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8 Vehicle Costs You Should Be Planning For

If you are one of the 9% of people who own a car, you know they are not free to operate. However, just because you know that, doesn’t mean you plan for all the costs associated with owning a motor vehicle. In fact, you may be forgetting about those costs and then are suddenly forced to try and come up with the money. To help combat this potentially budget busting area, I have developed a list of eight vehicle costs you need to plan for. Now, I hope you don’t have a car payment but, whether or not you do, let’s talk about some of those very costs you may be forgetting about.

1. Car Insurance

Whatever you drive – car, truck, van, motorcycle – you need insurance. In fact, all but two states in the U.S. (New Hampshire and Virginia) require insurance. So, here’s assuming you have insurance. If so, when was the last time you got a new quote? If you haven’t been requoted in a while, I urge you to contact an independent broker and request an auto insurance quote. Using an independent broker is best because they aren't a "captive agent" working for one particular company but rather are independent and can obtain quotes from multiple insurance companies to find the best price and coverage.  This allows you to basically diversify your insurance shopping and it's super simple! I refer to the next three on the list as the “little three.” The first one is…

2. Car Registration (Little Three #1)

Why set aside money for that? Why not?! Setting aside the money over time not only helps you avoid reactionary spending, but you avoid being broadsided or your budget being knocked out-of-whack because you suddenly had to come up with car registration. Find the amount to renew your registration and then divide it into your budget (ex. $90 every 2 years/24 months = $3.75/mth).  Take one less frustration out of your life concerning the DMV!

3. Car Emissions/Inspection (Little Three #2)

Like car registration, this is a great item to save up for so you are not broadsided by these little costs when they are all of a sudden due.  In fact, if you are late on this it can often force a retest sooner than normal plus a fine!  So be proactive!

4. Driver's License (Little Three #3)

Be prepared for those driver’s license fees. They not only sneak up on you, but they typically arrive on your birthday. Not a very fun birthday present if you ask me.  Often times this can break down to as little as $1/mth so set it aside and stop getting surprised! The next three are what I refer to as the “big three” in budgeting for vehicle costs...

5. Car Repairs (Big Three #1)

At some point, something is going to break or wear out. Even if your vehicle doesn’t have major issues, it will eventually need brakes, an alternator, something. You need to have money set aside to cover these costs because they can break the bank. God forbid it is a transmission! I recommend to obtain estimates from local mechanics. It's a good starting point because though their estimates can sometimes be a little high, you'll at least have a ballpark. Then if you work with a local, independent mechanic, like I recommend, you'll have a great one-two punch ready to pay as little as possible for needed repairs. So, set aside those funds so that when you inevitably have to replace that $300 alternator, you don’t have to try and come up with the money. 

6. Car Maintenance (Big Three #2)

Okay, so I already talked about repairs, but what about maintenance? You will inevitably need things like wiper blades, windshield washer fluid (including special winter stuff like Rain X) and oil changes. You can set aside additional funds in your car repair budget to cover these things or even create a separate maintenance budget.  Huzzah!

7. Tires (Big Three #3)

I have a whole separate video discussing tires and how to save up to $200 here. Be sure to watch it! Tires can easily cost $400 or higher to fix. In some cases, and depending on the type of vehicle you drive, upwards of $1,000! Be sure you are setting aside money for tires! Now, here’s the really big one...

8. Property Taxes

If you live in a state that doesn’t require property taxes to be paid for your vehicle, I am jealous. I may not only visit your state, I may even move there! Some towns break down your vehicle’s property tax in two six-month installments. However, one way or another, you will have to pay a privilege tax for living in your state and owning a vehicle. Therefore, you need to set aside money for property taxes just like you set aside money for tires.  This is a perfect of example of that saying "Failing to plan is planning to fail." I have seen property taxes range from $200, $400 and upwards of $1,000. It all depends on the value and age of the vehicle not to mention the changing assessment metrics of your town. If you have records, go back and check what your property tax was in order to determine how much you should be saving. If you don’t know, contact your local tax assessor, not your tax collector, to find out the cost. Property taxes, at least in the state of Connecticut, are billed by your town and can be a HUGE budget buster item that you inevitably have to come up with and if you are late fees and penalties can really rack up. However, if you budget for them, you will find yourself much happier come tax time!   So, these are eight vehicle costs you need to plan for. This information is meant to help you prepare for those inevitable, but often forgotten, vehicle costs. Feel free to share this list too so that others may glean from it. As always, I hope this information helps keep your wallet heavy and your heart light. Question: What would it feel like to have money set aside for car repairs?  Imagine yourself in the future freaking out and then realizing you already have it in the budget set aside!  What does that feel like?  Share in the comments below!


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