I owe $17,000 on my car, and it is my largest and only debt. I think I can have it paid off in two years, because I bring home about $2,800 a month and my monthly expenses are $2,100. I also just got a $2,000 tax refund. Should I pay it off as fast as possible, or sell the car?
If you think you can have the car paid off in two years or less, that’s what I’d do. The question is this: Are you willing to do what it’ll take to make that happen? It’s going to mean lots of discipline and hard work on your part, in addition to living on a really strict budget. But in return, you’ll have that car loan off your back for good.
You don’t want the debt on all your vehicles to be more than half of your annual income. If that’s the case, it means you have too much money tied up in things that are going down in value. If you bring home $2,800 a month, you probably make around $40,000 a year. Technically, your car loan is under half in this scenario, but it’s still pretty expensive. I’d get serious about getting out of debt, and pay the thing off!
* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 16 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.