Am I the only one that gets super excited about having a new car loan, so that I can have the pleasure of scheming how I’m going to pay it off ahead of schedule? I’m sure there are others out there that feel the same way!
Um, no? Oh….right…
Yes, I’m excited about having a real loan. Sure, it means I’m in debt, but its a different feeling from having a lease, and knowing that even after you pay all that off you’ll still have to give back the car in the end. This time I get to keep my car. I haven’t quite made my first payment on the car yet, but I’ve already been thinking about how I’m going to approach paying it off early.
When I opened up the savings and checking account at the credit union, I figured it would be the home of all my car expenses (minus gas, I like using my Amex rewards card for that). So right now I have a direct deposit set up for the amount of my old car payment and I’ve already added some money to the savings account. My new payment will actually be $30.50 lower than what I was paying before, so while its not much I actually have options for what I chose to do with that money. I mainly had two choices:
1) Gas Fund- Some months I underspend on gas (like the last two months!), but sometimes I overspend. I want to keep a buffer for those months I go over my gas budget. The budget is $200, so I’m thinking $100 would be a nice buffer? I could make this a separate “account” from my car fund (it would only be a line item on my spreadsheet, but it’d just accumulate in my regular checking) or I could group this with my car fund. It would also grow during the months I come in under my budget. I think right now its at $70-something.
2) Extra Car Payments – Should I go ahead and just pay an even $260 (my old payment) as soon as the new bill arrives? I figured this is what I’d do, but if anyone can offer some compelling advise to do otherwise I’ll take that into consideration. (I’m mostly excited about doing that so that I can use my Vertex42.com spreadsheet and watch the balance go down!)
Other than that I’d also like to have a general car “emergency/maintenance” fund. My car is brand new, so hopefully it won’t need any serious maintenance any time soon (knock on wood), however the time will come eventually and I’d rather save up slowly. So what is a good amount to have in a car emergency fund?
Here is my potential breakdown for the funds:
Checking: Keep the equivalent of one monthly payment in there, just in case. Otherwise the money will trickle in each week, and when payments become due it will go out automatically (or manually, depending on if I can get an automatic payment set up that is more than what is due. Not sure how that works.) Every few months the sitting balance will go over that “one-month equivalent”, I’ll transfer the difference to the savings account.
Savings: This money will come from extra gas payments when I go under budget, or “oversavings” for insurance. For example, even though the last insurance payment went down $100 I’m keeping that just in case it goes back up next time around. I still have yet to figure out how they determine our rates. (Its gone up and down a bit the last few years.) It’ll serve as my emergency and maintenance fund….now I just have to figure out how much I need in there.
That’s where you and your ideas come in….do you have a car emergency fund? How much is a good amount to have on hand, even if my car is new? Should I even have one?