When you think you're so smart by starting a new car fund category...

And your "good" car dies when you have \$10 saved.

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• Okay. You get a great big LIKE for demonstrating humour in the face of disaster, and a cyber {{hug}} for the sheer frustration I know you must be feeling.  What are you thinking of doing?

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• ClimbingOutOfDebt
• I think I can I think I can
• ClimbingOutOfdebt
• 4 yrs ago
• 4
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HappyDance Thanks, I needed that. I thought I would start by panicking, and follow that up some some fretting and then gnashing of teeth. Maybe later I'll start researching auto loan rates.

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• HappyDance
• YNABing consistently since 2014
• HappyDance
• 4 yrs ago
• 18
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Marisahowardkarp

Start in your budget.  Always start in your budget. It will guide you with realistic numbers and cause you to make wiser decisions. Make it a math exercise. Be Vulcan.

I financed a car purchase in 2015. I set my max transportation costs at 15% of take-home, and my max financing at 2 years to pay off.

my monthly net income x 15% x 24 - 2.x.all.other.costs.annualized (insurance, fees, gas, maintenance) = maximum amount I was willing to finance.  By adding in some cash as a down payment, which I did, I was able to use the combination of cash and financing to buy a car I could use for many years.

Using this example of a \$4,000/month take-home

• \$4,000 x 15% = \$600
• \$600 x 24 = \$14,400
• \$2,500 x 2 = \$5,000
• maximum loan = \$9,400
• + funds for down payment = \$9,400 + \$__________ = this is the most I can buy at this time

Then I amortized the loan over 4 years to obligate me to less in case I needed the wiggle room, but I paid that sucker off in 14 months. Now, debt-free, I budget \$150/month towards my next car.

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• Jen
• Budget Expert
• Jen_c
• 4 yrs ago
• 1
• Reported - view

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• HappyDance
• YNABing consistently since 2014
• HappyDance
• 4 yrs ago
• 1
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Jen

Thanks, Jen.  I find in casual conversation that most people think the interest rate is the big factor on car decisions. I came to the conclusion that it's the total amount of the car you choose to buy, and that a 5% loan on a used car was far better than a 0% loan on a new car because it fit in with my other goals and priorities AND I could get back out of debt the quickest.   (Aye-yi-yi, so many priorities!)  I also figured that running my budget through a few scenarios ahead of time was very helpful: if I couldn't trim enough to fit a 15% transportation figure into my budget, I had better adjust my expectations.

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• g.359
• Gold_Boa_675fa61a67a7
• 4 yrs ago
• 1
• Reported - view

HappyDance I agree that you are giving amazing advice. I even started following you so that I could keep up on more of your advice!

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• So very sorry to hear you only had \$10 saved.  Best of luck finding a great, inexpensive replacement.

That is the thing I've learned in my last few years of budgeting.  When I started, and was pay check to pay check, having that \$1,000 emergency savings seemed huge.  Today, I know things can break that cost lots more.  That \$1K is just for starters.  The more I have saved, the better shape I'm in.  I've had several occasions when what I thought was "lots" turned out to be "not enough."

Sure hope this is not a major reminder to save more.

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• I feel you!  My wife's car died the day before Thanksgiving.  We had recently set a goal for buying a car at the end of summer 2018.  \$178 in the car fund so far.

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