I am just getting started in my process of minimizing my bloated lifestyle. One month into a spending freeze and just trying to get my head above water.
I live in a small town 2 hours away from where I work, but I work from home 3 days per week and stay near work at a friends one night. So basically I have a 200 mile commute once per week. It works well for me because my housing and taxes are half of what they would be. Public transportation is not an option, it is very rural.
I'm currently driving a 99 Honda Accord with a gas hogging V6 (24-26mpg) with 168,000 miles on it. It is due a timing belt, which I would change myself but would take a weekend and $200ish. Plus this year's Honda Accord is famous for having transmissions go bad, so that feels like a ticking time bomb.
My parents who live 500 miles south of me, in a non-rust-belt area, are trading in a 2009 Honda Fit with 74,000 miles on it. It was driven primarily by my 60+ year old mom and my dad was a mechanic, so he can maintain cars well enough. They are offering it to me for the trade in value of $8,000. I could probably get $2,000 from my car.
That leaves only $6,000 for me to come up with. I can only come up with another $2000 cash at this point, so I'd have to get a loan for $4,000.
I had been planning on driving my Accord for another year and saving up for a $5-6k small car with 100,000+ miles on it.
The smaller car will save me at least $30 per month in gas and $200 that I don't have to spend on timing belt. That is about $560 saved in the first year.
If I got a 24 month loan for the $4,000 I'd pay at most $300 in interest. So it looks like I would be ahead by a few hundred dollars and end up with a much smaller car.
Is this smart or should I continue saving until I can pay cash?
