Choosing A New Car

Are you looking for a new car?  Maybe a new adventure wagon, something sweet that you can use to get to the ski slopes, pull your boat, get you to the trailhead, take on your next vacation?  Let me give you some advice on choosing your new vehicle!

Don’t do it.  That’s my advice.  Okay, that was a trick, wasn’t it?  But so often we discard our older vehicles in favor of some shiny new piece of metal that has all of the bells and whistles that we just can’t live without when the one we have still has a lot of life in it.  There is a common train of thought that when a vehicle gets more than 100,000 miles it is just about worn out. These ideas are not only outdated, but can be very expensive.

How many miles can you get on a vehicle?  Probably a lot more than you think.  Cars are expensive, they often come with a monthly payment, and they lose value quickly.  If you really want to get control of your budget, driving a car as long as possible is a good place to start.  Learning to be happy with what we have, or being happy with something sufficient even if not new, can save a ton of money.  How much faster could you pay off your debt if you didn’t have to fork over anywhere from $400-800 every month for a car payment?  Where could you go and what experiences could you have with that much extra money?

So to debunk the myth that a car is worn out with 100,000 miles on it, let me share with you some true stories of vehicles that are still running strong with many more miles on them than that.  First of all, let’s talk about my trusty 2003 Chevy Suburban, aka the Mom Wagon.

Pulling the boat out of the Snake River

This vehicle can carry several people, always has a load of fishing equipment in the cargo space, pulls our boat easily, and has 4 wheel drive.  We bought it new with 43 miles on it, and it recently hit 351,000 miles.  I’ve driven it for so many years that it now carries so much sentimental value that I would have a hard time parting with it.  When we bought it our kids were younger and it was super handy for keeping all 4 of them separate enough that they weren’t in each others spaces on long road trips.  We’ve hauled friends, hockey bags, suitcases, camping and fishing supplies, bicycles, sewing machines, groceries, and lumber in it.

We still use it to pull the boat to the river, and to go on short and long road trips.  It’s been on family vacations, game weekends, camping and fishing trips, business trips, weddings, and funerals.  I can’t even tell you the emotions and memories that are wrapped up in that one vehicle.

This rig has paid for itself many times over, and for several years it has cost me only maintenance and minor repair expenses.  I typically average under $1,000 per year keeping it going, but we do make sure it is well maintained.  And I plan to keep driving it as long as possible.  It isn’t new, it doesn’t have heated seats or a backup camera or wi-fi, and I now make sure to keep my AAA membership current just in case.  But it still fits my needs so perfectly that I have no excuse to trade it for something newer.  And the well worn in seats are ridiculously comfortable.

If I had traded it when it hit 100,000 miles, on something that I had to make payments on and kept that cycle going, assuming a $700/month payment for 10 years, it would have cost me $84,000.  Spending $1,000 per year for 10 years instead saved me $74,000!  That doesn’t count the interest we have earned on that money saved either.  Imagine paying that amount of money toward your home mortgage instead of on a car.

So just to show that my car isn’t an anomaly, let me introduce you to a few friends who also have a well loved vehicle that is still getting them where they need to go.

Taryn, of http://www.happiestoutdoors.ca drives a 2004 Nissan Xterra with 112,000 miles on it.  She bought it new off the lot, and has since taken it from her home in BC through every Canadian province and through most western states.  She says she has taken it on “extended road trips across Canada, to Utah, down the West Coast to California and to Alaska”.

The Adventure Mobile

She also adds that it has plenty of room for 5 adults and overnight backpacking gear, along with 4 wheel drive.  Taryn also has a sentimental attachment to this car as it reminds her that “every backpacking trip, day hike, road trip or weekend away started with loading things into the truck”.  It has become part of her family as much as mine is a part of our family.  The call it The Truck, but think of it as the Adventure Mobile, and have no plans to drive anything different in the near future.

Teara, of http://www.thepipsqueakchronicles.com had a 1990 Chevy Blazer K5 that she bought used.

It had 186,000 miles on it, and she took it to Delta, Park City, and Moab, Utah, through Nevada, Oregon and California, and on all of her mountain biking adventures around Salt Lake City, Utah.  What I love is that she says it was her dream car, and it was old and beaten so she didn’t have to be careful with it.  This sounds like a perfect adventure vehicle to me.  She called it Franklin, and drove it until she needed something that she could pull her trailer long distances with, otherwise she would have “ran that thing into the ground”.

Franklin

Hatie, of  http://www.whoamag.co/ has a different perspective on vehicles because she lives in Chicago and doesn’t need a vehicle for her daily life.  But she uses her mom’s 1998 Honda CRV with around 300,000 miles on it for adventuring.  She takes it annually to northern Minnesota, used it to move to college in 2009, and says that it has since been to every Midwestern state.  She adds, “It was even stolen once, I couldn’t tell you where it went those couple days!”  She loves its reliability, and I think she even has an affinity for its “goofy flame type details”.  It doesn’t have an official name but she refers to it as a “sturdy bitch or sturdy bastard”, so I’d say she’s bonded with it as if it were her own.

These are all examples of vehicles that are loved because they get us where we need to be, with the gear that we need to have a great time.  This doesn’t require that the ride is new or has GPS, most of our phones do, and for places with no cell service they still make paper maps like they used in the old days.  It doesn’t need leather seats, or heated seats; I bought a heated seat pad for mine for about $30.  It doesn’t require wi-fi (again, smart phones).  What it does require is dependability, safety, and enough space to haul our families and our gear.  So before you buy a new vehicle, look at the one you have with fresh eyes.  Be sure to stick to a regular, “severe use” maintenance schedule, and take care of it as if you are going to drive it forever.

Think about the money you would spend on something new and the adventures you could go on with that money instead.  If you do decide you need something different, take advantage of the fact that there are lots of people getting rid of perfectly good used vehicles that have many more years of use left in them.  Let someone else take the hit on the new price and the drop in value.  Look diligently and be patient and you will find a gently used and well maintained rig that you can use to get you to the mountains and back for many more years to come.

The Mom Wagon

 

 

 

 

Setting Financial Goals

While we’re talking about goals and the new year, let’s discuss financial goals.  This is a subject that is uncomfortable for a lot of people.  It’s a lot easier to just stick our heads in the sand and ignore it all.  But our finances should be planned as much as anything else we do in our life.  Even more so than other goals in my opinion.  Because if we don’t plan our financial adventures, the other adventures in our lives aren’t going to happen.  As the great Zig Ziglar said, “If you aim at nothing, you will hit it every time.”  So let’s put our goals out there early in the year so that we know what we are aiming at.

What do you want your year to look like?  Do you want to be debt free?  Do you want to own your own home?  Do you want to be able to travel?  What do you want retirement to look like?  Do you want to retire early, or do some form of work forever?  Does your vision of retirement cost as much as you are making now, or less?  These are all questions that need to be asked.

Here’s my list of things to consider so that 2017 can be your best financial year so far:

1.  How much debt do you have and how much can you pay it down this year?  This is the most important thing on your list this year.  Start this right away so that you can move to the next item on the list.
   

   Carrying debt is like lugging this ball and chain around.

2. How much extra can you pay on your mortgage?  The sooner you have your house paid off, the better, but make sure to pay off your other debt first.    That way you can take the money you are paying on student loans, credit cards, cars, etc. and put it toward your mortgage too.  Being mortgage free puts a lot of extra cash in your hands every month.
3. How much do you need to have saved for your retirement?  Chris Hogan has a great retirement calculator that will help you see where you’re at and how much more you need to save.  Don’t think that you don’t have to worry about this yet, because everyone over the age of 18 should be thinking about retirement.  Time is money, and the sooner you start saving, the less painful it will be.  On the other hand, it is never too late to start saving either, you will just have to save more aggressively if you start later.   https://www.chrishogan360.com/riq/
4. What adventures do you want to go on this year?  Plan this into your budget so that they are paid for in advance, an adventure isn’t nearly as much fun if you are charging it on a credit card.
5. How about budgeting for Christmas now so that December isn’t so financially draining.
6. If you’ve gotten your budget put together, go through it and recommit to sticking to it.  If you haven’t, read my article on choosing the best budgeting system for you, and get it put together.  Don’t wait any longer.

The new year is a great time to start on a new financial path.  The holidays with all of their added expenses are over.  We’re thinking about fresh starts anyway.

This is for me.  I totally want to adventure in a VW van!

 

You have the whole year ahead of you to save for some of the expenses that you know are coming up.  Make a commitment now to end 2017 better off financially.

 

The Best Budget System For You

Finding a budget system that fits your family’s needs is comparable to finding the right pair of shoes. There are a lot of really good products out there, but your needs are specific to you.  The right shoe for your neighbor might not fit you properly, and the right budget for you may be completely different than your friend’s.  So how do you find a budget that fits your needs, is easy to use, and helps you to accomplish your financial goals?

This process is actually a lot like our shoe buying example, you might have to try a few on for size to see what works. A paper budget is a great way to see how your finances will perform over a span of time.  But it doesn’t work so well for knowing where you are day to day.  An app on your phone works great for tracking everday expenses, and it’s really useful if you and your significant other are synced so that you both know where your finances are at any given time.  But it’s a little more difficult to see your progress over time.  You might want to use a combination of methods.

There are a multitude of different types of “cash systems”, where you have a certain amount of cash set aside for each budget category. I like using cash because when it’s gone, it’s gone.  Cash gives you a better sense of how much money you can still spend, and it is easier to stick to your hard budget limits, as opposed to swiping your debit card.  It’s also really easy to underestimate your spending when you are swiping your card and keeping a tally in your head.  I like the small notebooks that have space for cash, they don’t take a lot of room and are a little easier to use, especially if you’re lugging groceries and a toddler around.  But you can simply make your own envelopes as well; look at your options and see what feels the most comfortable.

Even if you are using cash, it helps to have at least an app where you can get a quick visual on where your spending is at an any given moment. And of course, you and your spouse can both know where your finances are at, because living by a budget and becoming debt free is a team sport.  My suggestion is to download a free app that is seems like it will fit your needs.  Don’t buy an app at this point because we are still “trying on”.  Even if you find one that you love, I would try to stick with free.  Often the upgrade you get by buying isn’t something that you really need, and remember, we are trying to pay off our cars, credit cards, student loans, homes, etc. and we need to save money everywhere we can, so if you can get by with the free version, do it.

I would also suggest having some kind of budget that gives you a long term outlook. You can either do this in Excel or another spreadsheet type program, or if you already have something like Quicken you can use it.  Again, try to use what is free because we are saving money.  Even a sheet of notebook paper will work.  Try not to make this overly complicated or you will spend a lot of time setting up something that you won’t use.  It should be fairly basic and simple, with your monthly expenses, along with a list of what you are paying off.  What this extended budget will do is give you a visual of your debts being paid down, and seeing this progress helps you stay motivated over time.  And let’s face it, it can be hard to stay motivated in the beginning.

Remember to keep a long term outlook

 

Remember, try some different methods out, and don’t be afraid to discard what isn’t working for you. The only way you are going to be able to use your budget as an effective tool is if it is handy and convenient for you.  Just jump in there and get started!

 

How to Become a Millionaire (or How to Own Your Adventure)

Who wants to be a millionaire? Or a better question is, who doesn’t?  Do we need to have a million dollars to be happy?  Probably not, although it wouldn’t hurt either.  I knew that this title would catch your attention, but our real goal here is to be adventurers, right?  And trying to go on adventures when we are burdened by debt is kind of like trying to row a drift boat down the river with the anchor down.  You can row your heart out every single month and never make any progress.  And how much more fun would it be to adventure without having to worry about how to pay for it?  But how can you get there from here?  Especially if your “here” feels like a desolate place that barely covers the bills now?  How can you even think of getting to a place of financial freedom if you’re just scraping by paycheck to paycheck?

This isn’t an article about starting a new business, or getting a new job.  This is an article about using the resources you have now.  Once you have your finances under control, you will have the freedom to change jobs or go back to school or start a new business.  But for right now we’re going to concentrate on making your life better the way it is.  This is a story from someone who started out just like other normal Americans. We weren’t given any kind of inheritance, starved (literally) through college, work somewhat normal jobs, and still managed to pay off all our debt, house included, and are now free to choose our adventure almost every day. So when I say I know where you’re coming from, I really do.  In my previous article on living debt free, I talked about some of the reasons that we should live that way.  Now let’s talk about the how.

Sometimes the hardest part of any new plan is knowing how to get started. I don’t consider myself an expert, but I can tell you how we did it, and add to it an Accountant’s perspective.  Most articles you read will tell you that the first step to gaining control over your money is to live by a budget.  I agree, but this isn’t something typically taught in school, so the average person has no idea how to begin.  That’s where we’re going to start today, with the very basics.

When I was teaching Accounting at our local community college, I would have students set up a budget for themself as if they were an actual company.  I would first have them keep track of their expenses for a whole month, and then they would classify these expenses and make up financial statements for themselves.  Inevitably, almost every student would put in their narrative that they were surprised that they spent as much money as they did eating out, or at Starbucks, or on basics.  The point was that they really underestimated what they were spending.  I know that I am always surprised at how much money seems to just “seep” out, without my knowing exactly where it is going.  And it is surprising how much it costs for groceries, or kid’s activities, or fuel.  But the only way to really see that is by tracking your expenses.

What I want you to do for a full month is to track every dime you spend, whether it be for groceries, clothing, housing, insurance, utilities, or even the quick trip to the convenience store on your way to work. Every. Single. Dime.  At the end of the month you will have a better idea of what it costs for you to live, along with being able to see where you might be able to cut back a bit.  Once you are armed with that information you will be ready to construct a realistic, livable budget.

While you are tracking those expenses, there are a few websites to visit that give tips on budgeting, especially budgeting for different stages of life, because honestly a college student has different goals than a family, or a retired couple. There are sites that will give you sample budgets, and there are apps that let you enter your budget then track your spending to make sure you are spending within your budget.  Look around; see what format fits your lifestyle, what feels comfortable.  If you have any questions you can post them in the comments below, or DM me.  And remember what your motivation is.  We want to be free from financial burdens, be able to go and do what we want, when we want.  We want to be free to live our own adventures.  I want you to own your adventure, in the sense that you can choose your lifestyle without having a big heavy credit card balance dragging you back.  The time to do it is now!

Budgeting Helps:

www.mint.com  For info on setting up a budget, paying bills, and more.  Also offers an app.

www.everydollar.com  Budgeting tools, tracks spending, also has an app.

www.feedthepig.org  Tips on saving, budgeting, and investing.  Lots of different articles that pertain to different stages of life.

Microsoft Excel also has several different budgeting templates

 

Why Live Debt Free?

Why live debt free? We live in a society that makes it easy to have just about anything we want through the use of credit.  We also live in a time of instant gratification.  We can have what we want now, if we only sign on the dotted line.  Worry about the payments later.  So why should we avoid doing this, if we can drive the cool car, have the bigger house, or wear the nice clothing NOW?

Because what seems like a great idea in the moment can come back and haunt us later. Emotional financial decisions almost always come back to bite us in a big way.  There is also a lack of satisfaction with something that we don’t have to work for.  If we have to wait and work for something, it seems to be a bigger deal when we finally get it.  And by the time we have saved for something, we are pretty sure we still want it, while impulse buys often lead to buyer’s remorse.

The bigger part of this though is what debt does to our lives and our marriages. The American Bar Association has stated that almost 89% of divorces can be attributed to financial problems.  The weight of debt on a marriage can’t be underestimated.  Add to this the fact that many of your choices are taken away from you if you owe money.  Are you stuck in a dead end job because you have payments to make?  Are you paying for your vacation long after you’ve returned home?  Can you not sell your home because its value has dropped and you owe more than you can sell it for?

Do you want to break this cycle? I would like to walk you through the steps we went through to become debt free.  And the freedom that came into our lives when we owed no one and owned our home.  We were able to fully fund our retirement.  We were able to fund our children’s education (within reason, we’ll talk about that subject later).  We are able to travel where we want, when we want, and pay cash.  We don’t fight about money.  And we don’t sweat it if there is a downturn in employment, because all we have to do is pay utilities and property taxes.  My family will always have a home to live in.  And I have had the freedom to work from home as I please.  And we are able to go on adventures without worrying about how to pay for them.  So are you ready to join me on the road to becoming debt free?