How to get a free car
In this country, as in any other, we are very fond of our cars. What's more, we love them as if they were part of the family. Where else in the world can you find a bankrupt couple, living from day to day, with two new cars in the garage?
The problem is us and our way of thinking. We have been bombarded with the idea that we will always have a car payment and then when the car looks a bit used, we rush to sign a $ 26,000 contract for a new one. Because everyone now says, “We are always going to have a car payment, get used to it; get the best possible cart for the lowest possible payment. " Not a little?
Car payments is a myth that everyone has believed. The truth is that the "car fever" and this myth are destroying our financial future.
A study shows that a third of car buyers sign a contract of up to six years for a loan with an average rate of 9.6% per year. Of these buyers, the average cost of the car is just over $ 26.00. This means that a third of the cars seen on the street have been dragging a payment of $ 495.00
And what the salesperson doesn't tell you is that your new "truck" is going to lose up to 25% of its value the moment you take it off the lot. After four years, your ship will have lost up to 70% of its value and you still have two years of payments left.
That means that after six years, you will have paid almost $ 33,000 for your $ 26,000 car, which is now worth perhaps $ 6,000. At this point how to get a free car from the government the normal person will suffer from "car fever" again and will rush to take out another loan to buy a new car and start over. Payments will keep coming.
But what if we decide NO MORE? What if we decide to keep the money instead of sending it all to the bank in the form of payments? What if we get really radical and come up with a plan to make money work for us, instead of working for the bank?
In our example the average car payment is $ 495 per month, correct?
Well, let's think differently for a minute. Let's say you want a “truck” that normally costs $ 495 a month and the car you have now is worth $ 1,500.
If you pay that $ 495 to yourself instead of sending it to the bank, you will have $ 4,950.00 in just ten months, add that to the $ 1,500 and now you can pay $ 6,450.00 for a used car.
That's a tremendous car raise in just ten months. And you don't pay the bank a penny!
But let's go further. If you keep saving at that rate, you will have another $ 4,950.00 in another ten months. Maybe in less than a year you can sell your $ 6,450.00 car for what you paid for it if you clean it really well. You will be able to buy an excellent $ 11,400.00 used car for cash in just 20 months. Not bad by little, right?
Now we are going to push this to the limit. At this point he has been on the plan for 20 months and has paid himself the car payment, he does not owe the bank a penny and he is in a very good $ 11,000 car with no payments.
Do you remember where you were 20 months ago? He was ready to sign another contract of $ 495 a month for six years. And in the end, he was going to have to start over.
Suppose we run this plan for six whole years in which you pay yourself $ 495 per month. He's going to put it in a good mutual fund for the next 72 months, and we'll see what happens.
You are now six years into the future. In his original plan he should already be finishing paying for his sports car, which no longer looks as good as it did six years ago when the fever started. So you start looking and pretty soon you find yourself signing another car loan and returning to endless payments. Sounds familiar? But what about our plan? At the end of six years, his $ 11,000 car has already seen the end of its days. It has been good, but it is time to improve.
But there's no problem. He has a mutual fund, specifically designated as the fund to replace the car. Do you know how much you have in that fund? At the stock market average of 12% per year, it would have about $ 32,000.
This is where things get really good. If you go and buy a cash car for $ 12,000, you still have $ 20,000 in your mutual fund earning 12% annually.
Do you know what that means? Even if you never add another dollar to the fund, you can still buy a $ 14,000 car every five years from now. The interest you earn on the mutual fund will pay for your cars for the rest of your life!
That happens when money starts working for you. You will never have to send a payment again! And do you know what the car payment is costing you? Do you know what you could do without car payments?
Do you remember the $ 495 payment you were going to start sending to the bank for your new car?
If you invest that money each month in a good mutual fund, instead of sending it to the bank, in just ten years you will have more than $ 100,000. In 20 years it will have about $ 489,000. In 30 years it will be $ 1.7 million and in 40 years, what would have been your car payment would be worth $ 5.8 million. Do you think you could retire if you had that money? Of course!
