My Financial Implosion: Fix It or Junk It?
Recently, my wife and I have had to cover a number of unexpected auto expenses. Our 23-year-old station wagon has nearly a quarter of a million miles on it, and has suddenly needed quite a few repairs. Since the end of April, we’ve had to replace the clutch, brakes and radiator. We also had some minor suspension work done, repaired a blown head gasket, and paid for some minor adjustments when the car failed its bi-annual smog inspection.
Since the trouble started, we’ve spent close to $2,000 in repairs. It’s a lot of money, but it would have been a lot more had we not been able to take advantage of our neighborhood economy.
Each time something has gone wrong, my wife and I have sat down and had the same conversation. “Do we fix it, or do we junk it?”
Even if our car had qualified for the Cash for Clunkers program, I’m not sure we would have traded it in. A new car would have meant a monthly payment, and more debt, something we are trying to avoid.
There are many schools of thought on when it’s a good idea to replace a car. Some folks advocate that you should replace a car when a repair will cost 50% or more of the vehicle’s value. Others think it’s more important to look at things like safety, reliability and the estimated remaining useful life of the car. For us, the decision came down to the following points:
- The car is paid off.
- It is a second vehicle, so will not be stuck without a car if it breaks down.
- It gets good gas mileage.
- It is inexpensive to register and insure.
- Our mechanic-friend reported that the engine was in decent shape and probably wouldn’t need any more major repairs for the foreseeable future.
- We would not have been able to buy a car that was materially better for what we spent on repairs.
- Our current car is a known quantity. A different used car in the same price range would likely have problems as well.
Although a newer car certainly would have greater fun factor, we are committed to getting out of debt and staying out of debt. At this time, replacing the car is most certainly a “want” and not a “need.” We’ll make due for now, and continue saving. When this car gets to the point where it absolutely must be retired, we want to be able to pay cash for its replacement.
Next in series: Wants vs. Needs for Kids
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