Monday, June 30, 2014

Truck Update

Big news on the truck front, Mr. Sam is the proud owner of a new truck.  

As I shared recently, we were not finding very good prices on used trucks, they were running $12,000 or so for the type of truck we wanted but were 10 years old.  As such, after doing a lot of research, we opted for new (as Anon noted, the used car market is tough).

Anonymous said...
we had to replace our truck last year too. After looking for used ones in the 3 - 5 year range and finding not much of a price break off new ones, we went new. Its been awhile since we bought new but the cost justified it this time. I was going to pay cash, like you we hate car loans but the rate was so cheap and a $1000 rebate off the price for financing that we financed about 60% of the cost and paid it off over 6 months and came out way ahead with the rebate vs interest expense. I would have paid off the loan with the first payment but feared they would come back at us for the rebate amount. Our weekdays cars we bought in 2007, both luxury cars that are 2002 and 2004 models, bought as a package deal and plan to drive them for many more years.
We bought last year's truck (2013) and opted for a low end model.  We paid cash for about 40% of the purchase price and the rest was paid via a loan.   While I hate having debt of any kind, we will work hard to get it paid off quickly and, in the long run, I think it is a better decision.  We have a new truck that is under warranty, it has four doors which gives us greater flexibility (old truck only had two doors), and Mr. Sam is so happy to be out of his old, beat up truck.  

Wednesday, June 25, 2014

2014 Savings Goals - June Update

(1) Max out 401k(s) -        $8,088    23%  (goal is $35,000)
(2) Max out IRA(s) -         $8,838    80% (goal is $11,000)
(3) Add to e/r fund -          $4,400    44% (goal is $10,000)
(4) Roof project -              $5,000    100%  (goal is $5,000)
(5) Vehicle replacement -  $5,000     100%  (goal is $5,000)
(6) House projects -          $0            0% (goal is $3,000)

Total:  $31,326  45%  (Goal is $69,000)

We are having the year of unplanned expenses, and as a result our progress chart has been altered.  First, because Mr. Sam needs new/nused truck (and that goal just won't wait anymore) we have cleaned out the house savings account and Mr. Sam's 401k savings account.

Mr. Sam is not currently eligible for his work 401k so we were putting aside cash so when he is eligible (September) he could increase/max out his 401k deductions per paycheck (up to his employer's limit, most employers do not permit a 100% contribution) and we would have cash available to make up for that budgetary shortfall.  But, the truck won't wait so since this money was not invested and available we are putting into the truck fund.  Hopefully, by the time September rolls around we will be able to manage our budget such that he can still increase his contributions to try and put away as much money as he can.

Second, similarly, our house project fund has also been cleaned out for the truck fund.  Our truck fund is $10,000, not the $5,000 listed in our chart.

At present, we are about $3000 behind on our savings goals.

Tuesday, June 24, 2014

Car Repair Blues

One of the ways we keep our expenses down so that we can save more is keeping our transportation costs low.  I drive a 2006 four door car, which was purchased with cash in 2008.  Mr. Sam drives a truck, a necessity for our rental properties, which was purchased with cash in 2004.  The truck is of the late 1990s vintage.  So, I've had my car for six years and Mr. Sam has had his truck for 10 years now.

This year the average price of new car was $31,252.  Additionally, Americans are keeping those expensive cars for more years (due in part to longer car loans).

Last year, my car needed a fair amount of work.  The work was done, about $2000, and I was hopeful my car would be good for a few years.  No such luck, I've just put another $1200 into my car and I have an outstanding transmission problem that needs to be addressed by a specialist (which means expensive in my mind, but its an unknown at this point).

While we were talking transmission for my car, Mr. Sam's truck has reached its end.  He either needs a new engine or a new vehicle and the mechanic who looked at it said it really wasn't worth putting a new engine into the truck. The truck is also only two doors and we really need another four door vehicle for a variety of reasons.

So, we are on the hunt for a used four door truck (with a shorter bed).  Interestingly, the prices on used (2010-2013) trucks are close to the price for a new one.  I mentioned financing a purchase rather than depleting our savings account (which has already been battered by prior unplanned expenses this year), but Mr. Sam is strongly against having a car payment (I've trained him well).  Which means that we will need to look for something that is older or figure out some other plan.

Monday, June 23, 2014

Rainy Day News

News today on Americans lack of savings.  Since our emergency fund has taken a hit this year (more on that later), I can relate to this news.  Our emergency fund is down to less than 3 months of expenses, which causes me great consternation.

Most of the time we are able to plan ahead for expenses, meaning that if we have a house project, like our recent new roof, we save up for it and then we incur the expenses.  We were not able to do that with the roof because we had to replace the roof prior to the rainy season here in Florida.  We had a recent family vacation, planned by family, that we were similarly not able to plan for (and our vacation savings fund was depleted due to a prior planned for vacation).  And now, we've got car issues (more on that later).

But, putting all that backward slide aside, we generally do well with our savings because we have a system in which we put savings first on our list of expenses.  Which means we pay ourselves first and second.  First is our pre-pay savings, meaning the 401k.  And, second is our automatic savings which goes for things like the emergency fund, the travel fund, annual and semi annual expenses like taxes and insurance, etc.  But, our automatic savings is based on planning and when our planning is either wrong or we have unplanned expenses we run into trouble - which is where we are at now.

Monday, June 9, 2014

Fleeting Figment

On Saturday I logged into my Fidelity Roth IRA account with the plan to check on and, likely, cancel some open limit orders.  Imagine my surprise (and short lived excitement) when the total value for my Roth IRA had jumped upwards by more than a $100,000.  I quickly realized that my Apple stock was showing the post 7-1 stock split with the pre-split price.

It seemed odd, to me, that Fidelity would combine the two pieces of data, over the weekend.  Better to just leave it as is until Monday and today my short lived wealth has disappeared.

Thursday, June 5, 2014

Aspirational Housing

Great article by author Michael Lewis of The Blind Side fame regarding the perils of expensive housing.  Even a very rich man like Michael Lewis couldn't keep up with renting a landmark mansion in his home town.  Mr. Lewis' fun essay also documents the hidden costs of utilities, maintenance and furnishings for a much larger house.  

I'm in a phase right now where many of my friends are selling their first or second home and upgrading into McMansion world.  It is somewhat surreal for my husband and I to visit our friends/peers who have moved from reasonable rancher to gated community McMansion.  Some of them bought during Florida's real estate bubble deflation so they got good deals, but it is still a whole different world.  One of my friends, who moved into McMansion world in the last couple of years mentioned that she felt like she had to buy (or lease) a new car to keep up with her new neighbors.

My friends' homes are beautiful and sometimes its hard not to think envious thoughts about those new chef kitchens and especially the walk in closets.  But, I have no desire to take on that kind of debt.  I did have a refreshing conversation with a college friend recently and she is just a couple of years away from paying off her home in full.  Great motivation for me as not having a home mortgage is a goal that is always in the back of my mind.