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Our current car is coming off of lease in January, so we need to buy a replacement car. We will have saved about $25K as of January towards our emergency fund. My goal is to have a minimum of $30K as an emergency fund. I'm not sure whether I should pay cash for the new car or finance the purchase and keep all $25K as an emergency fund. We would like to find a car for around $10-12K. Option 1 is to pay cash for the car and direct the money we are currently paying toward our lease ($400/month) towards building the EF. Option 2 is to keep the $25K as an emergency fund and finance the $10 - 12K needed for the new car. We should have a surplus of $2K - $3K per month in 2009 that could be directed towards building the EF if it we went with option 1. Your advice is appreciated.
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Pay cash. -
Pay cash. That will still leave you an EF of 13K-15K for now. $400/month will have it at 18-20K in a year. And if you also add 2K-3K/month in 2009, you'll have your 30K in no time at all.
Why pay interest you don't have to?Steve
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Option one.Comment
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Agreed.... Definitely pay cash, you'll be able to recover the EF (very healthy one, btw) quickly enough.Comment
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Caaaaash!
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Thanks for the responses. It sounds like cash is the way to go.Comment
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Are you going to be buying your lease? Will you get a good rate if you buy it? Like 1-2%?Comment
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I don't think we will be buying our lease. We have an SUV and are hoping to buy something with better fuel economy. I am thinking of a used subaru outback. We live in Colorado and will be driving in the snow a lot and taking trips up to the mountains to ski.Comment
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In case it hasn't been mentioned, pay cash. I would sooner fall on a sword than finance ever again.
You live in Colorado. Well just rub it in.
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The EF seems high relative to a single months expenses- 30k- is that 6 months expenses? What return are you getting on this 30k?
Before I say cash or credit I want to know the return on the cash.Comment
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I know this is right - I said it myself up above - but I know that when the time comes to buy my next car, forking over the cash will be very difficult to do mentally. To see the bank balance drop by a 5-digit amount all at once when you are a dedicated saver is hard. I'm not saying not to do it. I'm just saying to be prepared for those feelings when they hit.Originally posted by maat55 View PostSteve
* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.Comment
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Ah, the subie outbacks are great for ski trips... I just came from CO, and went up to the mountains all the time. I didn't have a subie myself, but many friends did/do, and love them.Originally posted by JinCO View PostComment
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The first thing that comes to my mind when shopping for a car with cash is, can I find one just alittle bit cheaper. If you go with the mentallity to spend 10 to 12, financing, you will spend 14k, with cash you will spend 9k.IMO.Originally posted by disneysteve View PostComment
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Depends. If I got an awesome rate on financing like my DH did with his focus 0%, then I'd finance.Comment
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