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:
- Fix it. Put money into a car that ought to be reliable, to the tune of more than half of what it is worth.
- 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.
- 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:
- Deplete our emergency fund to a level we're not totally comfortable with in this economy, or
- Take out a 1- or 2-year car loan and pay it off as quickly as possible.
- 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?