Greetings, Mustachians!
I feel as though I made a financial mistake a couple of years back. I received a major promotion at work (we're talking a 75% raise). As is often the case in life, my car (which was a junker) promptly decided to reward my pay raise by ceasing to work. This car was a bit of a money pit in the four years I owned it, but that didn't upset me terribly as I didn't have monthly loan payments to worry about. Insurance was also cheaper. Anyway, I was pressured by well meaning people to take out a loan and purchase a used car. I should add that I do love my car. I'm getting fantastic gas mileage, and it is a reliable brand. It's also not overly flashy - it's simply a 2013 Toyota Corolla. I expect to keep it for a very long time.
Going from part-time minimum wage to 30k per year felt like I was winning the lottery at the time, but now (two years later) I have a more realistic understanding of how far money goes. I've recently received another major promotion, which has bumped me up to 36k per year. This caused me to take a long, hard look at my spending habits. It also caused me to discover this blog, which I'm still working my way through. I'm beginning to wonder whether I should have taken that auto loan. My insurance premiums skyrocketed, and I'm now stuck with several more years of payments. I think the important lesson this has taught me is, just because you can pay for something, doesn't mean you can afford something. I was wondering what the MMM way of handling this would be? Should I hold tight and just keep on paying for several more years, and just keep the car a very long time (which I would be happy to do - I really like the car)? Or, should I throw as much money as I can at this loan until I pay it off (which would allow me to invest more, sooner)?
Some more details:
Gross Salary: $36,434
Minus Taxes, Mandatory 7% Retirement Pay-In, and Health/Dental/Vision Insurance Deductions: $24,016.24 (net)
Remaining Balance On Loan: $11,518.14
Finance Rate: 1.99%