HisHersMoney

It’s official, one of our cars is now paid off! We had a balance of around $4300 left on the loan which we just paid off when Her received her year end bonus. It felt so good to call up the bank and tell them to just deduct the remaining loan amount from the checking account and then to able to log back in online and see the loan simply gone from account listing!

We have an extended warranty on the vehicle which covers it bumper to bumper for the next 27 months so we plan on keeping it for at least that long!

What are we doing with the $455 a month that used to be used to pay the loan? It’s going in savings. We set up a sub account at ING called our New Car Fund. Hopefully by the time we need a new car we can either pay cash or at least put a nice down payment on it to minimize the loan.

Unfortunately we still owe about $35k on our other car loan so that one won’t be paid off for while, but we knew that when we bought the car last fall!

Well, we have officially scrubbed our budget as much as we can for the upcoming 2009 year. Our goal is to bulk up our cash savings account as much as possible. In order to do this we have decided to go to a cash system for our weekly grocery, incidentals and entertainment portion of the budget. We will take $150 out each week and that will be it, if we spend it all in one days then it will be 6 very dry days until next payday rolls around!

When reviewing our spending from 2008 we really didn’t over spend on any one thing, but it was the $12 here, $20 there etc that really just added up. By going to cash we are really going to have to make an actual decision every time we spend. It was so much easier to pull our the debit card knowing that there was money in the account to cover it.

We both get an allowance of $300 a month to do with what we want so if we really want to do something and our budgeted money is gone we can easily dip into our personal funds if we choose to but what we aren’t going to do is get more money out of the joint account!

Currently it looks like we should be able to save $1900 a month. I have gone into our ING account and set up automatic recurring deposits for these funds which are spread out between various sub-accounts.  This will give us $22,800 for the year.

What is our plan for this money?

1. Money for Christmas next year

2. Emergency Account

3. Vacation Account

4. New Car Account

5. House Down Payment Account

We are in the air flying to Chicago as I write on this Christmas Day. As Hers wrote previously, we were on a ski trip to Steamboat Springs, Colorado. We had a phenominal trip and I experienced some of the best skiing of my life. It’s hard not to as it snowed almost every day we were there including 19 inches in one night at the summit!

I grew up about 5 miles from a small ski hill in Pennsylvania. Both of my parents worked there at various times and so I skied for free every year. We also all had our own equipment. For those unaware, skiing is similar to golf in that both the initial barrier to entry and the long-term costs are expensive. Of course, since I went skiing probably 30-40 times at the minimum every year it ended up being cheaper in the long run to purchase equipment rather than buy.

Today, it’s probably not so. We don’t live very close to any ski areas, the closest being about a 2 hour drive. Last year we actually only got a single day on the slopes. This year I’ll probably ski somewhere between 8-12 days and Hers probably 18-24 days. She already owns all of her equipment due to previously wintering in Steamboat as a ski instructor. My equipment has long since become outdated and misplaced. So should I purchase new equipment now that we plan to make skiing a higher priority in our lives?

First off, I would love to get all of my own equipment again. The advantages are thus:

• Better quality and condition of gear
• Custom fitting for boots
• No waiting in line to pick up rentals
• Being intimately familiar with performance of equipment

However, there are cons as well:

• Cost of flying with or shipping own gear
• Over many years, equipment will become outdated
• Initial cost of equipment which will easily cost between $1k-$2k for good quality

For now we’ve decided to keep renting equipment for me. At this point we can’t justify the full cost for the amount of skiing that I do. Next season we possibly will purchase some boots and get them custom fitted at our favorite shop in Steamboat. Boots are actually the most important part of the equation as no rental will ever fit as well. This will take away some of the performance disadvantage of rentals but will still save money over the cost of the skis, bindings, poles, and helmet.

As a last note, when looking to rent ski equipment, check the local shops in the area of the resort that you’ll be going to. Many times you get better quality rentals at lower prices by using these local shops instead of renting at the slopes.

As we get ready for 2009 it is time to look ahead and establish our 2009 goals. The first thing I did was determine how much money we would need to live for a year and just pay our bills. No vacations, no spending, just food, rent, car, phone, etc. I was astonished when I realized that the amount was $3973 a month, $47,676 a year! This is getting rid of cable, dropping down to minimums and getting rid of all extras on cell phones, no going out, cheap food. All I can say is HOLY COW!

We really need to attack our Emergency Savings account goal this year! Our goal is to save $12k towards this number in 2009. We already have about $5k saved so this will bring us to a total of $17k which is about 60% of our total goal. That’s $1000/month. Can we do it? Really, there’s no reason why we can’t.

On a monthly basis here’s our savings plan:

1. $100 Savings towards car purchase, pay cash in about 3 years
2. $250 Vacation account, where ever, when ever
3. $50 Next year’s xmas savings
4. $1000 Emergency savings
5. $350 towards down payment fund

That’s a total of $1750 a month and $21,000 for the year. On paper it looks like January will be about $400 short of that goal. We are going on an unplanned vacation over New Years with a group of friends that we really didn’t plan or save for.

In addition to this savings we have $417/person going towards maxing out our Roth IRAs and $16,000/person going into our 401k accounts which adds another $42k towards our retirement!

We will track and post our progress through the year.

In my previous post I wrote about our new car and the associated ridiculously large loan associated with it. We financed $37k, none of which was any negative equity. We traded in His’ car which had the most miles out of our current cars and was also starting to need some work. While He was sad to see his car go He understood the rationale and our trade in value was a wash for what was owed on the car.

We did a 4 year loan on the new car. Why a 4 year rather than a 3 year of 5 year? My rationale is as follows: When purchasing a new car most people take a 5 year loan on it. Well, since the car is already about a year old that leaves 4 years on what would have been the original loan. I think that you shouldn’t exceed the original standard 5 year loan period and if the car is older than 5 years then you should pay cash for it or be doing an extremely short loan.

By keeping within that 5 year financing period the goal is to make sure the car is at least worth what you owe on it. Of course if you by a car brand new you’re immediately up side down on it which is why we look for a car that’s about 1 year old.

Our other car is a 2004 model and was originally purchased in March of 2004 for around $30k by it’s previous owner. I purchased it in Sept of 2005 for $18k. I originally did a 3.5 year loan on the car which I actually refinanced with my credit union when they were offering some great interest rates. They were only allowing even year terms with the offer so it changed the length of my loan but I’m happy to report that the car will actually be paid off in 3 years, 3 months!

The originally warranty expired in March of 2008 and we actually did buy an extended warranty. We shopped around and ended up going with an extension of the bumper to bumper coverage from the manufacturer which they offered with 10 months of interest free financing (I think we had to pay a $25 fee or something for the financing). Our payments were $140 for 10 months and the car is now covered for another 3 years with more than enough miles included.

We plan on keeping this car until at least the extended warranty is up if not until it dies!

As we prepare to close out 2008 and begin 2009 it’s time to look at what we’ve accomplished this year and our goals for next year. Back in March when we started this blog Hers had just over $19,700 in debt. Of which, $11,186 was student loan debt. I’m happy to report that all of Hers student loan debt has been erased!

How did we do it? We had two months of free rent as part of our move-in deal at our apartment which we took in Sept and Oct which freed up a big chunk of money. We also put every spare dollar towards it every month and when I received my yearly bonus in Oct I took 100% of it and paid the balance off. I can’t even begin to tell you how great it felt!

Our car debt was $8,528. We just made our regular payments of towards this debt and we currently owe about $4,400. I should be receiving another bonus in Dec and plan on paying this debt off completely. When trying to figure out where to apply my bonus funds we looked at all of our balances and all of our monthly payments and decided that completely eliminating the car debt on that car would have the biggest impact on our monthly cash flow.

So, you would think I would be able to claim debt freedom on the Hers side of things. Not so fast. There was a rather large purchase made shortly after we got married in August. You see, we bought this convertible BMW. The one we purchased is about a year old and originally costs about $55k and we paid around $43k for it. While still a substantially huge amount of money at least some one else ate the first $12k of depreciation. We did a four year loan for $37k and paid the rest cash. The payment is absolutely ridiculous (around $900 a month) but I absolutely love it.

So while many things have been paid off, we go into 2009 with a car loan of just over $35k.

In our previous post I talked about our December ski trip to Steamboat. Well I’ve gone and booked a second trip in January. Him will be at a training class for work so it will just be me going. A friend of mine from Chicago is going to try to come out for a few days so that will be great! I have spent a lot of time out there so I do have a few friends to pal around with while I’m out there so I won’t be hanging by myself.

I found a great deal on the airfare $200 form Washington DC to Steamboat which is a great price! I’m currently hunting around for a deal on lift tickets and I need to go ahead and book my hotel before the cheaper rooms are sold out. I’m looking at around $600 for 8 nights which isn’t bad at all. If my friend makes it out there she will kick in some towards the nights she’s there which will help out a little bit.

I plan on putting that new ski jacket I previously wrote about to good use!