Update: My old car payment finally ended last month

Three years ago, I bought a used Honda in Cincinnati with a $275 monthly payment. Last week, I set up a new transfer to my savings account for that same amount. It feels like a raise I gave myself. Has anyone else done this after paying off a big bill?

3 comments

3 Comments

matthewmiller1d ago

Actually, that seems like a weird way to think about it. You didn't get a raise, you just stopped having to pay for a thing you already own. The money was always yours, you were just sending it to the bank before. Feels more like fixing a leak than getting a promotion.

erickelly1d ago

Yeah the "fixing a leak" thing is exactly right. I paid off my car last year and the first thing I did was set up an automatic transfer for that old payment amount into a savings account. It feels the same coming out of your check, but now it's building up for you instead of going to a bank. You gotta trap that cash flow before you get used to having it.

ruby_wright1d ago

That "trap the cash flow" idea is smart, but it only works if your savings account pays more than your car loan cost you. My old loan was 3%, and my savings is barely 1%. So I'm actually losing buying power by doing that automatic transfer, which feels backwards. The real move might be to put that old payment into something that actually grows.