First I would like to thank you for your wonderful and consistent advice regarding money management. I was one of those who had a "delusional" debt repayment strategy. It was definitely like trying to climb a steep high in high gear....  I've sorted out that end and with a better debt strategy and religious use of the jars my husband and I are now enjoying positive cash flow each month! Now, the last area I need to address is vehicles. We own a pair of old (1994 & 1997) gas-guzzlers. I had rationalized keeping them as they have been paid for since 2000 and 2002 respectively. Recent steep repair bills and ongoing reliability concerns are forcing me to rethink keeping them. My question is how do you go about determining reasonable repair allowances especially as the vehicle ages and, where do the inevitable car payments fall within the budget? Are they considered transportation expense or debt or both?

Great question, Lynn. I feel your pain on the gas-guzzler versus fully-paid-for-car front. When the repair bills start to mount, and the gas bill is climbing, it does may one stop and think, “hmmm.” A general rule of thumb is that if a cost of repairing your current car would be less than 15% to 25% of your car’s total Blue Book value, it’s still worth repairing. As for where that payment goes on your budget, it’s in Transportation, and your total Transportation costs – including gas, repairs, insurance -- should not exceed 15% of your family income.

That being said, for people who have lower than normal housing costs, spending a little more on transportation is okay, as long as you don’t get silly about it.