Evaluate our budget (newly married)

[Square Root]

Let's try to keep religion out of this forum if we can. You asked for feedback and you got it.

[so_pink]

My husband and I have made some revisions based on some of the comments you have all provided. First a few responses and then an update:

- we've decided to revise our donation amount down - for the remainder of 2012, we'll be donating a bit less than 7% (to get to about 10% for the year) and will probably leave it at 10% going forward.
- unfortunately, we need two cars for our jobs - he travels to clients for work most days. However, any day that we're both working from our offices, we're going to car pool.
- we've decided to cut all additional investment contributions except for the amounts to get the company portion match. After the debt is paid off, we'll play a bit of catch up here
- since 95% of our investments are in tax deferred vehicles, we're going to leave them there for now and not liquidate anything
- we're going to build up a small emergency fund
- no vacations for the next little while besides the two we have on the books now: Boston (to visit a brother) and NC (for a wedding); in the new year, our vacations will only be to visit family (where we can stay for free) and using points to book the travel
- my husband is going to be cutting eating out from his costs unless it's paid for by work - he's in week three of this and seems to be going alright!
- we're thinking about cutting the iPad data plan - this saves us $13/month. Lately we haven't been using it and we both have data on our phones anyways. Not a huge expense, but every little bit helps


This gets us up to about $2K per month of excess cash, however can change depending on when we get paid. We detailed out the rest of 2012 and expect to pay at least $11,000 on the debt between now and the end of the year (this is including payments we made last week - $4.1K). After that, we'll re-evaluate our budget and plan out (in more detail) 2013.

Update on our financial position (end of September):

Cash - $5.5K (net of CCs which are paid off each month)
Investments - $50K
Cars - 2 fully paid off cars (maybe worth $12K total)

Liabilities
LOC - $46K

Forward outlook - we hope to make the following loan payments over the rest of the year: October $1,500, November - $1,400, December - $4,000.

[newfoundlander61]

Tithing is a must for us also, keep that going and you'll be fine.

[so_pink]

So just a quick mid-month update:
1. we had some unexpected expenses - we both needed to take a week off work as my husband's neice passed away
2. we've decided to try being a one car family for the next few months; after the hectic-ness caused by #1 settles down, we'll be selling the truck. If it goes smoothly though the winter (which is also my husband's busiest time at work), we'll keep it up through the summer. If it doesn't work out, we'll buy a replacement car in the spring

[Homerhomer]

So just a quick mid-month update:
1. we had some unexpected expenses - my husband's niece passed away and we are chipping in for funeral and other related costs so our LOC will increase a little bit.

I am very, very sorry to hear that.

Not that in times like this budgeting is a priority, however it illustrates the importance of having emergency fund readilty available, because one never know what can happen any minute.

[so_pink]

So we've had some more discussions about our car situation. Instead of going to 1 car, we're going to sell the Jeep and buy a new car instead. We're hoping to purchase a Ford @ 0% financing (expected payments are between $300-$350/month). This will cost us about $100 more per month (increased payments will be offset by significant gas savings (we think about 50%) and well as reduced maintenance costs (36 month warranty) but will allow us to immediately pay down our line of credit by $10K and will allow us to replace interest bearing debt with interest-free debt.

On top of that, we're going to only use my husband's car when absolutely necessary and car-pool to work other days. A bus to his office takes about 45 minutes and he can take this when his hours vary significantly from mine (his are longer and more flexibly). He'll use his car when going downtown (driving to Go-train), other clients, when he has to make multiple stops in a day and for evening activities (hockey mostly).

Thoughts?

[Spudd]

I think buying a brand new car is foolish. If you really think you need to update your Jeep, look for a used car instead with some remaining factory warranty. I am partial to Hyundais, personally, I find them very good value, especially when used. They have 5 years warranty from the factory, so you could get a 2-3 year old one and still have a good length of warranty remaining. I don't think the 0% interest is really a deal; I believe they jack up the prices to compensate for the low interest rate.

If you think you can get 10K for your Jeep, you should be able to get a used Hyundai for around the same amount and not add monthly payments to your expenses. Instead, you can direct the $300/mo you planned to spend on the Ford to repaying your LOC.

I searched autotrader.ca for the Toronto area, Hyundais >= 2011 model year, and found a used Hyundai Accent with 44,000km for <$10K. Expanding the search to >= 2010 brought me back many more choices (most of them Accents, but one Elantra in the bunch). There may well be other brands/models that would suit your needs (I don't really know what your needs are) but I just chose this as an example.

[Lephturn]

So we've had some more discussions about our car situation. Instead of going to 1 car, we're going to sell the Jeep and buy a new car instead. We're hoping to purchase a Ford @ 0% financing (expected payments are between $300-$350/month). This will cost us about $100 more per month (increased payments will be offset by significant gas savings (we think about 50%) and well as reduced maintenance costs (36 month warranty) but will allow us to immediately pay down our line of credit by $10K and will allow us to replace interest bearing debt with interest-free debt.

Don't do it! There are two problems with this plan - first you will get killed on depreciation. Second, it's bad for your cash flow situation. Don't kid yourself - 0% is not really 0% - you are paying for that loan it's just buried in the pricing.

On top of that, we're going to only use my husband's car when absolutely necessary and car-pool to work other days. A bus to his office takes about 45 minutes and he can take this when his hours vary significantly from mine (his are longer and more flexibly). He'll use his car when going downtown (driving to Go-train), other clients, when he has to make multiple stops in a day and for evening activities (hockey mostly).

Thoughts?

You need to just go to 1 car. My wife and I did this for years, and although it was difficult at first, we saved so much money! If it's just not possible for you to do, then fine - but I can't tell you how much it helped us in our early years to go to one vehicle. Once we had been a one vehicle family for a few months, we realized we never really NEEDED a second vehicle. A side benefit was that one of us picked up/dropped off the other much of the time, so we got more time to talk together than we otherwise would have, which was great for our relationship. It sounds silly I suppose, but the relationship benefits of having extra together-time was even more important in the long term than the money we saved.

Worst case - stay with what you have but just try not to drive it. The maintenance is not costing you anywhere near what the depreciation on a new vehicle is going to cost. Even fuel costs for a thirsty vehicle pale in comparison to the huge cost of buying a brand new vehicle.

If you do end up buying new anyway - there are good deals out there. Buy on the last day of the month, last day of the quarter, or best of all last day of the year. (I did my last deal on new year's eve and got a killer deal!) I know you pay for it anyway, but in those cases I do focus on cash flow - so 0% and long term financing is great. I got 0% for 5 years the last time I purchased a new vehicle - and I bought a car with a 5 year bumper to bumper warranty and 10 year power train. They are out there - Mitsubishi (what I bought and has been great), Kia, and maybe still Hyundai? Also - make nice sounds when they mention all the up-sell they are going to try on you - rust protection, extended warranty, pre-paid service, matts, etc. - then after you do the deal don't take ANY of that stuff. The add-ons are all way overpriced - if you REALLY need any of that stuff get it later and not from the dealer.

[Seth]

Some great advice on this thread.

I'll chime in on one thing, Tithing.

Jesus spoke more in the bible about Money than he did about Heaven and Hell.

Tithing is very OLD testament.

As stewards of God's money we're called to NEVER borrow and if we find ourselves in debt we should free ourselves "like a gazelle from the hand of the hunter, like a bird from the snare of the fowler" (Proverbs 6)

Listen to Dave Ramsey, he's very faith based in his personal finance teachings, and he has an awesome FREE podcast daily on the subject.

My advice to you, discontinue your tithing until you can give FREELY and with an unburdened heart... Pay off debt first, Proverbs 22:7, "The rich rule over the poor, and the borrower is slave of the lender"

Then you can tithe 20% if you like for a while to catch up.

$1500 a month redirected from giving to debt repayment will whack away at that 50k you owe in a hurry.

Cheers!

Seth

[so_pink]

Update on our financial position (end of October):

Assets
Cash - $8.2K (net of CCs which are paid off each month)
Investments - ~$51K (increase due to market gains + pension contributions)
Cars - $12K (2 fully paid off cars)
Total - 70.2

Liabilities
LOC - $50K (increase of $4K)

Net - $21.2K (prior month: $21.5K)

As mentioned earlier, my brother-in-law's daughter passed away which resulted in some extra costs. We also paid down the LOC $2.1K which exceeds our goal of $1.5K. This was mostly possible due to a larger than expected bonus for my husband. Cash balance is a bit high - we're in the process of transferring $1.6K to the LOC (hope to finish it this week).

Goals for this month:
- get the truck ready to sell and sell it - regardless of if we're going to replace it (we're leaning towards yes), we hope to sell it in the next few weeks and use the proceeds to pay down debt; we'll be without two vehicles until end of December/beginning of January as now is a time in our work lives that we can do with 1 car
- pay down an additional $1,400 in November (we're hoping to exceed this - our cash flow projections project us to pay down $2,600 in both November and December)
- limit expenses: we have some known expenses coming up - new boots for me, two new pairs of dress shoes for him and a suit for him and a trip to visit his brother

Other items:
- my husband has started to figure out his expected 2012 tax refund which will go to paying down the LOC. Hopefully it will be about $5K for him and $1K for me
- we've started to work nights on special projects for my company. the pay isn't great (so far, we've averaged about $14/hour) but it's for data entry and we can share in the work together - every little bit helps!