I applied for a $30,000 personal loan to purchase a used motor home. I sat and contemplated in my new back yard (I set up the canopy, with some comfortable chairs and a picnic table. My neighbor called it a party paviliion…lol). I got out the checkbook and calculator. There is no doubt that I can afford the loan even if I do get it (I may or may not…hard telling). But, even if I do, I can eventually accomplish my goals without having to pay all of that interest. So, I have decided to not accept it even if I do get it.
I will have to pay $463 per month for 84 months to repay the loan. Instead of paying almost $9 grand in interest, I have the ability to put at least $500 per month ($6000 per year) into savings. I will have to deposit more by taking out less cash each payday. But, I can earn interest with that much money instead of paying it. And, in less than 5 years, I will have that $30 grand on my own without having to pay interest over a 7 year period.
One may think that $500 per month is a lot to put away, but, after calculating my income and expenses, I can do it very comfortably. I can even add $50 per month to my car payment, which will help pay it off sooner, and pay $400 per month on my credit card to pay off the laptop and the camping trip. After the credit card is paid off in about 7 months, I can split that $400 between savings and my car. Then I will be able to put $700 into savings per month, and add $250 per month to my car payment getting it paid off even sooner. By then, I will have gotten another raise or two at work (I get one annually as long as I am there), and I will be able to add even more to my savings, and then focus on getting the house paid off, which is a 15 year loan that I took out three years ago. So, with 12 years left on it, and being able to double the house payments after I pay off the car, I will have the house paid off in about 7 years, making me debt free, and with a pretty hefty savings account.
NOTE: When I took out the car loan and the house loan, I made sure there were no penalties for early pay off.
On top of all of that, I will still have a bit left over, just not as much, obviously. Therefore, as the saying goes, I will have to “tighten my belt” a bit, but I will still be good. It will definitely be worth it in the end. I will have acheived my goals on my own, without having to borrow money and pay a bunch of interest. I will then be able to by a motor home outright, and travel with no stress of debt.
