Save Up & Pay Cash

  Save Up and Pay Cash

You’re heard the saying, “Patience is a virtue.”  But did you know that patience can also make you rich?  Yes, it can!  By saving up and paying cash for the things your family wants, rather than financing your purchases with a loan or credit card, you add a lot of dollars to your personal bottom line.


Unfortunately, in our culture, we want it and we want it NOW!  If we don’t have the cash to pay for it, retailers and banks will line up down the street to offer us “easy monthly payments.”  Once you fall into this trap of “easy monthly payments” it’s hard to break the cycle.  However, it can be done, and there’s great satisfaction in saving up and paying cash for something big, like a car.  Too many people are clueless about the true cost of financing their purchases.  Which is why I love this example from an article called, “Know the True Cost of Financing” from Kelly Blue Book’s website:


 “Let’s look at a typical new-car shopper, who has decided to buy a car with a price of a little over $27,000 which, with taxes, license and fees (which are usually about 10 percent of the vehicle’s price), brings the total to $30,000. Mr. Shopper offers a down payment of $5,000, which includes the value of his trade. That leaves $25,000 as the amount to be financed. For a four-year loan on that amount at 6.9-percent interest (Annual Percentage Rate, or APR), Mr. Shopper will pay $3,680 in interest. His monthly payment will be about $597 and the amount he will pay for the car will be $28,680 from the loan, plus the $5,000 down payment, for a total of $33,680 over the four years of the loan.”


By saving up and paying cash for his car “Mr. Shopper” will save close to $3,700 in financing costs!  This doesn’t even take into account any interest he might earn on his savings.  The same principle is true for smaller purchases.  If you charge your purchases for groceries, gas, clothing, and entertainment and DON’T pay off your credit card balance IN FULL every month, those items are costing you more money.  For example, if you spend $100 on a pair of new shoes and charge the purchase to your credit card which has a 15% interest rate (today’s average rate) and a minimum monthly payment of $10, those shoes will cost you $107.49. When you start calculating that impact over all of the items you charge, you can see why finance charges can take a big bite out of a family’s monthly budget!


New Shoes

Surprisingly, VISA offers a handy calculator – located at the bottom of this post – to show you how much your cost of credit will be if you charge something on your credit card.  My hope is that YOU will use it as a motivator to save up and pay cash for what you want!


And speaking of saving up and paying cash for cars…  As a follow up to my blog post, “How to Buy a Car Without a Car Payment,” I’m excited to announce that I did finally purchase my NEW 2014 Hyundai Sonata with cash two weeks ago!  I’ve been piling up money into my New Car Fund savings account since I purchased my last car, almost exactly nine years ago.  I had a picture of this black Hyundai Sonata hanging on my Vision Board for over two years. Now here it is in my garage!


2014 Hyundai Sonata

I negotiated a great deal on my new Sonata and sold my old one to some dear friends I know from church.  And I still have $3,500 in my New Car Fund to put towards my 2023 Sonata!  😉


What are you saving up for right now?


Spread the Word!
Christine Luken

Click Here to Leave a Comment Below 17 comments
Wendy - August 12, 2014

YES! THIS! We just recently came into a bit of money, and we have quite a bit of debt. So we used most of the money to pay down debt, to build an emergency fund, and plan on working hard to wipe out the rest of the debt. If we don’t have cash, we don’t do it!

Lois Alter Mark - August 12, 2014

The whole idea of credit card debt freaks me out so we do pay our bill in full every month. I put everything on the credit card so we also get points.

maria @ close tohome - August 12, 2014

I worry about my kids and credit cards, I think they see me use mine so much but I have the money to pay it off. Great article.

Helene Cohen Bludman - August 12, 2014

Credit cards are evil, I’ve decided. The less I use mine, the better!

shari - August 12, 2014

it’s always good to use cash and if you can’t then you should try and pay those credit cards off asap!

Kelli A - August 12, 2014

I learned a long time ago after watching family members use and abuse and totally ruin their lives at times over credit cards and I refuse to use them. When hubby and I got married its the first thing of his we got rid of..

Debbie Denny - August 12, 2014

Very smart advice. We always save up for larger purchases. Took us a while, but now we do not have any credit cards.

Mama to 5 BLessings - August 12, 2014

Great post. We use our credit card for almost everything and then my husband pays it off at the end of the month,we use it primarily for the points and rewards.

Amy Desrosiers - August 12, 2014

We are currently trying to save up for a car too! We do not want to finance more than 50% of it!

Brett - August 12, 2014

We save or don’t buy. Period. We do charge anything and everything to one card- it’s paid in full monthly- but we get $$ back so it’s a little something.

Nicole Brady - August 12, 2014

We use credit cards for EVERYTHING we buy. However, we make sure to pay them off each month. Congrats on saving up and getting a new car AND having money left over!

Lisa - August 12, 2014

We are one of those people who charge everything. However, we pay off our balance every single month. We get 1% of what we charge taken off the principal of our mortgage, so its worth it for us.

Maria Oller - August 12, 2014

We have no credit cards just 1 debit card for emergencies we pay everything in cash and other than left overs from and old debt we are almost debt free.

Dawn - August 12, 2014

So proud of you and your new car purchase! These are some wonderful tips!

Amanda Love - August 13, 2014

Congratulations on the new car. I’m not sure I’m that disciplined. I actually have one credit card, my AMEX which I use for emergencies only and i use my debit for everything else. Sometimes I do think I’d save more if I did use cash.

Shanna - August 13, 2014

We have a credit card for emergencies only. But everything else, we save up to buy.

Anne - November 23, 2014

We are saving for (and paying for) college right now. It is so hard to avoid loans for college, but so far our kids are debt free.


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