Author Topic: Advice For My Current Situation  (Read 14464 times)

GRSConstruction

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Advice For My Current Situation
« on: May 29, 2014, 08:54:44 AM »
Hello, let me start out saying I am new here and have been reading a lot on this site over the past 2 days and am really enjoying the reading and ideas. There is a lot of great information on this forum and site. I apologize in advance for the length of my post, but I would really love to get some advice from those of you on here that have the time. I would greatly appreciate it.

I just turned 30, as did my wife. We live in Oklahoma, so the cost of living is pretty cheap. However, we have not made the best decisions leading up to this point with our money and are not in the position financially we wanted to be at this point. Mostly all our own doing of course.

I am a construction manager for a small commercial construction firm. I make $61,560/yr base salary and average about $15,000 - $25,000 in profit sharing/bonuses per year (all before taxes). My company matches up to 3% of my weekly check into a basic IRA account. Currently that is all I've been putting into that account, 3% plus they match that same 3%.

My wife is a preschool teacher and was only working part time, but more recently has been working full time. She only takes home about $600 every two weeks working full time or $400 every two weeks working part time. They offer her no benefits or anything. **Just as a side note, I think it is absolutely absurd that my wife works with and is responsible for children from ages 2-5 and is expected to provide curriculum for these children, etc. for $9.50/hr. It is such an important job that is paid so poorly it is embarrassing in my opinion. She loves working with the kids though, so she sticks with it.**

So our total monthly income after taxes, my 3% IRA contribution, and our health insurance that is pulled from my check (I only pay for my wife, my company pays my insurance, so this is about $75/wk.) is currently about $5,000/month ($3,600 from me, $1,400 from her). If they drop her back to part time that will obviously reduce us down about $400/month.

We have more expenses than I like to admit. Our house payment is $1,350/month, my car is a 2006 Toyota 4runner with 132k miles that is paid off. She has a Mazda CX5 that costs us about $500/month. Outside of those two items we have normal utility bills, car insurance, and then the dreaded credit card payment and line of credit payment. We owe $6,500 on our credit card. This is mostly from our wedding and honeymoon for some additional costs we did not have cash for, and a couple emergency vet bills for our dogs we did not have cash for at the time. The line of credit balance is $8,500 and this was to pay off another credit card and help towards our adoption (we are currently in the adoption process which has almost completely drained our savings, so we used a line of credit to cover the balance so we could keep a little in savings). So the house, one car, the credit card, and line of credit are our debts. We did have money building in savings, but as mentioned, it was almost completely depleted so we could adopt (it's cost us about $25k so far for a domestic adoption). So with all of that in mind, we are left with about $5k in savings which we are now trying to build back up. Our average monthly expenses end up in the $4,500 range typically, but as most people outside of this site do, we overspend on crap we don't need or eating out and seem to be living paycheck to paycheck.

We have inherited a property in the mountains of northern New Mexico that my grandparents bought and then my parents bought from them. My parents haven't had the time to go up there much and more or less handed it over to my wife and I. I grew up going there my whole life for most any vacations we got as my parents never had much money. My wife and I got married on this property and love going up there to get away. Of course this does not happen near as often as we'd like. To have such a beautiful property and only get to visit it about once a year for about a week if we're lucky is just horrible. For those of you familiar with the area it is in Chama, New Mexico near the Colorado Border (about 1hr away from Pagosa Springs/Wolf Creek). I stumbled onto your site while we were up there last week. We got to talking about how we just have to find a way to spend more time there and how we want more freedom so badly. We want to be able to take our child or children to this place that has been so important in my life and now my wife's life and see nature and go hiking, etc.

SO with all of that information here's where I'm at...I want the financial freedom you all have and discuss. I want to be able to spend more time with my family, go to our cabin in New Mexico with our kid(s), have the freedom to not feel controlled by our money situation.

I know I need to first focus on the credit card debt. The $6,500 debt has got to go ASAP. Then I figured I'd focus on the $8,500 line of credit as it is at 10.9% interest. From there I'm not sure. I could try to sell our Mazda and get a cheaper car or something, but we do not have the cash funds to purchase another vehicle in cash and in Oklahoma, where we live, you have to have a reliable vehicle. I drive about 30 miles round trip to work every day and have to drive to job sites throughout the day. I easily put 20,000 miles/yr on a vehicle. My wife drives much less, so realistically she could drive the 4runner and I could get a more fuel efficient vehicle I'm sure for much less than the $500/month we're spending on the Mazda. What would be your suggestion on the vehicle??

Next is the IRA at work, should I up this substantially and not be able to save additional money outside of it until my debts are paid off or should I leave it at 3% and get my debts paid off as fast as possible and then invest the money I would have been spending on the credit card payment, etc.?

Any other advice from that point would be fantastic. For those of you that took the time to read all of that I really appreciate it. I really feel motivated and with our adoption moving along and hopefully having our baby in our lives in the next 12-15 months I want to get us on the right track. I want to turn the corner and start working towards the freedom I have only dreamed about the past 7 years. Thanks again!!!

-Grant
« Last Edit: June 05, 2014, 09:03:39 AM by GRSConstruction »

Scubatoad

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Re: Advice For My Current Situation
« Reply #1 on: May 30, 2014, 09:42:00 AM »
Grant,

Welcome to the forums.  I, like you am also quite new.  But reading your post - I realized how similar we are.  I make about exaclty what you make and my wife is a 3 yr old teacher that makes almsot exactly what your wife makes (whom also is way underpaid for the labor, but loves the job)

It sounds like you already have a pretty decent plan.  I live in North Carolina, so Im not sure on the cost of living compairison - but we live off of about 3200 a month.  I think the biggest difference is your car payment, credit payments, and u pay about 400 more on your housing, but we are currenrtly renting - so you might be making some of that back long term.

Only knowing the price per month on the Mazda doesnt give a lot of inforamtion to help give advice.  The interest rate, and how much is currently paid off will wiegh heavy on that decision.  Also, do you need the 4-Runner for construction type stuff?  Do you haul a lot?

As for the credit cards at 10+ % - I would be pouring everything extra into those because you are not going to get that kind of safe return in almost anything else in the current market.

Though, I would continue the 3% matching, as that is obviously fantastic.

I would really try to scrutinize your spending over the last 6 months and try to figure out where you guys can cut down any excess spending.  Since income is not likely to go up, you have to try to figure out how to make your monthly income last longer.  MMM has some fantastic article on how to cut down costs on almost all areas of life - and i really reccomend reading through a lot of his older stuff.

Congratz on the adoption, and keep fighting - you look to be above water soon!

trailrated

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Re: Advice For My Current Situation
« Reply #2 on: May 30, 2014, 10:11:12 AM »
"The first step towards getting somewhere is to decide that you are not going to stay where you are."

Congrats on your first step! As for the rest it would be a lot more helpful for us to point you in the right direction and make some suggestions if you posted a monthly budget, remaining balances on debt along with interest rates etc. If you have not had a budget in place before it makes such a huge difference tracking and seeing where your hard earned money is actually going.

Thanks for sharing with us.

JGB

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Re: Advice For My Current Situation
« Reply #3 on: May 30, 2014, 10:43:55 AM »
Absolutely, positively, one hundred percent, dump everything you can into paying off the high interest debts. Keep contributing enough to get the full match, but anything after that is going to cost you in the long term.

Out of curiosity, what part of OK are you in? I live in Jenks, just outside of Tulsa, in a house that could only be called excessive for anyone not in a huge family (5 bedrooms; 3 baths; under 10 years old), and my mortgage is in the $1200/month range. One option to consider may be moving to a lower cost house that is significantly closer to your work.

For additional advice, post details about where your monthly spending goes. We will help you figure out what else you can do to trim the fat, but we need all the information to be able to do so. Give all debts (including car, loans, mortgages, etc) with rates and amounts. Then list all expenses.

Fwiw, my wife and I have a similar income, and have maintained a savings rate of 60% for the past year. We do not have the adoption/child care expenses yet, but you can definitely get to the point of saving a large amount (which you first put toward debts, then apply to investments).
« Last Edit: May 30, 2014, 10:45:39 AM by JGB »

CU Tiger

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Re: Advice For My Current Situation
« Reply #4 on: May 30, 2014, 10:59:16 AM »
You aren’t really specific about your living expenses, so maybe some/all of what I am about to say is not applicable, but some of it probably is.

If you keep doing what you have been doing, you will always get what you have always gotten. Think about that the next time you are reaching in your wallet to pay for a night out, a dinner out, a gadget at Target that you are buying because “you work hard and you deserve it.”

Cut cable and internet at home. I know it sounds radical, but hear me out. What’s more important – 24 hour access to bad entertainment and cat videos or the baby you are trying to adopt and your time in New Mexico? You can get internet access with a laptop at the library, at coffee shops, etc. if you need it. But the $150-$300 each month you pay the cable company would go a long way towards killing your debt.

Plan your meals and shop sales at the grocery store. Don’t wait until you feel like eating to think about what to eat. You need to buy things when they are on sale and have them waiting for you. Cook a lot on the weekend and freeze things for your lunches and dinners.

Treat your debt like an emergency, like if you don’t pay it off someone is going to come into your house and start taking your things. Take on side work. You could build things for people or do yard work/handyman type stuff and your wife could babysit or do dog walking or something. “But we already work so much!” you say. “We deserve to rest and relax!”  (Wahhh!) Yes, you do and you can do it AFTER you are out of debt and have a stash. Until then, it’s time to buckle down and destroy that debt. And build a stash of at least six months living expenses… which will give you some freedom in maybe looking for another job where you make more money.

But the most important part is decreasing your living expenses. Get on the phone and call your insurance company. Tell then you need to get the cost of your insurance down and ask what they can do to help you. Ditch your fancy cell phone or data plan and go with something pay as you go. STOP shopping…don’t drop by Target unless you need something there. Stay out of places you know you spend money wastefully (for me it is bookstores, if I am in one, I spend cash!).

Sell stuff you don’t use. Do you have an old game system? A grill you don’t use? Old jewelry that you haven’t worn since junior high? Sell in wherever you can get the most cash. Take nice clothes that don’t fit to the consignment shop. Sell CDs and DVDs you don’t listen to. Sell the kitchen gadgets you used once and then stored in the pantry. Look at every single thing you own and say, “Does this bring value to my life?” If not, sell it or give it away. Maybe you can simplify your life so much you can live in a smaller place.

Pick your priorities (wife/baby/time to spend in New Mexico sound like they would be yours) and make sure everything in your life is contributing towards one of those priorities.

Whatever you do… if you want your life to change, you are the only one who can do it. A bunch of internet people, well intentioned though we may be, can’t change you. If you keep doing what you’ve been doing, things will stay the same. You’ll be in debt, working for people who don’t treat you with respect, and you’ll get to visit your beautiful NM land once a year if you are “lucky”. If you want things to be different it’s up to you.

rmendpara

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Re: Advice For My Current Situation
« Reply #5 on: May 30, 2014, 11:13:58 AM »
Many points:

IRA match: Contribute enough to get the match. NEVER turn away free money.

Job: Get a better one if you're qualified. You're only worth what someone is willing to pay for your time/skills. You can prioritize salary/flexibility as you see fit.

Credit card: Pay this off first. Rates are likely high, and this is also just a bad habit for life.

Line of credit: Take out $6,500 on your credit line and pay off the credit card. Then, pay this off second. 10.9% is NOT cheap. This is also a bad life habit to finance your lifestyle.

Car: If you get use out of the car(s) you have, it's okay to spend a bit more. However, you need to keep these cars, maintain them, and run them into the ground. I'm talking 150k miles minimum. Selling the car and buying a new one is just more hassle than it's worth, and may not save you much if you end up buying a lemon. When your 4runner starts to break down, look into a more fuel efficient vehicle so you'll have 1 SUV and 1 small/efficient car.

Cabin: You didn't give any numbers, just a sob story. Keep it as long as it's not costing you an arm and a leg to own. It will also cut your vacation costs if you go there at least once a year and keep other (more expensive) trips to a minimum.

Once the adoption is set, (Congratulations, btw on your new kid!) you should re-examine your budget and start to minimize overall. Start with Housing/Transportation/Food as these are likely the biggest categories of spending. You don't need to go extreme and eat Ramen noodles 5x/week (unless you love them noodles!), but cut back on eating out at restaurants and purchase groceries wisely.

First, define your goal(s). Retire in 10 years? Have a bigger safety cushion so you can slow down at work and enjoy time with your family? Work until 60, but do so in a work environment that makes you happy, even if it pays a little less?

Your income is not the problem, your spending is a problem. Make it a goal to max out your IRAs ($5.5k x 2 people = $11k/yr). You'll need to save more than that eventually, but it's a good start.

homeymomma

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Re: Advice For My Current Situation
« Reply #6 on: May 30, 2014, 11:21:44 AM »
Welcome! First, as others have said, we cant help you a ton with specifics unless you post your expenses. Include your monthly budget as well as any annual or semi annual expenses that you plan for.

Without your specific numbers, I can only guesstimate. If you add your debts (6,500+8,500), and divide by 12 (1 year), the result is 1,250/mo, which is exactly 25% of your income. I would set that as your reasonable target for the year before baby arrives. Put 1250 at the top of the page and comb through your budget to see where those dollars can come from. I don't know if it will be cable, insurance, memberships, food, gas, car payments, or what. That's up to you. But beg borrow and steal to get your surplus to 1,250/mo and then eat that debt up as fast as you can. (My math is not taking into consideration interest, which will pull you against the current but shouldn't slow you down by tooooo much if you're really aggressive with your payoff.) Remember, it's only for one year! And you're not doing it for yourself today, you're doing it for your baby and the life you want a year, two years, ten years from now.

1,250/mo may seem insane and impossible, but looks at things critically. We can help you if you post your numbers but think about renting a tiny studio for the year before baby comes (adoption may preclude this) or selling the Mazda if you're not upside down on it. Reductions in housing and auto costs will generally give you the most bang for your buck, but are also the hardest to change. It's all about priorities.

Good luck! I look forward to seeing more information if you decide to share!

phred

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Re: Advice For My Current Situation
« Reply #7 on: May 30, 2014, 11:49:41 AM »
I would pay off the credit card and line of credit pronto even if it means no restaurants, no concerts, no more large purchases.  The vehicles I'd leave as you drive long distances.  The IRA I'd leave as is. 

What you really need is to build up a large cash stash aka walking away money.  Right now, the owners have you over a barrel.  With a full piggy bank (NOT retirement funds) you will no longer have to be servile.  Save up about 6 to 9 months of net income, not counting wife's, before you try to stand upright.  Your present position may then transcend to absolutely wonderful. Vacations need to be at least ten contiguous days to be worthwhile

GRSConstruction

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Re: Advice For My Current Situation
« Reply #8 on: May 30, 2014, 12:20:52 PM »
Thanks for all the replies! I wasn't trying to give a sob story by the way, just trying to explain my current position. Nonetheless, here are the specifics as requested.

Average Monthly Expenses (Currently):
Mortgage: $1,350 ($186,00 loan at 3.25%, just purchased the home a year ago)
Groceries: $435
Car Payment: $516
Car Insurance: $100
Fuel: $400 (I spend approx. $300-$350/month, my wife spends about $50-$100)
Electric: $150
Natural Gas: $75
Water/Sewer/Trash: $75
AT&T: $200
Netflix/Spotify: $20
Baby Misc. Expenses?: $150
Pets (we have dogs): $135
Spending: $300
Basic Savings Account: $200
Visa Payment: $200
Line of Credit Payment: $210
Best Buy: $125 (forgot about this earlier, but it is 0% interest on a washer/dryer and will be paid off in 4 more months)
TOTAL: $4,641

Now, with all of that in mind, obviously I'm aware the Visa card needs to be paid off first. Then the line of credit. I feel confident I can have both paid off in the next 8-12 months assuming my bonuses this year go as planned. If not, it will take a little longer, but not a ton. The Best Buy payment, as mentioned, is 0% interest and will be paid off in 4 months no problem. Another place I see I can obviously cut back is AT&T. I am cutting it in half. We only have 1 cell phone we pay for (my iPhone and plan is provided by my work) and can cut back to just internet. I cannot go without internet. We have to monitor adoption stuff through internet, I have to have access for work, etc. As for the car payment and fuel, we could sell the Mazda, get a cheaper vehicle that is more fuel efficient, have my wife start driving the 4runner and I would drive the more fuel efficient vehicle and probably save $200+/month as well. I'm just not sure if that is the best decision or not honestly? We purchased the Mazda new about a year ago because my wife's car was costing more in maintenance than it was worth and we thought we were making the right decision buying something we could drive long term. It hasn't produced the gas mileage we were hoping for (avg. 25mpg) and now we are realizing it was a bit of a bad financial decision, but it is done and can't change the past. So looking forward...we owe about what it is worth since it is only 1 year old (it's actually a 2014 model though). The loan has an interest rate of 3.2% for 72months. Should I sell it and get a cheaper, more fuel efficient vehicle for me to drive, or should I just start driving it and have my wife take over the 4runner since she drives much less?

Once I pay off the Best Buy card, pay off the Visa, pay off the line of credit, and lower the AT&T bill that drops monthly expenses by $635. At that point where do you suggest I start putting that money? I could increase my contribution to the IRA account, I could make other investments, I could start paying more of the mortgage off, etc.

Thanks again for the replies and if I need to provide more info just let me know!



GRSConstruction

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Re: Advice For My Current Situation
« Reply #9 on: May 30, 2014, 12:29:59 PM »
JGB: I live in Yukon, Oklahoma. A 12-15 miles commute really isn't that far in the Oklahoma City Metro area. We just bought the house and really love it so I don't see us moving anytime soon. I can work around the $1,350 payment. The actual loan amount after the down payment was $186,000 and is at a 3.25% interest rate on a 30yr loan so it's not bad in that sense. The taxes and insurance around here are kinda high though. Moving closer to work would require moving into a questionable area, below average school district, and I would only save about $100/month in fuel savings from the 30 mile round trip drive (all highway) part of which would be lost by my wife then having to drive to work right back by our current house. I agree though, I think we can start saving significantly more quickly.

rocksinmyhead

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Re: Advice For My Current Situation
« Reply #10 on: May 30, 2014, 12:38:02 PM »
I know it's small but I'd think you could cut your AT&T bill more than in half? I get Cox in Tulsa for $60/month, their second slowest speed, and I even thought that was expensive (but yeah, totally not willing to drop it, I feel ya on that one!). See if you can shop around.

(or wait... just realized the $100 may be for cell phone + internet? nevermind)

ugh, $516/month for 72 months?!??? that just seems like a SUPER expensive car to me. did you put down a downpayment at all?! I guess I don't know if the hit you would take on depreciation reselling it now would be worth it or not, maybe someone better at me than math (er, less lazy) can figure this out.

agree with everyone else that swapping cars for the commute is a no brainer. that is A LOT of money on gas!

since the house is off the table (I kinda understand, I wouldn't want to move either out of a house I love and just bought a year ago... but fuck that's a lot of money for OK) that's about all I can come up with right now. as others have said, kudos for taking that first step! and good luck with the adoption, I hope it goes very smoothly!!

rmendpara

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Re: Advice For My Current Situation
« Reply #11 on: May 30, 2014, 12:49:30 PM »

Best Buy: $125 (forgot about this earlier, but it is 0% interest on a washer/dryer and will be paid off in 4 more months)

...

 we are realizing it was a bit of a bad financial decision, but it is done and can't change the past. So looking forward...we owe about what it is worth since it is only 1 year old (it's actually a 2014 model though). The loan has an interest rate of 3.2% for 72months. Should I sell it and get a cheaper, more fuel efficient vehicle for me to drive, or should I just start driving it and have my wife take over the 4runner since she drives much less?

Once I pay off the Best Buy card, pay off the Visa, pay off the line of credit, and lower the AT&T bill that drops monthly expenses by $635. At that point where do you suggest I start putting that money? I could increase my contribution to the IRA account, I could make other investments, I could start paying more of the mortgage off, etc.

Thanks again for the replies and if I need to provide more info just let me know!

Point #1: If you have any outstanding debt, you are technically paying interest even if the "stated" rate is zero.

Example: You have credit line of $8,000 at 10%. You go out and buy a washer for $1,500 at "zero percent". In this case, you are still "paying" 10% on the washer. How is this the case, you ask? If you paid the $100/mo (or whatever your washer payment is) against the credit line instead of for the washer, you would be saving 10% interest on the amount of the payment. Since you are not, you are effectively paying 10% interest even though you got a "zero interest" rate. Get it?

Don't worry about the car now. It's done. Pay it off as you can, and then stop buying things you can't afford. From the above, you have one car you can't afford, and a washer you can't afford, and $15k (cc and credit line) of various things that you can't afford.

Once your silly debts are paid off, then create an emergency fund. You really don't have one. With a family, you should have 12 months of liquid savings. This will help you sleep at night, I promise!

Don't even think about investing until you get your spending and debt under control. (get the 3% match, but no more)

Once you pay off the credit card, line of credit, and washer, AND set up the emergency savings, then get started on paying off the car. THEN start investing to max out your $5.5k/person IRA limit ($11k/yr combined) and increase your mortgage payment by $100/mo (then increase by $10/mo every month).

The only true way to freedom is to live within your means. You aren't doing that now, but we can all change. You have made the most important and hardest decision already... you decided that you want to change for the better! One day, when you have no debt and a paid off house, you can spend your time at the cabin and enjoy your family time knowing that your finances are in order.

Good luck! I am rooting for you!
« Last Edit: May 30, 2014, 12:56:53 PM by rmendpara »

homeymomma

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Re: Advice For My Current Situation
« Reply #12 on: May 30, 2014, 12:54:17 PM »
Woohoo!!

Here we go, baby.

For my previously explained goal of 1250/mo:
Groceries: cut down to 335/mo.    Save $100
Car payment: cut down to 0. Save $516
Car insurance: cut down to 80 (or less, you cheaper, loan-free car should be much lower to insure)
      Save: $20
Fuel: cut down to 300 (or less, depending on who drives the more efficient car, obvs your new car should be a cheap, compact with good mpg).   Save: $100
Electric: cut down to $125     Save: $25.   This shouldn't be too hard unless you already aggressively turn off lights and unplug things, and have everything set up as efficiently as possible.
AT&T: cut down to $100, per your info.    Save: $100
Netflix/spotify: cut down to $8. Save: $12.    You only need one or neither of these, especially since both of you work all day. Get rid of one.
Baby: cut down to $50.   Save: $100.    I do get that you'll need to be prepared with some baby items before the little spit monster shows up (congrats ;) ) but you should be able to get everything you actually need for much less than $50/mo over a year. Buy used, shop craigslist and consignment/resale for evvvvverything. I literally can't think, of anything other than a car seat you should not buy used. Don't worry, it's not dirty junk, resale is generally <3 years old and in great shape. You'll probably end up with nicer brands than if you shopped new. Diapers and wipes will fit below the $50/mo even when baby comes, though you will need to up it a tiny bit for formula/clothes/incidentals once baby arrives :)
Pets: do some shopping around, you may be able to find lower prices for your brands (costco, walmart, online, etc)
Spending: we have kids and we keep our spending under $150 per month, so I'm going to give you the same.      Save: $150
Savings account: put this on hold while you pay off the best buy. You already have a 5K emergency fund. Make that enough until you can put the best buy $125 toward debt. Then reconsider. Save: 125-200

Add up all these (1248) plus your existing surplus of 359 = 1607. Whew! You can knock out your debt super fast, without many lifestyle changes at all! Except the car, of course. You are lucky because you can basically get out of the car without much penalty because it's still worth what you owe. That's great, many people find themselves upside down on car loans. I'd sell it and buy a used, tiny, dirt cheap something that has good mileage. I hear you on the maintenance aggravation. Constantly putting what the car is worth over and over toward an old stupid car sucks. Don't buy a crappy brand, look for an old Toyota or Honda that is old in years but young in miles. Yes, this will feel like a huge downgrade from two relatively new cars. But consider if the downgrade is worth saving those big bucks on the car payment, insurance, and gas costs. I hope you will decide it is.
If you don't get rid of the car, you'd still almost (not quite!) squeak in to the 1,250/mo goal. However, then you've still got a car to pay off, on top of the other debt.
I hear you about wanting freedom to go to your cabin with your family. That's awesome. You need to put in the effort now, before you baby comes and still while baby is little and doesn't remember things like cabins and vacations. Then, when you kids are older and actually able to create childhood memories, you'll be so grateful you lived modestly now so you can relax and have that freedom later.
Good luck and happy adoption and debt payoff! :)

GRSConstruction

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Re: Advice For My Current Situation
« Reply #13 on: May 30, 2014, 01:22:44 PM »
Thanks for the great replies so far guys! I totally agree rmendpara, I had a mindset of living beyond what I could afford over the past several years honestly, but I'm just glad I recognized it now rather than 10 years from now!

I literally just got some info that changes things a little too. Just got told I'll be getting my mid-year bonuses over the next few weeks! Looks like I'll be getting about $7,300 in bonus money after taxes by the end of June. This would completely pay off the Visa card! One debt down without having to make payments!! :)

homeymomma: I agree on most all of the items you mention, I just don't have any way to go from the $516/month car payment to $0. We have to own 2 cars and I don't have the cash reserves to purchase a car outright currently. I wish I did, but just not happening right now. The $7,300 bonus could go towards a car purchase instead of paying of the credit card and then sell the Mazda and apply the $516/month savings to paying off the credit card, but I'm not sure if that is the better route or not?!

Thanks again!!
« Last Edit: June 05, 2014, 09:06:40 AM by GRSConstruction »

GRSConstruction

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Re: Advice For My Current Situation
« Reply #14 on: May 30, 2014, 02:17:20 PM »
With the additional $7,300 I'm gaining from this mid-year bonus stuff, it's got me really thinking now...would it be better to sell the Mazda (assuming I can get it sold for what we owe with no loss) and purchase another vehicle with the $7,000 cash thus free'ing up $516/month to pay off the Visa debt ($6,500 @ approx. 18% interest) OR should I go ahead and pay off the Visa with the cash and keep the Mazda and $516/month payment? Let me know what you think is the best use of this extra cash I will have by the end of June. Thank you!

trailrated

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Re: Advice For My Current Situation
« Reply #15 on: May 30, 2014, 03:49:27 PM »
With the additional $7,300 I'm gaining from this mid-year bonus stuff, it's got me really thinking now...would it be better to sell the Mazda (assuming I can get it sold for what we owe with no loss) and purchase another vehicle with the $7,000 cash thus free'ing up $516/month to pay off the Visa debt ($6,500 @ approx. 18% interest) OR should I go ahead and pay off the Visa with the cash and keep the Mazda and $516/month payment? Let me know what you think is the best use of this extra cash I will have by the end of June. Thank you!

PAY OFF THE CARD guaranteed 18% return.

Milspecstache

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Re: Advice For My Current Situation
« Reply #16 on: May 30, 2014, 04:32:51 PM »
Can you rent out your cabin?  That would generate a little add'l positive income flow.

Mrs.FamilyFinances

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Re: Advice For My Current Situation
« Reply #17 on: May 30, 2014, 05:15:17 PM »
Your grocery spending is really high for 2 people! We spend that much as a family of 4! And what is in the "spending" category? Can your wife walk to work? I don't think you can afford to keep that car, its an insane amount of money to shell out every month! If she is a teacher should be able to go without a car for the summer months while you save up some cash to buy a basic car that drives from point A to point B.

homeymomma

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Re: Advice For My Current Situation
« Reply #18 on: May 30, 2014, 05:25:46 PM »
Is there aaaaany way at all you could go down to one car just for a few months while you save for a different one? Drop your wife off at work, then go to your own job, then pick her up? It just seems like any way you can get out from under that car burden would be wonderful. I do totally get that you can't go from 516 to zero. But honestly, even if you have to finance the cheaper car, it will be a lower monthly payment, lower insurance, and lower gas (assuming you get the right kind of car!) even if you can't just buy a cheaper car outright.

That being said, 18% guaranteed return does seem like a good move. Paying off that big debt would be a good first step. I do wonder if afterward you'll have the necessary follow through to make other changes. If you decide to keep the car, that's fine. Just understand the effect that it does have on your FI goals. As long as you understand the trade off and make the decision knowingly, no one can fault you for it.

Good luck! I really hope the adoption process is smooth for your family.

MayDay

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Re: Advice For My Current Situation
« Reply #19 on: May 30, 2014, 06:58:26 PM »
Renting out the cabin is a really good idea.  Since you basically can't use it during the summer, why not try to rent it out?  That alone would probably pay off all your debts. 

thepokercab

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Re: Advice For My Current Situation
« Reply #20 on: May 30, 2014, 08:34:15 PM »
Is there aaaaany way at all you could go down to one car just for a few months while you save for a different one? Drop your wife off at work, then go to your own job, then pick her up? It just seems like any way you can get out from under that car burden would be wonderful.

Totally agree with homeymomma here.  Here's another perspective;  if your wife is making between $1200-$1400 per month, over $1,000 of it is going to car related expenses, between the car payment, gas and insurance. Are there other costs associated with her job, like purchasing class room supplies?  Does she eat out during lunch?  Financially speaking, it could almost be a net positive for her to quit her job so you can downgrade to your 1 paid off vehicle, and not pay as much in gas and insurance and any other expenses that arise from her working.   

Short of her quitting, maybe there is public transportation she can take?  Maybe there is another job opportunity for her, closer to where you live so you can cut out that second car? 

My wife is also in this field, and you're right the pay is shitty.  We have two kids and she recently looked into going back to work.  Even with the employer paying for a bunch of the child care, the math just didn't make sense for us  After child care costs and transportation, we'd end up realizing about $500-700 more in income per month.  That just wasn't enough for us to put the kids into child care every day, while also dealing with all of the stuff at home that gets done because she is there.  Anyway, just something to think about.. 

caseyzee

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Re: Advice For My Current Situation
« Reply #21 on: May 31, 2014, 05:27:22 AM »
Hi.  May I ask if you've looked ahead and planned for baby expenses?  Will you or your wife be taking any time off?  If the wife,would it be paid or unpaid?  I assume Junior will be going to work with your wife?  Will that be free? Have you estimated how much Junior will add to your monthly expenses?  I have a pair of 7 year old girls, and the baby years were not cheap!

On the plus side, you have 12 months+ to prepare, but I would say that your debt, coupled with your lack of savings, with a baby on the way, is an emergency.  Can the wife get a 2nd job to earn extra cash, just until the baby comes?  Can you?

Good luck to you and congratulations!

GRSConstruction

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Re: Advice For My Current Situation
« Reply #22 on: June 02, 2014, 09:03:46 AM »
Thank you to everyone who took the time to read through everything and post a reply with advice. I greatly appreciate it. I think I have my plan down for the short term after doing the math and researching a little over the weekend. I will be using the bonus money I'll have by the end of the month to pay off the $6,500 in credit card debt I have. I will then start paying off the $7,700 line of credit with most of my additional money (should have it paid off in 12-15 months). I've also tried to shrink our monthly spending down significantly enough that we have about $750/month in excess cash. I'm figuring $500/month towards paying off the line of credit and $250/month towards our emergency savings. Adding $500/month to my payment on the line of credit will pay it off in 12 months. Adding the full $750 would only save me 3 months of payments @ $710/month ($210 min payment + $500 extra) = $2,130 versus putting $250/month into savings will be $3,000. Plus, I want to build our savings up a little more since we had to deplete it down to $4,500 after the most recent adoption payment.

So anyways, for the short term, this is the route I'm going with. I decided to just keep the Mazda because I looked at what the same exact car (2014 Mazda CX-5 Grand Touring) is selling for and I would lose about $3k selling it right now. I'll revisit that in another year or so when it's paid down more and maybe get into something cheaper, but I have to have a low mileage, reliable vehicle since I drive 15k-18k miles a year for work. I'll find something I'm sure though. Just have to swallow my pride and masculinity a little since I'll be pulling up to construction sites in a fuel efficient vehicle and not a truck or SUV! haha

Once the line of credit is paid off I'll have about $960/month free'd up. With that I will likely apply some towards paying off the car and some towards extra on the house and the remainder into savings until I build up 8+ months of emergency funds. Then I can start investing. I have low enough interest rates on the house and car I'm not trying to pay them off with every dime I have extra as they are both financed at about 3.25%.

I will also take any additional bonus money I get from work and put towards the emergency fund until it is where we want it. Then the next step will be investing full tilt. Once we have the emergency fund set I can easily start investing $20k a year between monthly extra cash and bonus money each year. I will also start maxing out the IRA once I have the emergency fund set, so that will be an additional $11k/year.

In the mean time I'm going to talk to my father-in-law about his investments and his advice and read up more on here and in books, etc. about how to start investing when the time comes. My father-in-law has done very well with his money. He's an attorney so he pulls in a lot more money than I do, but he has been smart with it buying commercial real estate, parking lots, investing, etc. so I'm hoping he can help me out some. I feel like within the next couple years I'll be truly on my way with investing towards financial freedom! I'm sure I'll have lots more questions to come! Thanks again!

-Grant

Cinder

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Re: Advice For My Current Situation
« Reply #23 on: June 02, 2014, 09:49:31 AM »
So anyways, for the short term, this is the route I'm going with. I decided to just keep the Mazda because I looked at what the same exact car (2014 Mazda CX-5 Grand Touring) is selling for and I would lose about $3k selling it right now. I'll revisit that in another year or so when it's paid down more and maybe get into something cheaper, but I have to have a low mileage, reliable vehicle since I drive 15k-18k miles a year for work. I'll find something I'm sure though.


Remember, that whole time you are paying it off, the value of the car is deprecating very fast.  You are much better off getting a cheap, old, reliable car used that already has most of it's deprecation realized.  New  cars go 'the wrong way' to fast!.

GRSConstruction

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Re: Advice For My Current Situation
« Reply #24 on: June 02, 2014, 10:02:25 AM »
Cinder: I understand, but being $3k-$5k upside down on it currently depending on what I can actually sell it for, it doesn't make sense to sell right now. As mentioned earlier, I don't have cash reserves currently due to our adoption costs to pay for a cheaper car cash, so I'd have to finance something. This would lead to a payment of I'm sure at least $250-$300/month for something with under 40k miles I could drive for 7-8 years. Keeping in mind that I drive 15k-18k miles a year I can't get something with higher mileage than about 40k and expect to keep it very long. So, I really think the best I can do with my current situation is continue paying on the Mazda until we can get right side up on it and then sell it and don't make the same mistake again! Do you see another option?

homeymomma

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Re: Advice For My Current Situation
« Reply #25 on: June 02, 2014, 10:13:55 AM »
You may never get right side up on it if you just continue with minimum payments. It sounds like you didn't put much down on it so you may never catch up.

But otherwise your plan sounds solid! I do question whether you need to have 8+ months set aside before you even start investing though. I'd look into opening an IRA long before that. Just my two cents! Good luck!

zurich78

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Re: Advice For My Current Situation
« Reply #26 on: June 02, 2014, 10:28:31 AM »
Thanks for the great replies so far guys! I totally agree rmendpara, I had a mindset of living beyond what I could afford over the past several years honestly, but I'm just glad I recognized it now rather than 10 years from now!

I literally just got some info that changes things a little too. Just got our mid-year reports on cash flow, profits, etc. at our company and looks like I'll be getting about $7,300 in bonus money after taxes by the end of June. This would completely pay off the Visa card! One debt down without having to make payments!! :)

homeymomma: I agree on most all of the items you mention, I just don't have any way to go from the $516/month car payment to $0. We have to own 2 cars and I don't have the cash reserves to purchase a car outright currently. I wish I did, but just not happening right now. The $7,300 bonus could go towards a car purchase instead of paying of the credit card and then sell the Mazda and apply the $516/month savings to paying off the credit card, but I'm not sure if that is the better route or not?!

Thanks again!!

How is it possible to pay $516/month, on a 72-month loan @ 3.2% for a Mazda CX5? 

That should be around a $30K loan, and the CX5 costs less than $30K.

GRSConstruction

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Re: Advice For My Current Situation
« Reply #27 on: June 02, 2014, 11:15:55 AM »
homeymomma: I mentioned in my earlier post I plan to start making more than the minimum payment on the Mazda once I get the line of credit paid off. Until then I just don't think it seems like a wise use of funds to put the extra $250/month or so I'd have into the car payment with only 3.25% interest. I hear ya though, it's going to take forever to get right side up, so I'll probably have to add some to it as soon as I can! The 8+ months of emergency funds is probably a little extreme. I could probably go with 6 months and be fine. I just want to have at least 6 months before we bring home our baby is all. Just for my own peace of mind I guess.

zurich78: I guess I should explain that purchase a little better. So, the actual reason we even got the CX-5 was because we previously had a 2011 Toyota 4Runner. It had an even higher payment ($720/month believe it or not). I had purchased it new intending to drive it until the wheels fell off and my wife would drive the 2006 4Runner I had paid off. I loved the 2006 and it worked great for work, going up to our cabin, etc. so in 2011 I made my first bad car decision and bought a brand new one for about $40k. Well, in 2013 my wife got in an accident in the 2011 4Runner. Shortly thereafter was when we decided to buy the house we're in now. To help cut costs we decided to part ways with the 2011 4runner and get something more fuel efficient and a cheaper payment. That brings us to the Mazda. After a lot of research I liked what I was reading about the CX-5 and specifically the upgrades of the 2014 in safety and the 2.5L motor over the 2.0L motor. So, we went in and traded the 4Runner in on it. Obviously this was bad car decision number 2! To compound the bad decision, because the 4Runner showed a wreck on it's record (it was minor and I had it professionally repaired) it dropped the value. So, I was now upside down on my 4Runner I thought I'd never be upside down on! However, in the moment I thought getting the cheaper car payment and better gas mileage was still the best decision so I went forward with it. Rather than pay off the difference I rolled it into the loan on the Mazda, bad car decision number 3. Since it was a brand new model with the new motor, etc. the dealership didn't want to work with us much on the price so I got them down only a little (MSRP was around $31,575 on it and I got it down to $30k) then we got the GAP coverage, 100k warranty, etc. on it...bad car decision number 4! So now after rolling about $4k from the 4Runner loss into the loan plus the warranty stuff we were at like $36k so I put $2,250 down on it and had to finance $33,750 at 3.25% for 72mos = $516.57. So that is how you get to that number...several bad car decisions later! haha I only put that much down too because I needed to hold back money for the down payment on our house, closing costs, and showing that we had plenty of money in the bank to buy the house.

I know I know...stupid stuff on the cars, I don't need any lectures. I realize buying the 4Runner started it and the Mazda only made it worse. I won't be making those decisions again though. I love cars, but I hate debt more, so I'm learning from my mistakes and moving forward.

homeymomma

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Re: Advice For My Current Situation
« Reply #28 on: June 02, 2014, 11:44:51 AM »
Whew! Definitely a string of no good decisions on cars, but I totally empathize. Before we found MMM, my husband and i were lucky to have 2 cars, each given to us by our respective parents. They were 10 and 18 years old. The old one was the obvious choice to upgrade, but we upgraded the newer one because it was costing us 2,000 in repairs every few months (VW). Our rationale was 230/mo known payment vs. unknown thousands every few months? Logical to us, but definitely not a great decision overall. The super old car just kind of puttered along indefinitely, and while we didn't get it checked too much, it wasn't costing us insane amounts all the time so we just ignored it. Why did we buy new? I dont really know. I think the high MPG was an attractive factor, but mostly we just liked the look of it and the feel of being a "grown-up" buying a brand new car. Thankfully, we chose an inexpensive brand and high mpg, versatile compact sedan (Hyundai elantra).
There was no pushback from family who were all wondering why we hadn't just bought one earlier. Car payments are a way of life. It's part of being an adult. Man up and buy yourselves a damn car. Lol.
Still, for the money we spent (just under 20K), we could have gotten a used Toyota or better/more reliable car with better resale value. Stupid car decision #1 (hopefully only!). We still need to buy a second car eventually and even having made the bad decision in the past, we are still suckered in by the new cars! Aaaargh! What is wrong with us?!? I seriously don't know why cars have such a pull for us. Now that we're on our second baby, I look longingly at the SUVs I see constantly (we live in a high COL area, so every other car around here is a Lexus SUV). It's a sickness, I think. Lol.
Anyway, we are trying to convince ourselves to be happy with a compact, high mpg, used, commuter car as our second car. It's really hard! Maintenance costs are scary for used cars and the fun of buying a car is sort of diminished when you're not looking at a lot full of shiny, brand new vehicles. But we know it's the right thing for us financially, and what is good for our finances is good for our family! If buying small and used allows me to stay home with our babies, then it's a no-brainer.
Anyway, sorry for my super long story. I just wanted to tell you our story so you didn't think I was coming from a place of super judge-judgydom. I absolutely understand liking/enjoying cars. Sorry your payments are so high and you feel dumb about it, because that's honestly the worst feeling. Like, man I wish I didn't know better, because I know I have only myself to blame! Self-face-punch! (The worst). Have, but honestly I'd say enjoy your car, recognize it for the luxury it is, and learn from your financing mistakes for next time. :) best of luck!

rocksinmyhead

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Re: Advice For My Current Situation
« Reply #29 on: June 02, 2014, 02:53:59 PM »
I know I know...stupid stuff on the cars, I don't need any lectures. I realize buying the 4Runner started it and the Mazda only made it worse. I won't be making those decisions again though. I love cars, but I hate debt more, so I'm learning from my mistakes and moving forward.

yay! :)

(also $720/month is almost what I pay in rent on a 2-bedroom house, LOL!)

re. your comment about swallowing your pride when showing up at a jobsite in a small fuel-efficient car, and also honeymomma's comments... I know some people might find this kind of rude or not the healthiest/most positive way to think, but what REALLY helps me stay strong with decisions like this is just trying to cultivate a mindset where, every time I see a fancier car or a friend buys a nicer house or rents a fancy apartment, I think to myself "well they probably have average, aka terrible, net worth for their age while I am ROCKING it with my 401k savings and student loan repayment!!" seriously, just reminding myself to feel a little bit of superiority instead of inferiority really helps. and who knows, maybe their parents paid for college and their financial situation is just fine, but I pretend they're the average American in terrible debt, and though my real house may be a little bit of a shit hole, it suits my needs and my FINANCIAL house is in very good order :)

Erica/NWEdible

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Re: Advice For My Current Situation
« Reply #30 on: June 02, 2014, 03:49:19 PM »
When your 4runner starts to break down...
Which shouldn't happen until 300,000+ miles because the 4Runner is a beast and you will treat her with care, right? (I love my 4runner and I'll take the facepunch for saying so... :) )

Mt9982

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Re: Advice For My Current Situation
« Reply #31 on: June 02, 2014, 07:35:09 PM »
Cinder: I understand, but being $3k-$5k upside down on it currently depending on what I can actually sell it for, it doesn't make sense to sell right now. As mentioned earlier, I don't have cash reserves currently due to our adoption costs to pay for a cheaper car cash, so I'd have to finance something. This would lead to a payment of I'm sure at least $250-$300/month for something with under 40k miles I could drive for 7-8 years. Keeping in mind that I drive 15k-18k miles a year I can't get something with higher mileage than about 40k and expect to keep it very long. So, I really think the best I can do with my current situation is continue paying on the Mazda until we can get right side up on it and then sell it and don't make the same mistake again! Do you see another option?

You're paying approx 500 a month.  So in ten months you'd make up for the loss and never have to pay the car payment. Even less if you are under by approximately 3k.

I hate to say this but you don't come across as that serious about changing your lifestyle.  It's very much about changing how you think and your everyday actions!  At one point you rationalized all of your decisions to purchase the things you have now.  Cut up the credit cards and start living off of cash.  Cut costs by getting rid of a car, and cutting costs re phone, cable, internet.  You have to cut some things out and you can't review your list and justify what you're spending.  The car payment is a huge one.

I'm saying this since your wife doesn't have to carry the child, she needs to get another job.  It's not paying enough and this is part of the problem.  That's great she likes but this is work afterall.  If she's that interested in kids she should look into babysitting.  Heck, even being an in-house nanny for a child or two.  Right now your wife is barely covering your car payments.  Another option would be for her to become a waitress or a job where she can bring home cash tips.  Someplace where people waste a lot of money on tips and she can come home with a few hundred dollars every week without having to put in a lot of hours.

Absolutely rent out the second home.  No question about that one. 

okashira

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Re: Advice For My Current Situation
« Reply #32 on: June 02, 2014, 08:05:30 PM »
Dump both vehicles for $6500 max Honda/Toyota/Scion Hatch/Small Sedan each.
Perfectly reliable.
Don't make excuses. Find a way.
With your salary and immediate replacing on the of the vehicles, you can easily save the needed cash to deal with the up-side down cx-5. Once you get the "new" good gas mileage cheap tires vehicle, YOU drive that one (since you drive more) and the wife drives the other.
You're not losing money by selling the CX-5. You've already lost it:
http://en.wikipedia.org/wiki/Sunk_costs
The 4-runner is your more expensive vehicle long term, since it carries the $400/mo gas costs for the rest of it's life. I think the Cx-5 at least has better gas mileage and cheaper tires.
But the CX-5 is depreciating faster at the moment.

I just bought my GF a 2004 Acura RSX with 110,000 miles for $6500 after her Accord was wrecked. Car looks great, drives great, nothing to be ashamed of. Best part - it's a hatch with lots of storage, good gas mileage , cheap parts and cheap tires.


MarciaB

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Re: Advice For My Current Situation
« Reply #33 on: June 02, 2014, 09:33:15 PM »
You say that you do a lot of driving (in your personal vehicle) for work...are those miles reimbursed? And why are they not happening in a company vehicle?

GRSConstruction

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Re: Advice For My Current Situation
« Reply #34 on: June 03, 2014, 07:09:14 AM »
Mt9982: I'm changing my lifestyle as much as I can and as much as my wife and I feel comfortable at the moment. I am paying off all debt outside of my car and house within the next 10-12 months, swapped cars with my wife so I am now driving the Mazda to save $150/month in gas, yesterday cut my AT&T bill in half, set us up on a monthly budget that leaves $875/month in surplus income through misc. cuts to expenses and spending, we are putting money back in an emergency fund to cover 6+ months expenses, and I am actively researching investing strategies and reading on this site. We have a plan that has us investing $20k+/year soon in addition to our IRA and will invest more ever year. I know it may not be as extreme as some, but just because we have this one issue with the car doesn't mean we are not committed. I feel pretty good about making these changes all within the past week or less.

As for the Mazda, as mentioned before, after our recent adoption fee's we had to clear out our savings down to $4,500 so I don't have the cash to cover the $3,000-$5,000 I'm upside down on the Mazda and purchase a reliable car with low enough mileage for me to drive it 15k-18k miles a year. So, like I said, the only option I see right now is to keep moving forward and once I have the credit card and line of credit paid off I can apply more money towards the Mazda to get it paid down enough to sell it without a loss.

okashira: Same as above, don't have the cash to cover the amount I'm upside down and purchase a $6,500 vehicle. I am driving the Mazda now to help save gas money. I couldn't get a car with 110,000 miles on it anyways though. Driving 15k-18k miles a year would be too much for a car with that high of mileage. I need something I can drive for 7 years or so before having to purchase something again.

MarciaB: I get a "gas reimbursement" of $30/wk. However taxes are taken out of that and so it's really only $24/wk. I drive approx. 12 miles to work and 12 miles home each day and average an additional 20-50 miles during work to different job sites, etc. each day.

« Last Edit: June 05, 2014, 09:10:45 AM by GRSConstruction »

MarciaB

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Re: Advice For My Current Situation
« Reply #35 on: June 03, 2014, 08:09:27 AM »
Whoa! They are taking serious advantage of you! Shut that crap down immediately!

Let's do a little math on those miles. The gov't rate for mileage this year is $0.56/mile. This is intended to cover purchase/taxes/registration, insurance, repairs/maintenance, gas and every penny you spend on your vehicle. Your actual situation may be different (my Prius at this point in its life costs me $0.34/mile to drive - and I know this because I'm one of those nerds who keep spreadsheets on stuff). But let's look at $0.56/mile - those 30-50 miles add up to $16.80 to $28 per day you should be reimbursed. That's $84 to $140 per week. Not $30!!

That $30 you get per week would cover 53.6 miles, which is somewhere between 1 and 2 days of your driving. Stop driving your personal vehicle without greater reimbursement! And/or insist that they buy a company vehicle for this work. You should not be subsidizing your employer. Vehicle expense is a cost of doing business and they need to be bearing it. Not you.

A few clarifications - First, reimbursements are not taxable because they're not income. They're just a return of something that you fronted them (in this case miles). You might want to talk to your tax person about unreimbursed work expenses (in this case, mileage), those miles may be deductible.

Second, start referring to this reimbursement as "vehicle expense" instead of "gas expense." Why? Because language is powerful, and when you use the word "vehicle" you are reminding them that your entire vehicle is involved here (tires, engine, etc.) not just the gas tank. Since when did driving a car around only cost a few gallons of gas?!

Also, your commute to/from work is entirely on you (which I'm sure you already know), those 12 miles each way are just what they are, and are out of the control of your employer (meaning they're entirely in your control). In discussions with them about your vehicle, leave your commute out of the conversation entirely, it's not relevant.

You are doing some seriously great work on your personal finances - good on 'ya!

okashira

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Re: Advice For My Current Situation
« Reply #36 on: June 03, 2014, 08:34:31 PM »
Mt9982: I'm changing my lifestyle as much as I can and as much as my wife and I feel comfortable at the moment. I am paying off all debt outside of my car and house within the next 10-12 months, swapped cars with my wife so I am now driving the Mazda to save $150/month in gas, yesterday cut my AT&T bill in half, set us up on a monthly budget that leaves $875/month in surplus income through misc. cuts to expenses and spending, we are putting money back in an emergency fund to cover 6+ months expenses, and I am actively researching investing strategies and reading on this site. We have a plan that has us investing $20k+/year soon in addition to our IRA and will invest more ever year. I know it may not be as extreme as some, but just because we have this one issue with the car doesn't mean we are not committed. I feel pretty good about making these changes all within the past week or less.

As for the Mazda, as mentioned before, after our recent adoption fee's we had to clear out our savings down to $4,500 so I don't have the cash to cover the $3,000-$5,000 I'm upside down on the Mazda and purchase a reliable car with low enough mileage for me to drive it 15k-18k miles a year. So, like I said, the only option I see right now is to keep moving forward and once I have the credit card and line of credit paid off I can apply more money towards the Mazda to get it paid down enough to sell it without a loss.

okashira: Same as above, don't have the cash to cover the amount I'm upside down and purchase a $6,500 vehicle. I am driving the Mazda now to help save gas money. I couldn't get a car with 110,000 miles on it anyways though. Driving 15k-18k miles a year would be too much for a car with that high of mileage. I need something I can drive for 7 years or so before having to purchase something again.

MarciaB: I get a "gas reimbursement" of $30/wk. However taxes are taken out of that and so it's really only $24/wk. It's a joke, I know. I drive approx. 12 miles to work and 12 miles home each day and average another 30-50 miles during work to different job sites, etc. each day.

This is the MMM forum, not some regular personal finance blog. Can't drive a car with 110,000 miles?!? Are you fucking kidding me?!? This isn't 1979. 15k-18k per year is barely more then average. Hell a 1978 Toyota probably would have done 300k, too.
You can get a Honda that will do 200k MORE miles for $6000 and double any of your vehicles gas mileage.
You can't sell the car NOW, but with an MMM budget, you can easily make it happen in 6 months or less.
This blog is about changing your thinking and making REAL changes , not just "swapping cars" and calling it a day.
Perhaps someone can suggest some of the MM articles that are relevant here. I will browse if I get a chance.

GRSConstruction

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Re: Advice For My Current Situation
« Reply #37 on: June 04, 2014, 07:17:50 AM »
okashira:  While I appreciate your enthusiasm, I think you've either not read all of my posts on this or you're confused. Read my response again to Mt9982. I have made and am making more changes than just trying to figure out how to swap cars and call it a day. I'm not sure how you even came to that conclusion.

Let's review what I've got figured out in just the first week. I'm cutting back my monthly expenses significantly (reduced by approx. $500/month already), set up to pay off $6,500 in debt this month, set up to pay off another $9,400 in debt over the next 10 months (at that point only debt is car/house), started driving the more fuel efficient car, set up a strict monthly budget for my wife and I, reading about ways to maximize our groceries for breakfast, lunch, and dinner so we don't eat out much at all, building up my emergency fund for 6-8 months expenses (approx. $25k), researching the best investment strategies, meeting with people in my life that have been successful investing, etc. etc. So how is that just swapping cars and calling it a day??! I really felt like this was good for one week's worth of researching and making changes. I can't become debt free and a millionaire over night so I'm setting myself up to succeed as fast as possible instead. I think some people on this site get a little too caught up in being judgmental instead of helping encourage those of us really trying to make changes. 

As far as the car issue...While I do agree many cars will drive that long, I don't want 2 cars that have that high of mileage when we drive as much as we do, it's really that simple. My wife does not drive much so she is driving our 4Runner that has 135,000 miles on it. It should last to 250k with no problems, so we'll keep driving it for a long time. However, I do not want a 2nd car with higher mileage because we do still drive to our place in New Mexico (hopefully twice a year @ 1,500 miles round trip) and like to take road trips occasionally which I want a reliable lower mileage car for. I don't think it is unreasonable to want one lower mileage vehicle when you do as much driving as we do. Now, I definitely don't need a $500/month car payment to get a lower mileage vehicle. That is where you are 100% correct. So I agree with you that I need to figure something else out as soon as possible, but I'm not really able to do it at the moment. So as I previously mentioned, as soon as I can get to where I have the cash funds to buy a decent vehicle for work I'm going to jump on it. What I'm looking at is something in the 50k miles range so I can easily drive it for 7-8 years without much in maintenance costs. Assuming I drive an average of 16k miles/year that's going to be at 178k miles after 8 years which is reasonable and if I need to keep it longer at that point I can or if I am having some issues with it at that point I can still get a couple thousand out of it selling it.


GRSConstruction

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Re: Advice For My Current Situation
« Reply #38 on: June 04, 2014, 07:23:12 AM »
I'm hoping that when my next contract extension comes around with my company 1 year from now, I'll be able to work a company vehicle into the deal so I won't have to use cash to purchase a vehicle at all and will save on car insurance too. I don't know if it will be a real possibility or not, but we'll see!
« Last Edit: June 05, 2014, 09:13:06 AM by GRSConstruction »

MarciaB

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Re: Advice For My Current Situation
« Reply #39 on: June 04, 2014, 07:31:54 AM »
Good on that - press that cheapskate for the company vehicle!

You've made some remarkable progress towards lifestyle changes - wow!

CarDude

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Re: Advice For My Current Situation
« Reply #40 on: June 04, 2014, 07:44:28 AM »
My wife is a preschool teacher and was only working part time, but more recently has been working full time. She only takes home about $600 every two weeks working full time or $400 every two weeks working part time. They offer her no benefits or anything. **Just as a side note, I think it is absolutely absurd that my wife works with and is responsible for children from ages 2-5 and is expected to provide curriculum for these children, etc. for $9.50/hr. It is such an important job that is paid so poorly it is embarrassing in my opinion. She loves working with the kids though, so she sticks with it.**

Absolutely. Despite the media rhetoric, our country doesn't actually value children or the people who teach them. OK, back to reading the rest of your post...

homeymomma

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Re: Advice For My Current Situation
« Reply #41 on: June 04, 2014, 07:49:55 AM »
Just curious if you've looked into renting out the cabin at all. My aunt has a cabin in northern CA that she rents out for just one month each summer, by the week. She charges $800/wk (based on the local market) and it gets rented a year in advance usually. This covers the costs of property taxes, maintenance, insurance, etc. They just chose one month they could set aside and not use it themselves, out of 12, and it pays for itself that way! Seems like a pretty sweet set-up.
Just wanted to put that option forward if you were reluctant to rent it out because you were worried about having access to it yourselves.
:)

CarDude

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Re: Advice For My Current Situation
« Reply #42 on: June 04, 2014, 07:55:00 AM »
As far as the car issue...While I do agree many cars will drive that long, I don't want 2 cars that have that high of mileage when we drive as much as we do, it's really that simple. My wife does not drive much so she is driving our 4Runner that has 135,000 miles on it. It should last to 250k with no problems, so we'll keep driving it for a long time. However, I do not want a 2nd car with higher mileage because we do still drive to our place in New Mexico (hopefully twice a year @ 1,500 miles round trip) and like to take road trips occasionally which I want a reliable lower mileage car for. I don't think it is unreasonable to want one lower mileage vehicle when you do as much driving as we do. Now, I definitely don't need a $500/month car payment to get a lower mileage vehicle. That is where you are 100% correct. So I agree with you that I need to figure something else out as soon as possible, but I'm not really able to do it at the moment. So as I previously mentioned, as soon as I can get to where I have the cash funds to buy a decent vehicle for work I'm going to jump on it. What I'm looking at is something in the 50k miles range so I can easily drive it for 7-8 years without much in maintenance costs. Assuming I drive an average of 16k miles/year that's going to be at 178k miles after 8 years which is reasonable and if I need to keep it longer at that point I can or if I am having some issues with it at that point I can still get a couple thousand out of it selling it.

See, while I tend to recommend slightly different cars than a lot of folks here due to the car safety angle, okashira is dead on in terms of vehicle longevity. The CX-5 is a brand new SUV (they only started making them in 2012), and if you're set on having it or keeping it until you can pay it off, that's one thing. But from a longevity perspective, there are plenty of Hondas and Toyotas that are likely to last just as long while costing thousands less, even with 100k+ miles on the clock. The fact that you acknowledge your 4Runner is capable of doing so suggests you understand this on some level. I'm pretty sure what okashira was responding to was your assertion that you can't buy a 110k+ mile vehicle and expect it to run for 7 years when you put 18k a year on it. That's just factually incorrect.

homeymomma

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Re: Advice For My Current Situation
« Reply #43 on: June 04, 2014, 08:02:46 AM »
As far as the car issue...While I do agree many cars will drive that long, I don't want 2 cars that have that high of mileage when we drive as much as we do, it's really that simple. My wife does not drive much so she is driving our 4Runner that has 135,000 miles on it. It should last to 250k with no problems, so we'll keep driving it for a long time. However, I do not want a 2nd car with higher mileage because we do still drive to our place in New Mexico (hopefully twice a year @ 1,500 miles round trip) and like to take road trips occasionally which I want a reliable lower mileage car for. I don't think it is unreasonable to want one lower mileage vehicle when you do as much driving as we do. Now, I definitely don't need a $500/month car payment to get a lower mileage vehicle. That is where you are 100% correct. So I agree with you that I need to figure something else out as soon as possible, but I'm not really able to do it at the moment. So as I previously mentioned, as soon as I can get to where I have the cash funds to buy a decent vehicle for work I'm going to jump on it. What I'm looking at is something in the 50k miles range so I can easily drive it for 7-8 years without much in maintenance costs. Assuming I drive an average of 16k miles/year that's going to be at 178k miles after 8 years which is reasonable and if I need to keep it longer at that point I can or if I am having some issues with it at that point I can still get a couple thousand out of it selling it.

See, while I tend to recommend slightly different cars than a lot of folks here due to the car safety angle, okashira is dead on in terms of vehicle longevity. The CX-5 is a brand new SUV (they only started making them in 2012), and if you're set on having it or keeping it until you can pay it off, that's one thing. But from a longevity perspective, there are plenty of Hondas and Toyotas that are likely to last just as long while costing thousands less, even with 100k+ miles on the clock. The fact that you acknowledge your 4Runner is capable of doing so suggests you understand this on some level. I'm pretty sure what okashira was responding to was your assertion that you can't buy a 110k+ mile vehicle and expect it to run for 7 years when you put 18k a year on it. That's just factually incorrect.

Agree with above, but just want to say that as some one with kids, having at least one reliable car on the newer side is such a relief. We used to have two beaters and it was a constant stressor. One felt unsafe, the other was constantly requiring expensive repairs. At least to us, two people with no car maintenance knowledge whatsoever, we would not be thrilled to jump back to that point. When you're first starting out, it feels like it's worth the cost to not have unknown maintenance costs jump out at you from nowhere. If you have two beater cars, you feel constantly a week or two away from decimating your emergency fund with another stupid car repair. Just saying, I know it's not totally rational from a numbers standpoint, but having at least one car that you pay X on each month, and no more, is quite nice.

GRSConstruction

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Re: Advice For My Current Situation
« Reply #44 on: June 04, 2014, 08:44:58 AM »
MarciaB: Thanks! I appreciate it, and believe me, I've been trying to get a company car for the past 5 years, but hasn't happened yet. I'm going to really push for it this next year though!

homeymomma: We have looked into renting the cabin a little, but there are two parts to this...one is that Chama, NM is not a super touristy area, so there is not a great rental market there, it's not non existent though, so it would still rent out occasionally I'm sure. The larger issue is that my grandparents originally started building our cabin about 20 years ago and at the time thought they would complete most of the interior work. So while the exterior is in good shape, the interior is not completed necessarily. It does have working bathrooms, heat, flooring, all that sort of thing, but for the rental market, I would have to put some money into the place mainly in some cosmetic finishes as well as two larger expenses in some major plumbing work and definitely in the kitchen. The kitchen was only partially completed and currently the oven does not work among a few other issues. So, for us to get up there it's a beautiful property on 3 acres by a river, etc. and we can deal with those issues and slowly start working on them, but from a rental standpoint I couldn't ask someone to rent it and just deal with those issues you know? I just think for now my money is better spent getting out of debt, saving for the emergency fund, investing, etc. and work on the cabin as we have extra money/time. However, long term, yes, absolutely I want to rent it out when we are not up there. That is a long term goal my wife and I have is fixing that place up over the next 5+ years until we can truly relax and enjoy it every trip up and we can rent it out anytime! Realistically to get it in the proper shape to be comparable to other rental properties in the area I've looked up online we'd have to spend somewhere in the $30k-$50k range. Which sucks, but as you mentioned it could create some great cash flow over time since it's paid off and we would relax and enjoy it even more. The current value of the property, as-is, is around $200k-$220k. With the improvements we could make for $30k-$50k it would go up about $75k+ in value. Which doesn't really matter since we will never sell it anyways unless there was just some horrible health emergency or something, but it's nice to know and will help with rental value! :)

CarSafetyGuy: Again, I feel like I beating a dead horse a little bit...haha...but I totally agree that a car can take that kind of mileage. I understand I don't need the CX-5 nor the $500/month payment and wish I didn't have them. As homeymomma mentioned, I am not willing to have 2 high mileage "beater" cars as much as it would save me money though. I am, however, willing to either: 1. Talk my boss and his wife into letting me get a company vehicle so all of this will be irrelevant (BEST OPTION) OR 2. Sell the Mazda as soon as I have the cash to cover any loss and purchase a reliable vehicle with around 50k miles on it for around $10k cash. I just don't have the cash for even covering the loss on the Mazda and a $6,000 car at the moment while I'm paying off the high interest debt which is more important to me. Hopefully in the near future I'll have this issue wrapped up so we can move on from it! haha

« Last Edit: June 05, 2014, 09:14:48 AM by GRSConstruction »