Purchasing Cars With Cash: Planning Ahead

I try to spend as little money on transportation as possible.  (I have better things to do with the little money that I have!)  Since public transportation isn’t available in my area, I have to keep and maintain a car. My practice is to buy used, pay cash if at all possible, and drive the car as long as I possibly can.

My current vehicle has been a good one; it hasn’t needed any repairs beyond routine maintenance. But it won’t last forever. In fact, it’s over fifteen years old and has almost 150,000 miles on it. If I am going to purchase my next car with cash, I really need to start planning and saving today. In fact, yesterday would have been better, but better late than never, right?

So, a few days ago, I took three simple steps to figure out how much to save for my next car.

First, I figured out how long my current car will last me. It’s a reliable model, so I'm hoping to get 200,000 miles out of it before it dies.  I might get more--my family has driven a few vehicles beyond the 250,000 mile point. But to play it safe, I’m going to plan on having to replace it once it hits 200k miles.

If the car’s going to last until 200,000 miles, that means I have 52,000 miles to go. I took out my latest oil-change receipts (with the mileage on them) and a calculator, and figured that I drive about 1350 miles a month. At that rate, I'll have driven 52,000 miles in about 39 months.  So assuming the car lasts to 200k miles, I have 39 months to save for my next car.

Secondly, I figured out what my next car will cost me. I looked through a couple of car-selling websites like autotrader.com and cars.com to get a feel for current prices.  Given that I'm cash-poor, I can't be too picky about what I drive, but the following are my minimum requirements:
1. A reliable make/model, like a Honda or Toyota
2. Gas efficient, preferably over 30mpg
3. Under 125k miles 

After some research, I decided that I would probably have to pay at least $3500 to find a workable car. Add in taxes and registration fees, and I’ll be spending close to $4000 for my next car.

Finally, I took the amount that I’ll need for my next car, and divided it by the time I have to save.  So I was dividing $4000 by 39 months. The result: I should be saving $103 a month towards the purchase of my next car.

Of course, there will also be expenses associated with my current car over the next 39 months--car insurance, annual inspection and registration fees, and repairs.  I did a few more calculations to figure out what those will cost me on a monthly basis, and decided that the total amount I should be putting into my "car fund"--savings for my next car, plus anticipated expenses for my current car--is $162.

Now, it’s not easy to squeeze $162 a month out of a budget like mine, but given that I will certainly have to purchase another car at some point in the next few years, I don't have a choice but to save for it, do I?  So I took a look at my budget and shuffled some numbers around.  Thankfully, I was able to make it work, though putting $162 into the car fund meant cutting a few other categories back to practically nothing.  For instance, our clothing budget has now been slashed to $3 a month--impossible, right?  But I'm sure it will be easier to improvise clothing for the three of us than it would be to improvise transportation, so we'll manage.  I take comfort in this verse: "Why take ye thought for raiment? ...for your heavenly Father knoweth that ye have need of all these things."  Matthew 6:28, 32.

Of course, there are a lot of uncertainties that could impact my calculations above.  For instance, used cars could go up in price, or my current car could need more expensive repairs than I've budgeted for. But on the other hand, my current car might last well beyond 200,000 miles--and I'm certainly hoping that my income will increase eventually!

Ultimately, though, the future is not in my hands: it’s in God’s hands. I can’t control all the uncertainties; all I can do is take what I have and come up with the best car savings plan that I can. And I do feel more peace of mind for having worked through these calculations.