Saving Up for a Car?

[igthebold]

Evaluating another aspect of my finances today. :)

Ever since I got married I've been saving $300/month toward our next car. I'm now rethinking this. We've always paid cash for cars and always by decent-quality used cars and driven them for a long time (we'll ignore the great F-150 debacle of 2008). However:

• We just sold one of our cars permanently
• We're planning to use our bicycles and feet as much as possible
• We're trying to batch car trips to reduce usage as much as reasonable (a bit of weaning here..)

In other words, our exposure to needing a new car is a lot lower than before. So, here's what I'm thinking:

• Fund a repair bucket at $500
• Take the current amount in savings and invest it
• Take the $300/month and invest it
• Take the auto insurance delta and invest it
• If I need a new car play it by ear, financing if necessary

What do you think?

[arebelspy]

That seems reasonable (besides the possible financing).

In all likelihood, if you need to replace the car you'll know well in advance, so you can switch from investing to saving for a car fund then.  You can probably make a decent estimate now based on how old the car is and how many miles it has, and then narrow that down when the time comes.

Now that you're down to one car instead of two, replacing them will happen less frequently. 

[Enphuego]

You might earmark your funds into buckets that you maintain personally and then treat all the money together as one lump sum for purposes of keeping it in accounts and investing.  If you've already got a emergency fund account, I don't know how much it's worth to have a car repair account too.  Probably better to have some of that money sitting in a conservative investment.

You can also plan on cashflowing some of the more minor emergencies.  If you are saving $1000 a month, you can just use your cash flow to pay the expense.

In the end, whatever makes sense to you works.  Remember to celebrate the victories like this one!

[velocistar237]

You can also plan on cashflowing some of the more minor emergencies.  If you are saving $1000 a month, you can just use your cash flow to pay the expense.

To the OP, how long could you go without a car?

That seems reasonable (besides the possible financing).

Agreed. I just financed a car, and the loan required collision/comprehensive insurance. I had to convince myself that I would have paid collision/comprehensive insurance anyway, but I'm not so sure I made that choice independent of financing. I now think it would have been better to pay cash, and I'm thinking that I'll pay off the car and drop collision/comprehensive within a year. It's a small loss.

[2handband]

I never buy cars I can't pay for in cash. I'm not afraid of high mileage, either... if you're looking at vehicles for under a grand you can only be so fussy. Learn to fix the thing yourself. Fixing cars sucks (I hate it, anyway), but it beats the shit out of working enough hours at some meaningless job to pay someone else to do it. Aside from not paying interest if you buy with cash, you also save the ridiculous prices full-coverage insurance costs.

I've heard some completely retarded arguments for having full-coverage. My favorite is my younger brother (who is a full-fledged died-in-the wool all-American consumer-bot) insisting that anyone carrying minimum insurance on a paid-off car is a moron, cus dammit if you wreck it you're gonna need money to replace it. My reply is always that if you're not going to pay stupid amounts for what is not really a vehicle but a status symbol, you don't need insurance to replace your car.

[igthebold]

To the OP, how long could you go without a car?

Interesting question. We would probably retrench a bit, but not in a desperate way. Indefinitely, actually, though it would be mighty inconvenient for my wife. We could carpool with friends, and just skip the activities that require a car. There's actually a used car lot within biking distance, too.

That seems reasonable (besides the possible financing).

Agreed. I just financed a car, and the loan required collision/comprehensive insurance. I had to convince myself that I would have paid collision/comprehensive insurance anyway, but I'm not so sure I made that choice independent of financing. I now think it would have been better to pay cash, and I'm thinking that I'll pay off the car and drop collision/comprehensive within a year. It's a small loss.

That is a bummer. It's been years since I've had a car loan, so I don't know the rigamarole. However, my car is reliable, and treating it well and not using it much should make it last a good long while.

[Lars]

That seems reasonable (besides the possible financing).

Agreed. I just financed a car, and the loan required collision/comprehensive insurance. I had to convince myself that I would have paid collision/comprehensive insurance anyway, but I'm not so sure I made that choice independent of financing. I now think it would have been better to pay cash, and I'm thinking that I'll pay off the car and drop collision/comprehensive within a year. It's a small loss.

That is a bummer. It's been years since I've had a car loan, so I don't know the rigamarole. However, my car is reliable, and treating it well and not using it much should make it last a good long while.

My collision/compressive runs me $150-200 year if you wanted to put some numbers on the cost.