An automotive repair emergency fund can spell the difference between a stalled, unusable car and a smooth, hassle-free ride.
Car troubles strike when you least expect it. Automobile problems can be bad news for your income if you use your car for your business. Worse, car repairs can easily cost hundreds of dollars in parts and mechanic fees.
If you’ve got a temperamental vehicle and you’re not ready for its challenges, you could end up with high-interest loans that continue to chip at your finances and keep you drowning in debt.
Many Endurance Warranty Reviews state that getting an extended warranty for car issues is worthwhile. It’s akin to car insurance, where you pay minimum monthly premiums. But unlike insurance that covers accidents, an extended warranty pays for mechanical problems and repairs. However, naysayers state that deductibles are high and all car problems aren’t covered.
If you feel that an extended warranty isn’t suitable for you, you need an emergency automotive repair fund for your car. Then you can be ready to handle the bills.
Cars are machines that will naturally wear out over time. The more you use your car, the more maintenance and repairs it will need.
But with an emergency fund, you have a safety net that readily pays for unexpected vehicle repairs to get you back on the road ASAP. Here are helpful hacks to build an automotive emergency fund to let you weather future car troubles without hurting your credit score.
You may be tempted to save thousands of dollars right off the bat. But that will only make things tougher because it will push your goal a long way off. Instead, break down your car repair savings goal into smaller, reachable goals that your budget can afford. Something realistic ensures you won’t get discouraged. Set an initial target of $1 a week. If you feel comfortable, increase the amount to $5 or $10. Saving the latter every week means you’ll have over $500 at the end of the year. Before you know it, your tiny steps will compound, and you will have a sizable car emergency fund in your hands.
Keep a Separate Account for an Automotive Repair Fund
Open a savings account that’s entirely different from your other expenses. Find a bank that can give you reasonable interest rates with low fees and without sacrificing liquidity. After all, the whole point of having an emergency fund is keeping it accessible in case you need the money. However, keeping a separate fund provides a psychological wall that prevents you from touching the money. If you keep your car funds with your regular expense funds, you may be tempted to spend it on wants.
Set Up Automated Savings
After setting up a separate account, automate your deposits. You can set this up online or go to your bank to sign the paperwork. Saving for your car emergency fund entails a mindset shift. It would help allocate a percentage of your income before expenses as your car repair fund. You can think of this fund as a bill since it’s a necessary expense for the future. With automatic payments, you can prioritize and ascertain where the money goes. You remove the temptation of spending and the chance of forgetting.
Pad Your Automotive Repair Fund with Extras
Pat yourself on the back for nailing your car fund game plan with a separate savings account and auto deposits. It won’t hurt to pad this fund when you find yourself with extra money. You can find them via:
Shopping or card rebates
When you receive extra cash, you may be tempted to splurge. Resist the urge to spend everything by funneling a portion of the money to pay your automotive emergency fund.
Increase Your Income and Decrease Expenses
Find ways to increase your income with side jobs like babysitting, car washing, freelancing, answering paid surveys, and so on. Consider selling unused items via a garage sale or online marketplaces. These money-making schemes can help you save more for automotive repair as well as for other purposes.
Most of all, cut down on unnecessary expenses by:
Eating home-cooked meals
Cutting unused gym memberships
Negotiating cell phone plans
These endeavors may seem small, but they will be significant in the long haul when you add the cost savings. Doing little things to secure your financial health makes a big difference.
Take Time for Budget Reviews
Always review your budget, especially when you’re establishing an automotive repair emergency fund. You can do it bi-weekly or monthly to ensure your savings and spending needs are on point. For example, if you find yourself spending too much on fancy dinners, you can cut down and impose a stricter budget to prioritize your car funds.
Most of all, don’t touch your vehicle funds unless it’s for a car-related emergency. Dipping into the funds for a clearance sale doesn’t count. It’s specifically labeled automobile for a reason. Leave it untouched unless it’s for a car expense.