My Life and Views on Personal Finance

I thought now would be a good time to follow up on my post about buying a third car, since it’s been 6 months since I made that purchase.  I have done most of the things I needed to do when I bought the car, but I still have a couple little things left to do once I get to them.  So far, I’ve spent money in the following areas:

• Replaced spark plugs, two oil changes, fuel injection cleaner, and leak preventative: $153.48
• Muffler: $63.44
• Parts for new radio (old radio volume quit working properly): $50.32
• New air filter: $13.15
• Haynes manual: $13.98
• New manual (car did not come with one): $6.94
• Sun visors (got from junkyard.  Old one on driver side was destroyed): $6

I still have a few other things to fix:

• Driver’s side window gets off track.  This could be as simple as adjusting something, or replacing a part that could cost up to $80.  I’ll find out once I take it all apart.
• Worn gasket.  In order to get to the gasket, I need to take apart half the engine.  Since I’ll have it all apart anyway, I’ll replace the timing belt, along with the other belts.  I looked through the service records, and didn’t see anything about the belts being replaced, so I figure I might as well do it while I’ve got it all apart.  This could easily cost me $500+ to pay to get it fixed, but it’ll end up costing me around $50 to do it myself.
• Bad strut.  I haven’t looked into this, but it sounds like there might be a bad strut.  The previous owner mentioned it, but it doesn’t sound too bad right now.  I might just leave it the way it is for now.
• SRS light on.  The previous owner said it’s been on as long as he’s had it, and it passes all inspections.  I like to have everything fixed, but this is my lowest priority.  It’s just for me to drive back and forth to work, so I might not fix it.

Now on to the savings.  I am actually saving more than I figured.  I originally thought I’d save $29.77/mo, but so far I’ve averaged $39.39/mo savings.  I did end up underestimating the monthly maintenance, but that’s because I’m getting the car in better shape than the previous owner had it.  I originally thought I’d spend $28.33/mo, but I’ve actually averaged $51.22/mo, based on the bullet points above.  The good news is that the car is actually worth $77 more than I paid for it 6 months ago, and the insurance is a little cheaper.  I’ve gone 8471 miles in the past 6 months, and my savings in gas is pretty much spot on with gas averaging $3.20/gallon during those 6 months.  Gas was cheaper, but I’ve averaged a higher mpg to balance it out.

Obviously I don’t expect the value of the car to increase over time, but the monthly maintenance should drop off once I finish the above items, which should pretty much balance out the depreciation changes.  Here’s how the actual costs have broken down for the first 6 months of owning the car:

Here’s the original estimate I made when I purchased the vehicle 6 months ago, just so you can compare both of them side by side:

So I have come out better than I planned, which I thought might happen.  Doing all the work myself on the car makes it pay off.  Otherwise, I would have paid more to get some items fixed with it.  Run the numbers yourself before deciding to buy a third car, but it might just save you some money if you have a similar situation as me.

As part of refinancing our house to a 15 year loan, I went through the process of reworking our budget with the new house payment involved.  By having a detailed budget for every month, I knew exactly where we were spending our money.  I looked at how much we typically budget per month and compared it to where we actually spent our money within each category over the past year.

Using our new house payment, I created a new template for our monthly budget starting point (no month is ever really the same, but I like to have a starting point as a guide), making sure that we can still pay off debt quicker than the minimum payments.  I found out that we still have some extra to put toward debt, but it will be about half of what we were currently allocating to debt reduction.

I wanted to know when we’d be out of debt (except for the house), so I plugged the monthly additional payment into my adjusted debt snowball spreadsheet I got from a user in the YNAB forums (I don’t remember their name, as it was years ago, but Thank You!), and found out that we can still be out of debt within 4 years instead of 2.  Within this spreadsheet, you can put how much extra you plan on paying each and every month.  I put the number I came up with from our new budget in for most months, but then added most of an extra paycheck I would receive within a month twice a year.  That’s the benefit of budgeting on a monthly basis; you essentially get a bonus paycheck every 6 months (assuming you get paid every two weeks).

I cut back the extra we’d be paying once we get out of non-house debt, but we’d still snowball our original debt payment into the house payment, and be paid off within 12 years instead of the 15 years on the note.  I’ve gone back to this spreadsheet several times in the past few years to see how different scenarios would affect us.  Here’s a graphical representation of the timeline of when we plan on paying off our non-house debt (available in the second tab of the spreadsheet):Once I got all the numbers figured out, I ran it by my wife.  She is on board, so we have a goal of how much to put toward debt with the new budget every month.  Don’t skip out on this step; it’s very important to get your spouse’s buy in on all your financial plans.

Want to run the numbers for yourself?  Get the template of the debt snowball spreadsheet I used here.  Just change the blue cells to fit your situation.  Leave a comment to see how this spreadsheet helps with your debt reduction.

When we purchased our house a year ago with an unbelievably low 4.5% interest rate on a 30 year loan, I never thought I’d end up refinancing it.  But that’s exactly what we are doing.  Our plan was to pay down all our debt, then start attacking the house until it’s paid off.  I wanted to pay it off in 15 years, but liked the option of a lower forced payment in case something happened to where we lost one income.

But then I saw how low rates have gotten over the past month or so, and I started running some numbers.  If we refinanced to a 15 year loan, we’d pay a few hundred more per month, but end up saving almost $23,000 over the 15 years.  That made me change my mind.  So we are refinancing to a 15 year mortgage with an interest rate of 3.25%.  This means we’ll be in non-house debt mode for a couple more years than I planned, but it will end up saving us a ton of money in the long run.  It’ll just take us 4 years to pay off our non-house debt instead of 2.

So if you currently have a 30 year loan, now is the time to refinance it to 15 years.  You’ll be happy you did once those 15 years are up and your house is 100% paid off.  Now I really feel confident saying we won’t ever refinance our house with the rate we are getting now.

Having a baby is really affecting my workout routine (or lack thereof) for my New Year’s Goals.  Enough to where I don’t think I’ll hit any of them.  It’s hard to get anything normal done around the house, let alone any personal goals I’d like to do.  At least the crying every night isn’t happening anymore.  It’s still tough though…

1. Sell old house.
   Goal canceled.  Found renters instead.
2. Reduce non-house debt by 47.57%.
   We just had a little extra to put toward debt this month, since I had an unpaid week off to stay home with Brooke.  Reduced by 27.12% so far, where we should be more like 35.68%.  We are above the revised goal (25.02%) though.
   Here’s a graph of how we’re doing.
   
   
3. Be able to jog 5 miles without walking.
   Realistically, I probably won’t be able to hit this goal anymore.  I want to start running again, but it’s difficult to add items like this into my daily routine with a newborn at home requiring my attention during my peak running times.
4. Do 100 push ups in 3 minutes.
   See jogging.
5. Do 200 sit-ups in 3 minutes.
   See the push ups.

I’m really disappointed in myself on these goals.  I think I just made too many goals to stick with all of them.  I think I’ll just make one next year, and try to hit it.