I realize some of you will not agree with me on having debt. I did, however, give every possible scenario some very serious thought, and this was the best plan for me.
If you’re friends with me on FB, you might have seen a picture of my car being towed last Friday….again. After all the work that was put into it last year after my car died on the 405 freeway, it once again overheated.
I managed to get it towed back to my house, and again towed to the Subaru dealership on Tuesday, hoping for the best. Turns out I got just about the worst news I could get. The head gasket…the one that was replaced last year, was toast, and there could be even more head gasket damage, but they would have to take the engine apart to check. Basically I was looking at around possibly $2500 in repairs. This after I spent nearly 5k last year total on my car.
*There are many details I’m leaving out about the decision to not get my car fixed. That’s for another day.
The dealership was kind enough to give me a loaner for the day while I figured everything out, but I pretty much knew at that point I needed to get a new (used) car, and it had to happen fairly quick. Although I had done some initial research and subsequent posts on my “future” car, I was still not prepared to make such a quick decision. And when you’re already emotional, you’re not necessarily in the best frame of mind to make sound decisions…especially financial.
I’m very lucky to have an awesome male best friend, who spent nearly two full days with me helping me make decisions and asking informative questions I might have forgotten to ask. Look, I’m a pretty independent woman, but sometimes in these situations, it’s kind of good to have a dude around. Actually, any friend or family member who can act as a support system. I didn’t need him to help me, but I wanted him to help me.
We came up with a financial game plan, which, unfortunately means a loan. Now this is where my friend Dave and I differ. I ended up choosing a local credit union for my loan, and with my excellent credit they were practically throwing money at me. I could have taken a lot more money, especially because the interest rate was amazing, but I chose to keep it as minimal as possible. Just enough to cover the cost of the car, plus any fees, taxes, registration, and a few possible repairs. Dave thought I should have more money sitting in the bank up front just in case, but I already have a car savings fund, plus my emergency savings, so I was comfortable with $10,500, the amount I took out.
One dealership had a 2007 Volkswagen Rabbit that caught my eye. I had driven a friend’s VW last year and thought it was really fun, so I decided to give it a whirl. It was just under $10,000, but with 72k miles on it. Not ideal.
The car was super fun to drive, and I felt very comfortable in it. A quick search online showed us that there was a used 2009 VW Rabbit nearby, with only 25k miles on it, and in excellent condition because it was always parked in a garage. It was also silver…a color I’ve always wanted in a car.
I met up with the owner and to make a VERY long story short, I decided to take that car.
The final price on the car was $9300, and I ended up getting a very sad $400 from the Subaru dealership to take away my old car from me. Sniff. I do admit I felt very sad getting all my stuff out of that car. E.M. from Journey to Savings understands.
All in all I’m disappointed that I have to have a loan again. I could have nearly paid cash for the entire car with the savings that I have that is immediately liquid, but after much thought and discussion, I thought that was a very bad idea given my unsteady income. With the interest rate being so low, that part wasn’t a huge concern.
My monthly payment is $188, and since I already had a “fake car payment” category where I was taking out $100 each month already, I need to make up the $88 difference. That at least will be covered for nearly three years in the car fund that I already had started, so all in all, my budget should not change that much (insurance will probably go up) for nearly three years. I can also pay off the rest of the loan penalty-free if I somehow win the lottery.
I’m really liking the car a lot. It drives like a sports car, and has a dock where I can finally play music from my iPhone! So long, overplayed songs on the radio!
The downside is gas mileage doesn’t match some of the new cars like the Honda Fit or Ford Focus. It’s also a two-door, and the cargo space in the back is a bit smaller than my Subaru. But I do have seat warmers…for those freezing LA winters. 🙂
All in all the past couple of days have been incredibly stressful. There is a lot of running around, paperwork, logistics, etc. Let’s hope this car lasts a long, long time!