Someday A Goat

Stopping the bad car habits

I’ve been bad about car maintenance. My car was due for an oil change last fall, and with the furnace debacle, a Thanksgiving trip back home to see my family and Christmas, I just didn’t get it done. It’s been on my to-do list week after week, and I just ignored it. I finally called last week, and came to find out my last oil change was long enough ago that I don’t want to admit how long it’s been, and that I was due for my 40,000 mile service.

 We dropped off the car last night, and I had been antsy all morning, wondering what problems might crop up. At 38,000 miles, this is the point where the car is no longer new and needs a close eye to keep expensive bills at bay. Since I didn’t work for about a year of the time that I’ve had the car, the mileage is pretty low for more than four years of ownership. I hope to stay in this car for at least four more years, but at the very least until the credit card debt is paid off and we have enough cash for a significant down payment. Both of us drove our previous cars until they basically were no longer driveable, so depending on how well I take care of the car, I may even get more than a decade out of it.

When I bought the car in March 2005, I went ahead and bought the car care service plan. I know these things can often result in paying a lot more for service than necessary, but my mom offered to pay for it, and it’s been a blessing ever since. As bad as I am about car maintenance, I can’t even imagine how bad I would be without the majority of my service appointments being prepaid over the past four years.

 With the service plan, the 40K maintenance will cost more than I had set aside, but still only around $200. What will cost a pretty penny, however, is the other services that need to be done. I talked to the service manager around 11 am this morning, and my back brake pads and rotors need to be replaced, my brake fluid flushed and new wiper blades.

 I could thank them for figuring out what needed to be done, pay for the maintenance, then take my car to a cheap brake place, buy wipers at autozone and skip the brake fluid flush. But honestly, I’ve had a great experience with this service department, they have fixed very expensive items at no charge AFTER my warranty expired, and I have a foreign make of car with a specialized engine and I feel more comfortable with the dealership service. Plus the logistics of locating another shop and transporting my car there, dealing with getting to and from work in the meantime and wondering if I’m getting good service, it is simply worth the money to me. Knowing my luck, my brakes would fail on the way there.

Maybe when I’m perfect and plan and research maintenance and schedule things ahead of time, I’ll be able to do things the “right” way. I have to find a way to be more responsible about something with so much effect on my bottom line (as an asset and in its importance in my ability to earn money).

But for now, I’ll just cringe at the large chunk of change that I’m putting into my car. I’d rather pay a little more now and have the peace of mind that I won’t have to deal with brake failure while traveling at 75 mph on the highway and approaching a traffic jam.

Escrow + new savings account = win

Back in early September, I talked about setting up personal escrow accounts to help me save for big expenses that come along every couple of months: car insurance, pest control, car service, ad valorem taxes on the cars, travel and a general emergency fund. Inspired by J.D.'s post at Get Rich Slowly, I added up all the expenses, divided into monthly amounts, and figured out where I could make room in each paycheck. The total amount right now isn't enough to completely cover each individual expense, but it's working a lot better than our previous method (ignoring things until they came due).

I didn't really get things set up until December, but am I ever on a roll now. It's like once the ING account was opened, saving and budgeting has become easier. Well, it's not really saving, more like delayed spending, but forward progress nonetheless. Subaccounts are my new, dear friend. Now that we have specific places to put money away for various things, both of us are finding it easier to try to come in under weekly budgeted amounts, so that we can put a little extra away beyond the standard escrow amounts. Only part to the extra is going to escrow, some goes to debt. All of it should go to debt in a perfect world, but in our world, we do the best we can.

Insurance
For most of September and October, all of this money went to actual car insurance payments, both of our policies are due within a month. This escrow category also went toward replenishing our savings account in November. We have less than 3 months until the first premium comes due, but we're making progress.

Pest Control
Haven't really made much progress on this front, despite the fact our termite bond payment is due at the beginning of April. It's only $300, so I'm planning to save that amount before it is due.

Car service/ad valorem taxes
We've only pulled $10 into this account, but we have until summer before the first bill is due. I'll need an oil change before then, so this category needs improvement.

Travel
this is one of the best motivators, we're planning our first non-essential trip* in April, and we already have a couple hundred dollars saved. I don't have a specific target, but I would like to at least save up enough to cover our lodging. I'm hoping to save enough to pay for the entire trip.

General emergency fund
Our new emergency fund online account is in addition to our joint savings and other various accounts that comprise our emergency fund. The money is a little spread out, and it's hardly an efficient system, but we have enough saved to focus energy on budgeting and planned spending. I received a bonus for opening the account, which is about all I have in there at the moment. Eventually I'd like to have at least 6 months expenses under general emergency fund. Such a long road to reach that amount.  

* Pretty much all travel is non-essential, but for us, it's important that we be there for sick/injured relatives, wedding-related events of good friends and holidays with family. It's not like we can just put these events off until we have money, so we haven't taken a vacation that doesn't fall under the earlier categories since July 2005. We've made an executive decision to take an early 3rd anniversary trip at the end of April this year. We're both really excited and it has increased our motivation to live more frugally, in order to take this trip but to also live within our means, so it's a good thing.

Almost out of gas

You may have seen news reports that Atlanta is running low on auto fuel--partly because the pipeline that services the city is under capacity due to Gustav and Ike, partly because the EPA requires Atlanta gas stations to use a lower-sulfur fuel due to our lovely smog, and partly because every idiot in town wants to top off the tank before gas runs out entirely, exacerbating the problem.

We tend to wait until our cars are pretty low on fuel before we fill up--it's been helping us attempt to make our weekly spending targets. This has made the past couple weeks feel like we're speculators trying to time the stock market, only our transportation to and from work depends on the bet. Riding a bike, walking and car pooling are all not options for either of us for a variety of reasons. Kind of like living paycheck to paycheck, it's a stupid way to do things.

The week before Ike hit, my husband's car was approaching empty, but we figured that he could make it to work on Friday, we could use my car if needed over the weekend, and he could fill up the next Monday, which was payday for me and thus the turnover for weekly spending. I filled up my car that Tuesday, and as the week wore on, gas prices went up as Ike churned toward Texas. We heard rumors that gas was getting low in the metro area. We decided that his car running out of gas in an uncertain situation was not going to work as he was already almost on fumes, so he went with all the lemmings to fuel up on Friday. Turned out to be a good thing, prices went up further, and supplies in the city were limited.

However, the hurricane passed, and we figured it would be about a week before everything returned to normal and stopped paying attention all last week. Fast forward a week to last weekend, and both our tanks were getting pretty close to empty. I decided to delay a trip to CostCo on Saturday to save money. I would have filled up while I was there, and since I go first thing in the morning, I probably wouldn't be so nervous now. I noticed a couple gas stations with lines on Sunday, but figured it would be OK by mid-week when I would really need gas. On my way to work Monday morning, I was shocked to not only see lines at every gas station, but the station right by my work had two lines 7-8 cars deep outside the station. I would say at least half, if not more, of the stations in North Atlanta are out of gas at any point in time. And prices are more than $4, sometimes a lot more, just for unleaded.

I'm starting to get nervous. My car might be able to make it through Friday, but my husband's definitely won't. And I don't want to waste the last of my gas sitting in line to have the station run out by the time I get to the pump (happened to two of my coworkers). Five of the seven stations that I checked early this morning were out, and the other two had insane lines. Since I'm already not eating lunch out, and we've been cooking dinner at home, I don't have a lot of ways to save fuel at this point. News reports say that it's supposed to get better by the end of the week, but I'm not sure our cars are going to last.

Between this and the stock market wobbling, it's hard to stay optimistic. My rational brain knows better, but a giant emergency fund and a full tank of gas would go a long way to feeling more sane.

Update: My husband waited a short while in line around 8 pm to get gas, but had to drive around for a while. I'm going to see if I can hold out another day.

Buying a car in the next year?

In August 2007, shortly before we found and bought our house, my husband's beater car from the early 90s came to a sad end--he rear-ended another car in order to avoid an antsy semi-truck driver and the airbags activated. (Note to husbands out there. Don't send your wife a cell phone pic of a crushed car with deployed airbags without explanation. You will scare her.)

The damage wasn't too terrible, but body shops would not even accept the car to fix it. We finally admitted it was time to buy him a new car, which we had been putting off for years by this point. I know there is a lot of opinion about new v. used cars in the personal finance community. We fall into the camp of buying new and driving into the ground. He had always driven cars shabby enough that he was either disliked valeting the car when we went to nice places, or required a significant amount of expensive repairs due to age and wear and tear. Many of our friends drive very nice cars, and I was always proud that he didn't let that embarrassment keep him from doing the responsible thing and driving what we could afford.

We ended up purchasing a new Civic, spending more than we probably should, but he needed a car to get to work and we wanted reliability, low maintenance cost and good gas mileage. Since we had been planning on a new car for him for quite some time, we were a little better prepared than we might have been, although it did make our mortgage a little more complicated to close on since we had just financed part of his car two months prior. The timing was bad on that one, but sometimes there is only so much you can do. Here's what we did to be prepared for a new car.

Work on credit score

My husband's credit is affected by some past events, and although he has been working really hard to improve it over the past 7 years, some negative notes and a simple lack of long credit history and low credit limits has affected him. When we were married in 2006, I added him as an authorized user on my highest-limit card, which has helped his score. We've also periodically requested credit limit increases for the card in his name only--probably about every six months, which took him from a limit of $500 to north of $6,000 over a couple of years.

Of course, we didn't use that credit, because that wouldn't have helped. We always made sure that any CC debt that we've carried has not resulted in high utilization of available credit, which is I believe about a third of your score. We also check all three credit reports for errors at least twice a year (our state allows for two free in addition to the federal free report). That said, I would try to not request limit increases within about two or three months of applying for a loan to keep from a lender being too suspicious.

 Find a good loan

That brings me to something we didn't do: find a good loan in advance. We were so preoccupied with finding a house, that we didn't take some steps to figure out financing before he actually needed a car.

About a month before you’re planning to buy, start looking for good rates for your loan so you’re not at the mercy of the dealership when you get to the financing stage.

One important thing—do NOT try to qualify for a loan with a whole bunch of lenders. Every time a new lender hard checks your credit report, it’s considered a credit inquiry and dings your FICO score a little bit. I would narrow down to one lender that seems to be offering the best rate, and find out what they can give you for X amount of financing. Credit unions are a good idea, and my insurance company could have given me a very decent rate, which was a surprise to me.

Have down payment

Even if it just ends up covering taxes and title fees, save money for down payment. We saved up a significant amount (for us) by delaying the purchase as long as possible, giving us extra time to save. We just saved whatever we could, and for at least two years we were saying, well, in six months we’ll get him a new car. Add up $20 here and there, plus a portion of gift checks and the change jar, and we at least didn't have to finance every penny. It helped us to have separate savings accounts, which we did for both of our cars.

Do your research

 Check with your insurance company to see what your new insurance rate would be with any car you're considering. It can make a huge difference in premiums, and people do it all the time. I worked for a summer in college at an insurance agent's office, and those were my favorite calls to take.

Spend some time on Consumer Reports, think about who you know with reliable cars. Know what you want before you need it. Also know how you'll get rid of your old car--research selling it used if you are able to take that route. Find out what kind of trade-in value it might have. Get recommendations for a good salvage yard. When my car died in 2005, there was no fixing it, and I was particularly busy at work and had no idea where to start when it came to disposing of the vehicle. Sure I knew I could donate it or sell it to a salvage yard, but actually doing so was daunting. My mom found a good salvage yard and I had such a good experience with them that we knew exactly who to call when it was time to send his car into the sunset. This helped with keeping the stress down, and gave us a little extra money for the down payment. 

Any other suggestions for preparing to buy a vehicle?