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If you want, you can pm me with an email addy and I can send you a word file of a budget sheet we use. It is very detailed and will help you better see where your money goes and what you can do to maximize your income vs. your expenses! Very helpful! I can't upload it here though because of the format and the size. If you have works instead of word, I can copy the document in works and send it to you that way too. Just let me know, anyone else I can send it to you as well.
You are sooo right about the used car thing! Been there!
They do become money pits and you will not be saving in the end! You know, I actually like the idea of leasing because as long as you can keep it under the mileage limititations, you practically get to drive a new car every couple years, bringing down maintenance costs. You are paying for something that is not yours, of course, but overall, you are still making payments and helping your credit, and not getting stuck in a loan for six years, by the time you'd paid off the car you've paid well over the amount you'd want to and it's not worth hardly anything at resale/trade in. Just a thought!
Quote:
Originally Posted by riveree
This is an interesting post, especially the discussion about the cars.
I don't know if there's one answer that fits everyone.
My last 2 cars have been brand new (but I bought them at year end so I could get them under invoice), both have been financed.
I did it because I was sick of my old used cars breaking down. At some point, they become money pits. I considered a 2 or 3 year old car, but felt the savings did not outweight the risk (a lot of long term damage can come to a car that was treated badly during the break-in period).
I think I got it right when I bought the second car. I bought a japanese car with excellent reliability and resale value (a Honda), I bought a 5-year extended warranty (mainly for peace of mind during the finance period), and I have good credit, so I was able to get a car loan from my credit union for 4.25%.
Sure, I would have loved to pay cash for it, but that wasn't feasible at the time. I plan to drive this car for 8-10 years if all goes well.
As a female who is often driving alone, it's important to me to have a car that won't break down on the road (or at least isn't likely to) and going this route has served the purpose so far (I'm 3 years in and zero problems ).
I have had friends who traded down to something with a lower car payment, and that might be an option for the OP if the car payment is large.
You are sooo right about the used car thing! Been there!
They do become money pits and you will not be saving in the end! You know, I actually like the idea of leasing because as long as you can keep it under the mileage limititations, you practically get to drive a new car every couple years, bringing down maintenance costs. You are paying for something that is not yours, of course, but overall, you are still making payments and helping your credit, and not getting stuck in a loan for six years, by the time you'd paid off the car you've paid well over the amount you'd want to and it's not worth hardly anything at resale/trade in. Just a thought!
Hey LuLu!
I've never leased, always been too afraid....it feels like a rental to me. Yeah, you definitely do pay a few thousand extra by getting a car loan and purchasing (but then you get to keep the car ). We're trying to inch towards paying cash in the future for the cars, yet still buy new....we'll get there .
A good starting point is the book "Your Money or Your Life". There is also a website, Alternatives for Simple Living Home with resources and a forum for simple or simpler living ideas.
Getting back to the OP's original question, I love this book Sweetana recommended. I read this book in my 20's and it changed my entire perspective on money.
In my 20's I made a lot and I spent a lot (all on myself...ah, those were the days !), and I had no idea of what I spent or how to prioritize my money goals.
It wasn't for lack of an education, my parents were very good with their money, I just didn't listen to them .
OP, if you've never read the book, you should - I bet you'll find it inspiring:
Your Money or Your Life
by Joe Dominguez & Vicki Robin
It's not how much you make, but what you do with it.
It's so easy to spend money and not know what happened to it. I've now gotten into the habit of writing down every expense every day. This way, it is there in front of my face. Did I really need to spend $60 on lunch (sandwiches) in one week? No, I can make my own or eat lunch at home. What about the $130 hair cuts at the expensive Los Angeles salon? No more of those. Letting the hair grow and found a place that's less expensive. Also, I color my own hair each month and paint my own toenails. I only buy clothes that are on sale, and yes, everything goes on sale! I don't have a TV or cable. I get all my movies through Netflix. My point: it's the little things that ad up to a lot of money. And it's very easy to remain in a state of denial and lose track of what you spend. it's like the fat person who looks at you and says, "but I don't really eat that much!"
We have lived on 85K for years, even in Los Angeles, and we have had a much larger mortgage.
We also used to have student loans, car payments, some cc debt, adoption debt, and buy whatever really we wanted, etc.....
Then we ran into a program like Dave Ramsey's, but at church. DR has a very similar approach and I would highly recommend getting a copy of his book, "The Total Money Makeover."
It changed our lives.
In 2 years we have paid off ALL debt other than our mortgage.
I could go on and on about how to change your spending, but the book more than says it all.
You absolutely CAN get debt free, but it will require a drastic change in lifestyle. You may need to give up eating out, any spending that you don't need (and most of what we buy we don't need!), and maybe even have to sell some things.
Dawn
Yes I recommend him as well. Sometimes he makes it seem like it's a bit too easy, but basically, I like the fact that he promotes living debt free. To the original poster, I totally understand how you feel. I think most Americans feel the same way. And most household don't even make $85K. thank goodness you are not like a lot of Americans who fell into the "real estate will continue to go up forever" mentality and didn't buy a $500K house. I work at a credit counseling agency and what you need to do is to do a written budget. My biggest pet peeve is the stupid car pymts. Those things mess up people's budgets most of the time, especially if it's a big SUV. Add in gas, insurance, maintenance and you can hit $1000/mo easy. Oh believe me, I see it every day. Also watch how much you spend on things like cell phone bills, cable, eating out. Those are things our parents did not have. Suddenly we feel like we can't live or do without. We really are a spoiled materialistic society and most of us are one paycheck away from being totally broke. I'm glad at least you are thinking about your situation. It is so important to live BELOW your means in order to save some money. People never think that something can change in their life, like somebody gets sick or laid off. Alot of them end up losing their homes or filing bankrupcty. I see it every day. Good luck to you. I think you can live just fine with $85K income and $160k house. Just watch all of the other miscellaneous bills.
"Always pay yourself 10% of your gross paycheck to your savings account."
She said if your gross pay is $178.65 then deposit $17.86 for that week.
Rule of thumb - 10% and no excuses.
my grandmother followed one simple rule when it came to purchasing her little luxuries. If you can't afford to pay cash for it, you can't afford it. I try to follow this rule.
As for whether or not to purchase a new or used car. It depends upon your needs. Personally, I drive 90 miles round trip every day. I need a dependable and reliable car. With a new car I get this. I do however make sure I keep my cars until they die and I do not buy when I do not need. Drive a 2007 honda accord now (no leather, no fancy moon roof just a plain old simple accord).
I had similar issues until I divorced my husband...lol (sorry, that's not funny). But seriously, he was compulsive about spending money on anything and everything, was addicted to using credit cards, etc. Ended up filing bankruptcy back in the early 90's. Long story...will make it short by saying I am now single and in control of how my money is spent. It is so refreshing to know that while I'm at work all day, I don't have a husband who is out spending it all!
I budget and account for nearly every dollar spent. I allow just so much for food each wk and if I want to go out with friends, I budget for that too. I don't spend money foolishly with the thought that "you only live once, and there's always tomorrow". I no longer have credit card debt and therefore don't pay high monthly interest charges. When I set up my budget it is for at least six months down the line to be able to get a good idea of what's coming up and when. There are always unforseen situations that can arise; but by being practical/responsible and "saving for rainy days", those expenses can be handled without having to starve.
You did not indicate what your lifestyles are like. Do you eat out a lot? Do you buy a lot of 'convenience' foods? Are you careful when grocery shopping and buy just what is needed? It's amazing how much money you can save by shopping for food, etc., at Wally-World, or Sam's or Costco. Do you have huge credit card debt with high interest? Do you both have cell phones with high monthly charges? Do you spend a lot on clothes, entertainment, travel, etc., etc.?
Who is more in charge of finances in your marriage? Is there really any control, or is it just "catch as catch can"?
There are numerous ways to be conservative with your funds without feeling like you don't have a life.
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LuLu
Dave Ramsey rocks
