Changes on the horizon. Financial, budgetary changes…or “Why the heck would we go from having no car payments to having TWO car payments?”
After several years of enjoying paid-off vehicles, we realized that our vehicles are a bit too old and not quite right for our driving habits to be worth driving them. Adding up repair bills and maintenance costs and lost work time costs on both cars and averaging them out over the past three years?
Around $400 per month.
$400 PER MONTH! That’s a car payment right there…and we often were living in fear of breaking down IN THE HEAT or losing A/C IN THE HEAT or having a car die ON THE FREEWAY IN THE HEAT (as has happened to hubby countless times over the past several years!).
His vehicle was averaging 22mpg and mine just 10mpg (around town, with my typical driving…it gets 16-18 on the highway but I’m usually not on the highway).
We’ve also been spending about $750 a month for gas between the two of us.
Hubby drives about 100 miles per day, but I don’t. Many days I don’t drive at all and on the days I do, it’s anywhere from 10-20 miles total…almost all in-town with too much idling in the mix (waiting for kids to come out of practices and rehearsals). Our oldest has been sharing my 2003 Expedition for the better part of the 8 months since she got her license, so she’s been driving it back and forth to her job (which is only 1 mile each way) and around to visit friends, etc. She’s starting classes this summer on campus (24 miles round trip, all surface streets) so I was expecting even higher gas usage and low mpg.
We probably should have looked at this more closely a few years ago and perhaps traded these cars in back then rather than paying them off with cash. You know what they say about hindsight though, right? 😉
A few weeks ago we purchased a new 2013 Elantra for hubby. He’s averaging 40mpg for his commute (cutting his $400/month gas expense nearly in half) and our payment is $400/month including 5 years of free standard maintenance, a good pro-rated tire warranty and a bumper-to-bumper 100,000 mile warranty. We financed $20k at 4% after putting down $2k. We are happy with the rate being that our credit is just average at the moment (there are mistakes to fix that should help). Our intention is to pay off this vehicle, have hubby commute in it for 3-5 years and then hand it down to one of our teens. We expect it to drive for a long time with minimal service costs after the warranty expires.
True, we could have bought a used car for hubby’s commute but part of this is psychological. He had never, ever had a new car and he works so hard and so many hours in a very stressful environment. I really felt that his leanings toward having a new car (that he plans to keep for a very, very long time) we worth following, since he spends almost 90 minutes a day in his car. We also wanted it warrantied for the absolute longest period of time and good certified pre-owned cars weren’t really that much less money when calculating all the factors involved.
Hubby’s 2002 Nissan Quest is soon to be on the chopping block, but currently is being driven by our 18yo. It gets better gas mileage than my Expedition and has new brakes and tires. We are tentatively planning on gifting it to her to trade in on her “dream car” within the next year. It has almost 200k miles so isn’t worth a fortune, but it should be reliable enough for her till we can replace it.
My Expedition is for sale. We were shocked to find out we can easily sell it for at least $6k! We might be selling it to my dad, who would like to have it for sentimental reasons, since it was my mom’s before it was mine. She had is for the first 9k miles before we assumed the loan and eventually paid it off. We had considered trading it in on a 2013 Sonata for me, but my dad just happened to have a 2011 Sonata that he needed to sell, so we’re buying his Sonata The payments on the Sonata will be $350/mo. It has 55k miles with a 100k power train warranty. I drive about 10k miles per year. I should have that coverage for +/- four years.
It is averaging around 18mpg with my typical in-town driving versus the 10-12mpg I get with the Expedition. I’d like to see my in-town average go up and I’ll be getting a tune-up and making sure I’ve got optimal air in the tires, etc. Hubby said I have been driving the Elantra and the Sonata “like an 18yo” so maybe I’m the reason behind the less-than-expected gas mileage…maybe I’m going through some sort of a honeymoon period after 14 years of driving a truck or minivan! Even with my lead foot, I’m going to save $150-200 per month on gas.
Total savings on fuel: $350-400 per month
Total monthly savings on oil changes, tire rotations and other “free” maintenance on hubby’s car: $35/mo
Total monthly savings on maintenance and repairs: $400
Total outgo for new payments: $750
Insurance difference: $40 per month
So we’re $790 more out-of-pocket monthly, but our overall average monthly savings should be around $785. We’re driving newer, safer cars that shouldn’t break down and should save us $$ on gas. The only difference is that all those repair and maintenance bills usually were something we allowed ourselves to cover with savings, since our monthly budget after savings was so tight. We’re going to try to work it out so that the car payments will come out of the main budget. In the longterm, this will help keep our savings growing better. I’ll have to cut other areas to make that happen, but I have a plan.
Note: Our registrations yearly will be more expensive as well…we prepaid a year on the Elantra and the Sonata’s was recently renewed. The Sonata also has new brakes and tires, so barring anything unexpected, I shouldn’t have to pay for more than oil changes and rotations for several years. It just had both done as well, so I’m good for a while since it has synthetic oil in it. The first Elantra payment isn’t due till the end of June and the first payment on the Sonata is the same. And we can “bank” the Expedition money when it sells.
Analyzing all those details, I feel good about our decision for now. I may feel differently several months into making those payments, so I’ll definitely update in the future!