How to be debt free when you need a car?

[Radiance]

I have been learning a lot and looking back I sometimes can not believe the weird beliefs I had about money.

I thought that paying debt was a regular, sensible, acceptable and reasonable type of monthly bill, just like the water bill. Where did that come from? My parents never carried any debt....

I have managed to pay a lot of it back, but as it stands today I pay $700/month in debt (including car payment).
Now I look forward paying down debt, which I have done before, but I strongly plan not to have any of it again.
There is no need for that.

Car payment is of course a problem. I thought at best I had to allocate monthly monies to buy a new car every 7-10 years in cash.
South Florida public transportation is a joke and I have a 22 miles commute with $150 in gas and $35 in tolls.
So, in the longer term I plan to change jobs and/or work from home. A city with a better climate would help too.
It is so frigging hot and sticky most of the year that riding a bicycle is just not an option unless I had access to a shower when I get to work. If I could use public transportation or ride a bike I am sure my 10 year car could last double of that so a $60 allocation to buy a car would be enough.

So, for those of you living debt free, how do you manage not having a car payment?

I have used car phobia, I had bad experiences and my friends with used cars are always stressed between making repairs or changing to another used car. Maybe some of you have had a different, and more positive experience?

[happygirl]

I save up the money and make my purchase with cash. If you're worried about buying a used car, maybe you could consider a slightly used car that's only a year or 2 old and doesn't have many miles. It will cost more than a beater type car, but not as much as a brand new car and it will probably still have a warranty on it.

[Caoineag]

I have owned two different used cars. The first one had been extremely reliable but was about due for some major repairs thanks to all original parts and we sold that because at the time we didn't want the expense. We used mass transit for a number of years thereafter. The next car was ultra cheap and was well maintained by someone we knew. This is my current car and almost everything has been replaced so we should be good for awhile. This car has 300k on it and I would be very surprised if it doesn't reach 400k.

Neither was a bad experience because you can afford a lot of repairs when the initial price is cheap. Nor did either one require a tremendous amount of upkeep. I am not debt free but I have never added to my debt for a car and could never imagine doing so. My family always bought used cars outright when I was a kid. You basically make a car payment to your savings and use that for repairs and new cars.

[MonkeyMama]

I only have positive used car experiences. Which is really the key - buying used.

All my cars have been bought with cash, or what I Could pay off in a year.

I personally only used to buy used, private party. Wonderful experiences. My dh only will buy from a dealer. Those "1 at this price" discounts are pretty sweet though. Usually previous rentals. Some people have issue with that - we have had no problems.

My dh spent $8k for a 1-year-old Ford, and 8 years later, have barely put a dime in repairs and maintenance. (This is how he talked me into getting a minivan at a dealer. Ugh!)

The trick to getting a used car is getting one that is well maintained, finding an older model with less miles (best deals), AND remembering to maintain it yourself. We don't take in our cars for tune ups or anything like that. We do change the oil regularly and take it in to a trusted mechanic at first sign of any problem. If I bought a new car, I'd expect it to last 15-20 years, the way we treat our cars. (My first car lasted 20 years from manufacture date. The rest we chose to sell for life changes, before their time was up). Since we have spent so little on cars over the years, we will easily have the cash to replace both our vehicles next round with new cars, if we choose.

------------------------

For reference, this is how I rate expenses of upkeep for our vehicles (there will be upkeep expenses with ANY car!). You see it can be really hit and miss!

1) 1-year-old Dodge minivan (repairs, $1500/year - few mechanical problems for 70k miles - it's ALWAYS electrical problems. Problems are not because it is used - it is the year of the model - major issues. I could have paid twice as much for the pleasure to buy this car new)
2) 7-year-old Mustang with only 15k miles (needed $500 repair every 6 months, like clockwork)
3) 7-year-old Saturn with 150k+ miles (it ate oil and belts like crazy - a few hundred dollars a year?)
4) 13-year-old Toyota with 150k+ miles (occassional small repairs. Replaced water pump 2-3 times. Never more than a few hundred dollars a year)

Above vehicles in the shop 1-2 times per year. NEVER stranded - all pefectly reliable.

5) 1-year-old Ford Escort (we take it in once every 2-3 years - hasn't had much repairs/maintenance. Owned it for 8 years so far).

I separated this one out because the repair schedule is so low. Could be a "newer car" thing - just not a lot of experience with newer cars.

[LivingAlmostLarge]

Bought a new car 2x and nothing else. DH and I each had a cheap new car, Corolla and Focus, DH had a payment of $150 for 3 years and that's it. We are driving them into the ground currently. 9 and 10 years old with signs of lasting a lot longer.

[frito833]

Friend got a 92 Toyota Corolla with 20k miles on it for $1,000. He found it on Craigslist where the seller is a senior citizen. The seller lived in a retirement community where he hardly drove the car and found out later he doesn't need it.

Me, I enticed my mom to upgrade in car and to give me a"family discount". Bought my mom's 2002 Nissan Xterra for 3k outright.

[GREENBACK]

Originally Posted by Radiance

I have been learning a lot and looking back I sometimes can not believe the weird beliefs I had about money.

I thought that paying debt was a regular, sensible, acceptable and reasonable type of monthly bill, just like the water bill. Where did that come from?

I think this is a product of modern advertising. The banks and, of course, the car dealers want you in the vehicle and cleverly offer ways to make it happen.

[fruitbowlk]

My car has been paid in full for about 3 years and I'm debt free. It's 10 years old. I do have a car account where I'm saving for a new car now so when my car do decide to cluck out on me I will be ready. I have had only one brand new car and the rest has been used.

[swanson719]

I bought my car brand new. I take care of it pretty well. Short of a major accident, there is no car repair that will cost you more than $5,000. You can't get an awesome used car for that. Therefore, it would be more economical to spend the extra change every ten or fifteen years for a new transmission or engine and a paint job than to go and buy a new car. Even if you go buy a 2 or 3 yr old used car, you're still looking at about $8,000 for a family sized sedan. So if you pay half of that to repair whats wrong with your car now, you essentially save yourself $4,000 and don't need to trade in.

[disneysteve]

Originally Posted by Radiance

So, for those of you living debt free, how do you manage not having a car payment?

I think the keys are buying used, keeping cars for the long term and living below your means overall so that you are able to set money aside to pay cash when it comes time to replace a car.

I currently drive a 1998 Toyota Camry. I bought it used as a dealer demo in August 1998 with about 11,000 miles. My wife drives a 2000 Toyota Sienna that we bought in September 2002 with about 34,000 miles. We financed mine but it was paid off by the time we bought hers, and hers was bought for cash.

We have no immediate plans to replace either car. When the time comes to do so, we will buy lightly used and either pay cash or put down a big downpayment and finance a small balance for a short term.

A lot of people recommend buying older cars for a couple thousand dollars. I'm not comfortable doing that personally, but I'm more comfortable than I used to be and would be willing to consider something older than I might have last time around.

[maat55]

We set aside 400.00 per month into our high yield savings account. We just started last year and have 5k in waiting.

Our plan is to replace each car every six years, that is buying one every three years. We should have after sell of existing cars roughly 16k to 18k to pay cash for a nice used car.

We are not ruling out using a small portion of our EF to buy a little early if we desire, replentishing it first, then moving on to the next car. This would not include buying over our allotted amount.

We can at anytime increase the amount if we see need.

[autoxer]

Originally Posted by Radiance

I have used car phobia, I had bad experiences and my friends with used cars are always stressed between making repairs or changing to another used car. Maybe some of you have had a different, and more positive experience?

I have new car phobia. The depreciation is dreadful. The subaru that I bought new had depreciated $10k in three years. My next car cost me $1,800 and I have probably spent $2,000 to keep it running for the past three years. That may seem like a lot in repairs, but it's a far cry from the depreciation of the new car. On top of that, with the old car, I saved $1k a year in insurance costs and another $1k a year in financing costs.

A better bet for you would be a 2 or 3 year old car. Avoid the worst years of depreciation, but enjoy having to do less repairs. Consumer reports has lists of used cars to avoid and used cars that are good buys. They even have lists of what to look for in certain price ranges. Once you have chosen a car that you like, find an expert to look it over before you buy it.

[murphyc]

Can't move closer to where you work? I've been carless for about 2 years now and don't miss the darn thing, but I work from home and most of what I need is nearby. My goal is to pay down my mortgage quicker. I do have good bus service here, and I'm within walking distance of 3 different routes. Can use mom's car if absolutely necessary (have only done this twice in all this time). I can even walk to a car rental place if need be. I personally think we Americans are nuts when it comes to having to drive miles and miles in a vehicle if it's at all possible to live close to your employment, just my two cents. Wish younger people would look at the future in this manner.

[LivingAlmostLarge]

How do you guys find used cars that have a depreciation hit? I've been looking on craigslist and stuff and dealers and people are asking outrageous amounts for their 2 or 3 year old cars.

Why should I a used car when these people are asking $1-2k less than a new car?

For example Disneysteve's camry or sienna i am very interested in. But used? People are trying to get the same as what they paid for it.

[disneysteve]

LAL, recently, the situation with used cars has been very strange and new cars, in many cases, have actually become better deals, especially thanks to all the dealer (and government) incentives. It is a rare situation that can't last. Eventually, things will get back to normal. If I was buying today, I would take a good hard look at new models and compare the deals very carefully with the used versions.

[Mjenn]

We 'take a loan' from ourselves. Meaning, we have bought two used car with cash from our nest egg (never more than 10% of the savings) and then pay ourselves back monthly until the sum has been repaid. No interest, and if there is a month we want to prioritize something else, we don't beat ourselves up over it.

When we have monthly money left over, we use it to pay back our 'debt'

[Radiance]

Murphy, I have been trying to reduce my commute on more ways than one. Will see what happens, but my dream is not needing the car at all by living close to work, school and shops.

Mjenn, I like the loan for oneself idea! Imagine the application process ;-)
Seriously, I think that I can live with and I would try to pay back fast!