Monday, September 08, 2008

990 Days

Back in early 2006, when my wife and I refinanced our then-showroom-fresh Honda Accord, I wrote:

The balance in the right column shows my current balance on the loan. My accelerated payment schedule will, if I can stick to it, have it paid off within three years.

At that time, one of the ho-hum paperwork tasks I had to accomplish was to write a letter to the credit union's board of directors. They were hesitant to fund our loan, as a large portion of my income was bonus-based. From a credit union's point-of-view (a smallish, local one, anyway), that's an understandable tripping point. Bonuses are a lot like campaign-trail promises: They can disappear real quick.

Still, I remember thinking to myself back then that the credit union was mostly wasting time by pondering whether I'd be good for the loan. Rather, they'd be more on target by wondering just how long that 5-year, 3.95% auto loan would be cash-flowing for them. The credit union's risk was never about having to repo the car. Instead, their only real "risk" was early payoff.

Now, 990 days after we initially purchased the Accord, the credit union is gonna have to find someone else to whom they can loan that money. Our car loan is paid off.

And once again (see "So Long, Sallie Mae" for more on our first trip to this decidedly unAmerican status) we are debt-free except for our mortgage.

That Last Payment's a Lulu

We've had the cash available for full payoff for a while, actually. But as I noted in "Why Not Pay it Off?" the thought of completely draining my savings is one of those things that keeps me up at night. So we waited until a bit more savings padding was present.

Then, this past Friday, I transferred the final $5.6k chunk into the auto-loan account. Within moments, the loan account disappeared from my Account Summary screen completely. The '06 Accord is now well and truly ours, from grille to kid-seat to trunk.

For those folks who, like me, have a sick interest in dollar figures and stats, I will divulge that over those 990 days of auto-loan bondage, we paid $741.71 in interest. That's pretty close to seventy-five cents per day.

"Had you carried the loan to its original 5-year term," my spreadsheet whispers, "you'd have paid over $1,861 in interest. By paying the loan off in 2 years, 8 months, and 16 days, you saved just a paperclip over $1,119."

Interest Comparison

Obviously, the true cost of buying new cars is stout. But we now have an '06 Accord with 23k miles on it, and while it's not dent-free, it is lien-free. Which, I would say, is better.

I'm of the belief that written goals are pretty much a necessity. In this case, regarding the car loan, our goal was to have it paid off in three years. We beat that mark, with four months to spare. Hooray for us.

So Baby Step Two is zapped. Up next: Fill up that Emergency Fund.

Labels: ,

— Posted by Michael @ 9:07 AM


Congrats on the loan payoff. Don't be too hard on the local credit union. At least some of them will do in-person loan underwriting compared to the faceless wonders who are fixated only on credit scores.


I'm so excited for you! Not only for the car loan payoff, but also for finishing baby step #2. (I'm currently on that one now.)
I can't imagine the relief it feels - invite a few friends over tonight and have a "We're debt free" party!


Congrats. It's always good too pay off a loan. (Hopefully I can get there some day.) Enjoy the accomplishment and good luck on the next step.


Wow! Debt-free sounds fantastic! I hope to be there in 8 months. I look forward to following your progress through Baby Step 3!


Hooray for you! I remember when you were upset (rightfully so) about losing your reliable car and not getting the insurance payoff you wanted/finding as good of a used car replacement.

Now stay away from all the bad drivers out there!!

** Comments Closed on this Post **

Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).

My financial life began turning around when I took responsibility for it.
— Dave Ramsey


Start (2005-12): ~$21,900
Currently: $0
[About Our Debt Paydown]


Savings Goal: $15,000
Currently: ~$15,115
[About Our Liquid Savings Goal]