Saving for Your Next Ride

by Lila Quintiliani, AFC ®
Military Saves Assistant Coordinator

One of my biggest financial mistakes came early on in my marriage.  My husband and I fell madly in love…with a large, extended cab pickup truck.  But the honeymoon was over when the car payments started.  After just a few months, there was a trickle down effect – because we were struggling to make the payments, we weren’t able to pay off our credit card fully each month.  We ended up carrying a balance on our card, and that balance got bigger and bigger.  After a couple of years of this, we finally realized we had to stop hemorrhaging money and we sold our truck and got a used SUV.  Eventually we paid off our credit card debt.  But we were so scarred by the experience that we now do our darnedest not to have a car payment.  And when we do have to take out an auto loan, we make paying it off one of our first priorities.

I have seen plenty of people struggling with huge car payments.  Several times I have counseled service members who had TWO car payments totaling nearly half (or more!) of their monthly take home pay.  Here are some tips for saving for your next vehicle so you won’t be crippled by your auto loan:

  • Drive what you have. Yeah, that new car on the lot looks pretty sweet, but if you already have a reliable vehicle and it’s still being paid for, then you really shouldn’t take on new debt.   Many people think that they need a fancy car to show that they are successful.  The real truth is that most rich folks don’t drive flashy vehicles.  In fact, 86% of those who drive luxury cars are NOT millionaires.  Unless we’re talking 1953 Corvette 138Z convertible, a car is not an appreciating asset (although I’ve had a pushy salesman try and tell me otherwise!).  So you need to drive what you have for as long as possible.
  • Pay off your loan. If you are able, make extra payments on your auto loan.  We used some of my husband’s combat pay to finish paying off our car.  But then once we paid it off, we kept it.  (In fact, six years later, we STILL have that car!)  Wouldn’t you like an extra $300 or $400 or whatever your payment is a month in your pocket?  There are even online calculators that will let you see how extra payments will affect the loan payoff.
  • Save for your next car. Once you have paid off your current car, don’t just spend the cash.  Save it in a separate account and use it as a down payment on your next car.   If you do this and you can keep your current vehicle for even a year or two after you have paid it off, you should have a sizeable down payment for your next car.  We switched from having an allotment going to the auto loan to having one going directly to our savings account.  And we keep our “new car fund” in a bank separate from our regular checking account.   That way we aren’t so tempted to dip into it.

Tip of the Day

  • Written by Guest Blogger | September 30, 2014

    The Thrift Savings Plan (TSP) offers the same types of savings and tax benefits that many private corporations offer their employees under 401(k) plans. Sign up or get more info at

Saver Stories View all »

Regular Savings is the Key to Success

Written by Super User | November 26, 2010

My name is Chris Strong. I joined the Air Force on 25 March, 1985. On that day, my financial life changed forever. I was introduced to saving bonds in Basic Training. Savings bonds were the big thing back then just like the Thrift Savings Plan is today. A Colonel gave us a briefing. I cannot remember his name but I can remember the 100 savings bonds he had posted to a piece of card board. He gave us a speech on the importance of saving money and how it can change your life. He inspired me to save.


One Sailor's Course to Financial Freedom

Written by Super User | November 26, 2010

We all know its not easy to get out of debt once you in over your head. But it can be done with the sound advice and support that the Military Saves program offers. I am a testament to that. I was a recently divorced, single mother. Like many people I had credit card debt, a car loan, bad credit, and a low income job that never seemed to be enough to put food on the table.

Then I decided I'd had enough of living paycheck to paycheck and worrying about money all the time.


On the Right Track to Build Wealth

Written by Super User | April 16, 2013

My name is Robina Wahl, and I am a military wife and a veteran. Although I am fairly new to the Military Saves Campaign, the message to “Build Wealth, Not Debt” reassured me that my husband and I were on the right track and doing the right things.

I have always been pretty responsible when it comes to saving and living within my means, but I was not prepared for the unpredictable employment lifestyle of being a Reservist and military spouse.