Tips & advice on getting your finances back on track.
I have recently paid off my debt through the debt management program and am officially debt free! As I was rejoicing in my new found freedom, I realized that my car will need replacing shortly. It is over 10 years old and has 150,000 miles on it. I want to be smart and not put myself back into debt right away. I am hoping to save $10,000 over the next year to put towards the car. What is the best way for me to begin saving for the car?
I am so happy to hear that you are debt free! The average new car price in 2018 was $36,270. My suggestion would be to start with a SMART goal. This is a goal that is Specific, Measurable, Attainable, Realistic and Timely.
Your current goal is to save $10,000 in 1 year for the purchase of a car. I would simplify that even more. I would create a specific goal stating, “I will save $416.60 each pay period.” I also recommend you find the make and model of the car that you are interested in, so that you have a visual motivator.
The measurable aspect of your goal is simple. You should be putting that money in a savings account each pay period, so you will be able to measure your progress by the balance in the account.
Is this goal attainable? Have you figured out how you will come up with the additional $416.60 per pay check? Perhaps you can take the money you were paying toward debt management plan and apply it to your goal.
Is this goal realistic? Are you hoping to purchase a small sedan or a large SUV? Should you buy new or save money purchasing pre- owned? Will $10,000 cover the entire cost of the car or is that only the down payment? Make sure that the goal and the steps necessary to reach the goal are realistic. I would love a new luxury sports car, unfortunately it is not only unrealistic financially, I also have 2 small children and 2 dogs that would not fit in a 2 seat sports car.
Read more: Setting A SMART Financial Goal This Year
Lastly, make sure the goal’s time limit is appropriate. Is 1 year enough time to save $10,000? You should have a time limit; just make sure that it is a realistic time frame.
Following this outline will help you achieve your goal. Keep pictures of the car around your home and in your wallet so that you never forget what you are working towards. I am so pleased to see that you are making wise financial decisions to maintain your debt free status.
I realize that going to a car dealership tomorrow and taking a loan for a new car would be easy, but just imagine how satisfying it will be to use the $10,000 that you have worked for at the end of the year and walk away with the car that you saved for. I wish you the very best of luck.
Kim Cole is the Community Engagement Manager for Navicore Solutions. Kim provides financial education workshops and seminars to communities. Readers can submit general questions relating to personal finance, credit scoring, debt management, student loans, home finance or bankruptcy which may be highlighted in the next month’s edition. All identifying information will be kept anonymous.
Please send your questions via email to DearKim@navicoresolutions.org