Finally Paid Your Car Off? Be Smart With The Extra Cash

You finally paid your car off - hallelujah! Rest assured that you've done the right thing.

Financial experts agree that you should pay off everything except for your mortgage as soon as possible, including your car. Now you have a new problem: what to do with all of that extra money in your pocket every month?

Here are a few ways to use it wisely.

Save The Cash For Car Maintenance

You should bask in the amazing feeling of paying off your car, but only temporarily. Now that your car is older, it will likely need costly maintenance more often. Even the best car insurance doesn’t cover everything. If you set aside a portion of the money used for your car payment for car repairs, these funds will save you when an inevitable car emergency strikes.

Pay Off Any Other Debts

Now that you’ve paid off one loan, look at paying off any other high-interest debts you may have. Paying off credit cards or student loan debt may give you the same feeling of accomplishment.

Invest The Extra Money

Consider investing the amount of your car payment. If you haven’t already, contribute this money to your 401(k), deposit it into your Roth IRA, or hand it over to a stockbroker.

If you make these deposits into your bank account as regularly as you made them into your car loan, you will begin to experience the opposite of a car payment - a car "reward!"

Be Practical: Get A New Set Of Tires

Tires cost more when people know that you need them. If you can get a set of tires before you get a flat, you can get a substantial discount. Even if you don't want to get a full set, you can definitely replenish the spare that you know you are supposed to be keeping in the back.

Spend The Money On High-Quality Maintenance

You can invest in higher quality maintenance to keep your car running longer. For instance, put synthetic oil in your engine over normal oil. If your mechanic tells you about a slight bend in the alignment that "is not an emergency just yet," go ahead and get it fixed before it turns into a big, expensive problem.

You can celebrate your newfound wealth any way you feel, but know you can turn this short-term wealth into long-term gains. A little bit of patience and savvy go a long way with a little money.