A few weeks ago, Kate and I were reviewing our financials from 2015. We were looking at our monthly nut and asked the question, “What can we do to lower that?” We ask ourselves this question about three times per year.
Why, you might ask?
Because Kate and I have the same money personality, which is a good thing but also a challenging thing. Good part, we understand each other. Challenging part, we love to spend money. It comes in, and it goes out. We have to make sure we set up automatic withdrawals to be put away in savings, or we would never do it. Sometimes we track everything we spend to keep us on track with the direction we are heading, which allows us to pay more attention to our monthly spending.
One number was sticking out to us when we were reviewing our monthly nut. It was the amount we were spending on our cars. We officially paid off Kate’s Prius in February 2016, which created an extra $474 we are able to put into savings or toward something else. Okay, that is awesome.
We took a look at my truck, and I am paying $650/month on my truck with a six-year loan. I don’t know why the bank gave me a six-year loan but they did. I purchased it in June 2014.
When it comes to automobiles, I was taught leasing wasn’t a great decision. Instead of leasing I was supposed to purchase a car and own it outright. Which is funny because at the moment, the reason I rent is so I don’t have to own anything.
I recently learned about this concept called leasing. I was hanging out with my buddy, and he had leased the same truck I have, minus a few bells and whistles. His was two years newer, but he was paying $200 less per month. I was blown away.
Kate and I talked about this on a Wednesday. I called a friend who pretty much knows everyone in Maine who has a car dealership. He gave me the name of the guy at the Toyota dealership, I filled out the form online, and the next day I went into the dealership and spoke to the sales guy, Bryce. I walked out 30 minutes later with an estimate for what Toyota would give me for my truck, and when I got home there was an email waiting for me regarding trucks I’d inquired about.
I took about four days to chat think about the next move. Penelope was about to nap, so Kate and I hopped in my truck, drove to the Toyota dealership, tried three different models, and I paid for the first month’s lease on a new 4Runner. I had to wait two days for the model I wanted to arrive from New Hampshire.
In one week, I made a decision to save us $200 per month on a brand-new 2016 vehicle.
$200 x 12months = $2,400/year
$2,400 x 4 years left on my old truck =
$9,600 savings over the next 4 years
I can now take that extra $200 per month and put it towards something more valuable than a truck that sits in the driveway.
Actually I’ve saved even more than that because I signed the lease in the name of our company. I use the 4Runner for business, which allows us to write off the business expenses for this truck on our tax returns.
I had an ego check with myself about why I had a truck in the first place. At one point I needed it, and I am sure I will need another one again. I felt like a big man driving a big truck – it is crazy but true.
It has now been 3 weeks, and I miss the truck but not really that much. I miss the idea of having a truck more than the truck itself.
I love the new 4Runner.
We always talk about creating more income, but we can always create more savings as well.
What are you keeping around that you don’t really need? Where can you find some money?
Mike Watts is an entrepreneur, speaker, husband, and father.
Before becoming an all around badass by radically reinventing his own life, he used to work for Phillip Morris. Today, he shows business owners how to expand their choices, do less and create the financial lives they want.