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This 1 Tip Will Help You Save $147 Dollars Per Month

by Christy Bieber | April 9, 2019

The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.

 A smiling woman putting money into a piggy bank.

Image source: Getty Images

Living paycheck to paycheck is a way of life for many Americans, and finding extra money to save can sometimes seem impossible.

The good news is, for most people, there are lifestyle changes you can make to leave more cash in your pocket. You could do a lot of little things to save money, like giving up eating out, cutting cable, and shopping with coupons. Making all of these changes can free up quite a bit of cash if you're willing and able to sustain them.

But, if you want to make a big impact on your financial life -- without constantly feeling like you need to scrimp and save -- sometimes it pays to focus on the big stuff. Cutting some of your largest monthly payments can have a far more profound impact on your financial life than trimming the fat at the margins -- and one big payment that it's easy to cut is your car payment.

In fact, making this one simple change to how you buy cars could give you $147 more per month in your pocket -- which is a pretty substantial chunk of change.

Make this one change to save $147 more per month

So, how can you end up with an extra $147 freed up in your monthly budget? It's simple -- just buy a used vehicle instead of a new one.

According to Experian, the average monthly payment on a new auto loan is $525. The average monthly payment on a used car is just $378. While that new car smell may be nice, buying a brand new vehicle is one of the worst investments you can make. In fact, Carfax research found a brand new car will lose more than 10% of its value in the first month you drive the vehicle off the lot.

That means if you buy a $40,000 brand new car, you've just lost $4,000 in less than a month. Of course, your actual losses are likely even bigger if you've borrowed because you'll be paying interest on that $4,000 -- often for years as car loans grow longer.

Most people can't afford to just throw away $4,000 every few years when they buy a new car -- and there's no reason to do so when you can get a late model used car for a far more affordable price and can borrow far less.

Changing the way you buy cars could make all the difference

Borrowing for a cheaper used car, rather than for a brand new one, is always going to be a better financial bet to avoid deprecation. But, if you really want to be smarter about how you buy cars, you'll opt to stop taking out car loans altogether.

How can you do that? It's simple. Buy a cheap used car, but keeping making the full "car payments" to yourself that you were making with the costlier new car. Drive the used vehicle for as long as you can, then use those "car payments" you saved to pay for your next used car. Rinse and repeat this process and you should be able to pay for your cars in full and have additional money to set aside in savings.

Once you have no car loan at all, your savings will exceed $147 per month and could turn into a small fortune over time.

Are you ready to save $147 per month?

Saving $147 per month doesn't have to be hard if you just follow this one simple tip and opt for a used car instead of a new one. You can change your whole financial future and all you have to do is give up that new car smell. It's worth the trade-off!

These savings accounts are FDIC insured and can earn you 12x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you more than 12x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2021.

Two top online savings account picks

Rates as of Feb. 15, 2021 Ratings Methodology
Logo for CIT Bank Savings Builder
Logo for American Express® High Yield Savings Account
CIT Bank Savings Builder American Express® High Yield Savings Account
Member, FDIC Member, FDIC
Rating image, 5.0 out of 5 stars.
5.0 stars
ToolTip Icon for Star Rating. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. = Best
= Excellent
= Good
= Fair
= Poor
Rating image, 5.0 out of 5 stars.
5.0 stars
ToolTip Icon for Star Rating. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. = Best
= Excellent
= Good
= Fair
= Poor
Open Account

On CIT's Secure Website.

Open Account

On American Express' Secure Website.

Read Review Read Review

APY: Up to 0.40%

APY: 0.50%

Best For: No monthly maintenance fee

Best For: High APY

Min. to earn APY: $25k or $100 monthly deposit for highest tier

Min. to earn APY: $0

About the Author

Christy Bieber
Christy Bieber icon-button-linkedin-2x

Christy Bieber is a personal finance and legal writer with more than a decade of experience. Her work has been featured on major outlets including MSN Money, CNBC, and USA Today.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.

The Motley Fool has a Disclosure Policy. The Author and/or The Motley Fool may have an interest in companies mentioned.

The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation.

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