A car fund?



Many people who have paid-off cars continue to make their car payment to a savings account instead. I save for quite a few different things (retirement, emergencies, household repairs, vacations, etc) but a replacement car is one thing that I don’t have a fund for. This may be a mistake, because cars are mechanical things, and all mechanical things eventually wear out. But I like my car so much that I prefer to remain in denial. Besides, I have a backup plan in place:

If something happens to my car and I need to replace it but don’t have the money, I’ll just walk or use public transportation until I do save up the money for a replacement. There’s only one place that I really need to go that’s more than 4 miles from my house, which is the only obvious snag in my plan. Most everywhere else that I need to go is within 2 miles.

I got to test my plan out recently when my car had some trouble with its battery. (And, as it turned out, with its alternator.) My husband dropped me off in the morning at work, and then I walked home afterwards. I stayed at work for lunch. While I enjoyed the walks home, I was very happy to have my car back in working order again. It was frustrating to me to have to plan things out in more detail (after all, I’m not just going to “stop in” at the store multiple times if stopping in means a 1.5 mile walk in each direction.) I also missed being able to go home for lunch, but mainly because I had a hard time finding anywhere at work to sit that wasn’t freezing.

Overall, I’m glad I got to experience a trial period on this plan, because while I certainly could do it if necessary, I’m not sure I’d want to do it for a couple of years. So I may want to start a small car fund just in case. On the other hand, if I did end up doing it for several years, I might get so used to it that I’d decide to pass on a replacement car entirely.

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Posted in Savings & investments on Feb 26, 2008

5 Responses to “ A car fund? ”

  1. # 1 Paul Says:
    February 26th, 2008 at 7:31 am

    I’ve been a little worried about cars. Ours are getting older, and I’ve put no money aside. I don’t ever want another car payment, but unless I can save some money up…

  2. # 2 JEM Says:
    February 26th, 2008 at 9:48 am

    My Aunt makes a car payment every month into a car fund, they get new cars about every 10 years and pay them in full. They have doen it three times in there 40 year marriage, I think it is a good idea.

    Here is south florida we have horrid public transportation and I have a 15 mile commute to work, so if I don’t have a car, I am in trouble. My hubby and I both drive old cars, we maybe have a 1 or 2 left, but I have already saved enough to buy two new cars when we need them, I have parked the money in a money market fund until the day comes.

  3. # 3 GPhiDoll Says:
    February 26th, 2008 at 11:42 am

    My car fund is used for maintenance – oil changes, tires, brakes, tune ups, etc. It comes in handy and I don’t have to worry about dipping into another account.

  4. # 4 Matt Says:
    February 27th, 2008 at 1:23 pm

    Cars can be so expensive and its for nothing more than the luxury of not having to walk somewhere. I like the idea of setting aside the money from car payments for a car fund though. I might have to do this when I pay my car off.

  5. # 5 Bas Says:
    February 27th, 2008 at 2:04 pm

    I paid off my car last year, using money from my savings account. It had a 5.5 year loan on it, at 7.25%, and I paid off the balance after 2 years, and have been putting that money back into savings (at 4.5%). While I haven’t done the exact calculations, my gut feeling tells me I did the right thing. If I didn’t, I’m not sure I want to know…

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