My wife and I are trying to figure out what to do with our car situation and could use some outside perspective. We've been going back and forth for weeks and can't land on a decision.
Our situation:
– Household income: ~$225k gross, ~$12k/mo net after taxes, 401k (5%), health insurance
– Mortgage: $3,428/mo (1928 rowhouse in Philadelphia)
– Childcare: $1,380/mo (toddler)
– Credit card debt: ~$7,900 on a Citi card at 0%, paying $467/mo, targeting payoff by Aug 2027
– Emergency fund: $1,500 (yes, I know — we're building it at $500/mo)
– Current car payment: $405/mo lease + ~$175/mo gas = ~$580/mo total transportation
– Cash available for down payment: ~$2,000
– One car household
The lease situation:
– 2023 Mazda CX-5 Premium AWD, lease through Toyota Lease Trust ending July 2026
– Residual buyout: $21,401
Lease ending in July — buy out my CX-5, go EV, or get a hybrid? Gas prices and budget constraints making this complicated.
byu/theblartknight inpersonalfinance
Posted by theblartknight
7 Comments
You’ve already paid down a lot of the depreciation on your Mazda. Going for a new car will just reset the depreciation. I’d just buy out the Mazda.
You’d have to use the gas vs hybrid calculator. For me when I was comparing a Rav4 vs hybrid Rav4, it would have taken close to 10 years for the Hybrid to be worth it. Of course it depends on gas prices in your area and how much you drive.
How long is the credit card debt at 0%?
You’ve only accounted for about half of your monthly net income with the expenses you’ve listed, and gas prices will come down so I wouldn’t join the throngs of people overpaying for hybrids right now to temporarily save 10s of dollars a week on gas.
What’s the Mazda worth?
Do you like the Mazda and does it fit your needs?
If you like the Mazda then buy out and drive it til it’s dead is ALWAYS the best option financially.
What is your weekly driving habit like? If you don’t drive much already that’s going to make EVs less of a good choice. It’ll also depend on what your eventual charging costs would be (electricity rates, options for managed charging etc) compared to your local gas prices.
You have a nice income, but little to show for it. $3500 cash and 5% to 401k is weak sauce.
Do you have any other savings/investments?
You listed monthly payments of:
* $3,428 Mortgage
* $1,380 Childcare
* $467 Credit card
* $500 Emergency fund
* $580 For Car payment & gas combined
That’s $6,355 and leaves more than $5K unaccounted for from your $12K/moth net. Sure there will be incidentals, other insurance, groceries and so-on, but it looks like there should be more slack in the budget than saving $500 a month.
If you like the car, and the lease-end price is reasonable, it may make sense to buy it, rather than running out and racking up even higher debt on a new car. $19K should only need a three year note if you squeeze a little. then run the car for at least two more years making the same car payment to yourself.