Remember a few weeks ago when we chatted about budgeting for yearly/semi-yearly expenses? In that post, I was mostly preoccupied with figuring out how I could budget for car expenses.
I didn't like my current method of budgeting where I'd estimate $60 for 'Auto & Transportation' expenses during the month-- but that only really covered gas and smaller expenses. If I had a big repair (or even just an oil change, or my yearly registration fees), it totally blew my monthly budget.
I knew there was a better way-- to create a 'sinking fund' where I put in money each month, and used it whenever I needed it throughout the year. But I was left with one big question: how much to put in the sinking fund each month?
Awww it's my old car!! I miss this guy :( :(
I did some calculations/estimations to figure out how much I was currently spending each year on Auto expenses. Then, I divided by 12 to get how much I should to contribute to my sinking fund to cover myself for the whole year. (note: I'm not counting gas in this fund-- I'll keep budgeting $40/mo for my gas spending in my normal monthly budget)
- Insurance: ~$700/year
- Registration: ~$50/year
- Property Tax: ~$150/year
- Inspection: ~$50/year
- Maintenance/repairs: ~$1,200*
= $2,150/year ---> $180/month
*This was the hardest thing to estimate! I read a few articles that mentioned $1,200 a year ($100/mo), so I went with that number. Who knows how accurate it will be, but at least it's a starting point and I can tweak later on if I want.
I rounded that $180/mo number up to be on the safe side and went with $200/month. This seems a bit high compared to how much I've spent on my car in the past few years that I owned it... but I'd rather be safe than sorry. I also haven't been doing much preventive maintenance on my car, and I know I probably should be. So putting aside this extra money might be a good thing for the overall well-being of my car!
(speaking of- Mike and I learned how to change our air filters in our cars the other week, and it was SO cheap and easy! I'll write a post on that soon!)
Also! I created a tracker to keep track of this sinking fund. It tracks the amount I deposit each month, and the amount I spend out of the fund. I'll be emailing it out to people on my email list on Wednesday, June 1! Sign up below to make sure you get the tracker :)
PSST- want more car chat? Here's a post where I talk about how I bought my new (to me) car a few years ago off Craigslist!