Today's post is from Adam Olson over at Wallet Squirrel. Adam and his wife paid off their car loan ($7,00o of it in 3 months) and will share with you today exactly how he did it.
Today it is your turn to learn how to pay off your car loan faster. Last Spring/Summer (May thru August) my wife and I worked really hard to pay off our car loan.
What an amazing feeling it is to free up $405 a month to tackle other debt we have! Ugh….student loans…
Since we took a multi-faceted approach to tackling our car loan debt, I want to talk about all of the things we did last Summer to save us money.
To start off with how to pay off your car loan faster, you need to create a roadmap. Do not just jump into the process without a plan on how you will tackle debt so aggressively.
This roadmap should look to answer three questions. When? How? What? You should look at when do you want to pay it off by. For my wife and I, we wanted to have our loan paid off by the end of the summer.
You will want to make sure that you choose a timeframe that is feasible for you to achieve.
I want you to be successful in paying off your car loan faster! Be honest with yourself.
Then look at how and what you can do that will help pay that car loan off faster. These questions are a little harder to answer in one sentence, so we will look at them for the rest of the article.
It is a good thing I have a list of easy ideas for you to use. Let's get started!
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Adjusting Your Budget
One of the first things we did was take a serious look at our budget to find where we could cut down costs. We decided to cut our weekly grocery bill by 25%. We also cut our entertainment budget along with our utilities.
Look at your budget to determine what categories can be trimmed down in costs. Some easy categories to start looking at first are entertainment, eating out, groceries, or utilities.
I use Mint to help organize our budget and see where we are actually spending.
One sneaky way we adjusted our budget was during the summer.
We were able to temporarily remove our son's daycare expense. As a teacher, my wife has the summer off so we were able to pull him out of daycare for 10 weeks.
This ended up saving us $3,000!
Tip: Cushion is an app that refunds bank and credit card fees. You can expect refunds on things like late fees, overdraft fees, monthly service fees, account maintenance fees, ATM fees, credit card interest charges, late fees, and more. “Cushion got $187 worth of fees (that I was not aware of) waived from my credit card within a few hours of signing up. They turned me into a believer real quick!” – Isaac, Cushion User
Minimizing Excessive Spending
Cutting excess spending goes along the same lines with refining our budget. I tend to see refining your budget as a high overview. Cutting excess spending is working on the nitty-gritty details.
So how did we cut out our excess spending? Easy. We started by looking at each expense we had and asked ourselves, “Is this a need or a want?”
If it was a need, then we kept it. If it is a want, then we cut it out. Did I really need to pick up a pop every day on your way to work? Of course not!
We also made a cut with our cable bill. We did not need it anymore so I canceled it, just leaving us with our internet.
This saved us 50% a month on our cable/internet bill.
Of course, there are plenty of items that are necessary. These include mortgage, groceries, cell phone, gas, and so on.
In today's digital world it is so easy to find coupons to help us save money.
These apps help my wife and I save money every week. This money went directly to helping us pay off our car loan faster.
Tip: Want to save money when shopping? Ibotta is a free money-saving app that gives you cash back at almost any store. You get real cash – not points. Ibotta is my go-to app for saving money on groceries (even fruits and vegetables!), clothes, travel, and a lot more. You even get $10 in your account just for signing up through my link here.
Last Summer my wife and I decided to redo our backyard as well. We were able to save nearly $5,000 while doing this remodel (You can read more about that here).
One of the biggest reasons we were able to do this is because we recycled a lot of material.
For example, we reused a lot of rock that ended up saving us nearly $300!
We also now buy most of our clothing second hand at stores such as Goodwill, The Arc, and Once Upon A Child.
I used to think buying used clothes was disgusting but really it is pretty awesome! Especially once you start seeing the savings.
Tip: Pet Assure is a dog owner's dream come true. Pet Assure is a veterinary discount plan, meaning every time you go to an approved vet, your bill will be reduced by 25%. There's no waiting period, no deductible, every medical procedure is covered, pre-existing conditions welcomed (what?!) and no claim is ever denied. Example: Dental Cleaning and X-Rays = $475. Your savings on that would be $118.75. Even better, Pet Assure is incredibly cheap!
Do it Yourself
Growing up my Dad taught me to do a lot of things on my own. I never realized the true power of this until I became a homeowner.
My wife and I have literally saved thousands of dollars because we do not have to hire anyone to do it for us. As I mentioned above, we redid our backyard last year. We did all of it ourselves and saved us about $3,600 in labor costs.
Other projects we have done ourselves include replacing the hardwood floor in the kitchen, painting, and opening up our kitchen by busting a hole through one of the walls.
That last one was fun!
Be smart to know what you can and cannot do though. Even though I probably could, I am not going to redo the houses electric wiring. We are currently saving up the $5,000 for that major project.
Tip: Do you shop online? If so, you’ll want to use Ebates from now on. Ebates is a website that gives you cash back for your purchases, giving up to 40% cash back. All you have to do is log on to Ebates, find out which store you want to shop at, and you’ll start getting cash back. You get $10 for signing up through my link here.
Selling Items That are Not Needed
I made it a point to sell items around the house that I did not need in my life anymore. This money helped us shave off nearly $1,000 from the car loan. Pretty awesome right!?!?
Your assignment is to look at the items you barely use around your house.
Ask yourself, “Do I really need this? Does it help me towards my goals or does it distract me from them?”
If you do not need the item or it is a distraction, it is time to sell it. You can either sell the item on Craig's list or eBay to help you earn some extra cash to pay off your car loan faster.
Getting Rid of Temptation
Advertisements are everywhere to tempt us with the latest and coolest gadgets for purchase. Giving in to these temptations is a weakness of mine because I am such a materialistic person.
I had to find a way to minimize these temptations, so I did not want to go out to buy things I did not need.
For me, the biggest culprit was all those emails from retailers that I love such as REI. To help reduce these, I started using Unroll.Me to unsubscribe me from all the pesky emails.
Whatever might be tempting you, try to find a way to remove that trigger to spend excessively.
Earning Extra Money
There are literally whole books written about this subject.
To refrain from going into too much detail this will be a 30,000-foot level overview about earning extra money, so you can pay off your car loan faster.
Side hustling consists of extra gigs you do to earn extra money on top of your full-time job. These gigs could be selling photography, driving for Uber, delivering for Amazon, freelance writing, and so on. There are hundreds of opportunities out there for you.
I used any income that has come from Wallet Squirrel or my photography sales to help my wife and I widdle down our car loan.
For more ideas, check out our list of side hustles that Andrew and I have actually tried out.
Tip: Are you looking for an online job? Become an online English Teacher at Qkids and make up to $20 per hour from home. You can learn more details and apply here.
Keep Your Eyes on the Final Goal
The last item on this list is the centerpiece that brings all of this together. You need to stay focused on your final goal.
I like to have one big main goal written down with every sub-goal that is going to help me get to my final goal. I look at these sub-goals on a weekly basis deciding on which one I am going to accomplish for that week.
It feels so good to check those smaller goals off knowing that I am one notch closer to completing my main goal.
Now Go Save!
Now it is your turn to go out and save to pay off your car loan faster.
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How do you plan on tackling this debt?
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