Pay Off Your Car First

They say that credit card debt is the worst. It is bad debt. You should pay it off first. I disagree. Pay off your car!

If something were to happen and you can no longer pay all your bills, they’ll take your car from you. Then where will you be? How will you get around? How will you get another car? Further, if you own the car when things go south, it may be possible to trade it in to get a cheaper car and have cash for other expenses.

One of the other factors of this philosophy is that my car loan has a higher interest rate than my credit cards. I only pay 3% on credit card debt once every 18 months as a balance transfer fee when I move it to another card under one if their 0% offers. I’ve been shuffling it between cards for years. And while doing so, my credit rating has climbed from good to excellent.

Ensuring you keep your car is very important if you live somewhere where you need it to get around. I guess if you live near suitable public transportation or can get where you need to go on foot or by bike, it might not be the debt to pay first. But maybe it still is. If everything else goes horribly wrong, you can even live out of your car. It’s transportation and housing. Just don’t do anything to jeopardize driving privileges (e.g., cause an accident, drive under the influence, etc.).

Number one financial goal: own your car.