Recently our car hit an unwelcome milestone—150,000 miles. We’re a one-car household and own a red Ford Fiesta that probably dates back to 2012. It’s needed more frequent repairs lately, so we’ve had to sink about $1,300 into it in the past few months. Because our Fiesta is starting to have some issues, I’ve been reviewing our finances and looking into our car replacement options more seriously.
My partner drives about 20,000 miles per year for work, and I’ve seen estimates that say this model only lasts for 200,000 miles. Although I’d love to get 250,000 miles out of it, that’s looking like less of a possibility. We decided that we’re going to budget as if we’re replacing our car in two years so we’re prepared if it dies.
Status of Our Car Replacement Fund
Right now I have $10,000 specifically earmarked for a new vehicle. We have a separate car maintenance fund that has $3,000 in it, which we could potentially dip into. We also have an emergency fund with about eight months of expenses, but we don’t want to touch that unless absolutely necessary.
Initially we thought an adequate budget for a used car might be $15,000. But after further research, it seems like the market has gone bananas and that’s not enough to get a reliable vehicle anymore. It’s looking like we’ll have to spend $20,000 to $25,000 to get a car with the specifications we need, such as all-wheel drive to navigate through the extreme amounts of snow we get.
Our current vehicle doesn’t have it, and my partner has felt unsafe at times driving down gravel roads during the winter without it. Ideally we’re also looking for something lower-mileage that will last us for a while because we hate car shopping!
Plans to Add to Our Fund
I’ve calculated that I need to save at least $700 per month toward our car replacement fund. This will enable us to avoid taking out a car loan or dipping into our emergency reserves to buy our next car. Luckily this is doable since I was already saving, albeit at a slightly slower rate because I didn’t think a car would cost this much!
I’ll have to bump up my savings rate by cutting some extras from our budget such as eating out. I’m also going to route any extra money we get toward the car fund. My partner is expecting to receive $2,500 thanks to a bonus and an upcoming extra paycheck month, so that will help get us closer to our goal.
Right now my partner and I are considering getting a Toyota Camry. One of my family members who also lives in a snowy climate has one and likes it, but I’d love to hear your thoughts.
Are there any other cars with AWD that are a great value and handle snow well? Is $20,000 the right budget for a reliable used vehicle? I’d also welcome any car shopping tips since I’m not the most experienced buyer!