New Van!!

For the last 2 years, I've posted about how our van was slowly breaking down more and more, and how we just kept fixing it and going on.

After a few more old-age quirks from our van, we decided to start looking for a new van.  We found the van that we wanted (a Toyota Sienna, 2004+), and waited for a good deal.  We waited for nearly a year, watching online ads and keeping our eyes open at all times, waiting for the right van to come along.

On Monday morning, I came across a van that I'd seen before, but it was listed as a 7 passenger.  We were set on an 8 passenger van.  I'm not sure why, but I clicked on the ad, and browsed through the photos.  It was then that I realized that regardless of the title on the ad, this was definitely an 8 passenger van!  I called the Lexus dealership that was selling the van and confirmed the number of seats. The sales person couldn't believe they had made a mistake like that- it virtually eliminated their chances of selling the vehicle!  Anyone who wanted a 7 passenger would have seen the photos and realized it was an 8 passenger.  Anyone who wanted an 8 passenger would never click on the ad, as "7 passenger" was written right in the title.

It was a 2005 Sienna with only 126,000 km on it, for $11,500.  The other comparable vans for sale were all a good $2000 higher than this one.  This one had come down in price by over $1000 since it had been on the lot since February. 

After crunching the numbers and dipping a little into our emergency fund (technically not allowed by the Dave Ramsey Rules, but we were sure this was the right van for us,) we decided that we could pay cash for the van. Since Steve and I couldn't really find a babysitter at the last minute, we decided that I'd go do a test drive alone.  I asked my dad to come along, mostly to help with the deal making.  I've never bought a vehicle at a dealership before, and I wasn't sure what to expect.

I loved the van right away, and it took very little time to settle in and driving felt just as normal as ever.  The van was in perfect mechanical condition, the dealer had put in nearly $2000 of work into the van to bring it all up to good condition.  They even replaced the windshield because it was cracked.  When I asked about the condition of the vehicle, the sales person said to me, "What??  This is a Lexus dealership.  We do NOT sell anything that is not in excellent mechanical condition!"  He had the work orders and the inspection results to back that up.

We worked out a deal for $12,000 final price, and I was pleased to find that they had thrown in free lifetime oil changes as an added perk to the deal. 

My favorite part of the whole deal was when we came back the next day (Tuesday) to pick up the van. It was paid for in full, we didn't owe a penny.  The van was ours, like 100% ours, no payments to make later, and no buyers remorse.  We'd waited a long time to choose a van, and we felt that this was right for us!

We brought the kids to go pick it up, and we were so pleased to see that they had the van all shiny and polished up, parked inside the building right alongside all the other Lexus vehicles, waiting in front of some grand glass doors that opened to let us drive through.  The kids were all so amazed that our van was in the midst of all the "race cars", and it was immediately dubbed, "The Race Van!" 

We drove from the showroom floor out through the glass doors and felt like royalty.  It was fabulous.  They treated us so well, we really loved the whole experience.  And the best part is that we paid cash, 100% cash for the purchase. No credit card debt, no car payments, nothing. 

Thanks Dave Ramsey!  Now we start building back our savings to get a down payment for a house!  We accomplished one major purchase, and I have the confidence that with more hard work, we can keep saving our way to a paid-for home!

Black Friday - SAVINGS!!! (......Really?)

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.

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: 

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. 

Interesting - Lesson Learned!

If you have been following along in the last couple of months, you'd know that we have been going through a tight financial time.  In order to combat this, we really pulled in on the budget, and then laughed as we quickly transferred the money back OUT of our emergency fund for a few things.  We've managed to save very little, but at least we haven't gone into debt!

See, we've got a little guy who is just starting Kindergarten.  Call me crazy, but I totally didn't realize how expensive it would be to get him all set up in school.  We faced school fees, purchased school clothes, winter coat and boots, and a bunch of other things!  Our little guy is super sensitive to anything touching his skin, so we had to make sure he had super soft pants, seamless socks (rather expensive!) and a bunch of other stuff that would be suited to making him feel comfortable at school.  I didn't want his teacher to have to fight with him every day to get his socks back on, while he screamed that his socks seams were cutting into his feet.

We also ended up having to get new tires, a wheel alignment, and a couple of other things.  It was kinda crazy.

The one mistake we made was to not bother getting cash out of the bank, and assumed that without the cash in hand, we'd spend much less.  WRONG!! 

I can tell you that without the cash in hand, we spent quite a bit more on groceries than we had before we cut the budget!!  Like, easily $200 more!  Wow... was that ever a wake-up call for us!  When we cut out our cash budget, we spent more on the things that we used the debit for.  I was baffled at how we were spending so much and yet, we were trying so hard to save more!  Starting this week, we are back onto a cash budget... that will save us more money than spending with a debit card.

The second mistake I made was to cut out some of our grocery budget.  With one of the kids in school, healthy snacks are a must.  Easy lunches are a must.  Unfortunately, I cut back our grocery budget to a completely unreasonable amount and then "overspent" even when I was buying just the bare minimum of our food needs.

In November, I'm starting up a dayhome, and that will replace my lost salary from the bookkeeping position that I quit in August.  (It is the only job where I can honestly stay home with the kids and focus on them, without having to meet deadlines, work late hours, and neglect the kids when I'm busy with work.)  I'm very excited to start this up, and have already been planning out a new budget.  We'll go back to the same grocery budget that we had, but we'll try to keep out other expenses as low as possible.  We should be able to save like crazy and see our emergency fund back up to the full 6 months of expenses within the next 6 months.  We'll see.  I know that there will be expenses that come as a result of the dayhome - insurance, a little more food, other random things, but I'm confident that we can manage those things well. 

Well, here's to a new start... again!  :D  I am a very optimistic person and I don't mind starting fresh as many times as it takes to get back on the right track.  As long as I start fresh from a slightly higher position than I started from last time, I'm happy!

Necessary wants, how to fit them into the budget!

So last week I wrote about how we were pulling in on every front and guarding our finances from anything that might try and whisk them away.  This week is a little different, and in some sense, is a contrast to all that talk about saving every last penny.

Once we got back on track last week with an extremely limited budget, we were able to regain the focus on saving that we've lost in the last few months.  Things have come up that we do need money for, and not "needs".  These are things like birthday celebrations and other stuff that you just really wanna do! 

With no room in the budget for any sort of entertainment, you have to figure out how to handle it when things come up.  Sometimes you have things that are not truly needs, but are necessary wants!  For example, if friends get married, you need a gift!  If someone comes into town that you haven't seen in awhile, you'll need to make the time to see them, and if that happens to be a family gathering at a restaurant or something, you'll need to go.  You get the picture.  Life happens, and life usually costs.

So how do you fit "life" into a strict budget?

Here's how we do it.  We save $50 every two weeks into what we call our slush fund.  This is not something that we just spend when we want to, it's kept in a secondary savings account and used as an pre-emergency fund.  Every time we can gather a couple hundred bucks into that account, it gets transferred into the emergency fund so it doesn't get used on things that we don't really need.

It takes 5 business days to transfer the money from our savings account into our checking account where it can be put into whatever we need it for.  Knowing that there is a 5 day wait for what we want usually helps us to decide whether it's really worth it or not.  Generally, necessary wants are planned for at least a week before they arrive, giving us time to figure out where to get the money from.

God and others have blessed us so much though that sometimes when we think we'll need to pull from the pre-emergency account, we don't have to!

Here are some ways that I've found money to do the things I want to, even when the budget is super tight.

1. Sell stuff!  Do you have an old bookshelf or table kicking around your shed?  Sell it!  Make sure you research the going price of such items before you list.  If you need a quick sale, list it slightly less expensive than all the other options.
2. Cash in those points cards!  Do you have a points card like Petro Points, AirMiles, or any other type of points card that is just sitting there gathering points?  You can usually cash those in for gift cards or even items that you can use for gifts. 
3. Pray!  Sounds so crazy, doesn't it?  God knows what you need, and believe it or not, He even knows what you want and what you are hoping for.  I really wanted a treadmill to use through the winter, but I couldn't afford one.  I would pray for one on and off through the last year, and a couple of months ago, I found one for free!  God is bigger than we know, and far more concerned about our desires than we sometimes believe He is. 
4. Pull in a few dollars from your other budgets.  If you can get by with a little less gas money in a month, you can use that unused budget to cover for some other stuff.  If you can avoid spending quite as much money on food or electricity, you'll have a few more dollars that you can claim for the fun stuff.

Back to the Basics!

Sometimes life hits hard and though you'd LIKE to continue living at the same level of comfort, you just can't.  Well, no, you can, but it will take you into debt!  We have just been through a financial storm, and though we were able to weather the storm nicely, we now have to get back onto our feet so we can prepare for the next one.  Stuff happens, financial storms come and go.  In the time between, it's up to you to get back up, brush the dirt off your back, and figure out how to strengthen yourself better for the next one. 

Living with financial peace is one of those things that takes a lot of sacrifice.  Creating a budget is great, but only if you are willing to adjust it and pull it way back if the need arises.

My husband and I sat down together last week and decided that if we were going to get back to the place where we could weather another terrible storm, there would have to be some serious cuts.  Adding to the equation was lost income due to the fact that I've recently resigned from my job.  With the lost income and the financial struggles in the last month, some serious re-ordering was necessary. 

I couldn't bear to to back to square one and create a semi-permanent budget of very low spending.  I just couldn't do it.  So we decided to budget for the next 4 months only, and then re-evaluate in January.  It seemed much easier to just focus on the next 4 months rather than feeling like we are back in a never-ending prison of sacrifice.  Yes... I am a dramatic person, and that drama certainly pops up when I think about sacrificing to save money.

How do you cut back a budget?  The only way to cut back a budget is to sacrifice the things you don't actually need.  Here's the funny thing. In the last year, we put about $500 a month into savings and lived comfortably on the rest of our income.  As we now work with newly lost income, we have cut the budget and INCREASED our savings to be closer to $1000 a month.  How can we do that?  Simple.  Sacrifice. 

We've totally nixed our eating out and recreation budgets.  We no longer have anything towards entertainment, nothing towards our special savings for random events.  We've cut our grocery budget by about 1/3, and we'll be back to the ground beef, eggs, rice, and bread diet!  I didn't take anything out of the fruits and veggies budget because those are necessary for a healthy lifestyle. 

Some of you may be thinking, "Well you can't possibly live like that... with absolutely no spending money, no entertainment money, and no recreation money!" 

Wanna bet?  This is where my dramatic side switches over to my competitive side.  We've done it before, what's to stop us from doing it again??  You think we can't?  You just watch and see and we'll prove you wrong! 

Even Gail Vaz-Oxlade, a money coach and financial guru, claims that no one can get by without at least $50 a month set out for entertainment.  She's very wise in a lot of things, and I lover her advice 90% of the time.  However, in this one thing, I think she's wrong.  I know she's wrong. 
 
I can get by without cable TV!  I can get by without eating out!  I can get by without spending money on entertainment!  I can get by without spending a single cent on clothing for myself, and only a couple bucks of clothing for my kids in the next few months!  I can get by on a small grocery budget of just the basics!  I can get by without costly recreation!  I can and I will! 

I did it for more than a year as we started to build a financial foundation, and I can do it again!  I can do it again because I know that under all this sacrifice is peace.  Under all the frustration of trying to feed a family of 5 on a budget for 2, there comes a satisfaction as we watch our savings account rise back to the place where we know that we can last another 6 months on our emergency fund if the need arises. 

Financial peace isn't very peaceful at first.  But, you know what Dave Ramsey says.  "Live like no one else so later, you can live like no one else!"  Right now, we are back to the first half of that statement, and though we are not really loving it, we are fiercely loyal to our plan so that we can reach the second half of the statement. 

Lots of emergencies!

In the last couple of months, we have come through some crazy financial emergencies.  We've managed to take out 50% of our emergency fund on things that we totally didn't plan for and weren't too thrilled about! 

Part of me wants to think of it in a very depressing and frustrated way.  All that hard earned money just went down the drain!  We worked so hard to save almost $20,000 as a good solid financial foundation for ourselves, and we just lost half of it due to stuff that came up.  Black mold in carpets couldn't just stay there, we had to replace the carpet. A cracked bathroom sink and rotten out vanity cabinet can't be ignored, we had to replace it.  Our van (our only vehicle and our means of earning money!) had some troubles and we had no choice but to fix it. 

We also ended up starting our own business in February and didn't foresee some huge costs for various insurance items that are mandatory for a business like ours.  Ugh. We had a slow work month in June and ended up not being able to take a paycheck in July.  It's been rough!

Instead of dwelling on those thoughts, I can tell you that I have been extremely thankful.  I'm thankful that we took Dave Ramsey's Financial Peace University course. I'm thankful that we worked so hard to save all that money.  I'm thankful that when we walked through the last couple of months, we had the emergency fund to rely on!  Most of all, I'm thankful that we sit here today with a small emergency fund instead of a huge credit card debt. 

There are more things that are coming and need to be dealt with one at a time before winter, but hopefully we can handle them without touching any more of our emergency fund.  We'll need new tires, new windows (the leaky windows caused the mold in the carpets), new front door and door frame (the snow blows in under the door), and we really need a new screen door for our patio door.  Our current screen door is getting more and more taped up every day to cover the new holes. 

Here's the thing though.  Did we and do we still have financial peace?  I can tell you honestly that we've had some doubts, but yes, we are still at peace.  It's funny... a few years ago, we felt that we were doing reasonably well as we lived from paycheck to paycheck, constantly battling a few hundred dollars of credit card debt.  At least we could find a lot of people that were in deeper debt or seemed less well off than we were. 

Now though, we've changed our mindset about money.  We sit here feeling empty and broke because we've had to knock $10,000 out of our emergency fund and only have about a 3 month buffer in there now.  We feel like we have virtually nothing and are doing everything we can to save our pennies to get us back on track!  I can tell you, if we had $9,000 a few years ago, we would have been dancing our way to the store to quickly find something to splurge on!  What a change! 

When I look at our entire financial picture, even the last few months have been peaceful.  Crazy, and frustrating, and expensive yes, but there is an element of stress that has been replaced by the peace that we were ready for all of this.  We didn't buy the bigger house (even though that would have eliminated the carpet costs and other house costs,) and have a bigger mortgage and new problems to deal with.  I'm thrilled with our new carpet, it makes our house look bigger and more beautiful.  I'm happy with the way things are, because I know that we were prepared.  I also know that even if we lost everything, we could rebuild it faster than ever because we've done it once already before.  We learned so much in the process that if we had to do it again, which we sort of do, we know how.