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Driving Expenses Can Really Add Up, Do You Have a “Bumper-to-Bumper Reserve”?

You know that sickening feeling you get when you are happily driving along and a light on your dashboard pops up, indicating the need for some immediate repair? Or worse yet, when the lights that pop up are those of a police car stopping you for a known (or oftentimes unknown) motorist violation? You may have thought driving expenses pertain only to things like gas, insurance and maintenance, but there are many more to be aware of before you hit the road.

When Hidden Driving Expenses Suddenly Appear

Just last weekend, when driving along an unknown thoroughfare while out of town, I peered into my rearview mirror and noticed a car tailgating me. Thinking I wasn’t going fast enough for “this guy,” I swiftly moved over to the right lane. So did he, with his flashing lights blinking and siren wailing – woop … woop!

Finding out that I was driving at 49 mph in a 35 mph speed zone was unhappy news indeed. Hearing that the ticket for this offense was $206 completely unsettled my stomach (and ruined my good mood). Fortunately, I do have my “bumper-to-bumper reserve” for just this kind of expected (but not, really!) life experience.

Are you properly budgeting for the driving expenses that will crop up?

Are you properly budgeting for the driving expenses that will crop up? I am not talking about the costs of buying or leasing the car, nor am I talking about the interest rate you are paying or how to minimize those costs. Today, I am addressing “the costs of doing business”—  those of owning and driving your car that go far beyond the initial sales price, down payment and monthly installments.

Plan for Your Expected (and Unexpected) Driving Expenses

When you sit down to make a budget, or better stated, a “spending plan”, you need to look at all of your fixed expenses (the exact amount you can expect to spend every month on expenses that do not change such as your insurance premium and car payment) and also your variable expenses (those which change monthly — the cost of gas and routine maintenance you will incur each month).

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When preparing your plan, you must consider all of your net income and divide it into assigned categories designated for disbursement: savings, food, shelter, utilities, clothing, medical, household, personal and transportation. In order to maintain your financial stability and reap the rewards of financial security, prepare now not only for budgeted costs and potential emergency expenses, but also be sure to plan for the expected “cost of doing business” output, like driving expenses.

In order to maintain your financial stability and reap the rewards of financial security, prepare now for budgeted costs and potential emergency expenses

Unfortunately, most people are overly optimistic about their ability to pay the costs of driving, and are therefore completely unprepared when saddled with costs that were outside of their periphery.

Your Bumper-to-Bumper Reserve Checklist

I have come up with a list of things that you may not already be considering, and ask that when preparing your own personal spending plan, you prepare for these costs. By doing so, even if you do not run up against these expenses in a given month (or even within a year), you will have amortized and funded your own “bumper-to-bumper reserve” that will be readily accessible when these costs inevitably do arise. To stay financially stable, you should consider, predict and be prepared for the following costs.

Use this checklist and jot down next to each expense how much you might reasonably be expected to pay for each category annually.

Expected Car Expenses:

  • State fees (annual registration and inspection)
  • Insurance premiums for liability, collision and comprehensive coverage. Always invest time to shop around to find the best premiums and deductibles to meet your needs — a lower premium means a higher deductible
  • Maintenance, repairs, and wear and tear (batteries, tires, brakes, alternators, belts, wipers)
  • Gas and fluids (oil, transmission)
  • Parking permits and garage fees
  • AAA or other roadside service or towing fees when necessary
  • Car washes

Unexpected Car Expenses:

  • Car accidents and/or deductible payments (even those that aren’t your fault can cost you)
  • Moving (and non-moving) violations (add the cost of time off from work to attend hearing), plus additional fees incurred if you are late to pay, along with the resultant increased insurance premium (often for 36 months) based on “points” assessed for your infraction
  • Unexpected repairs (engine problems, drivetrain damage, suspension, starter, steering, alternator and water pump replacement, and electronics – sensors, cameras and entertainment systems)
  • Car rental fees (necessitated by accident or needed repairs) and tolls
  • Exposure for damage (to persons and/or property) you create which exceed the benefits provided by your insurance policy
  • Defensive driver class

Stay on Top of Driving Expenses by Anticipating Them

You may (ill-advisedly) think you will never get into a car accident or have a tire blow out. If none of these things happen to you for years, hooray! If, on the other (more likely) hand, you experience multiples of these expenses in a given year, won’t you be happy when you are prepared?

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You may want to budget anywhere from $20/month to $1,500/month for your “bumper-to-bumper reserve,” but you don’t have to guess blindly. Go through the proposed expenses above and realistically note, based on your specific vehicle, how much you might need to pay for each of any of the given items in a full year. Then divide the total sum by 12, and make sure to fund your “bumper-to-bumper reserve” monthly, at the same time you pay your other fixed expenses.

If your car is currently under a bumper-to-bumper warranty, you may not need to fund for the “repair” category. However, if you are driving an older car, you may have to forecast significantly more in the “repair” category.

[Failure to plan ahead] is akin to putting your head deep in the sand and suffocating your goals to achieve financial freedom.

Assuming that you are just going to pay as you go (while hoping you will have the funds if you really need them), or that you will rely on a credit card (for which you will then have to make added interest payments) when these inescapable expenses occur, is akin to putting your head deep in the sand and suffocating your goals to achieve financial freedom.

Be responsible to yourself and your financial fitness by anticipating and preparing for these probable expenses, so that when you see the “troubling” lights, you can address the underlying problems without the added stress of worrying about how you are going to pay for them.

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About Michelle Gershfeld

I’m a debt settlement and bankruptcy attorney who negotiates resolutions between clients and their creditors. I am also a real estate attorney involved in both sides of purchasing and selling distressed real property. I am passionate about teaching people about money and helping individuals of all ages achieve financial independence and success in a "no…

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