May 06 2009

We’re paying off our car loan this month!

You all have been so encouraging to me over the past several months as I have discussed our car loan. To recap:

  • April 2008: I showed you what our debt looked like by using Monopoly money
  • October 2008: Sent an extra $277 toward the principal
  • November 2008: $277 extra
  • December 2008: We wanted to be certain our son was born in 2008 so we could claim him on our ’08 taxes and get a pretty sizeable deduction. If he was born in ’09, we’d owe. Instead of paying extra on the car, we just saved our money that month.
  • January 2009: Sent $1,350 extra
  • February 2009: Sent $662 extra
  • March & April: $0
  • May 2009: $5,080

In March, we found out that Shane’s company would be laying off some of its workforce. We went to savings mode again until things started to look more stable. 

The situation has now improved! My hard-working husband was promoted and has received a raise for his efforts. Hot dog!

Now that we have enough to pay off the car in full, we’re gunna. 

When I login to my bank account info, the remaining balance is $5,083. That is not the “pay off balance,” however. Since we’ll be paying it off in less than 36 months (more like 18 months!), we’ll owe a 1 percent pre-payment penalty. 

There’s a cool way to get around this. Mrs. Money taught me that I can pay almost all of the balance, leaving it around $1 or so. Then, I’ll owe a 1% prepayment penalty of just a few pennies, instead of the $50 it would have been right now.

I’m writing a check for $5,080. Wow. I have never written a check for that much — not even during my tuition-paying college years. 

Once it clears and my car balance is down to a few bucks, I’ll call and see if they can just take the remaining bit out of our checking account and send me the title. The title. To the car that I own. What?

And then I get to do the debt-free happy dance! Yay!



16 Responses to “We’re paying off our car loan this month!”

  1. Congratulations! I have just nominated your wonderful site for a “One Lovely Blog Award”. I really enjoy reading your great articles!

  2. CONGRATS! That is so exciting! How much are you saving in interest by paying it off early? Now you’ll be able to put all that extra money toward house savings! :D

  3. Congrats! Being debt-free is really, truly freeing. You’ve worked hard to achieve it. Now you’ll have even more flexibility to work toward fun goals rather than paying off debt!

  4. Congratulations! It is such a great feeling to be debt free! And now you can start working toward your house goal!

    And congrats to your husband on his promotion – that’s terrific news, too!

    Thanks for inspiring us to keep working on our goals. Success comes for those who work for it!

  5. AWESOME! I hope I can catch some of your determination (although it’s really hard to save money when you’re husband is bringing home half as much as your budget is for- he got laid off in November).

    Congratulations on being so close to being debt free! That’s just GREAT!

  6. Make sure that the penalty is on the remaining balance, not the original or yearly average balance or such. I remembering being told that my prepayment penalty was on the original loan amount. Which is why I never prepaid my car loan. Or, they might only allow a certain amount of prepayment w/o penalty (one website I saw suggested 20% was common. IE, if you paid anything more than 20% in a year, they penalty would kick in).

    Here’s hoping it really is the remaining balance, but it seems too good to be true. :(

  7. Wow, that’s fabulous news! Way to go! It’ll feel so good driving a paid for car!

  8. That’s great, Kacie. Congrats on the job situation improving and moving beyond this debt.

  9. I am sooooo happy for you!! Congratulations! You worked HARD for this and totally deserve to do a huge happy dance!

  10. Thanks everyone! It’s been a long time coming.

    We’re only saving about $300 in interest, since most of the interest has already been paid. But still, $300 is $300! And, not having to make that payment anymore will free up $277 per month that we can put to better use.

  11. Congratulations! What a feeling it is! :)

  12. Thanks for the link! I will have to admit, I was a little surprised when I first read the title, but the more I read, the happier I am for you! That is so awesome. And congrats to Shane for the promotion and raise!!

  13. Congratulations! That’s wonderful!

  14. That is so exciting Kacie! What a relief it will be to have one huge debt gone. I cannot wait until we are in the same boat.

  15. You are truly a frugal inspiration — thanks for this great blog! As for the prepayment penalty tip, how incredible is that? I (and likely so many others) would have never thought to pay the balance *nearly* off, leaving a tiny amount on which to be penalized. So smart, and so frugal!!

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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