I'm jumping on to this thread, as I'm in a very similar situation. We're a family of 4 that includes 1 baby and 1 elementary school kid. We have 2 very old cars, and one needs to be replaced soon.
We currently have just $3k in our car replacement fund, and we'll start funneling more money into it this year.
We need something that is good in snow, and I don't necessarily mean AWD. We live in a small, hilly town with a serious snow removal problem--roads are frequently glare ice with potholes for 2-4 months of the year, plow piles get tamped down and solidified at many intersections. We use studded snows all winter. So, we need something that can handle snow (unlike, for example, my bro's Matrix, which was a total dog even with good snow tires). We've been driving a subaru outback (which I love) and a Mazda Protege (which has been a little workhorse, and does OK)
I'm fantasizing about a used Prius or a Sienna. Any thoughts on either of those? I want to have a pretty narrow list before we get started on shopping. Since we live in a smallish town in an incredibly rural state, used cars of all kinds--especially Priuses--are in short supply, and we don't have time to be driving all over tarnation to check out used cars from Craigslist. We'll either have to do a shopping excursion to the nearest city (6+ hours away) or use a local car-buying service.