|my handsome hubby driving his new truck home|
A little background...
Justin and I are debt-free other than our mortgage. We "don't do debt". Which means financing, making payments, and credit cards are out of our vocabulary as a couple. We both went through Dave Ramsey's Financial Peace University before getting married and have used it as our financial foundation as a married couple. We felt that God really spoke to us through this course due to the strong biblical foundation Dave Ramsey uses to explain the importance of staying away from "stupid debt" such as credit cards and financing purchases and using cash instead...with the main priority as being good stewards of what God gives us so that we can give as much of our earnings back to God as possible.
Commit to the Lord whatever you do, and He will establish your plans.
It just made sense to us. And it still does. We've seen God bless us like crazy, bless others like crazy, and provide in ways we can't comprehend. So needless to say, we paid cash for our most recent vehicle purchase and plan to do so for our next vehicle purchase. Was it easy? No. Frustrating? Oh my...yes. But I do want to share with you what worked for us in hopes of helping you take the same steps in order to remain debt-free if your family feels called to do that. (Please remember these are my personal opinions based on our situation and how we have seen God work in our lives.)
1. Save, save, save. In order to pay cash for a vehicle, it takes planning and saving. Since getting married, we have worked hard to save at least a fourth of our income. Recently, we've been saving half of our income. A good sized chunk of these savings have been designated for car purchases. This has been huge. It takes intense budgeting, discipline, and saying "no" to a lot of tempting purchases along the way. But it pays off.
2. Don't trade-in your car. You won't get what it's worth. We used Kelly Blue Book to price our cars, cleaned them up, took quality pictures, and posted them on Craigslist for free. While we're still waiting for Justin's to sell, mine sold within a week of posting. Even if it doesn't sell that quickly...it's worth the wait! We got at least $3000 more for my car by selling it to an individual and getting cash than we would have with a trade-in.
3. Research. Of course, you want to get the most for your cash. If you like a certain body style of a vehicle, find out what years it was made, and try to buy a vehicle with that model that was made earlier...it will save you money. Based on the quality of the car you are purchasing and how well it has been taken care of, you may be able to go up in mileage, which will cut off some costs as well.
4. Negotiate prices and extras. This is huge. Be your own advocate. We went into each deal we tried to make with our firm price. We researched the value of the car and knew exactly what we were going to make as our offer. Justin was so great at this because he doesn't get emotionally wrapped up into these things like I do. Choose your number and stick with it. (This is another great thing about using cash...when you are financing, it's easy to let the number go up...with cash, it's not.) Also, negotiate for extras. The truck we purchased was just a few hundred miles away from a standard maintenance that Justin has researched a lot about. Because we knew this, we negotiated to get this into the final asking price and got it documented that they would throw in the maintenance.
5. Don't fall in love! Enough said. When you get emotionally involved, you'll do crazy things...such as going over your budget. There are plenty of the same vehicles out there.
6. Watch for extra fees. If you buy from a dealership...they almost always try to throw in extra fees because "all dealerships do this". Don't fall for it. We were firm with the dealers that we weren't paying the fees...or at least they were going to have to go down in the vehicle price to account for it. To give an idea into how crazy this is...one dealership we worked with had over $700 in fees while the one we purchased from just had a fee of a little over $100. (And remember that taxes and licensing get thrown in at the end too.)
7. Negotiate for the "out the door" price. As I mentioned, many dealerships will throw in fees. You, of course, must pay taxes. And then there is the licensing and registration fees. Ask for those numbers. Determine the taxes yourself (your state sales tax times the amount you are going to pay for the vehicle). Once you see those numbers written down, negotiate for an "out-the-door" price. By doing this, we got the overall price of the truck down by around $1500.
8. Buy at the end of the month. I've always heard this and it worked wonders for us. It wasn't, but from now on, we'll intentionally buy at the end of the month. The dealerships have a quota they want to meet and each individual salesperson has their own quota. At the end of the month, they will do some crazy things to meet that quota. Because of our timing, we purchased the truck for $1500 off the asking price out-the-door. We also got the routine maintenance that would have ended up costing us between $400 and $500, plus there was a quirk with the windshield wipers that they fixed for free that would have cost us around $200. Because of our timing, our firm negotiating, and them wanting to sell the truck, we saved over $2000.
9. Hide your payment plan. While we realize the whole world doesn't work on the cash mentality like us, we got very frustrated with some dealerships that basically laughed in our faces and didn't value our money at all. Some would even tell us that we would get a better deal financing. (Thankfully we called their bluff and are smarter than they think...knowing that financing often leads to you paying more than the value of the car when it's all said and done.) We started hiding our payment plan when dealers would ask if we were financing. We simply replied with "we're not sure". Once they started in on numbers, that's when we threw in the cash bomb. We bought from a dealer that valued the fact that we were paying with cash.
10. Remember, patience is key. We got down to the final offer with three other vehicles before we finally found the truck we purchased at the price we budgeted. While it's hard to stand up and walk away from something you've put in a lot of effort and time, it was well worth it. Looking back, we see God's guidance as we obediently walked away from three different deals when they wouldn't accept our offer.
Have you paid cash for a large purchase? I would love to hear about it! And please don't hesitate to contact me through email if you have further questions about Financial Peace or our personal decision to remain debt-free.