomorrow. Why in the world would you want to give any of your money to a lender when you don't have to. Clear away all your debt, and then start stocking away cash, saving for future purchases (a home, your own children's college, etc..). That will ensure that you will never again be in debt, and you will be free to live your life, build wealth, and enjoy your future.

Thanks for sharing with us, and thanks for serving our country! You're doing a great job...keep it up!

[dpb]

Thanks clint!

Thankfully, I only had to pay $42.49 in interest on the loan! My monthly living expenses have now been reduced from $1,800 to less than $1,400!

[creditcardfree]

Great plan, dpb! A paid for car is a nice one to drive.

[Hector]

Thank you for the replies.

I have no other debts besides the auto loan. I just purchased this vehicle a few weeks ago and have yet to make my first monthly payment. I am trying to establish credit history. When referring to percentages towards retirement, are those calculated pre-taxes or post-taxes?

I dont think taking loan is necessary in establishing credit history if thats why you took loan. Credit score is over rated. It doesn't make sense to me when someone keeps balance on CC or take any kind of loan just to establish credit history.

[dpb]

I didn't take out the loan primarily to establish credit history - I did it because I was uncomfortable with making a $23,000 purchase at the time. I needed a vehicle on rather short notice, and I preferred one that was of good quality, high fuel-efficiency, and few to no miles. I realize buying new is costly and depreciates in value, but I didn't care. After two years of saving $2,000 a month (between 90-95% of my monthly pay at the time), I thought I deserved it.

[Hector]

It's done. The amount has been paid in full and will be posted by next Monday. I've also paid my annual renter's insurance premium and 6 month auto premium. Combined, that will save me over $410 each month. Also, I will have saved over $4,000 in interest over the course of the loan (assuming minimum monthly payment at the financed APR).

Now it's time to open up a Roth IRA and max the contributions for 2010 and 2011.

That's awesome! Great job.

[Hector]

I didn't take out the loan primarily to establish credit history - I did it because I was uncomfortable with making a $23,000 purchase at the time. I needed a vehicle on rather short notice, and I preferred one that was of good quality, high fuel-efficiency, and few to no miles. I realize buying new is costly and depreciates in value, but I didn't care. After two years of saving $2,000 a month (between 90-95% of my monthly pay at the time), I thought I deserved it.

I know how you feel. I remember that I spent money in stupid stuff when I started working full time because I was tired of living frugal in the school and when I started getting regular paycheck, I thought I deserve to buy stuff. Now whenever I think about that, I smile and I dont have urge to wast money anymore. Good thing is that you are only 23 and paid cash for your expensive car. You still have money in the bank and are going to open IRA. A lot of us think about spending money and borrowing more and more in our 20s. You are already ahead in the game! Congratulations.

[dpb]

Thanks Hector.

I don't think it was an urge to waste money. I didn't want to buy a vehicle; I needed to. I sold the 20-year-old high school car I had been driving since I was 16 before I went overseas. I understood the importance of fuel efficiency, maintenance costs, and warranties, so that was the most important factor for me in purchasing a new vehicle.

[Hector]

Thanks Hector.

I don't think it was an urge to waste money. I didn't want to buy a vehicle; I needed to. I sold the 20-year-old high school car I had been driving since I was 16 before I went overseas. I understood the importance of fuel efficiency, maintenance costs, and warranties, so that was the most important factor for me in purchasing a new vehicle.

This thinking will change overtime for sure. My wife and I bought our cars around 5k each. We drive them a lot and they are reliable. I was fortunate to learn that buying used cars in cash could save a huge amount over lifetime. Also we consider our cars as mode of transportation and not luxury or life style. But as I said you are doing great specially at this age.

[Frugal]

I personally would start a retirement account when I were able to, and would then try to not take out any other car loans. That is just my opinion, though...

I really feel the military should get their paychecks if a shutdown occurs...to me, this is so sad...

[dpb]

I personally would start a retirement account when I were able to, and would then try to not take out any other car loans. That is just my opinion, though...

I really feel the military should get their paychecks if a shutdown occurs...to me, this is so sad...

The car is totally paid off now. I plan on driving this vehicle for the next 10 years, so no, I don't plan on taking out any other loans.

We're receiving half of our normal paychecks because the continuing resolution lasted until the 8th. However, the Army already owes me back-pay for income I was entitled to but did not receive in March. Oh well. Whenever this budget is approved, it'll be a rather large payday.