Seven Life-Changing Things You Can Do With Car Insurance Savings
Why do people get so excited when they save on car insurance? It’s not as exciting as buying a designer bag on double-discount clearance. It’s not even as exhilarating as finding $40 in your coat pocket. But car insurance savings can make a big difference in your life, if you look at it the right way.
The average U.S. driver overpays for insurance by $368 each year, USA Today reports, and can save nearly a third on their car insurance bill just by shopping around. Let’s say you’ve been paying $1,200 per year, and when you compare car insurance quotes you find that you can get the same coverage from a different company for $800.
What could you do with your $400 car insurance savings?
1. You could take a week-long road trip.
Wait, a week? With the current low gas prices and some creative sleeping arrangements, it’s certainly possible. Travel blogger Nomadic Matt spent just $54 per day on a 116-day road trip around the United States while couch-surfing, camping and cooking his own meals. Read the rest of our summer road trip tips.
2. You could plan a car-camping getaway.
If you’d rather be hiking than driving, use your car insurance savings for a car-camping vacation. If you can rent a local state-park campsite for $30 per night, you could stay a whole week and still have almost $200 for gas, food and drinks. Here’s our car camping guide for first-timers.
3. You could fly to Europe.
Never been to Europe? If the euro or pound is weak against the dollar, it’s a great time to go. Compare cheap flights on Kayak.com and you may be able to snag a trip for the price of your car insurance savings. We found flights from New York to Iceland, Denmark, Finland, France and Germany for under $400.
4. You could invest in an index fund.
Why an index fund? It’s the simplest, lowest-cost way to invest in the stock market. Index funds have extremely low fees because they’re not actively managed; they simply include shares in every stock in an index, like the S&P 500. So, while the value of your investment goes up and down with the stock market, over time you can expect a good return. Let’s say you put your $400 car insurance savings into an index fund each year, and your return is 5 percent. After 10 years you’d have $5,934, and after 20 years you’d have almost $15,000.
At the very least, your car insurance savings can be a first-step in financial independence from your parents.
5. You could start saving up to buy a new car, loan-free.
No, $400 won’t buy you a new car. But it could seed a new-car fund that can grow faster than you think. Two years from today, you can have $16,000 — enough for a late-model used car —if you can manage to save $667 per month. Find your motivation in this five-step guide to buying your next car with cash.
6. You could upgrade your used car.
If a new car is far out of your reach, don’t resign yourself to the beater life. There are a few low-cost upgrades you can do to make your old ride feel new again. For example, you could:
- Add sound matting to muffle vibrations and road noise
- Add a stabilizer bar to improve handling and reduce vibrations
- Get your car detailed so it feels so fresh and so clean
7. You could finally take care of long-deferred car maintenance.
Have you been putting off crucial car maintenance, such as changing the brake fluid, belts and tires? Don’t sacrifice your safety. Use the money you save on car insurance to fix up your car to keep it going longer. If you’re handy (or even if you’re not), you can save even more with DIY car maintenance. We have quick, easy-to-understand guides on how to change your oil, how to change your windshield wipers, and how to change a headlight bulb.