3.16.2009

Transportation Troubles

Just a few days ago, my husband expressed excitement at our growing emergency fund. This may sound weird- but we set milestones for ourselves. "Save For a House Down Payment", "Pay Off The Student Loans", and "Save for a Once-In-A-Lifetime Vacation" are three that we've set, kept at, and accomplished over the last 2-3 years. Next up is "Create a 6-Month Emergency Fund" followed by "Pay Down Mortgage". I admit, we set pretty boring goals, but we're excited for them- that's what counts, right?

Anyway, so, finally, our Emergency Fund was growing at a decent rate. It seems inevitable, though, that as soon as we have this cushion, that something will happen to deplete it. In this case, it is the car.

We have two solid cars- a Honda and a Toyota, a 2004 & 2000 with average miles. We haven't been saving a car replacement fund because we were sure each of these would last us many more years. Until last night.

Last night, we were headed on a date night in the 2000 Toyota when the car started with a bad noise and a plume of white smoke out the tailpipe. A smell of oil was evident, and my car-savvy husband quickly made a preliminary diagnosis- the car is leaking and burning oil. The smoke, smell, and wetness near a valve supported this hypothesis. We took the car to the dealership this morning to get an expert opinion, but even the guy we dropped it off with, when my husband described the symptoms, came to the same conclusion. "Burning Oil" is a death sentence for a car- or, at least, a very, very expensive repair.

We've discussed how much we want to spend on the repair, about half of what the car is worth if we were to sell it on our own. If the number comes in later today higher than that, we have some decisions to make. Here are the options:
  1. Fix it. Put money into a car that ought to be reliable, to the tune of more than half of what it is worth.
  2. Buy an "in the meantime" car. Spend one to two thousand on a car that will function as transportation, but not much else, while we save up a car fund and buy the car that we really want and need.
  3. Replace this car. Spend more like seven or eight thousand and replace the car we have with something that has comparable miles and is a comparable age, but is a model we can foresee meeting our needs for a few years in the future. To pay for this car, we'll either need to:
    1. Deplete our emergency fund to a level we're not totally comfortable with in this economy, or
    2. Take out a 1- or 2-year car loan and pay it off as quickly as possible.
  4. Get by with one car. I haven't mentioned it, but we do have a third vehicle- an old truck that we use to tote stuff for home and yard projects. It's older but is working just fine, so my husband could drive this to work, and I drive the Honda, until we have a sufficient car fund saved to buy the car we want. The truck will use more gas on the long drive to my husband's job, but it's what we have for now.
We haven't really considered #1 or #2. I prefer #4, but my husband cares more about cars, so "making do" with one isn't his first choice. He's open to #3.2. I'm pretty averse to car loans, and I'm enjoying being totally debt free right now, besides the mortgage. I'd even prefer #3.1 to a car loan. I realize this is all pretty premature, since we don't even have word from the repair shop on the problem, but we like to plan. A lot.
Can you think of any other options? What would you do?

2 pennies for thoughts:

Kacie said...

I'd vote for #4 also, but only if your husband is on board. Gas prices in my area are around $2, so even for a gas-guzzling truck, it's not that bad. Would you be able to drive the truck to work instead of him? If it's a shorter distance, maybe you'd save on gas that way.

In my mind, #4 is like a version of buying a "just for now" car, but you already have it, and you don't have to deal with the extra expense of buying a car, registering it, insuring it, etc.

That way, you won't have to tap your e-fund or take out a loan.

I guess a #5 possibility would be to sell your 2000 car to a salvage yard (you'd get a few hundred or more), sell it as-is to someone who'd want to fix it, sell your pickup, and then take a smaller portion from savings to buy a decent car.



JB said...

Your #5 suggestion is something we've considered- and we'd actually be able to get a thousand or two out of it, my husband thinks, even un-fixed. If we sold it and the truck, we'd probably get a small SUV to sort-of replace the truck.

This truck is huge, and a manual- I don't know how to drive it, and wouldn't want to. Unfortunately, my husband's commute is more than twice as long as mine :(



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