Deeper in Debt

Well, I did it. Last Saturday I purchased a car. It's an 8-year-old luxury car. There was only one previous owner, and it only had 40,000 miles on it. I paid $10,000 for it: $6,000 cash and $4,000 loan. I didn't want to incur any more debt. As you know, I have more than enough. But it is what it is. The deed is done. The old wealthy_1 would have thought nothing of taking out a huge loan for a brand new car. That's what I did five years ago. My car payments and insurance were $400 per month!

I was saving $300 every month in my car savings fund. When I thought about getting a loan, I decided that I could pay $100 towards a car payment. As usual I forgot about the insurance, but the cost for me for this car is $60 per month. That's an added expense of $160, leaving me with $140. I have a four-year repayment plan on the loan, but I can pay extra on it, and I can pay it off early.

Now the question is: What should I do with that $140. Of course, the first thing that comes to mind is pay more on the credit card debt. That's a good plan, but for the first time in my entire life I asked myself, "How will I pay for routine car maintenance?" So, I've decided to continue the car fund at ING and put $100 every month into it for car maintenance.

That leaves me with $40. Once again credit card debt reduction comes to mind. Then I thought about the vacation we are planning this summer. Right now I allocate $100 per month towards vacation. Perhaps it would be a good idea to increase it to $140. Especially since once we're on vacation, money has a way of slipping through our fingers.