How one woman beat adversity, paid off her car loan early

Jen Miller

Patti Verbanas is a smart woman.

Not only did she pull off the ultimate "lemons into lemonade" car move, which I'll get to in a minute, but she threw herself a little party when she reached a big financial milestone.

Celebrating triumphs of financial success, whether it's fully filling your emergency fund or paying off a car loan, is important.

We'll spend most of our lives on the road to financial security. But little steps like this let us know we're on the right path, and taking a moment to acknowledge our progress helps to keep us going.

Now, to that lemon of a car deal.

Verbanas, who lives in Somerville, N.J., leased a new Honda Odyssey minivan in 2008.

It was a bad idea. She knew it at the time.

As a mom with two kids who drove as much as she did, Verbanas knew she'd put more miles on the car than the lease allowed.

Many more miles.

But her husband always insisted on leases, so she signed the papers.

By the time the three-year lease ended in March 2011, her lease-loving spouse was now her ex-husband, and she faced a stark post-divorce choice.

Patti Verbanas and her Honda Odyssey

She could turn in the Odyssey, which would require her to pay $5,000 in excess mileage charges and leave her with no car.

Or she could buy it.

Since she loved her Honda, she shopped around for financing and secured a 3.99%, five-year loan from a credit union with monthly payments of $278.

Verbanas admits that she likes "living as debt-free as possible," so the idea of taking out a long loan did not sit well with her.

But she was not only recently divorced, she was worried that she was about to be laid off from her magazine job.

So she took out the longest loan with the lowest monthly payment possible.

That seemed like a smart move when her worst fears came true and she lost her job.

Verbanas had now suffered two of the three personal calamities that wreak havoc on our finances. (The other is a serious injury or illness.)

To make ends meet, Verbanas took on as much freelance writing and editing as she could.

When she secured a new job three months later, she continued to freelance on the side, focusing what little spare time she had on her most profitable clients.

Verbanas lived on her salary, and every freelance check was split two ways.

What she'd need to pay in taxes on the earnings went into one account while the rest of the money was used to pay down the car loan.

In just 16 months, she had the pink slip on her beloved Honda.

Verbanas now takes the $278 that would go toward the car loan and puts three-fourths of it into investments.

The other fourth goes toward "something fun for myself each month," she says.

Verbanas started by throwing an "I bought my car" party, inviting her parents, kids and boyfriend out to dinner.

"The kids and my folks love Japanese hibachi," she says, "so we went together to celebrate."

Good for her.

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