Make car payments to yourself!

 

How much should you spend on a car?  For most of us there are really only two hard questions.  Is it reliable?  Is it safe?  A vehicle that's not reliable will likely cost you more in the long run and not just in repairs, but you may miss work, be stranded in unsafe places.  Safety is important too as transportation doesn't do you much good if the price is serious injury or death.  Everything else is luxury.   

A car you use on a regular basis is a depreciating asset, aka it loses value.   If at all possible, you don't want to borrow money on something that loses value.   So (with a few exception that involve you driving as part of a business) you should never borrow money to by a car unless it's the only way to get reliable and safe.  It can be ugly or boring it may not have the neat stuff you want.  You don't need that.

If you don't have a car yet or you have a paid for car you are in the best position.  Start making car payments, but not to the bank...make them to yourself.  If you don't already have one, I recommend opening a high yield online savings account.  There are a lot of really good ones out there that have low or no minimum balances and great rates compared to the national average.  By earning interest paid to you and not from you, your car will actually cost you less than what you pay for it.  Inversely if you borrow money for a car, you will end up paying a lot more for it.    

If you borrow $20,000.00 for you new ride and you get an aggressive 3 year loan at 5% interest you will pay an additional $1,579.05 in interest.  That's also a steep monthly payment of $599.42.   Say you can keep that same rate, but get a much lower payment on a 6 year loan, now your payment is only $322.10!  A lot more tempting, but remember this thing is losing value with every mile you log.  Your depreciation will outpace your loan paydown and it will cost you $3,191.10 in interest.  That will buy a lot of chocolate ice cream!  

Do yourself a favor and make car payments to yourself and drive off the lot with a paid for car!  

 

 

Review of TopCashBack.com

A good way to save a bit more $$$ in your daily life is to use a cashback site for your shopping.  The simple explanation of how this works is that a website works as an affiliate to drive traffic to a vendors website.  If this results in a sale then the affiliate earns a commission for driving that traffic to the retailer.  Cashback sites will pay you a portion of that commission.

There are several to choose from but in my initial research I liked Top Cashback the best and it has been a winner so far.

How do you use it?

First you go to their website https://www.topcashback.com/ and go through an easy sign up process.  You don't have to register any cards with them.  Then when you want to shop for something go to they topcashback website first, find your retailer and click the "Get Cashback Now" button and shop at the website as you would normally.  Once the transaction has been confirmed (this usually takes about a day) it will show up on your dashboard with an estimate of when it will be payable.  Overall I have found the estimate dates to be a bit inconsistent.  Perhaps over time they will become more accurate.

What's good:
 

1.  The site is pretty easy to navigate. 
2.  The cashback rates are pretty nice, you can combine these with a cashback credit card and increase the saving.
3. Payout is easy and responsive. No minimum!
4. You get several payout options.  Directly to you via bank transfer or paypal or to a gift card.  The gift card can be a better option as most have an additional bonus of 3-10% for using the gift card option.
5. There is a referral program.  If you use one of the links on my page https://www.topcashback.com/ref/sjdavisiv then I get a $10 referral bonus and you can too if you refer someone else.  At times there are promotions when using a referral link will also get the person signing up a gift card. 
6. Occasionally they have a promotional event that can let you win cash without a purchase.  

What could be better:

1. It takes a while to actually get a payable for your cashback and it varies a fair bit from the retailer.
2.  Many of the cash backs are up to a certain percent, but what you are getting may be a lower amount.
3. Some retailers such as Amazon only offer it for certain departments at a time.  

How I recommend using it for slow wealth building:

Don't spend more than you would normally, but use it when you were going to make a purchase anyway.

If you have credit card, student loan, or auto debt, use your earnings to pay that down quicker (if you are in a loan that does not have a pre-payment penalty).

If you have no debt or just a mortgage apply it to the mortgage or put it into a lending or brokerage account or use a robo investor such as Betterment or Wealthfront and enjoy the benefits of compounding returns!

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