Transportation and emergency funds

by Kelly

in Money & Spending

We have two cars: a French minivan and a smaller four seater that my husband uses. We have car payments on both of them, and our total transportation budget is €395.40 a month. This includes the car payments, gas, tolls and parking. It’s possible to lower this budget by €45 by not paying for tolls or parking, and by being more careful on gas.

Our two car loans are technically both car loans, but in fact we took out one of them to pay off a lot of high interest debt. When I got pregnant with our third child, we realized that we would need at least one car able to hold all five of us, so we started looking around for a good used car. We found one, in excellent condition and priced way below bluebook value, being sold by an expat family going back to the US. At the same time we had a revolving credit account at 21.9% interest with a balance roughly same as the car; we decided to take out a 5.9% car loan and use it to pay off the credit account.

This credit account is currently acting as our emergency fund. We pay a minimum of €133.97 on it, until the balance is paid off. We took off a huge chunk of the balance with the car loan- leaving less than €1000 to repay. Unfortunately, the balance has changed since then… and not in the right direction.

I’ll discuss our emergency fund, or lack thereof, in another post, but I wanted to finish with this. We pay off our minivan loan in June 2010, and it feels really good to have a fixed end date. Taking out the loan allowed us to save big bucks on interest, and at least now I know where the money is going, instead of straining to remember what we spent it on.

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