How do you save for your future new/used car?

[Chris24]

Paid cash , for better or worse, for the 2 cars we have today. Lately have been logging about 15k a year, total, on both. Going to either sell one , and put the monies aside for a future purchase, or both and get newer version of what we have.

My only wish is that there was a worthwhile ALL wheel drive Hybred. I think we are about 5- 10 years away for anything , energy efficient and practical. By then I'll be able to get Antique plates for the vehicles I have. and reduce my insurance costs. Gonna be a tough call.

[GatorBuzz]

Thanks for all your replies. My ideas are mostly in line with what most have posted in this thread. I think, ultimately, I'll start paying myself a car payment that goes into a high-interest savings account and/or CDs, which can be pulled at the time of purchase. I hope that's four years from now, if this Saturn can make it that far.

I appreciate the feedback.

[ajs56]

Quote:

Originally Posted by GatorBuzz I'm curious how some of you save for a car you know you'll need in four, five, six, seven, etc. years. Thanks in advance, GB

We figure we'll always have two late model vehicles for the foreseeable future, costing about 15k each used. I simply budget 750/month ($30k, 3yrs @8%), which I allow to accumulate in a MM or CD. Then we pay cash for the vehicles. Just the difference between earning interest and paying interest on vehicle costs puts you WAY ahead. We generally drive the vehicles way more than three years, but this gives me a big cushion for repairs, etc.

I don't have a separate account per se.

[LOL!]

I see no reason to save for the next car in a high interest savings account. Instead one should put the money in their investments in the normal asset allocation way. The timing of the purchase of your next car is not usually cast in stone, nor is the price, nor is it an emergency. Therefore, the savings account is too low a risk for this money. You will potentially get a higher return for your money elsewhere.

The last time we bought a car, we were prepared to cash in the investment asset class that had gone up the most (i.e. rebalancing), but in the end the dealer simply gave us the car just to get it off the lot.