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I’ve determined that I have to plan my next vehicle purchase!
Yes, I know it’s indicative of finally growing up…planning my next vehicle purchase…but since I’m almost 50, I know it’s time! I want to be proactive and NOT reactive. In the last 10 years or so, I’ve done better with managing finances and being a good steward of my money. However, on a teacher’s and social worker’s (my husband’s) salaries, we don’t always have a lot to work with. You know how it goes; you have to sometimes pick and choose where to focus your spending.
But a vehicle, that kind of major purchase needs to be planned for. You don’t want to be desperate when it’s time to buy.
There’s a small feeling of dread when your old clunker starts bumping and shimmying down the road. If your budget is as tight as ours has been, you might wonder how in the world you’ll ever be able to replace it. Right now, I drive a 2003 Dodge Grand Caravan. That’s old! However, it has all the bells and whistles and still moves along. We bought it in 2008, and it has served us well. It’s taken my family of 5 to Gatlinburg, Tennessee, South Padre Island, Texas, back and forth from mid-Missouri to various places in Oklahoma, plus so many more places. Now, with my granddaughter added to our clan, we can still ride in it comfortably and have room for everyone.
But, our dear van is reaching its last journeys, and we need something reliable. Unfortunately, after we paid off the van a couple of years ago, we didn’t keep saving towards our next vehicle. Mistake! And what we want costs more than we can truly afford. I dream of buying a camper….a travel trailer…and to do that, we must have a vehicle with enough oomph to pull the size we need. Oh, we don’t need the big fancy 5th wheels. Yet. We’re actually looking at an Apex Nano hybrid. For the one we want, we’ll have to have a vehicle that can tow 3800 pounds. That won’t be our minivan.
So we’re shopping and dreaming. A quick solution would be to find what we want and finance the full cost. Quick doesn’t mean better, though, especially not when we’ve been working so hard to get and stay debt free. Honestly, I don’t know that we won’t end up having to finance at least some of the cost, but I’m determined to make the whole process as stress-free as possible.
I’m curious. What do you do when you need plan for your next vehicle purchase?
I’m planning these six steps, and encourage you to do the same if you’re ever in the same boat I am. I know sometimes life gets in the way and we won’t be able to do them perfectly, but that’s okay! Every step towards planning will help.
1. Start making a ‘car payment’ to yourself. We ran the numbers on the vehicle we want and found that the monthly payment on the full amount would be $450. Yikes! I will pretend I’ve taken out that loan, and I’m going to start making a $450 car payment to myself. I’ll add it to my budget category ‘Car” in my YNAB budget software. That payment will go in every single month as long as my 2003 minivan can last. Hopefully, it’s a lonnnnng time. Then, I’ll have that big chunk of money to either buy or put down on my vehicle. If there’s anything left on the balance, it’ll be small enough that my monthly payment won’t be nearly that high. Yes, I know that’s not being totally debt free if I can’t pay the whole thing. I’ll try for that; it’ll just depend on if the van can last that long.
2. Tighten up your grocery budget and put the extra money towards that car payment savings category. For me, that also means cooking and eating at home rather than ordering or eating out. We spend way too much money on convenience. I’m constantly looking for simple, filling, frugal recipes. I know me. If the prep time takes too long, I’ll order pizza instead. So… the next part of plan includes meal planning and frugal (but delicious) cooking and eating at home.
3. Stay up on maintenance on your current vehicle. If we can keep our old van running as long as possible, that’ll give us more time to sock that fake car payment away and save up for our new vehicle. Sometimes it’s tough to save the car payment plus have enough to maintain older vehicles. If that’s the case, drop the monthly amount just a little and put $50-$100 of it in a car maintenance and repair budget category.
4. If you’re part of a couple, see if you can share one vehicle instead of driving two. My husband and I did this for several years when our kids were small. It definitely wasn’t convenient, but it was doable for us. We sold our 2nd car and used the money to pay on the one we kept. That helped us save on maintenance and repairs for that extra vehicle. It meant we had to get up earlier so I could take him to work, but at that time in our lives we needed that extra room in our budget, and so we made it work. You can definitely save money by going to just one vehicle.
5. Price insurance for your dream new car. We pay very little in auto insurance for our older models (my husband does have his own car now – a 2008 Ford Focus), but I know when we get our new one, that rate will go up. I’ve talked to my insurance agent to get an idea on what we’ll be paying so that I can save for that as well.
6. Have an emergency plan in place for breakdowns. This goes along with #3 a little bit and can help give an extra cushion so that you can repair a broken down older vehicle and keep it going a little longer to give more time to save. Whether you have a 3-6 month emergency fund or Dave Ramsey’s baby emergency fund of $1000, have SOMETHING in place so that you don’t rush into a new vehicle purchase before you’re ready. I recently read a great post from Jamie at Medium Sized Family with an excellent money saving chart to help you save $1000. It looks like a fun and not too overwhelming way to sock some money away for your emergency fund. Fine-tune the amounts based on your needs and income/budget.
Putting these six steps into action and sticking to them will keep you from rushing into a vehicle beyond what you can afford. In our early married days, we made tons of bad decisions. We’ve been upside down in our loans, we’ve used special financing, etc. Since we took Financial Peace University in 2007, we’ve done so much better. It’s still a constant effort to live intentionally with our money, too, and to make sure we manage it well.
To me, part of living my passion has to include being smart with my finances. I’ve felt the stress of too much debt, being behind payments, not being sure how I could pay my rent/mortgage. On our teacher and social worker incomes, we still have to keep a tight budget. That’s why I know that I must plan my next purchase of the vehicle I want.
Sometimes, it’s easier said than done. But just start. Step by step. Any progress is better than no progress at all, and I’m confident you can do it!