I sold my beloved BMW this past weekend. There were a myriad of reasons why ranging from maintenance costs, love of driving, lack of car payment, lower insurance premiums, smaller gas bill, looking for something fun, and a host of other reasons. But, now that I’m out from under the car payment, I’m at a critical juncture. Now is the time where most people who sell their cars make huge mistakes. The next step matters the most.
So, what are you going to do now that you have sold your car and have no car payment? What are you going to do with the extra savings from the car payment that you used to pay and the lower car insurance premium when I switch from comprehensive coverage to just collision? These are some of the big questions that my wife, friends, and family have been asking lately.
Do you want to change your financial situation after selling your car? Isn’t that the whole reason in most cases for selling a great newer model car to begin with? Here are three things that you need to do immediately before it is too late in order to set yourself up for financial success now that you have sold your car.
Three Moves To Make Right Now After Selling
Open A New Savings Account
When you have been making a car payment for years, you may feel a hole in your routine when that first payment after you have sold your car is due. What do you do with that money? In most cases, that can be a significant amount of money with the average car payment in America hovering around $400 or more. The trick of course is to continue making that payment to yourself of course. You should immediately set up a brand new savings account with an automatic payment from your paycheck or your main checking account where you receive your paycheck to deposit automatically into that savings account. You may also want to give your savings account a nickname such as “Brand New Car For Cash” or “Repair Fund” to help you keep your grubby hands off of it in the meantime.
Lower Your Car Insurance Costs
The second phone call I made after selling my car was to my car insurance company. I ended up paying cash for a very used car to replace the one that I just sold. Since it was very old and I paid for cash, I was able to get rid of my comprehensive coverage and just opted for collision and liability insurance. This will save me hundreds of dollars over the course of the year. Just be careful dropping your car insurance coverage level. Make sure that you have an adequate emergency fund to cover any repairs that you will have to make to your car for the accidents you cause. And, you should still consider keeping enough liability insurance to protect yourself from lawsuits. My wife and I still have an umbrella insurance policy that covers us which I would highly recommend to everyone.
Do Something You Enjoy
Now that you are out from under your car payment, you should also do something that you have always wanted to do or something that you will enjoy. I am actually currently on the hunt for a classic Ford Mustang to rebuild and tinker with. I know absolutely nothing about cars, but I want to learn desperately. It has been on my bucket list for years and years, and now I want to tackle it. And, now I have the funds to do so thanks to not having a huge monthly car payment. Maybe you take a small (very small) portion of that old car payment and do something that you always wanted to do.
Have you ever woke up one day to find out that you are just sick of having a car payment? That’s basically what happened to me? What did you do? I’d love to hear your thoughts in the comment section or on Money Q&A’s Facebook wall.