Clarification about saving for a van
Since there was some confusion from a number of people about this, I figured a little post would be the easiest way to clear things up!
I am not at all interested in buying a replacement van right now, or really any time in the near future. If we managed to make my van last us for another 10 years, I'd be thrilled to pieces. I don't think of my van as being particularly old (though it is 10 years old now) or worn out (it has nearly 100,000 miles on it) and I am not at all discontent with it.
The reason we're starting to save now is that we know the van will not last forever (even if it is a Toyota!). At some point down the road (har-de-har-har) it will start to break down and will require massive, expensive repairs and at that point, we want to have the money saved to buy a replacement with cash. Since it takes a while to save up enough to buy a low-mileage used Honda or Toyota (our current van cost us $15,000 used), we thought it would be best to start saving now, while the need for a van is not even remotely urgent.
So don't worry...I am not going to get rid of my van until it starts costing a ridiculous amount to maintain it. Ideally I'd like to get the money saved up for a van and be able to let the money sit and earn interest for a good long time before we have to actually spend it on a van. I'm mainly anxious to get the money saved up for a van because there are other goals I'm wanting to achieve (like paying down our mortgage) and those need to wait until the van fund is fully funded.
I hope that clears things up a bit. If it didn't, ask away in the comments. 😉
That is what we are trying to do (11 year old Accord), but do you have a backup plan if the repair bills get excessive prior to you having the $15,000 or more saved? Would you take a car loan for the remainder and pay it off as quickly as possible, or would you pull the money from your emergency fund and pay it back as quickly as possible?
Yes, we'd probably borrow from the emergency fund if necessary. Or, depending on the circumstances and the available loans, we might decide to get a loan.
I'm almost 100% sure, though, that we'll be able to keep the van going until we have sufficient cash saved up. Maybe that's just my perky outlook, though! lol
I completely agree with your philosophy on this. I need to start saving up for a new car, though I hope that mine will (knock on wood) last another few years. Unless you forsee some kind of increase in income or decrease in other bills in the future, it makes sense to put the money you would spend on a car payment into a savings account. At the very least, doing this for a few months will show you whether or not you can afford a new vehicle. If you can't afford to put money into savings, you can't afford to put money into a car payment!
You can do it! I read lots about how wise it was to save up to pay cash for a car and I thought I never would make it. I got a loan for my first car then as soon as I paid it off I started putting the car payment into savings (or as much as I could budget that month). About 3 years later I had enough saved up and we bought a nice used car--all with cash! It was so exciting to have a car where everything worked (my old car was definitely limping along!) AND not have any car payments. We're trying to do the same thing for my hubby's car since we'll have to replace his next.
Your plan sounds great! I hope that your current van lasts a long time.
We have one car paid off and the other one will be paid off later this year. After borrowing for two new cars, I hope to switch to your plan. I would like to save cash to pay for all future cars.
The ideal situation is to have $20K saved well before you need to replace the van. In the mean time, you will be racking up some interest. If only more people thought this way!
We do the same thing. Our goal is for our vehicles to last atleast 10 years each. We try to have atleast 5 years between purchases. This way we have 5 years to save up for each vehicle. It has really worked for us!!! Best of luck!
I'm with you on hoping your Toyota lasts a good, long time. We paid cash for a 2006 Toyota Sienna this past summer ~ it has 60k on it (Hondas and Toyotas are expensive, even used!) I try to stay home as much as possible so we don't usually put too much mileage on the car that I drive. I'd love to drive ours for many, many years ~ my dh laughed when I told him I thought it could take us until our oldest (8yo) is in college 🙂
lol! I was wondering the same sort of thing....if maybe this van will last so long that we won't even need a van when it wears out (maybe we could just get a car then). We'll just have to wait and see.
One name to keep an eye on is Hyundai. They used to be absolute garbage but are now beating Toyota in reliability and value. I was amazed when CR put the Elantra above the Carola
I know...it is crazy to see. I guess down the road when we need a new van we'll just have to see how Hyundai and Honda compare.
How do you balance saving for the van with saving for other needs? If you have X dollars left after bills, groceries, etc. to save - how do you decide how much to allocate toward the van fund vs. new camera, your annual vacation, or something like new carpet (if yours is 13 years old and not cleaning up very well like ours)? Do you have a separate fund for home repairs (like the inevitable water heater, furnace, or roof replacement), or would that come from your emergency fund if needed? Sorry if that is too nosy! We have an emergency fund but we would also like to have another $10K saved for those big home repairs (our house is 13 years old), but we also need to save for a new car (oldest car is 11 years old). It seems like too much and we don't know what to prioritize!
I feel your pain! lol And nope, that's not too nosy. 😉 We've chosen to handle this problem by saving a little bit each month for each of those categories. We have separate accounts for vacation savings, Christmas savings, new car savings, home maintenance savings, and so on.
We'd use the emergency fund if my husband lost his job or if we had car repair bills that needed more than we have in our car repair account, or if we had home maintenance needs that required more money than we had in our home maintenance account, if that makes sense.