by Tricia
September already wasn’t looking like a good month. It looks a little worse now after getting some repairs on our car. They are putting us behind about $300 so it looks like we will probably have to pull some money from our savings to pay for that. A bummer, but I really can’t complain about our car. The repair was one that was inevitable, and one may even consider it more maintenance since it’s a given that it will have to be done sooner or later. We always hope for the later, though LOL.
Sometimes I think to the future, and I think about how great it will be to have some savings set aside specifically for certain things. I can visualize an account that holds about $15,000 in it that can be used to purchase a car debt-free or used for car repairs. There is no relying on a bank or credit card to give you the funds. You call the shots, because you saved up the money.
*happy sigh*
That thought is almost as nice as my happy thought of relaxing in a hammock on a warm summer day with no bugs.
*another happy sigh*
I’m thinking that once our debt is paid off we’ll find ourselves going into extreme saving mode 🙂
I too want to pay off our debt first before we start saving for emergencies. However, it does really suck when something (like your car repair) comes up and you have nothing saved for it! 🙁
That sucks. In fact, I’m in the same boat. Took the car in today since it had a squeak, now I need a new clutch 🙁
I’m pretty certain I shall be selling the car soon and buying a pedal bike. I’ll be blogging about both of these related things soon!
My car is costing me about $500 this month on maintenance and basic repairs so I feel your pain. I’m totally with you on the happy thoughts of not having to rely on a bank to purchase a car or make house improvements.
Sigh. I’m just trying to get my emergency savings account back up to the minimal $1000. My Dodge Caravan seems to think that, having given me 9 years and 157,000 miles of service, it is now entitled to almost-monthly (and, needless to say, unbudgeted) repairs.
Now aren’t you glad you went with the idea of getting a savings account and putting money it? If you had used to to pay off your debt you wouldn’t have a car to use.
This is why you have a savings account, for things like this.
Well, let me offer you a congratulations! $300 worth of car repairs and you are just taking the $ from your savings account! No big deal … a minor glitch, a little pebble in the road for you! Good job and keep up the great work!!!
Every time my PT Cruiser needs new brakes or tires, I get grumpy but pay for them.
Last week, I learned routine maintenance can pay for itself.
A couple stepped off the sidewalk to cross on a red light, the SUV in front of ds stopped in time. Ds managed to stop before hitting the SUV (he figures there was less than 12″ between them when he stopped.) Thankfully, the SUV then pulled away because the car behind didn’t stop and rear-ended ds.
Insurance will pay it all (not ds’s fault at all so there’s no deductible). The damage was minimal, considering the car that hit the PT was junked (airbags went off and it wasn’t worth replacing those so the owner, who didn’t have collision insurance, junked the car.) Insurance will even pay for the loaner car for ds.
I just keep thinking how things might have turned out differently had I not kept the car in top shape.
I actually do have a small car fund. Every year we get a nice bonus, I use it to fund my account. Then I use that account all year to pay for the insurance, registration and maintainence. It is wonderful to have that account for piece of mind.
I’m very sorry that you are experiencing this. We have been experiencing similar for the last two years.
Hopefully things will work out.
Good Luck 🙂
My boyfriend and I BOTH had check engine lights on this week! Mine, along with the state inspection, turned into a $350 cost :/
Glad you are doing well with paying off your debt! It’s encouraging to see your progress.
It’s nice to think your problems will be solved by downsizing and extreme savings, but it will be extremely difficult to outrun inflation using that strategy. Think about your heating bill this year compared to several years ago as an example.
Why not give yourself more options (or just breathing room) by focusing on extreme income growth? If you and your husband can create the income equivalent to him having a good full time job, you will be able to save a big emergency fund as well as for specific goals like replacement vehicles and vacations, not to mention your son’s education.
In addition, I have not once heard you mention saving for retirement. As things stand now, you will be living on your social security check, if social security exists when you retire. Your husband has no work history, so his eligibility for social security will be as your spouse. How will you fit saving for retirement into yout “extreme savings” plan?
I’m not a huge fan of everything Dave Ramsey says, but he correctly distinguishes between people with a “spending problem” and people with an “income problem.” You have overcome your spending problem, but you have not solved your income problem.
Anonymous Reader – My husband has a work history. He’s already eligible for benefits and so am I. Not that we are counting on social security – because we aren’t. As for savings – that includes retirement. There are a lot of little savings cubbies that need to be filled once our debt is paid off.
I’m never read Dave’s books – what does he say about how much do you need to earn to solve an income problem?
If credit cards are the greatest source of bad debt, auto loans are a close second. You are upside down on the loan the second you drive off the dealership’s lot and it’s downhill from there. Too many people shrug off a car payment as a necessary evil.
My gut reaction is to disagree with Anonymous Reader.
Tricia, I wouldn’t even think of retirement savings right now. Since Jan 2006, you’ve increased your net worth by almost $30,000. Without changing anything, you’ll have another $30K in the next 30 months. If you stuck with this pattern, you’d be well set for retirement many years down the road (even without considering increases in income, interest income, real estate holdings increasing in value, etc.)
You are digging your way out of consumer and education debt, while raising a child and building a business (in a down economy). When your kid is older, you’ll have lots of time to work on retirement.
I agree that it is easier and more rewarding to start saving for retirement when you first hit the workforce. I did that, had no education debts, and never had credit card debt so my retirement is well provided for and at this point (post kids, pre retirement), I’m living ‘large’ (by my definition, not Madison Avenue’s!) because I can.
But the time for an excellent start is past for you and you can’t turn back time. Instead, you stopped doing the wrong things, and turned your life around. I think you are off to an amazing start and have no doubt you’ll realize all of your goals.
You are still decades younger than me, have shown you have the ability and determination to turn things around and I have no doubt that you’ll be close to my lifestyle, or whatever lifestyle that brings you happiness, when you hit my age. Money will no longer be a stress in your life.
I haven’t read Dave Ramsey either but after checking reviews of his books at Simple Dollar, I suspect his get out of debt slowly ideas would sound awfully familiar to you.
Tricia:
Good to hear your husband has the 40 quarters of employment needed to collect Social Security. My point, however, is you need to realistically plan for the future. If you lay out now what you will need to save for retirement, your son’s education, and all the other savings cubbies you will need to fill, you will probably find it daunting. However, your goals will be much easier to accomplish this if you dramatically increase your income. I urge you to sit down and run these numbers if you haven’t already done so.
The most important part of this is you will pay off all of your debt (including your student loans) much faster and get to the saving mode much earlier if you increase your income. That will give your invested money the time it needs to grow.
If your business is successful, that will be the income you need to meet your goals. If you focus on increasinfg the business’ net income, everything else will fall into place.
My knowledge of Dave Ramsey is from his radio program and his Fox Business Network television program. Often he will ask a caller for income and expense numbers. If the expense numbers are reasonable but the income does not cover the expenses and provide for an appropriate level of savings, he tells the caller to work on the income side of the equation.
If you were to double your income and go into extreme savings mode after you pay off the last of your debt, just think what you could do. You could pay off your house (or pay cash for your dream cottage), educate your son, and retire comfortably, maybe even early.
Tricia-
This guy sounds like either a banking scammer or a work at home scammer.
You’re still doing great, but I was hoping to log on after my Ike vacation and see more of your debt paid off.
Sorry, Danielle, I’m not a scammer. I suggested months ago that Tricia’s husband focus on getting a job to increase the family’s income and pay off the debt. I think you did the same. Tricia and her husband opted to start a business to create the income a job would have provided instead of pursuing the job.
My point is that Tricia and her husband need to focus on growing the income from the business as the best way out of their situation. I’m not sure from what Tricia has written they have a clear understanding of what their future income and savings needs will be, so I suggested that Tricia, the numbers person in the family, run some numbers if she has not done so.
Tricia and her husband are aware of the consequences of mindless spending and Tricia has demonstrated tremendous discipline in paying down their debt. If the business can produce a second income equal to that of the full time job her husband was seeking, the family’s debt will be paid in no time.
If the business continues to throw off this level of income, Tricia and her husband will be able to save and invest a sizeable amount of money once the debt is paid. So while frugality and discipline are necessary for success, doubling the income would dramatically impact their results. It’s also possible downsizing and going into extreme savings mode after paying off ALL their debt, including the student loans, may not be enough with just one income.
I can’t even begin to figure my over the top expense for the month of September. I live about 15 miles from Galveston. Hurricane Ike has put my expense over the top. I do have to count my blessing for actually having a home to go back to. So many people I know lost everything they had including their home. I am still without power and hoping any day to have it restored. I also have to count my blessing for the fact that I have a job to go back to. Most people that worked in Galveston do not have jobs to go to at this point. The people that live in Galveston and evacuated have not even been allowed to go back into Galveston. The situation is deplorable. It really make you stop and be thankful for the small stuff. Things as simple as ice so you can have a cold glass of water or tea. And drinking water…..for several days we had to boil our water. Which was hard to do if you had no power and your appliances were all electric. So remember, things can always be worse…..count your blessings small and large. Just thought I would share.
DLD
Hey its all good, no wrong in dreaming right? Cars are the biggest money trap IMO. Just for the plain fact that it depreciates the second you take it off the lot! But hey, this is America, what else are you supposed to do right? I have 3 years left and like 10k left on my loan and, ironically, due to the federal fund rates decreasing the last few months, my private student loan consolidation has a lower interest rate than my car loan!! I think I might start paying down my car a little quicker! We shall see, good luck and be easy!