We’re starting to hunt for our next family car. I was expecting to shop for a vehicle some time this summer, but we may get our next car this spring as the refinance didn’t go as plan. We would really like to avoid taking on a car loan for our next vehicle.
Avoiding a Car Loan
Not having car loans has been beneficial for us for several reasons.
- Smaller monthly expenses. Having a car payment is usually a big chunk on many people’s budget. It was for us years ago and remember the relief once we paid it off know that we had some breathing room in our monthly cash flow.
- More freedom to allocate money. That few hundred dollars that we don’t pay for the car loan has been reallocated for other goals. Yes, some of it is being redirected towards our car replacement fund, but it’s also giving us a bit more fun money and charity money. The point is we can decide month to month what we want to do with it.
- No more pressure to go to the dealership. Now that the car is paid for and isn’t on a warranty, we don’t have to take it to the dealership to get inspected. I don’t have a problem with getting a repair done at the dealerships, but I’ve noticed that I’m strongly encourage to get more services done there that only they could handle. I’ve found a greta independent mechanic who has done a great job on my car and who has been consistently cheaper than the best dealership prices.
Our goal for this next car is make sure it gets gas mileage as least as good as my husband’s car gets (30 mpg) and has a bit more space than our Jetta has now. We’re looking at some cars that are 2007-2008 models that are in good condition. I’m hoping that as we continue to build our savings, we can pick from more options.
Building Up Our Car Replacement Fund
The contributions to the car replacement fund has been going on for awhile. We’ve been making ‘car payments’ to ourselves on a monthly basis as well as putting a portion of our windfalls. Where do we stash our savings? We use ING Direct and have a sub savings account to help us keep track of our progress. If you’re looking for a savings account that works for you, you can compare saving account rates right here on Couple Money.
The key to success with this goal is automating deposits straight to the car replacement fund. I’ve set up an automatic transfer of $400 to be deposited into the the joint savings account each month.
Plans for The Jetta
Once we buy the family sedan, we’ll then focus our attention getting the Jetta Spruced up and ready to sell. We hope to use that money to cover car repairs and as seed money for replacing my husband’s car some time down the line.
Photo Credit: pedrosimoes7