Car Replacement Budget Strategy?

I'm a bit far off from this yet (early '21 I should finish off the car), but I know it is recommended by some to keep budgeting a car payment monthly after paying off your car to prepare for the next one (to either buy outright or at least have a good down payment ready).  What is the general guideline on how much to make that payment?  Do you budget the same amount you currently do, assuming that the next car will be approximately the same cost/payment as the current one?  Do you budget a little less to free up some of the funds for other things?

What are your thoughts?

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  • I wound up with less than the payment but I wish I had always been able to do the full payment amount! I had to start lower because my student loans came out of school deferment & grace period after I went back to school, and I haven't gotten it back up to what I had been paying yet (after several years). And I occasionally had to raid it to cover a larger car repair, and then paused adding more in 2018 while I was sasaving for a down payment on a house. So while I have a decent amount set aside, to get a car I would be happy with would still take a loan.

    Anything you can do is better than nothing though!

    Reply Like 1
  • I come from a family where we drive our cars until they die on the side of the road one day. So 10+ years. On the one hand, it makes all the upgrades and new features super exciting. I went from a '98 Accord with a tape deck and no CD player to a '15 Mazda 3 with a CD player, aux input, and USB connections (in fairness, I sold the Accord in 2012 and moved out of the country and was carless for 3 years). On the other hand, I would expect prices to go up a lot over that span of time so to get the same price, one would have to essentially down grade. But like adriana01 said, something is better than nothing.

    Reply Like 2
      • TechieM2
      • IT Professional and General Geek
      • techiem2
      • 6 mths ago
      • 1
      • Reported - view

      jenmas That's my plan as well.  I wasn't planning to even start thinking about looking for a new car until next year (I would have had my previous car 10 years in May 2020), but that wreck last year kinda changed my plans.  :)

      Now that I'm getting things in order I want to make sure that once I pay off this car I start working towards properly saving for the next one.

      Reply Like 1
  • Figure out the out the door cost you'd spend on a car now (including tax, tag and title). Figure out how many years from now you want to buy the car.
    C = Cost
    Y = Years
    I = Inflation percentage as a decimal.
    Figure out your inflation adjusted cost...

    C * (1 + I)^Y

    To figure out the monthly, take that result and divide by 12*Y

    So for example, let's say you want a $25k car out the door price today in 10 years, and you expect 3% inflation.

    Future cost = $25k * (1 + 0.03)^10 = 33,597.90

    Monthly amount = 33,597.91 / (12*10) = $279.98 (so round to $280 or maybe even $300)

    Reply Like 2
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
      • Reported - view

      nolesrule That's... depressing.

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
      • Reported - view

      bevocat There are less expensive cars out there, and I'm not even talking about used cars.

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      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
      • 1
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      nolesrule Yeah, I know. It's just a sore point, plus to see the effects of inflation so much all at once offends my sensibilities.

      Reply Like 1
      • adriana01
      • adriana01
      • 6 mths ago
      • 1
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      bevocat I was actually happy, since I could see that if I keep my car as long as I hope to, the amount I guessed at putting away worked out pretty closely to that formula.

      Reply Like 1
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
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      adriana01 I don't know how long it's going to take for me to feel safe again, but apparently six months is not long enough. I feel like I'm perfectly fine driving 20 year old cars just like my mom and so forth, but then something comes along completely out of your control and suddenly you're in a tailspin over it. (I know most people can probably cope with the chaos and uncertainty better than I can, but I have CPTSD, and the whole is way bigger than the sum of the parts, so my freak-outs are disproportionate compared with other people's. Part of me has a strong urge to apologize for myself here, but I will not. I'm actually kind of awesome, considering.)

      Reply Like 2
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
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      bevocat It's possible my multiplier above is higher than actual pricing inflation. I just tend to use 3% annual for base inflation adjustments. The all-in after-taxes based on MSRP for my car has only increased 4.5%  from 2016 to 2019 model years.

      Reply Like 1
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
      • Reported - view

      nolesrule Oh no. It seemed an eminently sensible set of assumptions. The numbers I plugged in for my own situation were quite similar, before I even read your numbers/assumptions.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
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      bevocat 

      bevocat said:
      I'm actually kind of awesome, considering

       I thought you said you went to school in Gainesville.

      Reply Like 1
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
      • Reported - view

      nolesrule Sir, you forget yourself! I have two undergraduate degrees from The University of Texas at Austin. How dare you.

      Reply Like
      • adriana01
      • adriana01
      • 6 mths ago
      • 1
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      bevocat yeah, it only works for me because I already have some saved & could get a car, just not what I hope to. If I was starting again from nothing I would freak out more, like I did when I was always raiding "car replacement" for maintenance

      Reply Like 1
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
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      adriana01 I hope that means I'll be in a decent position someday fairly soon, in 5 years or so. I ran the numbers using nolesrule formula looking at my old car that got totaled, which was actually 1.5 years old when I bought it, and what I actually paid for my brand new car was almost $5k less than what the formula turned up. That plus the fact that I can afford the payment comfortably now, I'm okay. And when it's paid off, I'll have a healthy maintenance fund and a small replacement fund already underway.

      Reply Like
    • bevocat Inflation, yes, always worth factoring in whether it is for a car or what your pension will need to be in x years time.

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      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
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      Aquamarine Cobra of course; I am keenly aware of how the rate of inflation compares with the rates on my home and car loans and my savings accounts. The new numbers will be released on Wednesday morning for anyone interested in such things.

      Reply Like
    • Khaki Storm
    • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
    • Khaki_Storm.1
    • 6 mths ago
    • Reported - view

    You could set back $.50 per mile driven now. Just an idea. 

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      • adriana01
      • adriana01
      • 6 mths ago
      • Reported - view

      Ben Khaki Storm isn't the milage reimbursement supposed to account for gas & upkeep? I would hope to keep my gas, maintenance, and replacement or loan payment under that amount.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
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      adriana01 Yeah, using a mileage rate seems a bit high. The Federal reimbursement rate is currently $0.58/mile and is based on an average across all vehicle types that includes fuel, maintenance and insurance costs. In 3.5 years of owning my car, the operational costs are already 1/3 of the actual cost of the car, so I would expect that after 10 years my operational costs will exceed the out the door price. While some costs are loosely based on miles driven others are fixed based on time regardless of miles.

      Without counting for inflation on operational costs, my cost per mile after 10 years would be around $0.44/mile. Excluding operational costs, the purchase price of my current car in 10 years would be about $0.24/mile. The purchase price of the same car adjusted for 10 years of inflation would be $0.32/mile.

      So $0.50/mile would be saving way too much money to replace my car at the 10 year mark with the same model adjusted for inflation by about $20,000. I have better uses for that $166.67/month.
       

      ETA.... I have 3.5 years worth of tracked operational costs in order to be able to run these numbers.

      Reply Like 1
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 6 mths ago
      • Reported - view

      adriana01 ah, right, remove gas. So maybe .24 a mile? Not perfect, I know, but a start and easy to calculate. 

      Reply Like
  • I don't know that there is a general guideline.  nolesrule lays out the theory pretty well.  I didn't do this as rigorously as he describes.  What I did:

    Bought a car in 2007, 2 months before starting to use YNAB.  Wanted to make it last 10 years.  Paid ~$13K, estimated that a new car in 2017 would set me back ~$18K even if I was conservative and wanted a small car.

    Didn't have a budget for Car Replacement originally, as I was budgeting paycheck to paycheck and whacking a lot of moles for a few months.  When I caught up, I reasoned that I should be budgeting $150 per month = $18,000 / 120 months, and extra to catch up to where I ought to be on a straight line if I'd started when I bought the car.

    IIRC, it took a couple years before I was caught up and consistently budgeting $150 per month for Car Replacement.  In the middle of the decade, I needed to use part of that category to replace a car totaled by an uninsured motorist before the insurance reimbursement arrived.  The insurance reimbursement essentially made the category whole.

    9 years and 11 months after I bought that car, my daughter's car died.  I had been thinking that 2007 Hyundai would last me 2 or 3 more years, but I decided to gift it to my daughter so she could still work, and buy a new car myself one month earlier than originally planned and 2-3 years earlier than recently planned.  I WAMed $150 from Unexpected Expenses to Car Replacement, and went car shopping on 3 days' notice.

    Having that hard cap on the category made me a less bad negotiator.  I walked out of the dealership with an agreement to buy a new 2017 Honda Fit for a total of $17,975.50 including all taxes and dealer fees.  The salesman could negotiate to an "out-the-door" price.  Who knew?  I sure didn't.

    Came home, and estimated I'd need ~$24K to replace this car in 10 years.  Started budgeting $200 per month = $24,000 / 120 months to Car Replacement.  My credit score still cites "lack of installment loans" as an explanatory factor for my score.   I don't care, I'd rather not pay interest for a higher credit score.

    It's possible that I may need to spend more than $24,000 to replace my car when the time comes.  If that seems obvious sooner, I'll adjust my budget according to new information.  If the car looks like it will last more than 10 years, I'll plan to keep driving it and letting funds build up in Car Replacement.  Life Happens, and I'll need to adjust when it does.

    Reply Like 4
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
      • 1
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      Patzer Basically the same approach but ballparking without using math to estimate the future replacement cost. ✔️

      Reply Like 1
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 6 mths ago
      • 3
      • Reported - view

      nolesrule I have a background in math and engineering but I just ball parked it. So sue me! 🤣 

      However, I’m a real-life car purchasing success story who bought my dream, not inexpensive car in late 2017 for cash for the first time ever. But not to fret TechieM2 , as I’m on the other end of my career. You are much further ahead of me than I was at your stage. It wasn’t until I paid off my last car that I started making car payments to myself.

      So, congratulations! You are way ahead of the curve.

      Reply Like 3
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
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      Superbone 

      Superbone said:
      I have a background in math and engineering but I just ball parked it. So sue me! 🤣

       If I can find a lawyer who will take the case on contingency...

      Reply Like 4
      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 6 mths ago
      • 6
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      nolesrule “Sir, how many years did you go to school to receive your Bachelor of Science in Engineering? And in that time, you took and passed classes such as Statics, Dynamics, and Differential Equations? Is that correct? And when it came time to figure out how much to put aside on a monthly basis for your next car, you simply quote/unquote “ball parked it”?!” IS THIS TRUE, SIR?!”

      Reply Like 6
  • I am in the same boat. I had a paid for car (which was nice) but it was really old and run down, so when it needed a $1,100 repair I decided to get rid of it, and I could have got another super cheap car by dipping into my emergency fund but I figured that would just end up in another large repair bill sooner than later and I have good credit so I bit the bullet and financed one worth about $5000 which I figure should (hopefully) last at least another 5 years.  I got it on a 4 year note which I am doubling up my payments and will have it paid off in early 2021 as well.  My plan then was to continue to put the same payment amount into the new card fund for about another 2 years beyond that so that by the time I've had this one for 4 years, I could buy another $5000 car this time in cash.  Then I plan to continue saving that amount this time for 4 years so my next car after that could be a $10,000 car paid for in cash, and just slowly work up to a good paid for car that's only 1-2 years old when I first get it.

    Well that's my plan anyway we'll have to see how well that actually works out for me.

    Reply Like 1
      • TechieM2
      • IT Professional and General Geek
      • techiem2
      • 6 mths ago
      • Reported - view

      Slate Blue Sander Yeah mine's on a 5 year loan but once I finish up my student loan in the next few months I'll be directing the extra funds to the car loan to finish that off early 2021.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
      • Reported - view

      Slate Blue Sander Seems like a reasonable plan as long as you can get at least the number of years out of the car that you expect.

      Reply Like
    • nolesrule It's a 2007 model year so about 12 years old but in good condition for its age from what I can tell and only 107,000 mile on it, I figure 5 years is probably a conservative estimate and I haven't taken into consideration being able to budget more towards the replacement due to an increase of income which will almost certainly happen over the next few years, I have lots of room to move up in my career so I might be able to jump right to a $10,000 paid for car for my next one by either waiting a little longer if this car keeps up, or by increasing my monthly amount I set aside.

      Reply Like
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
      • Reported - view

      nolesrule Right! Because you never know when someone's going to come along and unceremoniously total your perfectly delightful paid-off car.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
      • Reported - view

      bevocat When Mrs. nolesrule's car was totaled in 2013, we got more for it from insurance than I expected... plus a settlement check for "pain and suffering". Don't be the at fault driver.

      Reply Like
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
      • Reported - view

      nolesrule Does the "pain and suffering" of having to take on a new car loan count? Believe me, I am lawyered up and doing everything I can to get all I can for this wreck, because I was 0% at fault!

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
      • Reported - view

      bevocat I wish it did. No, it was for whiplash injuries. Those can really mess you up, even at a low-speed collision.

      Reply Like
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
      • Reported - view

      nolesrule Yikes! Yes they can. I hope everybody's fully recovered now.

      Reply Like
      • Technicolor Cheetah
      • Not sure when I became a cheetah...but I'll run with it
      • technicolor_cheetah
      • 6 mths ago
      • 1
      • Reported - view

      bevocat 

      Someone backed into our 25 year old car this week as it was parked on the street.  We were home so were able to exchange info.  We'd probably get more cash for it if we went through the guy's insurance as undoubtedly they'd total it but he asked if we'd do private.  We were looking to get rid of it anyway, my husband wanted to donate it because he didn't want to go through the stress of trying to sell it.  The damage was minimal, the body shop still quoted $700 of work, he's sending us  a check.  Now we're making money off if it even if we still end up donating it.  But I'd have been sad if it had been one of my other cars because I don't want to have to replace them.  

      Reply Like 1
    • bevocat That's what insurance is for, and I always carry underinsured/uninsured motorist coverage just in case (it saved me the one time I did have my car totaled) and it's cheap to add. I also carry gap coverage as long as i figure the value of the car is less than or close to the loan value, as that drops and eventually gets paid off I'll drop the gap, but that's also fairly inexpensive purchased directly from my insurance company NOT from the dealer.

      Reply Like 1
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 6 mths ago
      • Reported - view

      Slate Blue Sander ditto

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      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
      • 1
      • Reported - view

      Slate Blue Sander what’s what insurance is for? I got a check for $6k for my paid-off 7.5 year old, well cared for Prius with loads of life left on it. That amount could not put me back in the same condition I was before the wreck.

      I also have un-/under-insured motorist coverage too, and my auto deductible all saved in a category waiting.

      None of it made us whole again after the accident. :(

      Reply Like 1
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
      • Reported - view

      bevocat

       

      bevocat said:
      I got a check for $6k for my paid-off 7.5 year old, well cared for Prius with loads of life left on it. That amount could not put me back in the same condition I was before the wreck.

       Actually, insurance is supposed to make you whole. What was the market price at a dealership for the same model used? Insurance is supposed to be able to give you the money to be able to replace the exact car (including tax). If not, then you should have negotiated for more.

      When Mrs.nolesrule's car was totaled I went online and priced out every single replacement car of the exact same make/model/year/trim within about 90 miles of where we lived. We made sure the replacement check from insurance would be enough to buy one without any money out of pocket.

      Reply Like
      • Patzer
      • Retired at age 60. Thank you, YNAB!
      • Patzer
      • 6 mths ago
      • 2
      • Reported - view

      nolesrule 

      nolesrule said:
      Actually, insurance is supposed to make you whole. What was the market price at a dealership for the same model used? Insurance is supposed to be able to give you the money to be able to replace the exact car (including tax).

       In theory, yes.  In practice, no.  In practice, insurance gives you the amount of money your car could be sold for, including tax.   For people who drive older, well maintained cars, that is not enough to  buy as reliable a replacement car without giving up something.  In 1992 and 2009, cars I owned got totaled.  In 1992, I replaced the car with roughly the settlement amount plus deductible, but it was a downgrade in features.  In 2009, I spent more than the settlement account plus deductible, got a downgrade in features, but ended up with a car that lasted a lot longer for my daughter than the totaled car would have.   In the used car market, a whole lot depends on what's available when you buy.  And when your car is totaled, you don't have the luxury of waiting a while for a better deal to show up.

      Think about it.  Could you sell one of your cars, buy something that is equally good for your needs,  and end up being out only the amount of sales tax on the 2 transactions?  Maybe you come close, with a newer car; but it doesn't work with older cars.  And for economy cars, it's even worse. 

      . . . and that's part of why I won't put the Car Replacement category into an investment account.  Plan A is, I don't spend that money till 2027.  Life could force me to Plan B at any time.

      Food for thought:  My insurance premium went down.  I'm not a better driver than I was a year ago.  My car is just as good as it was a year ago.  But it's a year older, and the insurance settlement for being totaled would be lower.  Hence, the lower premium . . . and the need to have budget backup for the difference between what insurance pays and what I need to get a reliable replacement vehicle.

      Reply Like 2
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 6 mths ago
      • Reported - view

      Patzer All good points. On my 15 yr old ride which makes everyone full of pride when I roll by, I only have liability (and a lot of it) because I don't want to pay out of pocket for any damages I may cause. The difference between liability and full coverage could theorically be placed in a new car fund. Take into account my car only cost me 3,000, out the door (retired police car). I've driven it 2.5 yrs, plan on another 4 at least. Only 1 major repair (about 600) and the rest normal maintenance (oil changes, tires, alignment, wipers, air filters). I think I'm ahead of any car payment plan plus insurance plan you can convince. I also only drive 12 miles to work, so there fuel efficiency doesn't come into play. Our other slightly newer cars (11 yrs and 10 years) have full coverage because they are holding their value for the time being (people still seek then out), but if that changes (I check once a year, it's on the Google calendar), then they will go the liability only. One day I'd like to buy a 5 yr old car and see how that works out. All cars paid for in cash, btw. 

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
      • Reported - view

      Patzer 

      Patzer said:
       In theory, yes.  In practice, no. In practice, insurance gives you the amount of money your car could be sold for, including tax.

       In that case, don't accept the offer until they give you enough. How much you can sell the car for is not the same as how much it costs to replace the car at fair market value. Just provide the quotes from the research into the real-world pricing as proof they aren't offering enough and they will change the offer.

      Reply Like
    • nolesrule Exactly, I think most people don't realize it's a negotiation, they think the insurance company's offer is take it or leave it.  They are going to start off low to save themselves money, especially if it's the other drivers insurance company, at least yours would (i hope) be a little more reasonable on their first offer knowing that you are their paying customer. If they aren't willing to pay you what it take to make you whole you could (though most people won't) drag them into court where they will have to pay massive attorney's fees on top of making you whole (assuming you prevail and if you can document what a fair offer would be then you should be in a good position.  You aren't getting enough to move up to your next car, that's not the point, the point is to replace your existing car so its like the accident never happened.

      Reply Like 1
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
      • 1
      • Reported - view

      nolesrule Slate Blue Sander Welp, too late for me. Anyway, no matter what they could offer me or what I could negotiate, nothing short of a 2019 new car could have satisfied me that it was not a Harvey flood car. So it just sucks to be me. It happens, sometimes.  I've got a new Honda, so assuming this doesn't happen again, I should be able to drive it for a long, long time.

      Reply Like 1
      • adriana01
      • adriana01
      • 6 mths ago
      • 1
      • Reported - view

      Slate Blue Sander this is really good to know. I hope I never need the knowledge, but if I do I hope I remember!

      Reply Like 1
      • lindsay_g
      • Beige_Banjo.3
      • 3 mths ago
      • Reported - view

      nolesrule I have done this exact thing with success. I disagreed with their offer, cut out a load of adverts for that car in that year and sent them in (old days!). It nearly doubled the amount I got.

      insurance companies are rich because they keep their money in their pockets, not because they deal fairly with people. Bunch of chancers.

      Reply Like
  • nolesrule Patzer Ok that makes sense.  I hadn't even thought of inflation, that changes calculations a bit. 

    I think the idea of setting aside the same payment amount would assume that your current vehicle lasts at least X number of years after you pay it off, where X is your current loan period. 

    So if you currently have a 5 year loan, as long as the car lasts at least 5 years after you've paid it off you should have close to the same value saved up again for a new car.  Of course, this also ignores any down payment amount from the current car and inflation.

    So considering all that, I'm thinking the logical thing to do would be to set aside at minimum the current payment amount (assuming you plan to buy a similarly price vehicle), and then maybe reduce it (but not stop altogether) once you save up the amount calculated for a similar replacement (sticker + tax + inflation).

    At best,  the current car will last long beyond that point and you'll be able to buy the replacement outright.  If something happens after you've paid off the car but before you've set aside the full amount, you'd hopefully be able to either buy something more modest, or put down a decent down payment on something similar and be a bit ahead.

    Reply Like 1
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
      • 3
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      TechieM2 When we started YNAB, my car was already about 13 years old, and Mrs. nolesrule's car was 7 years old. So we threw a ton extra into saving for my car, and using my calculation for hers, targeting 5 years down the road. Once I got my new car, I did the above calculation for myself for ongoing payments. We're just now hitting the goal for Mrs. nolesrule's next car, but she wants to keep hers around longer. Instead of stopping monthly saving, we're dropping it down to the amount needed on a 10 year schedule and will continue to save.

      In fact, because it means we're ahead of the game, we're going to actually take the extra money out of the budget and invest it in an attempt to beat inflation. We have other taxable money invested, so we can afford to take the risk. In fact we have enough to buy a few cars right now. I wouldn't recommend this if you don't have the ability to take the risk.

      Reply Like 3
  • For your next car, if you are going to finance it instead of paying cash - I would say look for a car that you can pay off in 36 months as opposed to 60.

    Reply Like 1
      • TechieM2
      • IT Professional and General Geek
      • techiem2
      • 6 mths ago
      • 1
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      jenmas Amusingly, if my calculations and such are right, this one will be paid off in about a 36 month period (March 2018 -> early 2021).

      I definitely hope to be able to pay cash for the next one, but if I can't I'll hopefully have enough saved up to put down a massive down payment and have a short loan term for whatever is left.  :)

      Reply Like 1
      • adriana01
      • adriana01
      • 6 mths ago
      • 2
      • Reported - view

      jenmas that's my plan, depending on how long my 2007 Fit lasts. I have enough now to get something decent with a 36mth loan, so more will either mean a shorter loan or better vehicle, depending on what I decide at the time.

      I thought 60 months was long, but many new cars are being financed for even longer now!

      Reply Like 2
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
      • Reported - view

      jenmas I did that in the fall, and *boy* did it make my payments high! I can afford it, and I got an interest rate that is probably lower than the rate of inflation, but I could not in good conscience recommend that anybody else take on the risk of such a high car payment (which I just realized is significantly higher than my mortgage).

      Reply Like
      • WordTenor
      • Arranged the menu, the venue, the seating.
      • WordTenor
      • 3 mths ago
      • Reported - view

      bevocat This is a super old post I realize, but I'm just parking this here for anyone else who comes across this thread later: the idea of the 36 month payment is that it allows you to still think in terms of payments but also gives you a ceiling for the overall price of the car. It's not that you go out and buy the car you dream of and finance it over 36 months by hook or by crook. It's that you figure out what you can comfortably afford for the payment, and whatever car you can finance for 36 months with that payment is the car you can afford. If the 36-month payment leaves one cash-strapped, the car is too expensive.

      Reply Like
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 3 mths ago
      • Reported - view

      WordTenor Yeah, I hate that trap! I was very much operating from a position of "how much does the car cost? I don't care about payments and crap, how much does it cost?!" Then I went about finding the right payment and term and interest rate. I certainly wouldn't have taken on something with a payment I couldn't afford. I would have taken a longer term if I needed it. I had already determined what I was going to pay for the car and no more; the rest is just administrivia.

      Reply Like
  • adriana01 said:
    I thought 60 months was long, but many new cars are being financed for even longer now!

     I know and I think it is kind of crazy. My stance has been if you can't afford it in 36 months, you can't afford it period.

    Reply Like 3
      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 6 mths ago
      • 3
      • Reported - view

       I went  even more conservative with my last car purchase.  When I financed a portion of my car purchase in 2015, I deliberately figured out how much I could borrow based on the following considerations:

      1. The loan had to be payable in 2 years. (I amortized it over 4 years but paid it off in 14 months)
      2. The total monthly loan amount + all other car expenses -- fuel, insurance, maintenance, registration -- could not exceed 15% of my take-home monthly pay.

      I've been saving towards my next car since paying off my last loan.  I'm on track to being able to replace my car with one of comparable value in 2022, and hoping it will last much longer. If it does last longer, I'll be able to upgrade.

      Edited to add:  a link to how I did the math, posted in this other car thread a year ago.

      Reply Like 3
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
      • 1
      • Reported - view

      HappyDance hashtag-YNABGoals!

      Reply Like 1
  • I'm still saving $100 a month towards a new car even though we just bought one last November.  When we're done paying for that in just under 3 years, I want to just roll what we are currently spending on the payment to the new car replacement fund as well.  So $100/month for 3 years then about $440 a month for ??.  With any luck the next car we replace will be our Honda Civic and not our 7 passenger SUV.  We had to replace the transmission on the Civic a couple years ago at 15years - my husband wanted to replace it instead.  We still had a payment on our SUV and I didn't want two car notes so I had to tell him we couldn't afford that without severely adjusting our lifestyle.  $2000 is still cheaper than a new car.  Just like when we had TechniCub#3, we bought new car seats instead of a new car.  We had to buy three $200 car seats but by god we got three carseats in the back seat of our Honda.  $600 worth of car seats is still cheaper than a new car.

    Reply Like 1
  • bevocat  I'm familiar with CPTSD . . . uncomfortably familiar. :( So, first of all, you ARE awesome! Sending all the love and strength your way. ❤️

    My 10 year old car has been paid off for about 4 years. For the first couple years I found other things to do with the money that was going to car payments. Then, about a year ago I was in a hit-and-run, and thought my car was totaled. During the panic attacks that followed the event, I freaked out about my budget (surprises suck, amirite??).  I investigated car buying options and couldn't imagine how I'd find the money for a car payment again. Somehow, miraculously, my car survived and I breathed a bit easier, but decided to start a separate savings account called "Car Payment" - - I know, YNAB would say just create a budget category, but I like having this totally separate, even list it as a tracking account instead of budget.

    Now I feel more confident in my ability to adapt to a monthly car payment, should the need arise, and I'm also amazed at how quickly the account has grown, and feel confident about paying for inevitable repairs to keep it on the road.  Best of all, I didn't do any of the math listed in comments above..... Just planning to roll with the punches. ;-)

    Reply Like 1
    • Khaki Storm
    • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
    • Khaki_Storm.1
    • 6 mths ago
    • Reported - view
    Technicolor Cheetah said:
    new car seats instead of a new car

     I've done that too! And I'm looking to do it again! 

    Reply Like
      • Technicolor Cheetah
      • Not sure when I became a cheetah...but I'll run with it
      • technicolor_cheetah
      • 6 mths ago
      • Reported - view

      Ben Khaki Storm 

      Congrats!

      Of course, then we had the sea of old carseats in our shed.  Even though it feels like forever, this season too will pass.  In two years I expect none of mine will be in boosters.  OTOH, two of mine will most likely be in the throes of puberty in two years so on the whole I think I prefer the booster seat phase.  

      Reply Like
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 6 mths ago
      • Reported - view

      Technicolor Cheetah lol, I misunderstood. I was taking about going to the junk yard and getting seats from a wrecked car, and putting them in a good running car, but the interior is worn down. 

      Reply Like
      • Technicolor Cheetah
      • Not sure when I became a cheetah...but I'll run with it
      • technicolor_cheetah
      • 6 mths ago
      • Reported - view

      Ben Khaki Storm 

      Ah, well, new seats are certainly cheaper than a new car and a heck of a lot cheaper than a new kid in the long run!  I don't think my kids would like it if I nicknamed them  Money Pit #1, Money Pit #2, and Money Pit #3.

      Good call on the new seats; I've just bought a seat cover and called it good in the past as that's even cheaper than a new seat.  I wish I could do something about the droopy headlining, though, but I suspect there is no cheap fix there.    

      Reply Like
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 6 mths ago
      • Reported - view

      Technicolor Cheetah I've not found a good fix to headliners. I've used 3m spray glue, other adhesives, and pins. Nothing is great. I've also just pulled it all down and spray painted whatever was left behind. It didn't look great, but it worked. 

      Reply Like
      • Technicolor Cheetah
      • Not sure when I became a cheetah...but I'll run with it
      • technicolor_cheetah
      • 6 mths ago
      • Reported - view

      Ben Khaki Storm 

      If I used spray paint inside my vehicle, I'd need new seats for sure!  Although I'm sure you draped everything.  The liner is starting to go in the 17 year old car and would be sitting on our heads except for the pins in the 25 year old car.  I haven't wanted to remove it because I don't want to have to deal with the dying foam layer underneath.  

      Reply Like
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 6 mths ago
      • Reported - view

      Technicolor Cheetah Yep, I forgot about that foam layer. It was like 15 yrs ago that I did that. The foam was a mess to clean up.

      Reply Like
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 6 mths ago
      • Reported - view

      Technicolor Cheetah Yes, I wish Goodwill still took car seats. They are so expensive to buy new and it's a shame for old ones to sit. I understand the  exp. date issue. When we found a nice used one, I'd check the exp. date,  contact the mfg to get a list of parts, then order any missing clip or snappy thing. Good as new!

      Reply Like
      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 6 mths ago
      • 3
      • Reported - view

      Ben Khaki Storm If you are talking about children's car seats, you should never buy them used. You don't know their history, and the structure may be compromised even though they look perfectly fine.

      A car seat that has been in any accident should become instant landfill (or at least sent off to recycling when one of the big box stores does a car seat trade-in) even when there is no visible damage. Same reason you replace the biccycle helmet after the first time it gets used when falling off a bike.

      When I was rear-ended at low speed (and the car was totaled), the insurance covered replacement of the car seats. One of them was 2 months old. All I had to do was send them a photo of the seats with the web belts cut, and a copy of the replacement receipt.

      Compromising on safety while trying to be frugal is just being cheap, not smart.

      Reply Like 3
      • bevocat
      • Sometimes, It Just Sucks to Be You
      • bevocat
      • 6 mths ago
      • 1
      • Reported - view

      nolesrule And will cost you a whole lot more (possibly more than just money) in the long run.

      Reply Like 1
      • Khaki Storm
      • YNAB book topics online: https://support.youneedabudget.com/r/q5w48j
      • Khaki_Storm.1
      • 6 mths ago
      • Reported - view

      nolesrule I should have added more context. This was a long time ago. The kids in question are adults now. There was no booster seat law and even though there was something on the books about kids buckling in the backseat, it was widely know there was no "moving or primary violation required to stop a motorist who has an unbuckled child in the car" at that time. So, we'd be dropping off are kids at school and be behind families who had kids climbing around their back windows/hatchbacks as they drove. Again, very dangerous for all in the car. Seat belts do save lives, I'm just giving more context to the times. We did the used car seats as I said because that's what we could afford. We also did used booster seats.

      Reply Like
      • Technicolor Cheetah
      • Not sure when I became a cheetah...but I'll run with it
      • technicolor_cheetah
      • 6 mths ago
      • 1
      • Reported - view

      Ben Khaki Storm 

      I wish that I could say that things have changed in the years in between your kids and today regarding kids' climbing all about the vehicles even though there are now seatbelt and child restraint laws.  But there's not.  I regularly see little kids in the front seat of cars, free-roaming through the car, hanging out of window yelling at friends, standing up while the vehicle is in motion.  You name it.  I know people who put their 18 month olds in booster seats (basically once they could no longer jam them into the baby buckets - I wish I was joking).  

      My youngest was 7 when he got out of a 5 pt. harness.  Different strokes for different folks.  I'm kind of appalled at people's indifference to the risks they take with their children, but not my kids, not my rules.  Except when I'm transporting other people's kids, then if my rules are stricter, they must follow my rules. 

      Reply Like 1
  • There's so much good advice on this thread! We were just having a team discussion around cars the other week. Thanks for sharing all these great thoughts! 

    Reply Like 2
  • We got a new car last fall.  This spring one of our cars got damaged by a company van backing into it.  We were in the process of deciding whether to donate it or sell it.  The company owner asked if we'd take care of it privately since the damage was minimal.  Long story short, I just deposited his check, still own the car (it surely would have been junked by his insurance since it's over 20 years old), and still could sell it for $500 as is.  Every penny of that check went into our car replacement fund.  Granted, it's not a huge amount towards a new vehicle but we absolutely got our money's worth out of that car in the last umpteen years.  We drive our cars into the ground barring accident.  

    Now, I just need to make sure it's sold before registration and insurance are due...

    Reply Like 1
  • I just did this and I *just* managed to get to the amount. I'm another one who drives cars till they literally die and have to be towed away (in fact, the last one was towed away, resurrected by the mechanic, and then later towed away again!)

    Knowing it wasn't going to last much longer I assumed two years, and assumed paying the same amount as I paid for this one, and set that as a goal.

    As it turned out it lasted half the time but I got one for half the price, so I was 100 short of what I needed, but that was 500 closer than I would have been if I hadn't bothered.

    On long term goals, at my school parents have to pay the fees for the external (leaving school) exams. My neighbours just paid 1000kd (over $3000) for their son to sit his exams. I immediately set a goal for that amount in 7 years' time! I really hope to have left the school and the country far behind us by then, but just in case 😇

    Reply Like
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