Purchasing your next vehicle: Principles to consider that will Save You Money

If you’ve been following my blog, you may remember this post from a month ago: A Minivan instead of a SUV? Well, we have an update! Here’s my FB status from yesterday:

There’s no cheaper vehicle than the one that you own. While this is true, eventually it’s time to walk away and say good-bye. The Jeep (15 yrs old) has served us well. We are now proud (and unashamed!) owners of a minivan. Yes, we only have one child but you can’t find a better value for your money (when comparing to SUV’s). Looking forward to picking up our new-to-us vehicle on Monday!

As we say good-bye to trusty rusty, I’ve been reflecting on some principles re: owning and purchasing a vehicle that are wise to consider. Here are some of those:

  1. keep driving your vehicle after you’ve finished your monthly payments. the cheapest vehicle really is the one that you own. even if you put $1,000/yr into your vehicle in repairs, you are still farther ahead than if you had car payments. many people trade in their vehicles before they are paid off or as soon as they are paid off and lose out on the financial freedom that zero car payments provide.
  2. when you no longer have car payments, put the money you are saving now into savings. you will need another vehicle at some point. instead of increasing your living expenses, set aside that money for your next vehicle and you may never have a car payment again! Amazing, right? It is!
  3. unless there’s unusual circumstances (ex: you work for a car company and get a significant discount), don’t buy a brand new vehicle. the greatest depreciation for your vehicle is within that first year. we bought a 2014 dodge caravan. it’s only been on the road for 15 months. we paid anywhere between $14,000-$20,000 less than what the original owner bought it for new. Crazy.

I hate spending money on a vehicle. They are a horrible investment. But given where we live (no bus system), we need a vehicle to work, shop, etc. We hope that our new purchase will last us 15 yrs. Who knows, maybe our daughter will learn to drive on this minivan. Now that’s a crazy thought!

5 tips for Financial Planning after having a baby

We have a baby. An 11 week old baby. Totally dependent on us for her daily needs but also dependent on us for her future. Daunting, isn’t it? It’s time. It’s time to re-evaluate our finances and start saving for her future. They say that you can never start too soon. Trying to get our ducks in order, here’s what we are in the process of working on:

1. Change our Life Insurance Policy. What we currently have on file is not enough now that there’s a child in our family. If you don’t have a life insurance policy – please make this happen asap. Term Life Insurance is inexpensive. Currently, Derek and I are paying about $20 a month for both of us to be covered. Yes, you may never need life insurance but if something were to happen to one or both of you it could make the difference between surviving and extreme financial stress and ruin.

2. Open an Education Fund. In Canada, this could be an RESP (Registered Education Savings Plan) or take the form of another type of savings account or investment. This is one area where every little bit counts and if you start early, your child reaps the benefit of all those years of interest.

3. Write a Will. When you have a child it’s important to have a Will that outlines your wishes re: legal guardianship. If something were to happen to both parents, the Will would help family members know who you’d like to raise your child, what you’d like done with your money and belongings, etc.

4. Start saving now for ways that you’d like to support your child as a young adult. This could be to help pay for their wedding, a down-payment on a house, etc. Yes, these are luxuries but if you put a little away now it can reap huge benefits in 20 years. For example, if you were to save $50 a month over the next 20 years, you’d have $12,000 + interest!

5. Get good at Budgeting. Clothing and other Children’s items can really add up. Find ways to save such as second hand shopping or only getting something if it’s on-sale. Curbing impulse buying now can help ensure there’s more funds available for your child’s future. My mother made us wear hand-me-downs and while I didn’t like it at the time, I’m so glad that she did. She was saving money for our future and as a result, I was able to attend my dream school.

Have you started to plan for your child’s financial future? Do you have any tips to add to this list? I’d love to hear from you!

Date Night Ideas for $10 or less

While engaged, we had several people strongly recommend that we guard and protect a weekly date night. For the most part, Friday nights have been our date nights. Date nights are a wonderful time to re-connect and have fun together.

Playing board games can be a fun date night!
Playing board games can be a fun date night!

While the positive benefits of date nights for a marriage are numerous, there are really two common themes why couples don’t go on date nights. The two biggest reasons for couples not going on date nights are: 1) children and 2) money. Children certainly make date nights more challenging. There’s both the scheduling and paying for a babysitter. Yet, I do know several married couples with children who go on weekly date nights. I have heard the argument that it’s even more imperative to have weekly date nights while raising young children.

Financially speaking, date nights do not need to break the bank. While on a budget, date nights require creativity. Here are frugal date night ideas that we have done:

– coffee at Starbucks and an evening of reading in Chapters ($10 for the drinks)

– hike through a local conservation park ($3 in fuel to get there and back)

– found local (free) events such as the Buskers and walked around ($7 for fuel)

– rented a movie and bought snacks for our @ home date night ($5-10)

– half price apps at a local restaurant ($8+ tip)

– gone biking (me) and rollerblading (hubby) on waterfront trails ($7 in fuel)

The list could go on and on. Sometimes our date nights include face-to-face time which means we spend a lot of time talking (something females tend to prefer). Other times it’s side-by-side activity (something males tend to prefer) where we are doing something fun together but it’s not really heart-to-heart time. Both are OK and necessary in a relationship. But now you are left wondering, how do parents achieve $10 or less date nights when they require a babysitter? Here are a few ideas:

– see if there are any family members or friends willing to babysit for free

– if you have friends raising children as well, see if they will babysit yours for your date night and then offer to babysit theirs for their date night

– sometimes date nights can be done by staying in. just be intentional that one (or both of you) doesn’t fall asleep on the couch or isn’t doing laundry during date night!

In regards to money and date nights the popular saying, “where there’s a will there’s a way” is true. Are you now or have you ever been intentional about date nights? I’d love to hear about it by you leaving a comment below. If you have other ideas for affordable date nights, I’d love to hear them!

Tips for paying off your mortgage faster

The following are 5 tips that can help you to pay down your mortgage sooner:

1. Believe that being mortgage free is a possibility for you. Many can’t picture being mortgage free as their reality and as a result, they don’t seek opportunities to be pro-active with their mortgage.

2. Sign up for weekly mortgage payments instead of monthly.  If you currently pay $1,000 once a month for your mortgage you’d pay $250 once a week instead. The advantage to this approach is that you are knocking off more interest when you make weekly payments instead of monthly.  Many who understand this concept sign up for bi-weekly payments, yet, weekly payments are even more advantageous. On a $200,000 dollar home at 5% interest, a person will knock their mortgage from 30 years to 25 years simply by doing bi-weekly instead of monthly payments. They’d also end up saving over $30,000 in interest. This example was of a bi-weekly payment plan, you’d save even more with weekly payments!

3. Don’t purchase mortgage coverage through your bank, go with life insurance instead.   Banks love to sell new home owners on the idea of paying a little extra each month to have mortgage protection. Theoretically, if one of the home owners were to die then the bank would pay off the remaining amount on the mortgage. The catch here is that the mortgage owners are paying for mortgage protection on the original mortgage price.  This means that the owners may be paying a monthly fee for $200,000 worth of coverage (original mortgage price) and when an emergency strikes, the bank would pay off the remaining mortgage which now may only be $120,000. For this reason, it’s better to purchase a life insurance policy for at least $200,000 (to cover the mortgage). Overall, life insurance gives you the best bang for your buck compared to going through a bank for mortgage protection.

4. If you have extra money at the end of a month apply it to your mortgage! And/or take your tax return each year and make a lump sum payment to your mortgage. Another idea is to change your payment plan so that more than just your minimum mortgage payment is drawn each month. This could be an additional $10, $25, $50, $100, etc. Your seemingly small efforts now will help you to be mortgage free sooner.

5. At least once every 6 months stop and picture what being mortgage free will be like. How would it feel to be mortgage free? What would you do with your extra cash? Knocking off a mortgage sooner than normal takes dedication and patience. Keeping the vision fresh in your mind is essential to persevering.

Do you have any tips or experience with paying off a mortgage faster? Are you attempting to be mortgage free sooner than what your loan expects from you?  Please share your thoughts in a comment below.

How we tackled debt

Many don’t like to talk about money. Finances are seen as a private matter. I believe it’s important to talk about finances and learn from one another. Here in this post, I will share how we worked together to become debt free. Now, I must give a disclaimer – we still have a mortgage! This is the story of how we were able to pay off all card debt, student loans, and own both of our vehicles before our 4th wedding anniversary.  If we could do this on a very small to modest salary, so can you!  The following is what helped us:

1) a mutual desire to eliminate debt. it was essential that we were both on the same page!

2) sacrificing for the sake of the goal. as my mother often says, “short term pain for long term gain”. while engaged, I decided to forgo purchasing a vehicle and walk to work instead. as a result, I had extra cash at the end of each month that I applied to my student loan debt.

3) we desired to learn from others.  while engaged, we sat down with a business professor and early in marriage a financial adviser. they both helped us to prioritize what to tackle first. crown financial money map was helpful too: http://www.crown.org/

4) becoming debt free took priority over acquiring nice new things. we took the money given to us at our wedding and paid off one credit card. since finances are often seen as the #1 reason for marriage break-down, their monetary presents were helping us on our road to financial freedom.

5) we didn’t put our goal of being debt free on-hold until we had decent earnings. we were slowly chipping away at our debt even when money was tight and one of us was in school.

6) when purchasing our first home, we heeded the advice of my parents. they recommended that we take out a mortgage based on one of our salary – not both. we decided we did not want to be house rich and life poor. this was one of the best financial decisions we have made to date. purchasing a house under our means was the key ingredient to finally becoming student loan debt free.

7) we are working towards putting safety nets in place so that we don’t need to go back into debt again. emergency savings as well as a life insurance policy were added after eliminating our last student loan.

8) we don’t view giving to others as something to start doing when a person has “arrived” financially speaking. it’s a habit that we chose to practice while deep in debt and living paycheck to paycheck.

The last thing that I’d like to add is that I believe the key ingredient to financial freedom is contentment. Being satisfied with less, with old things (from clothes to cars), with a smaller house, and waiting to do house projects or travel until its all paid for in cash are not easy things! We live in a “me” and “right now” society. I believe that contentment is the killer of consumerism. With contentment crawling out of debt is given fuel.

I don’t want this post to come across as if we have arrived financially. Did I mention that my husband is a pastor and I’m a social worker? haha. We are not rich by North America’s standard. Yet, we are grateful for what we have as only 8% of people in the world even own one car. I hope that you too will see yourself as rich and as capable of financial freedom. If you have any tips/experiences or any thoughts about this post, please leave a comment below!