A little bit of budgeting mayhem (Part 1)

by Melody on November 4, 2010

 

Our family has been following Dave Ramsey’s Total Money Makeover since February of 2007 and several months ago, we paid off our very last interest-carrying debt.  We were debt free!  I really thought our lives were going to change or the heavens were going to open up or something.. What happened was that we continued with business as usual.  We started saving so we could replace our aging family car.  It felt so good to pay ourselves, instead of padding someone else’s pocket.

We did NOT want to borrow money.  Our plan was to save a certain amount and pay cash on the spot for a newer car that would fit our family and all our craziness.  Plans changed when our car starting slowly falling apart.  It got to the point where we were going to have to start funneling money into a car that we weren’t going to get much out of anyway.  There were all kinds of crazy quirks that I could live with (drove me crazy, but I could live with them), but then the brakes started failing.  We had to make a decision.

We talked and discussed and worried about this decision.  We ultimately decided that the safety of our family was more important than not being in debt.  We are very lucky and were able to borrow from my parents instead of the bank, but we are still treating it like any other debt.

We live off a zero-based budget, where every single penny that comes in is accounted for.  Our money is broken up into different funds (ie car, gas, groceries, medical, etc).  You can see all of our categories here.  Every extra dollar that we find will be funneled towards paying off this debt, just like we have done in the past.

Why am I telling you all this?  To let you know that things will happen to derail your plans, your budget, your savings and your life.  We are dealing with it the best we know how and are anxious to be debt free again.  Stay tuned for Part 2: How we are “finding” extra money to put towards our debt and what we are using to manage it.

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{ 10 comments… read them below or add one }

Becky November 4, 2010 at 4:14 pm

So thankful for this post, You are a real person living in the real world. I agree, I want to live debt free, but there are circumstances that come up in life where you have to make the choice that is best for your family and their safety. Thanks for sharing this with us.

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Mary November 4, 2010 at 5:15 pm

Thanks for this post. We decided to the exact same thing about 2 weeks ago. It is so nice to be debt free but having a safe family car trumped all that. Good luck with everything. I love your site. Thanks for all the great deals!

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Chip November 4, 2010 at 6:23 pm

After years of sinking money into used cars, we decided to buy new. The upside for us was that we drove a car that we did not need to wonder if it would start in the morning and what was going to break next. The downside was that we had to pay more for auto insurance and that dreaded monthly payment. We worked hard to reduce other debt and when the time was right, we purchased a new Hyundai. Because we are credit union members, we were able to get a 0% auto loan. Then I approached my insurance carrier and negotiated a fair but discounted rate. The icing on the cake was a free oil change + the next 4 were 50% off. I suppose my point is that even when we decide to buy something that we don't have a coupon for, we can still look around to see how to get the most bang for our buck.

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Melody November 4, 2010 at 8:25 pm

You're absolutely right, Chip! Part of my reasoning for posting this was to show the fact that there is more to life than using a coupon for a free box of fruit snacks (although that's great too!). We have to manage so many other areas of our life. Couponing has helped me be a better steward of our money in all directions, just by teaching me to shop around and not buy on impulse.

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Lora November 8, 2010 at 12:03 am

My husband and I are avid Dave Ramsey followers. We are attending his Financial Peace University for the second time. He has helped us crawl out of very difficult, allthough self-inflicted, financial circumstances. We have learned SO much and are SO grateful! In the past year we have paid off over $30,000 in debt and are working hard to pay off the rest. Congratulations Melody for becoming debt free – even if it was a little short lived!! Very impressive and we hope to be there soon!

I am so sorry to be the party pooper here. I feel I should share some info. on buying cars with you all, if you can be open to it. The problem with buying new cars is that they lose SEVENTY percent of their value in the first FOUR YEARS. Even if you get a zero percent loan, you are throwing thousands of dollars away. Very few rich people ever buy brand new cars because they know and understand this concept. My husband is very into cars, and you can easily find a very reliable car that is used and save thousands of dollars. Here is an excellent link to explain better what I'm trying to say. Please take note – I'm not trying to be critical, just simply trying to be helpful. There is some amazing information on here that can help people save tons of money throughout their lifetime! I sure hope you will read. http://www.daveramsey.com/article/saying-no-to-new-cars/lifeandmoney_automobiles/

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Melody November 8, 2010 at 12:12 am

Lora – I agree as well. I hope I didn't give anyone the impression that we bought new, our car is a 2006. My husband is a strong believer in not buying new and we feel like our car is so "new to us" that it doesn't even matter.

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Melody November 8, 2010 at 12:19 am

Lora – Obviously, since you are attending FPU a second time, you find it beneficial. Would you suggest it for those of us who are mostly debt free? Does it touch on all the baby steps? We have talked about it off and on, but just never made a decision. Would love to hear from someone who's been through it!

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Lora November 9, 2010 at 3:52 am

Oh my goodness Melody, you should DEFINATELY go to FPU if at all possible! I say this not only because I'm excited and currently enrolled, but because it covers SO much more than getting out of debt! Every single aspect of your finances is covered. No stone is left unturned. In fact, getting out of debt is only ONE class out of thirteen. There is so much information that we were not able to attack everything our first time around. I have to agree with some friends of ours, that the class is even more powerful the second time. A few of our favorite class topics are how to save, how to really make a budget work, how to buy and get big bargins, investing, planning for retirement & college, the roll of insurance in your financial plan (what is a scam, what is absolutely nessary). I could go on and on, but I can't recommend it highly enough! It has completely changed our lives for the better. If you look on his website, you can easily find when and where a local class is being held. My husband and I are considering teaching one possibly next year. Fun!

Anyway, I wasn't under the impression that you got a new car. I was hoping that I could be helpful to Chip without being abrasive or critical. We never had any idea what a bad purchase new cars were until we went to FPU. So I can't help but share in the hopes of helping other people avoid losing money!

Thanks so much for your blog. It is one of my favorites, and it helps me stay within my budget, so THANK YOU! :)

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Melody November 9, 2010 at 4:14 am

Thanks so much for the information, Lora. I really appreciate it! We have gone back and forth for so long about going, but will now look into it. We really like Dave's program, but are feeling a little stalled. Whenever I felt discouraged before, I would just read the book and would feel better, so this would definitely give us a boost!

Thanks for reading my blog, I'm glad to be of some help!

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Lora November 9, 2010 at 11:28 pm

You're welcome Melody! Glad to share! I hope you are able to work out a way to attend the class. I'm sure you will not regret it! We were feeling sort of stalled too so we signed up again and are all fired up. Let us know if you end up going – I would love to hear what you think!

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