Saving Up Money To Pay Cash For A Car

Saving enough money to pay cash for a carA few weeks ago, I mentioned that one of our potential savings goals was to purchase a second car. Then when I posted my 2013 goals the other day, I let you all know that our main goal for the year was to pay cash for an almost new second car over the bathroom makeover.

An almost new car (hopefully small SUV) is going to cost us ton of money to pay cash for.  So how in the world am I going to be able to save that much money in such a short time? Well, I’m not certain that I will, but I’ll definitely give it a go.

I did pretty good with my plan to save a lot of money, so I’m fairly confident I can save a substantial amount with my Second Car Save-a-rama. Yeah, I know I’m a dork, but it sounds more fun than saving for a car. Don’t you think?

I’m shooting for $13,000.00, whether or not I will get that close is still a mystery. I expect that between that and the free car (mentioned below), I will have enough for a new-ish small SUV. We’ll see, but I’m crossing my fingers.

Time Frame 2 Save

My stepdad is supposed to be retiring late this year, so that would mean that my parents would both move back to Washington. Which would leave them with an extra car, that they so graciously offered to me. :-)

I know what you’re thinking…if your parents are giving you a free car, why are you going to buy one. Yes, I would be wondering the same thing. Don’t get me wrong, I very much appreciate them giving me a free car, but I want something newer and bigger.

Their car has 100,000+++ miles on it (triple + isn’t a typo, there’s a ton of miles) and seems to need repairs constantly. In our financial situation, we can’t afford to keep pouring money into a car that’s wasting out of life. Plus it seems smarter to get what I can for it while it still runs.

I’m also looking for something that will be better on my back and from experience, that would be something higher off the ground (ie: small SUV, regular SUV or a truck).

Whether you are buying clothes, there are coupons available out there such as Nike coupons, eBay coupons which are found everywhere online. So I asked my mom if they would mind if I used the car as a trade-in (or even sell it) to help me get a newer one. She said that she didn’t mind, but I would need to check with her husband. I haven’t talked to him about it yet.

I’m almost certain that he would be fine with it so long as I had saved up the money to pay cash for the new car. He’s really into making wise financial decisions and wouldn’t encourage me to make stupid mistakes. If I had wanted to trade it in and then get a big car loan, he wouldn’t probably tell me to stop being a dumb*ss and use the car until I have more money saved (probably at least half or more).

So far, my mom is guessing that around the end of October, they’ll drive the car back to Washington. I’m hoping to have enough money saved by the end of October to get our second car. Yes, I know that’s less than 10 months away…but I have a plan. :-)

What We Have Saved So Far

I’m using our Car Expenses Fund for our second car savings. We already had a little over $1,000 in it, that we saved in case we need to fix our current car or other car related stuff that we couldn’t afford from our paycheck.

I also have some other money set aside for a personal savings goal (no, it’s not for a boob job), leftover luxury spending money and a little bit of money that I made last year from blogging. I’m still debating whether or not I should just add all this to the second car savings or not…I probably will. But I’m not counting this until I actually add it.

We put the Christmas money ($300.00) we got from my parents in here too, instead of just buying more presents like we would normally do. Plus there is also the Christmas money ($50.00) from my grandma. I’m so happy that we saved the money this year, it’s a huge help toward our goals.

But wait…there’s more. My honey’s company actually gave him a nice little bonus this year for stepping up and taking over while his boss was (and still is) unable to work. They were really happy with him and sent him a handwritten card too (yes I save this stuff like a child’s report card). I’m so proud of him. After taxes and such were taken out, we had $461.94 to add to our second car savings.

Prior Car Expenses Savings: $1,054.63 (as of Jan. 1 2013)
Christmas Money Parents: $300.00
Christmas Money Grandma: $50.00
Bonus Check: $461.94

Total Saved So Far: $1,866.57

Still Need: $11,133.43

The Plan

Okay, let’s get down to business now. How in the world am I going to be able to pay cash for a second car?

Housewarming Gift:

My parents told us that they were going to give us the last installment of our housewarming gift sometime in January. That is going to go straight into savings for our second car and will be $1,000.00.

Still Need: $10,133.43

Tax Refund:

Yeah, I know a lot of people don’t think it’s wise to have more money taken out of your paycheck than necessary, but we still do it. So whatever we get back from our taxes this year is going to be a nice addition. All of it. I’m expecting about $2,000, but it could be more or less.

This year we’re going to pay a professional to do our taxes to make sure that we get back as much as possible. I’ve been using Turbo Tax online and still totally love it because it’s so easy, but since we bought a house this year, I made money online and my husband got a couple of raises—it’s for the best.

Also, I really think that something weird is going on with the Oregon taxes; we don’t even live there…we shouldn’t be paying “that much” in taxes. Maybe the tax person can wave a magic wand and get that all sorted out too.

Still Need: $9,133.43

Daily Transfers:

I recently made some changes and additions to our daily transfers that I have set up. One of those is to save $2.00 every weekday for our second car. So, if we just assume each month only has 4 weeks, that gives us 20 days of transfers. 20 days x $2.00 a day = $40.00 each month & $400.00 total by the end of October.

Still Need: $8,733.43


Anything we have leftover when payday comes is going to be added straight toward the second car. It’s not always a lot, but it adds up over time. I’m a big fan of starting each pay period with a fresh canvas anyway, so it’s not really much of a transition.

I’m still expecting this to be at least $250.00 over 10 months of bi-weekly paychecks, that’s 21 paychecks. As long as there are about 12 dollars in leftovers each paycheck, we’re good.

If we end up averaging $20.00 in leftovers each check, that would be around $420.00, $30.00 each check would be $630, $40 be 840, 50 be $1,050. You get the idea. Crazy how quick the little bits can add up, huh?

Still Need: $8,313.43 (using $20 average)

Root Income:

Optimally, we would save 100% over our root income each paycheck. Instead, I’ll shoot for 50% because there are other expenses coming up this year and who knows what else will pop up. Our current root income is $1,350.00 per paycheck. I’m not sure if there will be any upcoming opportunities for overtime or not, so this might not even matter.

Let’s just assume that on average, we’ll only be able to save $15.00 over our root income each check, that still equals $315 over the course of 21 paychecks. It’s the equivalent of working 2 extra days, which is sometimes very likely to happen.

Still Need: $7,998.43

The Extra Paychecks:

Getting paid biweekly sure rocks when you get that extra check twice a year. This year, the 3 paycheck months for us are May and November. Since we’re planning to get our second car around October/November, there might only be one extra paycheck before then. Although, depending on when the car comes, when we sell or trade it in and when we find the right car…we just might be able to take advantage of November’s extra paycheck. We’ll have to wait and see though.

Since there are still 2 weeks worth of regular expenses, we can’t save the whole paycheck. But we can save the mortgage and bill money—around $800.00. So this will end up being either $800 or $1,600 depending on the time.

Still Need: $7,198.43 (for 1 extra check)
Still Need: $6,398.43 (for both extra checks)


I will continue to use coupons on the things we normally purchase. Sometimes I slack on doing this, but I will make a concentrated effort to remember.

I’ve also starting using a new app on my iPad called ibotta, it’s similar to coupons, except you get the cash via PayPal instead of saving at the store. But you can still use coupons for the item at the store, double win.

All you do is choose which items you plan (or think you might) buy, complete crazy-quick activities for the item, buy it at the store and go home and scan your receipt and the bar code. I love this because I don’t have to have my iPad with me at the store (I only have wifi).

If you sign up on your tablet or smartphone through my refer a friend link, you will earn a $5 bonus *promotion ends this Thursday night at midnight* after you complete your first offer (and I get a dollar for referring you). Okay, now I just need 13,000 12,999 12,998 of you to sign up. Go ahead. 😉

So by using the coupons, I should be able to reduce the amount we spend on groceries and other products, which would leave us with more money to save. With ibotta, I can just throw that money into the savings account. Easy peasy.

Everything Else:

Odd jobs here and there, raiding my piggy bank, selling stuff we don’t use, housecleaning if my mom ever needs me again, surveys, paid emails, swagbucks, cash crate, my points…anything I can come up with and have time for. Sure some of the things only earn gift cards, but I can still use them to save money by getting them for the stores we normally shop at for groceries and whatnot. And of course I forget about car insurance, car insurance by Youi is a good place to start.

Have you ever saved up the money to pay cash for a car?
What did (or would) you do?

Image Credit:

About Jen Perkins

Likes: saving money, being debt free (aside from our house), zombies, travel, getting money, blogging and dogs. Dislikes: debt, being broke, bunnies, wasting money, not having enough money to travel the world and paying interest. Facebook  ♥  Twitter  ♥  Google+  ♥  RSS


Saving Up Money To Pay Cash For A Car — 35 Comments

  1. We saved up cash for each of our last two cars. For the first one we were blessed to get a decent amount of cash given to us from my in-laws. About half of the cash came from that and the other half came from money we’d been saving for the past few years (as we planned ahead and made sure to stash money aside each month).

    The last car we replaced (two months ago) was a little more surprising and therefore didn’t have the cash on hand. We ended up using a portion of our emergency fund and the house down payment fund we’d been saving. All savings has come from working extra jobs and blog income.
    Jason @ WSL recently posted..Recipe: Green Chile EnchiladasMy Profile

  2. We are also planning to buy a second car this year. However, we will also be purchasing our second home because we need a bigger one for the growing kids. To avoid two mortgage payments, my husband and I decided to save up for our car and pay it in cash. We are hoping to get it within the second or third quarter as we are more than halfway to our 15K goal. We have already paid off our credit cards and we will be paying off the few hundreds left on our bank loan. The money we used to pay our credit cards are now put for our down payment for the car. After paying off the loan, we will be adding the amount to the payment for our second car.
    Manette @ Barbara Friedberg Personal Finance recently posted..GET HELP WITH DEBT; AND DEBT SCHOLARSHIPMy Profile

  3. Sounds like a great plan. Our last car had ended up taking a loan out on, but were able to make a significant down payment on it and were able to pay it off a year early. We’re close to needing to start saving for a “new” one to buy in the next few years and will likely save up to just be able to pay with cash.
    John S @ Frugal Rules recently posted..December Blog Goals UpdateMy Profile

  4. Up until my wife’s car, I’ve only paid cash for cars, but then again the most expensive car I had ever bought was my ’68 Beetle at $2400. The wife’s car was $10,000 and we’ve spent more on repairs on that thing in 2 1/2 years than I have on the 4 cars I’ve ever owned over 12 years. I’m going back to cheap Toyota’s!
    Edward Antrobus recently posted..3 Ways to Save Money When MovingMy Profile

  5. I think your saving strategy is great. I was saving up for a car recently but ended up taking a loan out. I found that with good credit, I could get a loan for under 2%. If I just make payments as required and pay off the car in 60 months, I’ll have paid a whopping $850 in interest. For me, that was enough for me to make the deal. I might still pay extra each month to retire the debt early, but only as a last resort.
    Jon @ MoneySmartGuides recently posted..The More You Trade, The Less You EarnMy Profile

  6. Sounds like you have a good plan laid out. Saving for a car is never easy, I guess thats why most people take loans or lease them. I just paid off my car earlier this year & it was one of the best feelings. Now you’ve got me thinking I should start saving up for the next one already!

  7. Sorry to spoil the party @Jen but why not rent a car?

    A car is a rapidly depreciating asset that loses at least 20% of its value the moment you drive it out of the showroom. In three years it as at least halved its value, not to mention petrol and maintenance etc.

    We lease ours for 3 years then maybe buy if we like it. Otherwise we walk away from it. It is a much more efficient and sensible use of money, so your savings can go into something else that will generate income rather than wasting it! We also get a car that needs no repairs, is up-to-date and cheap to run.

    Maybe the market in the US is not so flexible but we are just picking up a brand new Skoda CitiGo (about 70mpg, no car tax etc) for £127 a month. And if we need an SUV (I fancy a Range Rover for fun), then an old one will do, LPG converted (they are gas guzzlers) for a few thousand GBPs.
    John@MoneyPrinciple recently posted..About New Year’s resolutions, saving and wastingMy Profile

    • I wouldn’t buy a brand-new car! New-ish means gently used with low miles. I always give my mom a hard time when she buys them brand-new, it’s such a waste of money.

      I’m expecting the car to last at least 10 years, so it makes it cheaper to buy it instead.
      Jen Perkins recently posted..Saving Money: Daily Transfers UpdateMy Profile

  8. We still do the whole withold so we can get a refund, too. I don’t care if it’s a non-interest savings account held by the gov’t. It’s better than us getting it throughout the year and not saving it. Because that would be reality.

    I hear you about the nearly new cars vs. one that needs repairs all the time. I’ve always taken loans out for them, but paying cash would be much, much better, especially on such a depreciating asset.

    But, the real question is, how are you going to live with that bath tub?! :p
    femmefrugality recently posted..Getting the Most Out of Pregnancy Health InsuranceMy Profile

  9. I’ve never bought a car with cash, but I really would prefer to buy my next one solely with cash.

    Currently I don’t even have a car as my work is paying for my public transit and we use my wife’s car for everything else. That’s not a plan that will last forever though – I imagine I’ll need to buy a car again in 3-4 years.
    Alex recently posted..Weekly Update on my GoalsMy Profile

  10. Great blog. I can tell you with 100% certainty, paying cash for my car in March 2006 was the best decision of my life! It was 19k, and now has 91k miles. Its been a fantastic, reliable, cheap car to own. With no payments in all that time, Ive been able to save over 100,000 in cash. (However Im single with no kids, and I keep my expenses quite low. Shop at dollar stores, etc.). Good luck reaching your savings goal! Its a very wise decision if you can afford it. PS watch out for gas prices and the fuel economy of the vehicle you want. For an SUV, that can get very pricey quick.

  11. Whoa, that’s just awesome. Our income is fairly low to achieve a goal of this price tag, but I’m looking forward to the challenge. Even if I don’t make it on time, I’ll still be way ahead.

    I was looking into the Kia Sportage, one of the attractive features was the MPG 21/30. Plus it still has the other things I’m looking for.

    Life would be so much easier if we could all just teleport. :-)
    Jen Perkins recently posted..You Can’t Always Respond To Every CommentMy Profile

    • I know that Hyundai is one of the best (if not the best) for economical, reliable import vehicles. Kia’s reliability is hit or miss from what i’ve heard, which can be very problematic if you buy used with no warranty. You might check out a Hyundai Santa Fe, I’ve heard great reviews from friends of mine:)

  12. I really enjoy your blogs. Totally impressed with your priority to save. You should write a book.
    Having a car totally paid off is so worth it. It’s nice not to have that extra payment every month. As far as ideas to save for it, you’ve probably already thought about this and mentioned it briefly above but….. we had a major yard sale when we were saving up for ours. Made a pretty good penny and now I’m a total minimalist! We did other things too, but I always recommend yard sales if you want to make some extra cash and clean up the house too.

  13. Most cars I purchase I pay cash for but I have never paid over 2.5k cash. Anything over that I would have to be buying a car that I plan on flipping to make a profit and already had a buyer lined up. We used income tax and extra checks as well but then we aren’t talk about over 10k when we did it. Nice plan and I feel you on a car to help with the back pain.
    Thomas | Your Daily Finance recently posted..How To Survive Unpaid Internships as Summer JobsMy Profile

  14. I’ve never bought a car on HP and never plan to. Cars are not a status symbol to me!

  15. I personally like the “inverse car payment” method where you save several hundred dollars a month (must be separate from emergency fund!!!) for a few years when you don’t have any auto debt, and the money will be there. It is simple and doesn’t rely on outside help or gifts. The hardest part of it, is actually deciding you’re going to do it!

    I have already promised myself I won’t live more than 2 miles from work unless I already have the cash. This allows me to avoid the risk of having auto debt in the future. I have virtually no credit history (credit card I never even used back in 2006, that’s it!) and I don’t even care. I’m gonna pay cash for everything, why bother?

    • Well, unless you’re planning to either pay cash for a house one day, or never buy a house—then you don’t need to worry about having good credit. Some people just aren’t house people. If on the other hand you do want to buy a house (via home loan), having good credit & credit history can nail you very good interest rates.