Dear Dave: I am following your plan and recently became debt-free, but I have a question. When doing a monthly budget, should I figure in a specific category for car repairs and maintenance, or just use my emergency fund? – Ashleigh

Dear Ashleigh: Congratulations on becoming debt-free! You know, new cars, old cars and in-between cars all have one thing in common – they’ll need repairs at some point. Fixing your car is just a basic part of car ownership, and something every car owner should expect.

When life happens to your vehicle or anything else, an emergency fund acts like an airbag. Only instead of keeping your face from hitting the dashboard, it keeps your finances from getting smashed up. When it comes to car repair costs, I advise creating a sinking fund in your budget. A sinking fund is a special place in your budget where you save up money for specific, big-ticket items – like car repairs.

I know stuffing money into a sinking fund each month sounds about as enjoyable as waiting in line at the DMV. But look at it this way: If you had a car loan like most people, you’d be putting hundreds toward that debt each month. Instead, you’re one of the smart ones who doesn’t have any debt and can easily create a repair fund for your car by setting aside less than the average car payment each month. Even “reliable” cars need repairs and maintenance, and a sinking fund within your budget for this sort of thing means you’re ready to handle virtually any car issues that pop up.

You know you’ll need to pay for repairs and maintenance. It’s a thing with all cars. And when you know something’s coming, that’s not an emergency fund situation. Great question, Ashleigh! – Dave

— Dave Ramsey offers financial advice as host of a nationally syndicated radio program, “The Dave Ramsey Show.” Locally, his program may be heard from 6 to 9 p.m. weekdays on TALK 104.1-FM WKCT. For more, visit www.daveramsey.com.

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