My First Vehicle Purchase

After 5 years of taking public transit, I finally caved and got a car. 2008 Acura TL-S from Acura dealership. I like to think of it as no more toughin it out on public transit. Let's face it, YRT transit sucks if you want to go anywhere besides the Viva routes.

(not actually my vehicle, but same color/make/year)

I think I could have lasted a couple more years if the Viva drivers didn't go on strike this year for 3 months, but that was the last straw.

While I complain about gas prices as much as the next person (will probably cost ~$100 for a tank of 91 octane), deep down I really don't mind the gas prices. My motto has always been, if you can afford the car, you can afford the gas. While probably not true for very old vehicles (10+ years), Edmunds True Cost to Own estimator agrees and indicates that for most cars under 10 years old, the average annual cost of depreciation is similar to the average annual cost of fuel.


I also am of the belief that the only long term solution for our dependency on fossil fuels, is to use them like they are renewable, and eventually, the cost will be so high that alternative energy will really be feasible. Fact: very few people would care about developing solar or wind if oil is $40 a barrel.

Even though I've only purchased my first vehicle, I've already begun to save for my second. Why? Because I don't like paying interest on depreciating assets, so it really takes me a long time to save up for a car. I will probably drive this one for 5-10 years, so I figure in that time, I need to save enough for the next car, so I can buy it in cash, just like this one.

To save up for a vehicle (and other major purchases), I use what I call a CESA, or Capital Expenditures Savings Account. This account doesn't actually physically exist, but is a virtual combination of advanced principle repayments that sit in my MCA (mortgage cash account) and my liquid checking account.

Each month, I set a CESA target, which is then composed of existing savings X in my MCA, and target month end savings Y in my checking account. As the months roll by, the gradual accumulation in this CESA target is money I've set aside for capital expenditures.

Usually I'm able to exceed the target, so once in a while, I remove some funds from X in the MCA, and those funds are permanently paid into my mortgage principle (no longer part of my CESA touchable amount).

I think this exercise is useful for young individuals who are struggling to juggle saving, mortgage, and car payments all at the same time. It's a good way to not only manage but understand your own finances. It does take some extra work with Excel, but saves you the trouble of having so many different accounts where you put small amounts of money aside for various uses.