It’s Only Money, After All
After our series of unfortunate events, we’ve been thinking about what our 2009 financial goals are and how debt elimination factors into that. Although I planned (and pre-wrote) a 2009 goals post for today, the last day of 2009, the events of the past week and a half has made that largely irrelevant. I’ll be working on goals for 2009 over the coming days but these are some of the things that have factored into our thinking:
1. The car. Oh what can I say about the car that hasn’t been said. It is, in fact, supposedly fixed right now. I say supposedly because I have about zero trust in that car. But the Saturn dealer seems completely secure and convinced of their diagnosing and fixing the problem, and my bitter email to Saturn about how much I hate the car prompted them to wave all diagnostic fees. My spouse (and my inlaws working in concert) will get the car to Indiana on Friday, I hope. As long as it is really fixed.
So because I have zero trust in the car, we’re looking at replacing it possibly before we originally planned. The original idea was that once we’re out of non-mortgage debt, we’d start saving aggressively for a new car as part of the emergency fund, and depending on what happened with the car, get another once we’d both saved a 6 month expenses emergency fund plus enough for a semi-used car (budget, about $10000-$15000). But this car may not make it that long, because I think that is about 2 to 4 years out. So, we may be scaling back the aggressive debt elimination we’ve been doing and start building the emergency fund - just in case. Which leads to…
2. The emergency fund. Right now, the emergency fund is $300. It was $1000 before all this happened but it has had to help out with all the towing, car renting, etc. Some of that $700 is still in my checking account unspent, and after the car is back here I’ll figure out exactly how much and move it back to savings. But $1000 doesn’t feel like enough anymore. It never did feel like enough for the long term, but now it is not enough even for the short term. We’re still discussing what we’re going to change to, and the current idea is $2500. Maybe even $5000. This will be bumped up the priority chain above my student loan. Speaking of which…
3. Debt elimination. My student loan, still at slightly over $10000. I want to keep paying it down aggressively, but that may have to just be put on hold. We may decide a fixed minimum amount to pay to it while trying to deal with the rest of life - my gut says $300 per month which is a little more than twice the minimum. It won’t get rid of it very fast, but it will bump the schedule up much more than the 2017 that it is due by. Once other things are sorted out we would go back to aggressively paying it off. Because I want to try and avoid creating…
4. New debt. We may have to take our a car loan. I am sincerely hoping not. But I have to responsibly look at the possibility (versus continuing to dump money into a car that will just find new things to break). Could we become a one car family? Yes. But not with my spouse’s car. Becoming a one car family in a place of very little public transportation and a dual working household would necessitate more driving with the one car that we do with both cars combined right now. Instead of putting about 20,000 miles per year on both cars combined, we’d probably put 30,000 a year on the one car. I love the Corolla but a 13 year old car with 200000+ miles on it that already burns through oil at a higher than necessary rate already is just going to be run into the ground in a short period of time by all the driving. I like the Corolla. I don’t want to kill it.
So we may have to get a car loan for a new (to us) car. We’ll see how the Saturn does coming home from NY. If we can put it off for another two years, than we might not have to take out a loan at all. But - I refuse to keep dumping money into that money pit of a car. One more major problem and I think I’m done.
So, a lot of things swirling around my head right now. In my heart, getting rid of our last non-mortgage debt is still my #1 priority, but my head says be cautious and prepare for the inevitable while you still can. But there will definately be debt elimination in 2009 - hopefully all of it. Here’s to 2009 improving vastly over 2008!
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December 31st, 2008 at 10:16 am
I agree with you 1000 isn’t enough in an emergency fund. I actually have a car savings fund that is used for car upkeep and fixes so we don’t have to use our emergency fund.
I don’t think a car loan is a bad thing (provided you buy a car within your means). We have found it’s much cheaper to be paying a monthly car payment on a reliable car than to keep fixed an old one. We simply can’t afford to be stranded on our way to a job (we’re self-employed) because one miss would lose us half a month’s salary, so a car payment we have. But we’re on target to be able to pay for our next car in cash - YEAH!
December 31st, 2008 at 10:25 am
i’m so sorry that you’re dealing with all of this! craziness. but, if you do end up looking at a new/used car, i humbly suggest a newer diesel VW. the mileage is amazing, and you can expect many more years out of a diesel engine than you can a “regular” one. add that to the ability to use 100% biodiesel with no modifications, and these cars retain their value really well. i’m thrilled with mine, five years after purchase, and expect i may have it for another 15 years, if not more. it’s a debt i’ve felt very good about as i go through my own financial makeover.
December 31st, 2008 at 11:06 am
My 2000 Honda CRV is a keeper. With regular maintenance and new tires a few years ago, it has been no problem at all. I recommend Hondas. My 20 year old has a 1993 Accord that she bought used for $2000 2 1/2 years ago. We have put about $1000 into it for new brakes, tires etc and it is a great around town car.
Here’s hoping your Saturn stays stable for you and if not, that you find a good reliable car for your family.
December 31st, 2008 at 12:01 pm
Our emergency fund is $2500. You inspired me to make one, but I knew $1000 was nowhere near enough for us. Now I’m thinking of having $2500 in my husband’s easily-accessible savings account, and another $2500 in his ING account to make it so that it’s $5000 in total, but we get a decent interest rate on at least half of it. It’s scary how fast it can go.
December 31st, 2008 at 12:10 pm
I hear you about the Saturn. We have a Saturn and I cannot wait to get rid of this car. It did the whole transmission is dead trick a couple of years ago and it totally wiped out all of our Savings and then about 2k. So I can totally relate to you on the I hate Saturn front.
It sounds like you have some good plans set, and yes I think it is a good idea to start saving for a new/used car now. You never know when your Saturn won’t be worth it anymore, and you need something reliable. Good Luck!
December 31st, 2008 at 12:30 pm
the way you’ve thought it all out is very inspiring! i’m sure things will work out for the best, hope you get a newish car soon. happy new year!
December 31st, 2008 at 12:33 pm
I’m sorry you’re having to go through it, but thanks for posting about it. It’s helpful seeing how other people ‘drop back and punt’ after a setback.
We’re actually a Saturn family. We’ve owned 3, currently have 2 and have found their service to be excellent and ours have lasted a really long time even though I’m not great about regular maintenance. Best of luck on the vehicle front!
December 31st, 2008 at 12:45 pm
If you do end up getting a new(er) car, consider Toyota or Honda. When I was considering my car purchase, these two brands make the most reliable/safest cars. Also, since insurance rate is tied to where you live and the model you get, you might want to consult moneycentral.msn.com/insure/autorisk.aspx for the lower risk cars to get better insurance rate!
December 31st, 2008 at 4:01 pm
I am also struggling with determining how much money to set aside as an emergency fund… and then how to manage the fund when the emergencies happen and those funds are depleted. It helps to hear your thoughts about how you might proceed.
Also, you might consider looking for a car that has a 10-year/100,000 mile factory warranty. There are manufacturers who offer these warranties as a “standard.” Perhaps you could find a new-to-you car with the original warranty still in place and with many years of coverage remaining. We are a family of KIAs - there are 5 between our household and my in-laws. The lengthy standard warranty is among the major selling points (with us at least).
December 31st, 2008 at 4:14 pm
I like the idea of having a general emergency account and a car maintenance emergency account!
December 31st, 2008 at 5:01 pm
Definitely a good idea to seriously pump up the EF. Maybe 2009 is a good year to car shop. Now that credit is starting to loosen up a bit, I suspect there are some pretty good deals out there. Possibly the Congress will also put in a tax credit for fuel efficiency. As long as you’re ready to pounce, could be perfect timing. You could then just park the Saturn until the economy allows for a better sales price.
BTW, I, too, am a fan of Honda/Toyota. A 2000 CRV is our second car. We bought on the last day of 2000 and got a great deal, since we were more than willing to just walk out the door empty handed!
December 31st, 2008 at 10:31 pm
Sorry to hear about the bad news…
I like to have a mini-e-fund of 500 per family member…
As for the loan for the newer car… Why don’t you give the Saturn some time, just to see if it’s fixed? And, if you must buy something, how ’bout s 2000 to 3000 dollar beater? Personally, I’d rather spend 1000 bucks to fix my car and stay out of debt… which is what I’m doing with my 2001 Accord that was recently hit by a deer….
Rock on,
NCN
January 1st, 2009 at 12:18 am
Cars can almost be worse money pits than houses! For one thing, it’s easy to get sucked in. “We’ll be fine once we fix *this*.” Yeah, and this, and this, and this….
Good for you, drawing that line in the sand. One more major thing and you’re done. I think that’s great. Coming up with the money for a new (to you) car is less great but I’m sure you’ll manage. Just keep saving like crazy as long as the Saturn holds together.
Good luck in 2009!
January 1st, 2009 at 8:43 am
@NCN - ah, but you have an Accord - not a Saturn L Series. Heh. All told in the past year, not counting car payments, I have put over $7000 into the Saturn, just in 2008. And will put a few hundred more into it in 2009 to pay for the repair and get it home. (Oh and if the Saturn was simply hit by a deer, I would fix it. The Saturn itself is the problem, not things that happen to it).
$7000 is like a $583 car payment every month if it was on a loan. I would NEVER buy a car I had to pay $583 a month on. I refuse to keep paying like that on the Saturn that is a piece of junk.
I am giving the Saturn a chance to redeem itself. We aren’t buying a new (to us) car immediately. We’re waiting to see if the Saturn does anything else. If it behaves and all I have to pay is regular maintenance, I’ll keep the car. But if something major dies that either strands me on the road or is something that should not be going on that car, I am done pouring money into that car.
It’s worse than a credit card. Way higher interest on return ;).
We already have one “beater” - a 1996 Corolla with 200000+ miles on it. If I could guarantee that another car I bought for $1000 would be as reliable as that car, I would do it. But my little kids have already been stranded (with us) on the side of a road on a highway for hours twice in the past week. I need a car I can trust not to self destruct to transport my family in, it is a matter of safety.
January 1st, 2009 at 9:38 am
I hear you on the broken-down Saturn front. Ours has cost us about $2,000 in repairs this year alone. Our mechanic seems to think Saturns are very reliable cars, but after this year I don’t know about that!
The latest mishap came right before our 500 mile trip home for the holidays (of course). We had to shell out $700 for a broken water pump and some other minor repairs. Thank goodness for our emergency fund! We had $1500, so we essentially cut it in half. But we’re socking away $400 per month, so in two months we should be back on track.
Good luck with the car!
January 1st, 2009 at 12:55 pm
Now, admittedly, I probably do not know as much about your situation as the other readers here. However, one of the last comments in your post here was in reference to the lack of available public transportation.
Well, could you possibly move to an area where better/more public transportation in available? Then you could either ditch the Saturn all togethor or keep it and use it as a backup. Anyway, that’s my 2cents. Good luck.
January 1st, 2009 at 1:13 pm
You’re absolutely right about safety for your family, a beater will not do. Not now.
One last piece of [unsolicited] advice: consider adding in, if not there already, towing/car rental coverage to your car insurance. Also, if somehow you end up with a new car –I know, I know– get one of those policies that cover EVERYTHING. We were able to get that on our Honda, and though we haven’t had any issues, I would never drop it. I do think the Saturn qualifies as a lemon, unless you have well over 100,000 miles on it!!!
Oh, and DO NOT even THINK of getting a Plymouth Voyager van–worse machine ever. By the time we could trade it in on the Honda (it was only 4 years old) we had gone through 2 transmissions, paint was peeling off the roof, the header had detached from the roof and our kids had to crawl through the back to unlock the doors for us. Acckkk.
January 1st, 2009 at 2:43 pm
I saw your post at the Festival of Frugality, where you hold forth some more about the dratted Saturn. Good grief! If that thing is costing you $600 a month, it’s past time to get rid of it. Betcha that if you traded it in on a late-model Toyota or Honda the car payments would be less than that…and they’d buy you some peace of mind and a lot fewer hours down at the shop. My mechanic expects a Toyota with 100,000 miles on it run fairly trouble-free for at least another 50,000 miles, which tells you something.
Deals are out there to be had. A couple months ago, a friend who works at a large and formerly prosperous Toyota dealership said they had sold, during an entire month, a grand total of three car — one of which was used. That puts you as a buyer in the…heh…driver’s seat.
January 1st, 2009 at 2:54 pm
@ Paul - since we own a house, moving is a complex idea. Possible - yes. probable - no. Especially with the current state of the housing market. And we’d have to re-employ ourselves in the new location. A car is cheaper.
@ Funny - I have much ranting left in me about the Saturn. But cost of ownership is a frugal thing to consider :). I hadn’t really realized exactly how much the car cost us in 2008 until I sat down and added it all up. Some could “supposedly” be classified as maintenance (like tires) but that car EATS tires because it refuses to stay in alignment (which from reading online reviews from owners, I found out is a common thing with this car, it isn’t just me). But that’s besides the point. Some months it would totally behave, and some months would be, well, like $3500+ (engine), or $1000 (power steering pump) or hey just $300 (oxygen sensor and related other issues). Dratted car.
@ Jay - our car insurance does have towing coverage, we submitted the tow receipts already. But not rental coverage unless it is an accident. No rental coverage for car being stupid.
I would love to officially classify the Saturn as a lemon but I researched lemon laws and they hardly ever apply to used cars. Only new ones, except very specific situations (which we do not fall under).
Unofficially though - lemon. At least here.
I wish Toyotas didn’t hold their value so well.
I am currently tossing around the idea of a Kia Rondo. But we are far from making any sort of real commitment.
Unless the car doesn’t make it back from NY tomorrow of course.
January 1st, 2009 at 4:13 pm
Shuda realized you’d have done your research! Anyhow, you’re going to get another car this year, I suspect. As it is now, if the Saturn even hiccups its going to make you nuts, and sanity is worth something. Start looking around before you *have* to.
Funny’s prob’ly right about pricing. Toyota did post a loss, after all. AND maybe 0% financing ?!?
January 1st, 2009 at 9:51 pm
@Jay - well, Toyotas hardly depreciate (compared to most cars). I was looking today and a two year old Camry seems to only be a few thousand less than a brand new one. But I haven’t completely researched things, I have just started poking around.
I like the Outback we’re driving (rental) but hardly any used available at all (at least here). People must hang on to them.
And they also hold value well. lol.
I suspect the Saturn will not last another year too, but, we’ll see. Definitely not putting another $7000 into it
January 1st, 2009 at 10:17 pm
Bummer on the Saturn. I think your idea of dumping it if it blitzes out again is a good one - and drive it til then.
In the meantime, if you can eliminate another non-mortgage debt, that will be that much less monthly minimum you have to pay, along with the next car payment.
And, I’d heartily recommend my 2001 Subaru Forester
Bought new, she’s at 115,000 miles, and knock on wood, is good for that many more! Good luck trying to find a used one tho! I was looking for a used 97 or 98 and couldn’t find one is why I ended up buying this one new in fall 2000.
January 2nd, 2009 at 8:44 am
@ Marci - yeah um, Foresters and Outbacks are about impossible to find used. I was looking online for one of wither of them here and I found 3 Outbacks available and I think 1 Forester - and all of them were either 8-10 years old and very high mileage, or the one that was newer, the price was only $1000 less than a brand new one.
Those are currently out of our price range. But maybe if the Saturn behaves this year.
January 4th, 2009 at 7:02 pm
I am also starting to think $1000 isn’t enough for an EFund. I used to think it was just a huge and crazy amount of money, but after burning through ours a couple different times because of how crazy life can be I’m beginning to think $2500 sounds better everyday.