This morning, I paid off my 2008 Mazda3 about 9 months early. I wasn’t planning on it. But paying off the car significantly reduced my debt to income ratio, which is more important to lenders than your total debt, the number I have been fixating on. I had to drain all of my savings, and I’m also a little worried I won’t have enough money for rent on Monday, but I always scrape together enough to pay all of my obligations (I was saying I wanted my debt repayment to be a little harder and I definitely made that true this week). The savings was just sitting there earning a low interest while my car was costing me much more in interest charges. So I just went for it. I now have $270 per month less in minimum debt payments, and that money will go straight into paying off my highest interest credit card. And having an improved credit score and financial profile brings me that much closer to my dreams of being a business owner and real estate owner. My banker even told me that I would probably prequalify to buy something under $250K, but we all know I am not prepared for that, especially without a 20% down payment and another $5K for all of the incrementals that come after buying a place. But I’ve continued with putting money into savings automatically as well as large chunks from my side businesses. Doing a payoff like the car had a big impact on my situation (and mentally I feel all kinds of giddy thinking I don’t have a car payment this month), so I’ll continue to save but regularly use chunks of that money ($500 increments) to go towards debt. I’m still doing irregular debt updates, so here it is:
Total Remaining Debt: $23,068
Next week I am going to post exactly how much interest I paid over the life of the loan (4 years and 3 months) and some of the costs of owning the car. I love cost breakdowns!
Have you made any unexpected big moves lately? Let me know and have a great weekend!