Where to stash my "next car" money

[DocCyane]

I have a 7 year old Mini Cooper with 40,000 miles on it. With its fairly low usage (24 miles a day back and forth to work), I plan to keep it another 7 years. If I can get 10 more years out of it, I will.

Right now I have $8k put away in a Smarty Pig account for the next car. I put in about $65/month more in automatic savings.

(I plan to leave SoCal in ten years and move to a colder climate, FYI, so my thoughts lean towards an all-wheel vehicle.)

It occurs to me that if I don't plan to touch this money for 7 or more years, it might be wiser to put it elsewhere. I'm a big Vanguard investor, if that helps narrow down the options. Your thoughts on where to stash the cash is appreciated.

Thank you in advance for your thoughts.

[gooki]

Just throw it in with your other vanguard investments.

[grantmeaname]

How much will you spend on your next car? If it's not more than a couple months' worth of your savings, you could just stop saving into your retirement account for a couple of months and save everything towards the car instead. That way you could wait until your car seems like it's about to need replacing.

[Posthumane]

Agree with the above two posters. I don't think there's a need to have a separate savings vehicle for a car purchase, to which you're putting in a small amount every month. It would be simpler just to put that amount in with your regular investments and when the time comes that you need to replace it, either save aggressively only for that, or pull some money out of your existing accounts for it (if you have some taxable "non-retirement" accounts).

[tannybrown]

A seven year timeline is long enough that your regular asset allocation for retirement, whatever it is, is probably fine for a car purchase as well.  If the timeline was something like 2-3 years, a more conservative mix may be justified (e.g. - 25% cash, 40% bonds, 35% stock, or something like that).

[rugorak]

As a side note you may not need to get something with 4/all wheel drive unless you plan on living somewhere that gets lots of snowfall and little to no plowing. I live in upstate NY and we get lots of snow most years. Yet I drive a corolla with front wheel drive and good all seasons (I researched them before buying and they got good ratings for use in snow as well as summer). I also have a coworker who has a mini that he drives year round (and almost 50 miles one way over rural state highway). As long as you have decent tires and adjust your driving you should be fine in snow other than on the worst of the worst days (such as the one Valentines Day 2007 when we got over 3 feet in less than 24 hours) in which case it doesn't matter what you drive you won't be making it anywhere. I find most people who think they need 4/all wheel drive tend to end up in ditches or worse 10x more often then others because they don't adjust their driving for the weather. Or they think 4/all wheel drive trumps the need for decent tires and drive on Mr. Clean bald tires.

Anyway just a pet peeve of mine. And I figure a mustacian suggestion as front wheel drive vehicles generally run much less expensive (both initial and in future maintenance) than 4/all wheel drive vehicles do. A little knowledge can save you quite a lot.

[DocCyane]

How much will you spend on your next car? If it's not more than a couple months' worth of your savings, you could just stop saving into your retirement account for a couple of months and save everything towards the car instead. That way you could wait until your car seems like it's about to need replacing.

I hadn't thought too much about how much to spend on the next car. I was aiming to put away about $15k and then see what I could find in the "lightly used" category.

I agree with those who have said not to put the car money in a separate account. I just closed the Smarty Pig account and will toss the money into a non-retirement Vanguard mutual fund.

And as for what to drive in the cold weather, I'm definitely out of touch, having lived in SoCal for the past 22 years. My father lives in Indiana, however, and has a big, 4WD truck. I know I feel better that he's in such a large vehicle driving in the snow. But I realize not everyone has a truck or SUV and they manage to get by just fine.

I appreciate the input, everyone.

[NestEggChick (formerly PFgal)]

I agree with rugorak.  I drove a Cavelier and now a Corolla in the Boston area and the key is knowing how to drive in the snow.  Take some good lessons and you'll be better off than having 4WD.  I do think that front wheel drive is a good idea, though, and definitely anti-lock brakes.  I have seen plenty of SUVs stuck on hills that I had no problem driving up, because I learned how to drive in the snow.  Since you've been in SoCal, just take some lessons when you head to a snowier climate and you should be ok.

Congratulations on the excellent car fund so far in advance!