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Photo by Cohdra via MorgueFile

I was thinking about this last night: if I were to lose my job, could one of my paid-for vehicles be used as an emergency fund?Let’s see…our family has two vehicles: a 7 year old four cylinder sedan with 120,000 miles, and a 3-4 year old Ford Escape with about 50,000 miles. Both are paid off.

In checking their resale values on Kelly Blue Book, I see that I could probably easily sell the Ford Escape for $10,000, no problem. Granted, it is worth a few thousand more, but if we were in an emergency scenario like a job loss, I’d probably take the easy cash first.

I believe I have enough in our emergency savings to get us through a month or two, which could, theoretically, allow me to try to get a bit more for the truck before accepting a crazy price.

While it wouldn’t be fun to have only one car, if I lost my job, I would have to pull our daughter from her childcare and watch her at home, but wouldn’t need a vehicle. If there was an emergency, I could probably sprint to the prompt care clinic in under two minutes (very close to my house).

If I had a job interview, I could probably arrange a ride, or take the bus or a taxi. In reality, having two vehicles is really a luxury, especially if you are facing job loss.

This is why paying off debt is such a valuable thing. Not only are two paid-for cars two payments we don’t have to worry about when facing unemployment, the debt that was the car payments has actually been turned into an asset. By selling off the car, we get a one-time cash infusion that could probably feed my family for a year. Also, I wouldn’t have the added expense of gas, insurance and maintenance, saving us even more.For the first time, I am looking at our paid-for car as an asset. I’ve mentioned in earlier posts that I view cars and vehicle purchases as the easiest way to NOT get rich. I’ve watched family and friends (including myself) blow so much money for the privilege of having a nice car, and I almost cry thinking of the $45,000 we’ve spent over the past 5 years on vehicles.I don’t love either vehicle. I am grateful for my car because it was a commuter, and saved me a lot on gas. The Escape was a purchase we shouldn’t have made. We just took a look at my wife’s old car payment then found the best vehicle we could get for $100 more per month.We were looking at vehicles as necessary evils. It never occurred to us that we could live a life with no car payment. And maybe it can be done. Right now, we are not putting money aside each month to replace a vehicle when one of these craps out. Maybe that means, no matter what, a vehicle payment is a near impossibility to escape.

But in seven months when we’ve paid off everything but the house, we would have the option to start putting a few hundred a month into a dedicated fund for vehicle replacement. Because if you aren’t saving for your NEXT car, you have another debt time bomb that could potentially get you.

That is, unless you don’t mind driving a $1000 beater.