Why do I keep so much money in my new car account?

Why do I keep so much money in my new car account?

Elizabeth at Simple Finance left me a comment on my 2012 Goal Recap post in which she asked the following:

"Just curious why you want to have SO much in your new car account? You could get a great car (new or used) for the $17k you already have. Since cars depreciate in value so quickly, I've always seen a really expensive car as a bad investment."

This is a great question, with a complicated answer, which I will try to address here.

As it stands now, my new car fund has over $17,500 in it and my goal for 2013 is to increase this amount to $25,000.  Elizabeth is correct that I can get some very nice new and used cars for $17K, so why do I continue to save so much?

1.)  The car I want (notice I didn't say "need") costs more than $17K.  My last two cars have been Volvo station wagons.  The first one was a used 1996 860 and my current one is a 2007 V70 that I bought new when the 2008 models came out (meaning that I got a killer deal on it).  The Volvo wagons suit my needs  - they have a wonderful safety record, they are extremely comfortable (important as I have a long daily commute), great storage room, and they are reliable.  I also put a lot of miles on my cars so it is important to me to have a car that is well made will hold up to heavy use.  The Volvo fits the bill for me.  In fact, my current car just hit 100,000 miles not too long ago and, other than general routine maintenance, I have not had to do any major repairs!  I have never had another brand of car hit 100,000 miles without having major issues, yet Volvo has impressed me twice in this regard!

2.)  I don't feel guilty buying an expensive car.  For one, I keep them for many years and miles, so I consider it an investment.  Accounting for longevity and maintenance costs, my Volvo's have cost me less per year to own than any of my other cars.  This is an important thing to consider when looking at a big investment like a car!   Secondly, I have no debt and I work several jobs so a nice car is my special treat to myself for working hard.  Of course, if my financial situation suddenly changed and I could no longer afford to drive a Volvo, then by all means I would reconsider my options.

3.)  Even cars need an emergency fund.  My new car fund also serves as my "oh crap, shit just happened" fund.  If I need to do any major repairs to my car I know I will be able to cover the expenses.  Also, if my financial situation should change,  I'll still be in a good position where car maintenance and replacement is concerned.  Knowing that I have the ability to provide safe and reliable transportation at any given time without putting myself into debt gives me a lot of freedom.

So, I hope that answers the question as to why I have such a large new car fund.  No matter how much I save, I will continue put money into that account because I like the peace of mind it brings me.

Do you agree or disagree with my approach here?  What are your thoughts on car purchases?