As we all probably are aware of, saving money versus paying off debt is a hot topic among personal finance bloggers. I recently came up with a financial plan that should help me be prepared in the instance I lose my job due to the merger. I had initially decided that I was going to pay off the last remaining student loan over nine months. As the economy keeps getting worse, I can’t help but feel that maybe I should hang on to as much extra cash as I can. I decided I’m going to change my plan of attack.

I’m going to do a “reverse debt snowball”. I’m going to take the money that I was going to put towards that student loan into our savings account. That way, if we absolutely need it, we’ve got it. If not, in six-nine months, if things are better I can take that money out of savings and put it right onto that student loan.

I thought about starting a separate account to keep those funds separate, but I currently am earning 4% on my savings account at my brick and mortar bank. I would rather earn that 4% interest and have the peace of mind than not have that money later on if we absolutely need it. I think this will be the best plan for us, but I know it’s going to be hard to take that money out of savings and pay on the loan. Of course, if things are looking up then I think it will be much easier.

Here’s hoping that the economy turns around in a few months!

Posted under Pay Off Debt

Well, we finally figured out what we were going to do about our car problems. I couldn’t justify purchasing a brand new vehicle, and it felt like the car dealerships were trying to rip us off, so we decided that we were going to be patient and just make do with having one working car (and two broken ones). Last Friday as I was sitting at my desk, an elderly gentleman came in to ask one of the tellers the NADA value for his car: a Ford Freestlyle.  I almost passed out.

I went over and asked him if he was thinking about selling it, he told me he’d like to buy his wife a new car, and that he was considering it.  I told him I was definitely interested and would like to know more.  I knew that he had taken excellent care of it and most likely it had low miles on it.  I was right: 17,000!! I was ecstatic.

 We ended up getting the vehicle on Thursday.  I think we made the right decision.  We had talked about buying an older, cheap car, but with the bad luck we’ve been having with them we decided to spend a little more and get a more reliable car, and something we can use for when we have a family.   We weren’t able to pay cash, but I’m anticipating paying that loan off as soon as possible.  We sold one of our old cars yesterday, and when we get the money for that we’ll put it right onto this new auto loan.  I’m completely happy with what we did and I love my new car!

Do you think I made the right decision?

Posted under Pay Off Debt

I am so ready for this year to be over. I have had the worst luck this year! My grandmother passed away in January, we had the tree fall on the house in January as well, I thought I had cancer (I go to the oncologist tomorrow for a check up), my dad is currently in the hospital, and now we have all this car trouble.

I am ready for a break!

Monday I decided I was going to take my car in to the mechanic because it was running funny.  It sounded like something was going to fall through the floor, and when I turned, I heard this “wubba wubba wubba” noise.  Of course that’s not good.  When the mechanic called me on Monday to tell me that the Motor Mounds were bad and that it was a miracle the motor hadn’t fallen out, I asked him how much it would cost to fix. Around $500.  Then, he proceeded to tell me that because of the motor mounds being out it ruined an axle, which will cost me another $500 at the most.  At this point I’m wondering if it’s worth putting the money into a 1994 Oldsmobile Achieva, but I think, hey, I can’t buy a car for $1000.  So I tell him to go ahead and fix it.

He calls me back a few hours later with more bad news.  The steering rod needs replaced and the bottom of the car is rusted out.  At this point it makes no sense to fix the car, because it’s going to cost more than it’s worth!  Plus, if we did fix it, who knows how long it would last before something else happened to it.

There goes my “no car payment” plan.  I am so bummed.

I have a few options, as I see it, and I really need your advice.   This is what I’ve come up with:

• Buy a car that’s a few years old, obviously used but in good condition.  Take out a car loan and try to pay it back as soon as possible.  Take some money out of savings to pay for the car.
• Buy a car that is only $6,000-$8,000 and pay cash.  I’ve been saving up for a car (thankfully!!).  The only problem is that if I do this then I’m not going to get a newer car and I don’t want to get something that I’m going to have to sink more money into.
• Buy a Vespa scooter for $1,000 and drive that.  Just kidding.

That’s pretty much the only options I can think of now.  I am dreading having a car payment/spending money.  I hate this! I feel so unfrugal lately.

What would you do if you were in my shoes?

Posted under Budget, Gas, Pay Off Debt, Save Your Money