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Just paid off my 2013 Subaru Outback Premium and it feels good! Bought it for ~$25K out the door, all inclusive. Looks like it's selling for just shy of $15K in private market, in good condition.
I'm deciding whether I should sell it or not.. the reasons are:
1. Would like a quick way of padding my emergency/rainy day fund. Selling the car for around $15K would go a long way towards that goal. I want to be able to survive
for at least 6 months if I were to lose my job or need to take unpaid time off. It'd be even better if I could extend that rainy day fund to 1 year. I'm setting the monthly
amount needed at $3K, which should cover my mortgage payments (including property taxes, insurance, HOA), gas, food, utilities, etc.
2. Would be able to get a used Prius or other hybrid with low miles (20K range), no older than 2014, and get around 55mpg, instead of my current 26mpg (about half).
I love the Subaru Outback and AWD system. It's a very substantial feeling car that is very stable and secure on the road, even in heavy rains and moderate winds.
It certainly won't be the same in a Prius, but I'd only mainly be using it for commute to/from work and shopping. With an occasional weekend trip. So, I could possibly
save as much as $80-100/month on gas (or about $1200/year).
A SECOND option is to keep the Subaru Outback, and take the monthly payment amounts that I no longer have to make and stash that away. That would be $336/mo, or about $4K/year. In about 4 years, I'd be able to build up about the same $15K emergency/rainy day fund.
And a THIRD option would be to sell the Outback and find some killer lease deal to hold me over for the next 3 years (if such a deal exists that would make it financially a smarter move than buying a used Prius/hybrid or keeping the Outback).
What do you guys think would be the wisest choice out of the above 3 options?
Keep your car, put your payment money away, that way when you need to replace the car you will have either a nice chunk for downpayment or maybe even enough to pay cash.
I'm firmly in the "devil you know" camp, make payments to yourself with the understanding/expectation that you will Still spend some on the Subi (preventative maintenance, sucks to take a perfectly good car into a mechanic but it's FAR cheaper to do it when there are no issues than to wait till there is an issue) AND that you're basically making your next car payments ahead of purchase.
I just bought a 2018 Mazda to replace a 2001 VW, was able to not only buy outright/pay cash but still have a significant amount in my "rainy day" fund. Nothing like driving a brand new car and knowing you'll never make another payment on it.
Milk that Subi for all it's worth. Most people I know who drive them can get into the 250k mile range before the repairs just become more than they're willing to deal with (both frequency and costs).
Keep what you got if it’s reliable. Buying a used Prius (no matter what Toyota fan boys say) can be a headache because you have no idea how that vehicle was used. So unless you know the seller I would stick to your paid off Subie. 50/55 mpg sounds good until you’re replacing a a main battery for $3800.
Sock the monthly payment away in a account. Drive the Subie till it’s worth nothing or the repairs get to be huge.. You could see 5-7 more years of perfectly reliable service out of the car and still get a few thousand when you’re done with it.
Dump it and get the Prius. You seem budget minded so that would be the best option.
Get your $15k out of, finance a slightly used Prius at a low interest rate and very little down and stick the $15k in a high dividend mutual fund. It’ll still be liquid and it’ll kick out another small revenue stream on top the $1200 a year in gas savings. You might even get some insurance savings. You could call your insurance company and find out for sure to help with your business case.
How about keeping your Outback and adding that $336 to your mortgage payment each month, Ecsdude?
You would be amazed at how that relatively small amount (about $10 a day) would reduce the term of your loan (many programs online to help calculate the actual savings).
Example . . . on a 30 year mortgage, one extra monthly payment per year will reduce the term to about 21 years.
There is nothing more comforting than the NO MORTGAGE FUZZY FEELING.
Hmm. A Subaru Outback that was just paid off and know the history of in exchange for an unknown used Toyota Prius that starts the car payments all over again?
Q: Just paid off my car - what's the best decision to make out of the following?
A: Load up on consumer debt. Take out a line of credit, extract the cash and head to Vegas. Always split aces & eights, and double on 11 unless the dealer is showing an ace.
Drive home poorer but with the knowledge your car is paid off.
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