As I looked through my inbox this morning, I was getting all excited with all the advertisements for Black Friday sales. Really, that sweater that I absolutely ADORE is 40% off? Old Navy has their entire store on sale for 30% off? Ooooh, those gorgeous earrings are 60% off! And all those warm turtleneck sweaters from Lands End are on sale too! This is wonderful! Think of all the money I can save!!!
.... But really, how much would I save? If I spend money on things that I want but don't need, even if they are on sale, how much am I saving? I have come to realize that when I don't have the budget for those things, it's ridiculous to pick them up anyways simply because they are on a great sale! In fact, unless I have the budget for them, even sales on things I need shouldn't sway me. In two days, I will have a fresh 2 week budget, and then, and ONLY THEN, can I justify spending more money.
Now, don't get me wrong. A couple of months ago there were more diaper sales than I could budget for. We went above our budget and used ...*gasp*... the credit card... on diapers. Some of those boxes of diapers were close to 50% off and I just could not pass that up. I don't have a budget for splurging when there's a good sale, but on occasion, I do it anyways. We didn't have to buy diapers for over 2 months! In that 2 months, we had to fix the van a couple of times and other stuff went wrong and I ended up being so thankful that the diaper budget could be used on other necessary things. (Can you hear the "BUT" coming?)
But, (here it is,) that was a rare occasion in which I know 100% for certain that I would absolutely need the product no matter what. When I get close to running out of diapers, I need more. That's just a fact of life for us right now. I knew for certain that spending more now would save me money later on something that I cannot possibly live without.
A sweater? Those earrings? All those awesome tunic style shirts that will actually cover my ridiculously long torso? Yes, if I have the budget, I can grab a couple. But I cannot justify "saving all that money" and getting things that I can live without.
The only way that purchasing sale items actually saves you money is if you have a budget for something. When you have a budget for something and you spend less than you thought you needed to, you actually have money left. That's saving. When you spend without a budget, I don't care how much of a discount it is, it's not saving! It's still spending more than you were going to in the first place.
Would I have gone out and purchased that sweater when it wasn't on sale yesterday? No way. Would I have gone out and purchased diapers when they weren't on sale? Yep. So there's the difference. If I wasn't planning to purchase the product without a sale, than unless I have the budget to use, I shouldn't purchase the product even on a great sale.
Be careful with all the "savings", make sure you aren't spending more than you budgeted for just because things are on sale. That's not savings at all, that's just a ploy to get more of your money, not less.
Thursday, November 22, 2012
Monday, November 12, 2012
Fix the vehicle or buy a new one?
Here's a question that we've had to really think through a lot in the past few months:
When is better to just purchase a new vehicle instead of keep paying to fix an older one??
This question has risen up a number of times as we've paid at least a couple of thousand dollars in the last 2 years to keep our vehicle running. It's currently headed back into the shop this week, and we've got a rental vehicle so that Steve can continue to earn money while our van is costing us money.
I've been watching the posts that come through my RSS Feeds from Dave Ramsey, and he talks a lot about this topic. People are constantly asking him about their own personal situation, as if they are sure he will say, "Yes, now is a good time to go into debt by purchasing another vehicle," but it never happens.
Here's what Dave says over and over again:
Mathematically, repairs almost never drive the decision until you're down to a $1,000 car. You really can't mathematically make the decision to sell a car because the repairs are eating you up. It never works out.
So here's how that works out for us. We don't have a lot saved up for a new vehicle yet, because we are still working on getting our emergency fund back into place after it took a severe beating this last summer.
How much is our van worth? According to yesterday's hours of research online, I have to come to the conclusion that our van is worth at the very least, $3500. How much of a new van can we pay cash for right now? About $3500. What on earth would be the point of purchasing a new vehicle???
Some of you are staring at me like I'm crazy. I can just hear you thinking, "What's the point?? Are you really going to keep throwing money into that old thing and let it eat you alive?"
Sure, I'd love to drive a shiny new vehicle. Sure, I'd love to be able to take it into the dealer and say, "Fix this... it's on warrantee," and walk out of there with a fixed vehicle and no less money in my bank account. Sure, I'd love to show up in a snazzy ride that everyone oohs and ahhs over.
Let me ask you something: Would I rather throw my own money into something that I own to keep it running, or would I rather borrow a bunch of money and throw way more of my own money at something that won't break down... at least for a little while. And then when I still owe about half of it, it will start breaking down and causing trouble, and then I'll be throwing money at my vehicle AND at my loan! Yay.
That's not the way I want to live. Ever.
So we shall drive a beater and until it costs us more to fix it than it does to purchase a new one, we'll keep at it. Besides... eventually, we'll have replaced so many things that we'll sort of have a brand new vehicle! :)
We'll keep saving our money by NOT purchasing another newer vehicle that we can't pay cash for, and we'll keep repairing our current vehicle and staying out of debt.
When is better to just purchase a new vehicle instead of keep paying to fix an older one??
This question has risen up a number of times as we've paid at least a couple of thousand dollars in the last 2 years to keep our vehicle running. It's currently headed back into the shop this week, and we've got a rental vehicle so that Steve can continue to earn money while our van is costing us money.
I've been watching the posts that come through my RSS Feeds from Dave Ramsey, and he talks a lot about this topic. People are constantly asking him about their own personal situation, as if they are sure he will say, "Yes, now is a good time to go into debt by purchasing another vehicle," but it never happens.
Here's what Dave says over and over again:
When you are driving a $1,000 car and a $2,500 transmission goes out,
that car goes to the junkyard and you get $500 out of it. It's a
throwaway–that's what it's for.
If you are driving a $5,000 car,
you have to stop and think about whether to put a transmission in that
and whether that makes sense. Overall, mathematically, until you get
down to that level of car, if your car keeps breaking down, you can
mathematically fix a car forever until you get down to $1,000 value. You
can mathematically fix a car for cheaper than you can buy another one.
If
you have a $10,000 car that always breaks and upgrade to a $20,000 car,
that's $10,000 worth of repairs you could have done. How long can you
keep something running for $10,000? Forever! If you have a $5,000 car
that's breaking down all the time and you buy a $10,000 car, that's a
$5,000 difference. How long can you work on a $5,000 car with $5,000
cash? A long time!
Mathematically, repairs almost never drive the decision until you're down to a $1,000 car. You really can't mathematically make the decision to sell a car because the repairs are eating you up. It never works out.
So here's how that works out for us. We don't have a lot saved up for a new vehicle yet, because we are still working on getting our emergency fund back into place after it took a severe beating this last summer.
How much is our van worth? According to yesterday's hours of research online, I have to come to the conclusion that our van is worth at the very least, $3500. How much of a new van can we pay cash for right now? About $3500. What on earth would be the point of purchasing a new vehicle???
Some of you are staring at me like I'm crazy. I can just hear you thinking, "What's the point?? Are you really going to keep throwing money into that old thing and let it eat you alive?"
Sure, I'd love to drive a shiny new vehicle. Sure, I'd love to be able to take it into the dealer and say, "Fix this... it's on warrantee," and walk out of there with a fixed vehicle and no less money in my bank account. Sure, I'd love to show up in a snazzy ride that everyone oohs and ahhs over.
Let me ask you something: Would I rather throw my own money into something that I own to keep it running, or would I rather borrow a bunch of money and throw way more of my own money at something that won't break down... at least for a little while. And then when I still owe about half of it, it will start breaking down and causing trouble, and then I'll be throwing money at my vehicle AND at my loan! Yay.
That's not the way I want to live. Ever.
So we shall drive a beater and until it costs us more to fix it than it does to purchase a new one, we'll keep at it. Besides... eventually, we'll have replaced so many things that we'll sort of have a brand new vehicle! :)
We'll keep saving our money by NOT purchasing another newer vehicle that we can't pay cash for, and we'll keep repairing our current vehicle and staying out of debt.
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