Major Speed Bump Ahead!

Alright, guys.  We’ve got a problem.  I think I’ve affectionately mentioned my hoopty before: a 2004 Ford Taurus.  She doesn’t have a name, we’re not that close, but sometimes I feel like we should be.  I bought the car in 2008 with just over 50,000 miles for $10,999.  I was so excited, it was the first major thing I had ever qualified to owe money on all by myself!  My payments were pretty high for someone just out of high school, but I still managed to pay it off almost a year early, and that felt even better.

For almost 10 years, old Goldie (I said she didn’t have a name, but maybe she needs one at this point) has been more than good to me.  I’ve only had one major breakdown, and while the minor repairs have been expensive here and there, I can’t really complain about something that’s been 99.9% reliable for the 120,000+ miles I’ve put on it since I bought it.  But she’s getting up there in miles, and sooner or later, she’s going to have to go to the Jiffy Lube in the sky.

While I’d still consider my car “good enough” for now, it’s almost 15, and it’s sure acting like a teenager.  I’ve never had a working rear defroster, the transmission is starting to develop an attitude, I have door dings and literal holes in my bumper from fender-benders that I just don’t care to fix, and my cruise control seems to have cruised off into retirement.  My radio antenna got stolen four years ago.  Yeah, I was confused, too.  My doors do this really cool thing in the winter where they freeze in whatever state they’re in.  I’ve found it’s much safer to have it freeze shut than to freeze open and have to hold it while I drive home.  Yup, it’s happened.

These inconveniences are minor, but I’m thinking they won’t stay that way forever.  But how do you balance going gazelle intense at your debt with saving for a new car?  How much should a person budget for a new car when they’re still $60k in debt?  Should we even be thinking about this, or just wait until mine bites the dust completely?

Here’s where you come in.  I’m going to tell you how Rachel and I have decided to move forward and why, and we want your input.  Let us know in the comments what you would do if you were in our shoes, and whether or not we’re crazy.

The Situation

  • I’ve been in a situation before (different car) where my engine has blown in the middle of the road.  It’s not fun, and I don’t intend to repeat it if I can avoid it.
  • I drive 30-50 miles a day for work, depending on what jobs I’m at.  Catastrophic failure on the highway, though unlikely at this point, would be dangerous and result in days missed from both jobs while we search for a replacement.
  • Though it’s not much, there is still some value left in the Taurus, which I think we’d do better to take advantage of while we still can.
  • If the Taurus were to die today, we would only have the $1,000 in our emergency fund with which to buy a replacement.  The thought of buying an $800 car and then driving it all over town every day doesn’t make me feel warm and fuzzy.

The Plan

  • Now that the Discover loan is paid off, we’ve got an extra $200 every month to play with.  Normally, this would be thrown into the debt snowball and applied to the next item on our list.  We’re thinking of adding the $200, or at least some part of it, to the $150/month we already budget for car repairs and maintenance, bringing us to $350 each month.
  • Once we hit $5,000 in the maintenance and repair category, we’ll sell the Taurus and buy something new.  Normal maintenance will still come out of that budget, so it would probably take 2-3 years to save up.
  • If the Taurus completely dies before we hit the $5k mark, we’ll use whatever we have saved up at that point, plus the $1,000 emergency fund if necessary (probably until we get to at least the $2k mark), to buy a replacement.  If that happens, we may need to reset this process and try again, depending on what we’re able to find with the money we have at the point of breakdown.

The Goal

  • Because of my commute, I want a similar-sized sedan that would be better on gas mileage and able to accommodate a future Kyle Jr. or Rachel Jr.  I’m currently leaning towards a Hyundai Sonata or a Honda Civic.
  • This car needs to last for at least five years to get us through the debt storm and interfere as little as possible with saving for a house/retirement, so reliability is a must.  I’m thinking something in the 2008-2010 range should be fine.

 

Okay, armchair experts.  Have at it.  Are we foolish for slowing down our debt snowball this drastically, or would it be more foolish to continue racing against the clock on old Goldie’s time left on Earth?  Should we beef up our emergency fund instead?  Is there anything we’re not thinking about that would impact this decision?  Also, any tip you can think of for finding a reliable used car would be appreciated; I’ve always bought from a dealer, but I think our budget might be a little too small for that this time around.  Thanks in advance for your help!

19 thoughts on “Major Speed Bump Ahead!

  1. I think you guys are spot on. When we were debt snowballing it, we did not have car about to die but we did have a payment that was killing us slow with the crazy interest rate I signed up for. We bought a 2005 Pontiac vibe for 10k (on a loan still) and got it from the other payment and interest rate. We had a motorcycle so I road that 99% of the time and my wife drives the car. That car carried us 7 years down the road till I just sold it last month due to it peaking at its positive car value.
    Save your money as long as the Taurus will let you and count no value from it in your savings. Once you hit your goal just sit and wait. Start paying your debt again and keep driving the Taurus. At this point be sure to sign the title and leave it in the glove box just in case you need to abandon it. 😁😁. You may be supprised just how long she lives but at that point it does not matter as you already have the replacement value in savings.
    The perk to not rush towards a deadline is that you know what you want and most times as I have learned, something generaly comes along that it just for you. If your buying person to person, best friend Grandma car will always be a better deal. If your not in a rush, you have the time to make a new friend with a grandma who has a nice car that she takes good care of who’s eyes about to go out……

      1. The main thing is your taking steps to prevent further debt. Yes you are delaying the debt removal so you could say your paying more in interest than you would otherwise but if you count the interest paid if you keep paying minus the interest paid with the new car plan you will find it is a fraction of the cost of taking on more debt if you need a new car and have no cash. Best if luck to you guys

        1. That’s true. We definitely don’t want another loan, and if we choose to do nothing, we may end up with no other choice. I suppose I could brush up on my biking, but I’d probably end up with Arnold Schwarzenegger’s legs with my commute, haha!

  2. I don’t know the APR on your balances remaining for a concrete answer.
    But I think its good to prepare, as the car is older. But after you reach your goal of $5K, sit on it until you need to use it. No need to buy another car unless you really need one.
    BTW, I’ve had 2 Hyundai Elentras. Both made it past 100K. First one was totaled for me (and I just hit 125K). Second one right near 125K now. As long as you maintain the Hyundais keep on chugging. so its a good buy if you do need another car down the road.

    1. Okay. So you think I should just drive the Taurus until there’s literally no value left in it? One thing I struggle with is defining when it’s “dead.” It’s going to get to a point soon where even replacing the tires on it will cost more than the whole car is worth. I don’t know when to suck it up and pay for a repair and when to call in the coroner, haha.

      1. I am in a similar position. But I have not had any major problems with the car. And I take great care of it.

        My overall thought is to revisit the situation when you do have a major problem. The car can’t be worth enough to really monetize a good return. And who knows what the “new” car will be like. It culd have you shelling out lots for stuff the seller didn’t tell you about. You know your car. You’ve taken car of it. Still say hang onto it, but save in the meantime (unless the APR is high on the discover loan. Then maybe save 100 and 100 extra toward the loan)

        1. True story. And the Discover loan is paid off as of yesterday! We’re looking to make quick enough work of the credit card (17.99%) that interest shouldn’t make too much of a difference anymore. Our snowball payment has been averaging about $800, not including the $200 minimum payment that would have been added in if we’d thrown the Discover loan money into the mix.

          I definitely agree about the unknowns that come with a new purchase, though. That’s what gives me the most pause throughout this whole thing; I don’t want to go for a $1,500 car that would solve this whole dilemma and end up in the shop every other week draining our emergency fund.

  3. I can completely relate. My 1997 Camry just turned 400,000 miles (not a typo), and has it’s “quirks” too. We are in the same position as you, not a lot saved where a decent car could be purchased without going into debt, but absolutely no desire to take on more payments.

    What we did was watched Craigslist pretty much every day, for a very cheap car that seemed undervalued (you’ve gotta move fast on these, lots of other people think the same way!). We finally found a 1996 Toyota Corolla for $475.00. It had high miles, but absolutely everything worked well, so we got that as a “spare” car. It’s not pretty. But when I think about how it feels to have my car in the shop (or worse) and not know what I’m going to drive, I know that “pretty” is going to be the least of my concerns! I like Toyotas because it seems like the general thought amongst mechanics is that “they last forever”. I drove the Corolla to/from work for a month just to get a “feel” for it, still no problems!

    (You do have AAA, right? You can get their premium plan for like $120.00(?) per year and that will pay for roadside assistance (come and change a tire, jump starts etc., plus 100 miles of towing at no additional charge etc.)

    So now, I am (for the most part) still driving the Camry, which, at this point does not have any problems that I’m aware of. My current thought as to when to stop repairing it is that if I feel like I’m “always” paying for repairs, or if a big repair comes up that will cost more than another car (i.e., over $1000.00 or so), it’s probably time to come up with a new car/plan. I don’t worry too much about breaking down on my way to/from work any more (I have a 150 mile round trip commute), because AAA will cover the tow and even drive me home if needed. And they have amazingly fast response time, so I’m never waiting too long, even in a snowstorm, they’re better than I would expect.

    In the meantime, I’m putting away extra into savings that is specifically for the new to me car.

    When the Camry does go, my hope is that the Corolla will buy me even more time while I sock away more money to buy something “decent”, and I will be able to avoid the car payment. If not, well, the car payment option always exists, if needed.

    1. I. Like. It. I don’t know how our apartment complex would feel about another car in our already jam-packed parking lot, but it’s worth looking into that. Buying a car off Craigslist gives me the heebie-jeebies, but I know there are decent people out there. This could be a really good option, and may end up being cheaper if we can find something like you got!

    2. Love this answer! You’re basically buying a $500 insurance plan.

      If the Taurus lasts until you’ve saved for your new car, insurance plan doesn’t go away. It’s still there while you continue to attack the snowball, waiting to be cashed in.

      If it dies before you’re ready, you’ve got plan B.

      Really seems like a sound financial choice.

      1. Yeah, it’s definitely not something I would have thought about on my own! I’ll have to talk it over with Rachel, but it sounds like something that could work pretty well.

  4. Definitely understand your dilemma. Like a couple others have said, I would save up and watch Craiglist constantly. My husband has purchased most of his cars through Craiglist or small used car lots. Sure, there are people out there who will try to take you for a ride (no pun intended), so if possible, take someone with you who knows cars very well. Also, if you live near a university, the end of semesters is a great time to check Craiglist because students, especially international students, are trying to sell their cars.

    In addition, I would have a back-up plan in case the Taurus goes belly up much sooner than expected. God forbid, but when throwing all available funds at outstanding debt, it’s important to plan for the worst.

    1. Yeah, the contingency plan is the main sticking point, and really what I’m most worried about. I don’t know if that car has 3 more years left without some repairs that just wouldn’t be worth it for us to fix. I feel like we probably should have started planning for this sooner, but with the amount of debt we had, there was just no way it would have been possible. Looks like I’ll be reading up on tips for buying cars off Craigslist!!

  5. I really like the idea of AAA for peace of mind while you continue to drive the Taurus, and the idea of the sinking fund for a vehicle replacement. The beater spare car is not a bad idea at all, and you may be mroe comfortable with that — your call. Your car will not drop much more in value as long as it stays in the condition it’s in, i.e. no more major body damage, etc. Either plan is solid: the beater / spare car, or set aside a **portion** of the most recent debt snowball value into the sinking fund until you reach your target, then sell your car & get a more reliable one for cash — then you can keep snowballing.

    What you’re essentially doing is heading Murphy off at the pass; you know the current car is not going to give you another 10 years and all of them repair-free.

    As for buying: I’ve bought new from dealers, used from dealers and used from individuals, in the news paper, in Auto Trader, and via friend/ network (11 cars in the last 38 years). Many of my friends have bought from Craigslist although when I had to buy one for my daughter last month, I went to Auto Trader first and that’s where we bought. The key is having a mechanic go with you for the test drive; if you don’t have a mechanic in your friend circle, one that you’ve used before at your local repair shop will almost certainly take the gig if you offer him a fair amount for his time plus coffee or lunch, whatever. I view that as an expense that’s part of the deal, and I will take a mechanic to see any car I’m serious about.

    Also regarding the car we bought last month: we were in a hurry (to replace my daughter’s total loss) and knowing we had to be quick, we made the choice to pay for a certain number of CarFax searches, which we did on the ones on our short list. It gave my husband peace of mind as well, which was worth it. Again, it upped the real cost of the car, but speed was of the essence and having that info helped us rule things out quickly.

    Best wishes! I know there are tons of options to consider and that can be overwhelming, but fear not — you know Who holds the future.

    😉

    1. We do indeed know Who holds our future 😊 I feel like this is shaping up to be quite the test of our faith, and with as many variables as there are, I’m sure no amount of planning we can do will leave us fully prepared for whatever happens. That doesn’t sit well with our über-planner personalities, but the good news is it’s just a car!

  6. We’ve paid cash for our last few cars, and it’s always a good feeling to be able to pay for the car in full up front – and nice not to have that car loan hanging over your head.

    I feel your pain though when it comes to having a car that seems to be having problems, one on top of the other. With one of my cars (a 1996 Dodge Intrepid) we started having problems before we had saved up enough money to pay for a replacement – or at least a nice replacement. We were determined to keep fixing it as long as the problems were minor, but the car finally had the engine blow on us. It had an estimated repair bill of over $3000. At that point we threw in the towel and bought a new to us used car because there were other problems with the car that wouldn’t be fixed, even with a new engine. We ended up buying something not quite as expensive because of the timing, and made a small sacrifice and got a small loan to pay for part of it. We paid the loan off in less than a year, but I hated having it.

    My recommendation is while you’re getting out of debt, do your best to not add more debt to the pile. If that means buying a $1000 beater car, or a $475 craigslist car like someone mentioned, go for it. I think your plan of keeping the car for now while you save up for a new car is a decent plan. Although it’s something to consider that most car issues aren’t going to be a $3000 engine, or something so expensive. It might not be a bad option to keep paying to fix small problems with the car and string it along while you can. A paid off car with small repair bills here and there is often still cheaper than buying a new one.

    Oh, and as far as new car options, I’m partial to the Hyundai Sonata, I’m driving a 2013 Sonata right now and love it. My wife finally sold her Civic a couple of years ago, but she loved it. Great mileage and super reliable.

    1. My previous car was an Intrepid, too! I loved that thing right up until it blew up in the middle of the road. That was a sad day. And thanks for the advice on the choice of car, too! So far, I’ve heard nothing but good things about Sonatas and Civics both from the people that own them. I think the timing will ultimately be up to God as far as when we end up buying, because I just don’t know how much life is left in my old gal, but one of those two seems to be the route we’re looking to take.

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