How to pay for 2nd car within a year

[CAP]

I replaced by 2005 toyota camry earlier this year with a honda CR-V and paid cash. The car was starting to have a lot of issues, and went with a bigger car as our family expanded. Recently my husband's 2010 camry got totalled and we will have to buy a second car within the year. Will look into an SUV up to 30k range. I can pay it with cash by tapping into EF which I can easily replenish soon, but does spending another 30k in cash make sense or does it make more sense to finance it?
We don't have any debt other than a mortgage that is just 0.65 of gross income left.

[JBME]

it almost never makes sense to finance your car, especially if you really can easily replenish an emergency fund

[Ozarka]

My take is an EF is just that, for emergencies, which this could very well be one for you and your family. If you can replenish the $30K rather soon then why not pay cash if there aren't any low financing "deals" currently going on. Otherwise, I would probably do a mixture of both in that I would finance if it's around 1% and build back up the EF after the down payment. When it gets back to a comfort level then you can always just pay off the car. Having no other debt leaves you with flexibility.

[Nysoz]

Depends on the financing rate you can get and your adverseness to debt.

If you can get 0-1% financing and you're investing the difference? Might as well finance it.

Don't like debt? Just pay cash.

[zlandar]

Financing is fine as long as you don't redirect the money to lifestyle. Sounds like you spend money carefully so do what you think is best.

[Peds]

new ID4.....

[TXDoc21]

Or you could just do a hybrid approach. What if you put half down and then cash flowed the rest and paid it off in 3 or 6 months? That way you keep your e-fund for another emergency around the corner. You won’t pay that much in interest if paid off rapidly. Just my two cents.

[jfoxcpacfp]

I personally think e-funds are kind of overrated for doctors. You tend to focus on the unusual situations of the person who has a tragedy and has to take $$ out of their kid’s 529, but I would hazard a guess that is rare in this community. Typically, my off-the-cuff e-fund amount w/b $25k - $50k tops. In this case, no problem with paying cash if that appeals to your priorities. But I also don’t have an emotional issue with very low-interest debt. Big deal.

So much of this site (rightly so) is targeted toward high-income doctors who have terrible (or no) financial policies and/or residents/fellows/new attendings. It’s not “wrong” per se to continue these stringent policies; otoh, so many of you guys are setting yourselves up to leaving this life with millions that you wish had enjoyed a little more while you had the time and energy to do so.

ok, end of rant, and I avoided mentioning how financial planning could make a difference...

[CBCwDiffpls]

I personally think e-funds are kind of overrated for doctors. You tend to focus on the unusual situations of the person who has a tragedy and has to take $$ out of their kid’s 529, but I would hazard a guess that is rare in this community. Typically, my off-the-cuff e-fund amount w/b $25k - $50k tops. In this case, no problem with paying cash if that appeals to your priorities. But I also don’t have an emotional issue with very low-interest debt. Big deal.

So much of this site (rightly so) is targeted toward high-income doctors who have terrible (or no) financial policies and/or residents/fellows/new attendings. It’s not “wrong” per se to continue these stringent policies; otoh, so many of you guys are setting yourselves up to leaving this life with millions that you wish had enjoyed a little more while you had the time and energy to do so.

ok, end of rant, and I avoided mentioning how financial planning could make a difference...

Thank you, this resonated with me. I only discovered this site (philosophy?) about a year ago. It definitely helped me with some basics I did not know about. But at the same time, I am finding myself more anxious about things than before, even though I’m more “financially secure” now than ever. Finding the balance is hard... much psychologically easier just to err on the side of safety which ultimately means I will die with millions and millions.

[wideopenspaces]

An EF is supposed to be for emergencies and does this really qualify? Most would say no. However I admit I use our EF as a slush fund pretty constantly. I would have no problem using it to pay cash for the car and then building it back again. Especially given your very solid financial situation. If you were in a million dollars of debt between house and student loans and no retirement savings, I'd give entirely different advice.

[STATscans]

I replaced by 2005 toyota camry earlier this year with a honda CR-V and paid cash. The car was starting to have a lot of issues, and went with a bigger car as our family expanded. Recently my husband's 2010 camry got totalled and we will have to buy a second car within the year. Will look into an SUV up to 30k range. I can pay it with cash by tapping into EF which I can easily replenish soon, but does spending another 30k in cash make sense or does it make more sense to finance it?
We don't have any debt other than a mortgage that is just 0.65 of gross income left.

Just pay cash for it. Don’t over think. Like someone else said, if you are on this site, you are financially literate for the most part and you have your whole life to enjoy. That 30k in 30 years will not be a big deal as long as you are working.

[TheDangerZone]

See what kind of deal you can get for financing versus paying cash. Many dealers make most of their money off of financing and will be more likely to negotiate a lower purchase price. If they give you a few grand off, make sure there’s no early payoff penalty, take the financing and pay it off in a couple months. If it’s the same price either way, then I vote to pay cash. Replenish the e fund to reasonable amount over the next few monthis.

[CordMcNally]

I personally think e-funds are kind of overrated for doctors.

This is probably way more true than most will admit. It seems kind of silly to make a big deal about an EF that many could cash flow in a month or two.