Paying for Cars and College without debt!

My last post illustrated the SMART goals concept. Today, I want to show you how to turn your financial goals into SMART goals. For the first illustration we will set a SMART goal for purchasing an automobile. We will state our goal as we would like to purchase a car. Now we will make it a SMART goal.

First, what type of car do we want to buy? We have chosen to purchase a used 2012 Toyota Corolla LE with cloth seats. Based on the current price for this type of car we feel the purchase price should be around $11,500 by the time we make our purchase in about 24 months. Our SMART goal can now be stated as we will purchase a 2012 Toyota Corolla LE with cloth seats for $11,500 in 24 months.

Next, how will we reach this goal? Now, we can calculate the amount of money we would need to save each month to obtain this goal. We currently have $300 set aside for this goal and we will assume a 1% interest rate if we just put the money in a money market account. Let’s use the calculator found at


Balance on start date $300.00
Rate of return 1.000 %
Savings goal $11,500.00
Number of years 2


To obtain this goal within 24 months you would need to deposit $461.96 every month into the money market account. If you happened to already have money set aside for the purchase you could add that amount to the $461.96 per month and purchase a more expensive car debt free or you could simply reach your goal quicker.

Now that we know our goal and how much we need to save monthly, we can work toward achieving that goal. I know that many people don’t think they can ever afford to purchase a car without a car payment. This illustration shows that it really does not take that long to save up and pay cash for a car in order to avoid car payments.

Another goal we can convert to a SMART goal is paying for our children’s college education. I wasn’t fortunate enough to have my education paid for by someone else so it was very important to me to be able to pay for my children’s education. I was an adult student who commuted to college. It took me many years to earn my degrees, but I can honestly say it has been worth it. Thankfully, I paid for it without borrowing any money so I graduated without debt!

For our college savings example, we will say that the child is 3 years old and you have 15 years to plan for college. At this point, time would be on your side so it would be best to start the college fund immediately. We will need to make a reasonable estimate as to the future cost of attending college and we will assume the child will be attending a college in their home state.

The total cost we have calculated is approximately $124,000 assuming a cost of $31,000 per year. I based my calculations on the information found in the article by Mass Mutual found at: I choose to go with slightly over 3% inflation. With this calculation you will need $124,000 in 15 years to pay for your child’s education. You currently have $500 as an initial investment. The SMART goal would be to save $123,500 by September 1, 2030, to pay for our child’s education at a public in state college. The monthly amount that needs to be saved is $563.85 with an anticipated 3% average compound interest rate.  The daily amount to save is $18.54. For less than $19 per day you could pay cash for your child’s education if you begin to save early enough!

I know you may be thinking, how on earth can I save $124, 000 for college? The initial goal of saving for college may seem overwhelming, but once you break it down into monthly and even daily amounts it does not seem as daunting a task. I hope this is the point that everyone understands. You can reach your financial goals if you stay determined and focused. My family is currently paying for my oldest son’s college education and we have done so without debt. It is a great feeling to know he will not have to come out of college and begin paying back student loans!

Are there goals you would like to set but feel you won’t be able to reach them? Put it down on paper. Share your goal with a friend who will encourage you along the way. Remember, a goal will never be reached if it is never set.


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