Dear Chuck,
I have a 2011 Toyota Prius because I commute 100 miles to work and back per day. I owe over $12,000 on it and it has 111,000 miles on it so far. We recently found out it costs over $2,300 to replace the hybrid battery. My question is – should I downgrade to a non-hybrid car now while its value is still fairly good, or continue with the payments and try to save to replace the battery when necessary?
Car Confused
Dear Confused,
It is encouraging to see that you are thinking ahead about how to best steward your transportation budget! With a commute that long, I commend you for seeking wisdom on how to steward your vehicle well.
This is a more complex question than it may first appear since there are many variables that can affect your final decision. I’ve done some research on your car, but please consider this advice as a starting place since I don’t have all the details about your car and financial situation. I’ll make some assumptions to help illustrate the overarching principles you can follow as you pray about this decision.
STEP 1: DO YOUR RESEARCHThe most important variable is the current value of your car. Using the Kelley Blue Book website, I selected the options regarding the model of your Prius, the upgrades, and overall condition to give it the maximum value.
Using this as a benchmark, and assuming you could sell the car to a private party, they quote the present value of your car at $9,062. If you were to trade it in, the value would be about $6,600.
Since you still owe $12,000 on the car, and its approximate value is $6,600, that means your car is assumed to be worth $5,400 less than what you currently owe the bank. If you were to sell the car now, you will likely not be able to pay off your current loan. In fact, you would still owe the bank money and still need to replace your transportation. But remember, that I’m assuming your Prius is in excellent condition.
Therefore, your least expensive option is to prepare to replace the hybrid battery. This will increase the value of the car and keep you on the road for the least amount of cash outlay.
But you should still consider the following:
Now, let’s talk about some practical ways to save up for a new battery and continue to steward your vehicle wisely.
Dropping over $2,000 on a new car battery is not something most people factor into their monthly budgets, or plan for with an emergency savings fund.
But since we are called to be faithful stewards, Christians should adopt these financial disciplines in preparation for situations just like yours.
It sounds like you are financially aware and concerned with making the right decision. God will honor you for that! Proverbs 21:5 says, “The plans of the diligent lead surely to advantage, but everyone who is hasty comes surely to poverty.”
Continue to plan for the future of your finances by making a budget (if you don’t already have one). It’s not as hard as it may seem, and it will give you much more freedom TO spend. And, you can adjust it from month to month as you need!
Your budget is going to be key for saving enough money to replace your car battery. If you decide to use an app on your phone, set a savings goal of $3,300 – this will help you save $1,000 as an emergency fund and the $2,300 to replace your battery. Once you’ve met that goal, set a new goal to save 3 months’ of living expenses.
Crown’s Money Map walks you through all the savings goals like these. You can download your own copy for free to stay on the right track.
Now that you have your $1,000 saved in an emergency fund, you need to develop a plan to pay off the rest of your car.
If you also are struggling with credit card debt, first get in touch with Christian Credit Counselors. They have a wonderful team of professional counselors to help you put together a plan to pay it off.
And if you have any other debt (including student loans or a mortgage), use the Debt Snowball Method to make a plan to pay it off. It’s a simple, easy method that saves you time and money by “outsmarting” your debt.
Otherwise, if your car loan is the only debt you have, work your budget to come up with at least an extra $100 a month to pay off your loan. This may mean you cut out cable, slim down your grocery bill, make coffee at home, and skip eating out for awhile, but I promise it’ll be worth it. Check out some of our other ideas on how to cut down on expenses.
In addition to using your budget to slim down on expenses, come up with some creative ideas on how to increase your income. Be sure to protect your family time if you add any extra work, but finding side jobs or working extra may be the temporary solution to getting out of debt. Use any bonuses, tax refunds, or gifts to put straight towards paying off your debt.
God never says that debt is a sin. But His word warns us repeatedly of the dangers of debt. Take Proverbs 22:7 for example – “Just as the rich rule the poor, so the borrower is servant to the lender.”
Experiencing the freedom that comes with being debt-free is worth the discipline and sacrifice right now.
Once you have your functional budget, $1,000 saved, your new battery in place, and a plan to get out of debt, you’ll be well on your way to living a life of financial freedom! Congratulations!
Continue to be a faithful steward and seek the Lord’s plan for your life and finances. As I mentioned before, following the Money Map is a great way to stay on the right track.
Thousands of others have gone through the Money Map and are currently going through it now. You can join them on the journey to financial freedom!
I am praying that you are able to make a wise decision and that this will set you on a path to a better financial future.
Originally published on the Christian Post, August 11, 2017
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