Should I save for car repairs or pay off car loans early?

I’ve been thinking about our emergency fund. By next Friday, we’ll have a little over $1600 set aside. Yipee! Dave Ramsey says that the EF is separate from the 3-6 months of living expenses, and should be used just for emergencies. So now I am trying to predict what unexpected expenses may crop up in the next year or two. For us, the most likely culprit would be expensive car repairs.

(our house is in good shape – the roof and heating/cooling systems are still under warranty) Of course, there could be an awful family-type emergency too, but I’m thinking more of a predictable emergency here. So here’s my thought – I am considering calling our mechanic to find out about how much the worst-case scenario major repairs would cost.

I figure I can do this for each car (95 Volvo 940 wagon and 92 Honda Accord), and then try to get enough in the emergency fund to cover the single most expensive repair (ie new Volvo transmission or engine) My DH thinks I’m going a little overboard, and that we should worry about paying off the cars instead of saving for repairs that may not be needed. The Honda has only 85,000 miles, and the Volvo 115,000. Both are very reliable.

What do you think? Should I get aggressive about paying off the cars, or should I save enough to pay for a major repair the cars may not need any time soon? (We owe a little over 10K for both cars, and the Volvo will be paid off next summer)

Emergency fund…can we use………

Ok I have a question on this…dh and I have devoured Dave Ramsey’s book and another called “Rich Dad, Poor Dad” by Robert Kiyosaki. He was featured on Oprah a few weeks ago. Anyway, here is my question. We own our own business, for which dh keeps a business acct. Then I have a checking account, which covers household expenses.

Dh writes me a check out of the business account each week for $400 to cover the household stuff.

Anyway, he always has a running balance of at LEAST $10,000 at all times in the business account. Can we use this/consider this our EF? If such an emergency was to arise, we would definitely pull that money to use it. Just wondering if I needed to set up a separate acct for that.

IMHO I would have an emergency fund before Idid debt reduction. Our emergencies in 23 years have included such things as pets being runned over emergency vet bills, unforseen plumbing and electric problems, teeth braces, root canals, eyeglasses, replacement of lawn mowers, edgers replaced dishwasher stove refrig and washerdreyer in a period of 8 years. I also think it is a good thing to have your cars tuned up once a year for about $160.00 and ask him to look at belts and hoses for you . We have been without a car for a dumb reason like not seeing a belt was almost worn off. Even though Honda s are rated number 1 my bf just spent close to $4000 fixing up her sons “92 Honda and we replaced our transmission on our Honda that was 9 years old at the time. What I am saying you never know. We had one month where emergencies were $1400 over my husbands monthly income. Of course I know we get more than our fair share of financial emergencies so I am very cynical about this.