I was bad today....

[Maigahane]

I've posted a couple of times about my car now; it's a 2003 Taurus with 199,600 miles and while it's been a good car I'm starting to worry about it's reliability due to a few replaced alternators and just this weekend the coolant hoses went bad and the car overheated. So I was starting to look for a new car planning on throwing money aside to save for one.

Well I found a '10 VW Jetta Sportwagon TDI today....listed online for about $19k but said to call for the internet sales price. So I called not actually planning on even looking at it; $16,900. Eh, I'll look at it but probably won't buy it (I have a proven record of looking at cars and deciding I don't want them so I wasn't being overly irrational with that thought). The salesman asked what would it take for me to buy it today so I low-balled thinking he wouldn't go for it cause $16.9k was already a good price and said $15k (KBB says $18.5k retail and $17something private party). 30 minutes later the manager agreed to $15k if I financed through their banking affiliated for 3%. Ended up driving it home with a 1.59% loan....

On a good note I got everything that was important to me in a car: Hatchback/wagon big enough to hold my two big dogs, manual, and great gas mileage and at a good price (though more than I was planning on spending just yet...)

[cdub]

Facepunch for taking out a loan on a $15k car. :)

Granted we just paid for an 2010 Odyssey in cash or for $17k...  still expensive  - but at least no loan and we'll drive that thing until the wheels fall off.

A 1.59% loan is pretty cheap - but I'm all Ramsey about debt now.

[Maigahane]

My goal was to buy a car without a loan cause I really didn't want any more debt but it was too good of a deal on a car I really want to pass up

And I will drive it until the wheels fall off which should take a VERY long time on that car

[Forcus]

It goes against MMM tenets but personally it would be something I would consider doing and move on. You bought an economical car for about half the new price.... sounds good to me.

[Maigahane]

I just found out that I have to add to the stupidity of this story....though in the end no-harm-no-foul (in fact I cost them some money)

The finance guy said that they'll work some fanageling with their kickback from the bank and get me a 4 year warranty at no extra cost to me which was gravy cause I wasn't planning on having one. I stupidly signed the papers without looking closely enough. Today I was playing with the numbers and they did not add up. My monthly payment came out to be at the equivalent of 8.66% interest rate or financing ~$18,500 at my 1.59% rate. So I looked at the paperwork and they added about $3k for the warranty....

I called them up and he said that he didn't say it would be "no cost to me" but that it wouldn't raise my monthly payment because they got my interest rate lowered down to cover the difference. This of course is BS since I was told before we got to financing that my interest rate would be 3% (part of the deal with the manager) which is only $10 more per month than 1.59% not $50. But I can cancel the warranty within 60 days for a 100% refund applied to my balance (monthly payment doesn't change but it gets paid off 8 months sooner with minimum payments). It's a good thing I'm a freaking accountant and know how to work these numbers or I'd have no idea they were ripping me off by about $2400

So guess who's going back tonight to cancel a warranty? *thumbs chest* This girl

[andru365]

TDIclub.com is your friend.  Oh, and keep an eye on the HPFP, as it has a nasty habit of failing on the early model 2.0CR TDI motors.

[mpbaker22]

Facepunch for taking out a loan on a $15k car. :)

If she's got $15K in the bank, no facepunch is needed.

[Maigahane]

Facepunch for taking out a loan on a $15k car. :)

If she's got $15K in the bank, no facepunch is needed.

Facepunch is needed :( I do not have $15k in the bank. I had planned on stashing money so I could buy my next car in cash but only decided on that plan last week....

In theory I could probably knock the balance down under $10k in the next week or two since we're gonna sell my old car and my motorcycle but I'm going to put that money towards my 6.55% student loans instead

[Rebecca Stapler]

I called them up and he said that he didn't say it would be "no cost to me" but that it wouldn't raise my monthly payment because they got my interest rate lowered down to cover the difference. This of course is BS since I was told before we got to financing that my interest rate would be 3% (part of the deal with the manager) which is only $10 more per month than 1.59% not $50. But I can cancel the warranty within 60 days for a 100% refund applied to my balance (monthly payment doesn't change but it gets paid off 8 months sooner with minimum payments). It's a good thing I'm a freaking accountant and know how to work these numbers or I'd have no idea they were ripping me off by about $2400

So guess who's going back tonight to cancel a warranty? *thumbs chest* This girl

So, you can ditch the warranty and keep the 1.59% interest rate? Great!

I have no idea how reliable Jettas are, but if they're reliable then I don't think you need a facepunch at all. It's a good deal on a used car, with a rate that's just about inflation. Of course it would be better to pay in cash and have no debt, but if you do have the cash for it then you probably should be investing it to get a better return. 

[Maigahane]

So, you can ditch the warranty and keep the 1.59% interest rate? Great!

Yup, I stuck it to them on that part :)

I have no idea how reliable Jettas are, but if they're reliable then I don't think you need a facepunch at all. It's a good deal on a used car, with a rate that's just about inflation. Of course it would be better to pay in cash and have no debt, but if you do have the cash for it then you probably should be investing it to get a better return.

Jetta's are supposed to be pretty reliable and the diesels are even more so. I had one VW sales guy say that when they got diesels as trade in they would keep them on the lot even if they had over 200k miles where other cars would go to auction after 100k

The ridiculously low interest rates are part of the reason I hadn't set aside any money for a car yet. I knew my money would do me more good paying on our student loans that are 4-6.8%. Seemed like a waste to hold onto money for an unknown amount of time to avoid <4% interest on a car instead of putting towards those loans now.

[SnackDog]

Grey deal!! That cat should last you ten years easily. It is safe, practical, stylish and fun to drive.

[mpbaker22]

Grey deal!! That cat should last you ten years easily. It is safe, practical, stylish and fun to drive.

I can't imagine a cat being practical to drive :P
HAHAHA - Great Typo!

[Rebecca Stapler]

The ridiculously low interest rates are part of the reason I hadn't set aside any money for a car yet. I knew my money would do me more good paying on our student loans that are 4-6.8%. Seemed like a waste to hold onto money for an unknown amount of time to avoid <4% interest on a car instead of putting towards those loans now.

Great! You are definitely putting your money to work for you better by killing those fuckers instead of putting money down on a car. Although ... with outstanding student loans at those rates, spending less on a car would have been even wiser. (but you know that)

[michael]

I can second this thread, woohoo! Last November, I financed a 2010 Golf TDI hatchback - exactly what I was looking for. I had the money in the bank but it was being a lot more effective there since I was able to land a 1.49% fixed rate loan on the order of $16900! Eliminated the costly maintenance of my previous car and increased my MPG by 100%...

I'm biased but I think you made the right decision, Maigahane. These TDIs are great and will be around for the long haul :)

[Christof]

I bought a new car. Because it was part of the benefit package of my employee I had no say in whether to buy a new or a used car and our tax laws drastically favor new cars. Anyway, I ran the numbers and to my surprise it turned out that financing was cheaper than paying cash or leasing. So I financed...

Fast forward two years and I'm still not happy with that decision. It was the best economic decision, but I'm not sure what I hate more: To waste money by paying cash, or having to pay another credit down.

[Maigahane]

I bought a new car. Because it was part of the benefit package of my employee I had no say in whether to buy a new or a used car and our tax laws drastically favor new cars. Anyway, I ran the numbers and to my surprise it turned out that financing was cheaper than paying cash or leasing. So I financed...

Fast forward two years and I'm still not happy with that decision. It was the best economic decision, but I'm not sure what I hate more: To waste money by paying cash, or having to pay another credit down.

...how was financing cheaper than paying cash? I can see like in my case where financing at 1.59% and throwing extra cash at my 6.55% student loan is a better use of my money but from what you wrote I don't think you're in the same position...

[Maigahane]

So I was really surprised by the general support here....until I realized that of course you don't know my full story...

Right now our net worth is something along the lines of -$50-60k (yup, negative) thanks to something like $80k in student loans. We are right-side up on all assets (house is about break even, his car is paid off and my 'new' car has equity already) but the student loans are killing us. I had JUST set up my autopayments on my loans to pay an extra $400/month, then a week later hubby decided to take a break from school so his will come up due to the tune of another $420/month AND last year we refi'd our house down to a 15 year loan raising our monthly payment by almost $200/month.

I'm going to try my hardest to keep the extra payments on my student loans where they are but it's gonna be tight with the extra $320 car payment and $50/month car insurance.

Net Monthly Income:
                                  $4,400
Expenses:
 Mortgage                  $1,375
 My Student Loans       $275
 Extra on mine              $425
 DH SL                           $420
 Jetta                             $320
 Monthly bills                $480    (utilities, insurance, cell)
 DH spending                $200  (might be able to lower this since we carpool now)
 Groceries                   $400 (this included toiletries and cleaning supplies)
 My spending               $400 (this is carpooling fuel, dog food, and dates. It all just comes out of my 'allowance'. Trying to keep anything non-neccessary to a minimum but not always succeeding)

Leaves only about $100/month plus $250/month in rent for non-recurring costs which we already know DH car needs tires and shocks before winter :(

Now the expected facepunches can commence

[Christof]

...how was financing cheaper than paying cash? I can see like in my case where financing at 1.59% and throwing extra cash at my 6.55% student loan is a better use of my money but from what you wrote I don't think you're in the same position...

Similar, except no student loan. The car is financed at a fixed rate of 1.8%. Two years ago a cash account paid 2.x% interest with daily availability and 3.x% when invested for 2 years or more. Since credit rates are known four years in advance, I could plan accordingly.

Then there's the matter of liquidity which is more important for a business due to the volatility of payments (salaries and taxes have to be paid). A large number of small businesses goes bankrupt not due to lack of orders, but lack of cash. And finally, there are tax implications. A car can only be written off as a business expense over five years. An upfront payment is basically a free loan to the tax agency.

All this amounts to a difference of a few hundred Euros.

[Rebecca Stapler]

So I was really surprised by the general support here....until I realized that of course you don't know my full story...

Right now our net worth is something along the lines of -$50-60k (yup, negative) thanks to something like $80k in student loans. We are right-side up on all assets (house is about break even, his car is paid off and my 'new' car has equity already) but the student loans are killing us. I had JUST set up my autopayments on my loans to pay an extra $400/month, then a week later hubby decided to take a break from school so his will come up due to the tune of another $420/month AND last year we refi'd our house down to a 15 year loan raising our monthly payment by almost $200/month.

I'm going to try my hardest to keep the extra payments on my student loans where they are but it's gonna be tight with the extra $320 car payment and $50/month car insurance.

Net Monthly Income:
                                  $4,400
Expenses:
 Mortgage                  $1,375
 My Student Loans       $275
 Extra on mine              $425
 DH SL                           $420
 Jetta                             $320
 Monthly bills                $480    (utilities, insurance, cell)
 DH spending                $200  (might be able to lower this since we carpool now)
 Groceries                   $400 (this included toiletries and cleaning supplies)
 My spending               $400 (this is carpooling fuel, dog food, and dates. It all just comes out of my 'allowance'. Trying to keep anything non-neccessary to a minimum but not always succeeding)

Leaves only about $100/month plus $250/month in rent for non-recurring costs which we already know DH car needs tires and shocks before winter :(

Now the expected facepunches can commence

Ah ha! You are looking for a face punch! What are you willing to do to recover from this decision? Is it too late to return the car? Can you sell a car and commute w/ YH? Can you bring in $$ on a side hustle? At the very least, cut your expenses to accommodate for the added expense of the car payment -- no more dates that aren't free (or close to it), start couponing to lower that grocery/toiletry/dog food bill, use vinegar and bleach for future cleaning supplies (or use coupons to get them for free), turn down your water heater, turn up the temp on your AC. If YH's spending is "unknown," could you try allowances for non-communal expenses and seeing how low you can go on them each month?

[Maigahane]

Ah ha! You are looking for a face punch! What are you willing to do to recover from this decision? Is it too late to return the car? Can you sell a car and commute w/ YH? Can you bring in $$ on a side hustle? At the very least, cut your expenses to accommodate for the added expense of the car payment -- no more dates that aren't free (or close to it), start couponing to lower that grocery/toiletry/dog food bill, use vinegar and bleach for future cleaning supplies (or use coupons to get them for free), turn down your water heater, turn up the temp on your AC. If YH's spending is "unknown," could you try allowances for non-communal expenses and seeing how low you can go on them each month?

There it is! lol
It is too late to return the car (as of last night) and due to current circumstances we are not willing to go down to just one car. We live about 30 miles from work and while we are planning on selling the house and moving closer now that we both work in the same direction it won't be for another 2 years or so (I have an old dog that I won't move again and we'll need to do some repairs after he's gone). We do carpool basically every day now which with my old car I figured saves us $10/day in car expenses (fuel, tires, and oil) and even more now with my better mpg.

I do make extra money in the spring doing taxes and planning on putting extra effort into it this coming year. Last year it was about $2500 and I'd love to double it.

I'm currently working on a spreadsheet that details the cost of my meals so I can plan my shopping trips better to lower the grocery bill. I'm also working on just really cooking more in general which saves us money over convenience foods. And I learned last year how much cheaper it is if I go shopping alone so DH is never allowed to go with me. I'd like to get our weekly groceries down around $75 but this is where DH and I butt heads since he thinks food is an acceptable area to overspend on while I'd be just fine eating beans and rice everyday.

I  recently cut my dog food as low as I'm willing to go which is about $35 for a 40lb bag which lasts us 3-4 weeks.

DH get's $50 every week for his expenses and I'd like to cut it down to maybe $25 since I fill up our commuting car but I had just cut it down from the $150 he got when we couldn't carpool and he was eating out more since he has class either before or after work. I'll broach the idea to him this weekend.

We just last year put in a new energy star water heater and set the temp lower than our old one. I try to keep our ac to a minimum but our bedroom gets insanely hot at night so I have to keep it running all night or we'd suffocate (it has 3 outside walls that I should have the insulation checked on and there are the two of us and ~160lbs worth of dogs that sleep in the room)

Also, once I can sign up for insurance through my work in November our health insurance will go down by about $150/month and since we're switching DH to an HSA his company will contribute about $600/year into his HSA account which should more than cover his higher deductable since he rarely goes to the doctor.

We've let the dates get out of hand lately but with an extra $1,200 worth of monthly payments hitting in just a few months I think we'll both be better about wanting to stay in instead of spending money.

We do have a decent emergency fund (~5k split between 3 accounts so I hate to touch any of it because it looks like a bigger hit that it would if they were together) and of course we are contributing to our 401ks and that was taken into account with my net pay number before. He's putting in 8 or 9% with a 3% company match (I periodically up it a percent and can't remember what he's up to) and I put in 7% with a 9% employer contribution. I had figured at one point what our savings rate was using MMM logic (i.e. paying down principal is savings) and I can't remember what it was but that it was higher than I had expected. I'll have to do the math on it now with our recent changes.

[Maigahane]

Just did the calculations (it's easy when you're a nerd and and accountant and already have all your stuff in a spreadsheet) and IF we can keep up the extra payments on my student loans we'll be saving about 30% of our gross income not including the employer contributions to retirement accounts (37% if you do include them)

[Rebecca Stapler]

OK, I'm going to try to address almost all of those explanations (complainypants?) with some hopefully helpful suggestions to reduce spending while still addressing those needs.

1) What can you do now to maximize your earnings come tax time? Will networking or marketing now help? Gaining more skills / knowledge?
2) There is a difference between splurging on food you eat and spending $$ on food that gets thrown away b/c it spoiled before you ate it. If you do weekly meal planning, and only buy for those meals, you can avoid wasting food -- which may be running up your bill? You could even do it monthly by freezing some meals, although it may not work if you're just now getting into shopping sales/couponing. Freezing / portioning meals will also help YH avoid takeout, because his meal will be planned in advance.
3) You don't have to compromise on the type of dog food, if it's one that has coupons. You can probably still buy exactly what you want, but for less, if you shop sales with coupons. Keep a price list where you track the price per unit that you can get at various places, during various sales, and with various coupons. Pay attention to your best price per unit and strive to only buy at that time. Stock up and store in a cool, dry place.
4) Do you see a theme here? While you don't have a side hustle, I highly encourage you to learn how to "extreme coupon." It is a thrilling experience for numbers-crunching, frugal people with a little extra time on their hands. I learned how to do it on www.hotcouponworld.com and use the weekly match ups on www.livingrichwithcoupons.com. I also liked Stephanie Nelson's book The Coupon Mom's Guide to Cutting your Grocery Bill in Half. We don't compromise on the quality of the food that we eat, and have really cut down our groceries bills from my pre-couponing levels. Each week, we save 30-40%.
5) Do you have central AC or a window unit? If you have central, try installing a window unit just in your bedroom. Turn the central AC off at night and just use the window unit (and close the door to your BR or put up a curtain so the dogs can still get in/out but the AC air won't)
6) Sit down with the hubs, get him on board, and see what suggestions he has.

Anything there you can use?

[Maigahane]

1) I work for a big box tax prep company and I can (and am working on) increase my certification level which will bump my pay. I also only worked weekends last year and am planning on putting in more hours this time (though thanks for the reminder because I need to talk to a different DM about that...). I have a few returns that I do on the side as well but since I signed a non-compete clause I can't actively recruit more.

2) We don't throw a whole lot of food away but DH likes to have easy (i.e. processed) foods around so we buy crap like poptarts and snack pack things. And to him a hunk of meat is a main dish which gets expensive. I've been meal planning for a while now and am getting better at it. Now what I'm working on is prepping food on the weekends to just throw in the oven or crockpot during the week. Makes it even easier to say no to going out

3) Not sure if you have dogs, but most dog food worth getting (no corn) doesn't have coupons. The stuff I was getting would regularly have coupons but the base price kept raising so I switched to a high quality one that has a steady price lower than what I could get even with the coupons but I've never seen coupons for. And one dog is allergic to poultry in a bad way so I have to be careful what he gets.

4) I do need to try couponing but when I've looked before I never found coupons for anything I would buy. I'll have to check out the sites you listed when I get more time to see if they're better for me.

5) We have central ac. I've been tempted to move to the basement in the summer to save on cooling but it would involve buying a full sized bed since our queen sized won't fit down the stairs (believe me we tried). I might just have to keep an eye out for a cheap window unit for our room though.

6) I do need to re-sit with him now that we bought the car. He doesn't have much interest in dealing with the budget but I do occasionally sit him down and show him what we've been doing and what changes I want to make to get his opinion. That might be our "date" this weekend :D

[Rebecca Stapler]

Oh yeah, that's another one -- not spending money on date night doesn't mean you should stay in! I'm sure there are lots of fun, free things to do -- especially in the summer. Some of my favorite dates with my SO are our hikes, XC skiing (we bought used gear and skied locally, so yes it's not free), etc. There might be outdoor movie nights near you?

Even if there are no coupons for what you eat (which I doubt, unless all you eat is produce, and even then there are coupons), I guarantee that they are in a sales cycle. Go to www.livingrichwithcoupons.com and look up your grocery store. Then look at the coupon / sale match ups this week and see if there truly is nothing that you could buy for a better price with a coupon or on sale than you did last week.

[Maigahane]

We don't really "date", it's more like we're on our way home and ask "So do you want to go somewhere or eat at home?" and stuff like that (meal prepping lets us avoid that particular one). We live in the middle of nowhere in the midwest so no good hiking close or I'd love to do that and most cheap/free community stuff would be at least 1/2 hour drive away. We do have a frisbee golf course very close that we go to once a week or so. I do want to say though that we are not the type of people that have to be doing something. We are perfectly content to stay in, our "dates" usually stem more from laziness than anything else

I tried checking out that livingrich site but my work computer doesn't like it and froze so I'll try again at home. The quick glance I got was more of the same from what I have seen before but I'll get a better look and read their couponing guide when I get on a better computer

[Forcus]

Hmm that does make it a different situation. Also sounds like the excitement on the new car has worn off :)

Honestly as others have indicated I'd not focus on getting rid of the car you just bought, or trying to downgrade (see another thread where I did the math for myself and a newer car was cheaper than a 10 year old used car), but on trying to increase your income.  Your total household income is net of under $50k / year which with your student loan debt seems low (unless you or DH picked a field where the cost of school doesn't line up with the potential income).

[Maigahane]

Hmm that does make it a different situation. Also sounds like the excitement on the new car has worn off :)

Honestly as others have indicated I'd not focus on getting rid of the car you just bought, or trying to downgrade (see another thread where I did the math for myself and a newer car was cheaper than a 10 year old used car), but on trying to increase your income.  Your total household income is net of under $50k / year which with your student loan debt seems low (unless you or DH picked a field where the cost of school doesn't line up with the potential income).

No buyers remorse for the car. I love it and it was a good deal, just bought about a year sooner than I maybe should have.

Our income isn't too bad really. We each bring home about $1100 per biweekly paycheck so about $57k before my tax prep job. I figured we're set to have gross income of just over $90k this year with everything. I just finished my masters about a year ago and am finally in a position to start making more money (my income increased by $15k in a year). DH makes decent money but most of the student loans are his. Not so much an issue of wrong field as wrong schools. We learned later he could have gotten his degrees for cheaper but lesson learned too late. The other side of our income that's hard to quantify is that we both have awesome benefits and great job security

And we have basically no tax deductions (no kids and not enough mortgage interest to itemize anymore) so more taxes withheld then most people our age/income but are still set to come pretty close to breaking even tax time.