Monday, May 30, 2011

How Can You Afford All Those Kids? part 3--We're debt free

I posted yesterday about our savings plan and how we set money aside in separate accounts for different expenses that we know will come up.  But how do we have extra money to put into savings?  We're debt free.

It helped a lot that we moved from an expensive house into a much less expensive house.  We had equity built up so when we sold the expensive house we were able to pay off the debt on the expensive house, pay for the new house in full, and pay off the van.  Then with the money we saved from not having house and van payments, we were able to pay off the truck and suburban pretty quickly.  I cannot tell you how incredibly freeing it is to have no car payments or house payment.  (Although we still save each month to be able to pay the taxes and insurance on these things!)

It really changes the way you see your vehicle, too.  It used to be that I knew we had to pay a car payment so the way I saw it, I should be driving the nicest car/van I could get for that monthly amount.  It didn't bother me to trade in a vehicle after a few years (when we weren't upside down anymore) and get a new vehicle as long as the payment was about the same.  I figured I was doing great.  I feel so stupid now when I look back on my "logic" from those days.  I would never have been done. 

So now I've been driving the same 15 passenger van for 8 years.  It's got some dents and places where the paint has come off.  We've had to have some work done to it over the years, too, to keep it running well.  But when we looked it up, the cost of a new van was in the vicinity of $50K!!  That's a lot of money!  A used van isn't really much better when you consider that ours is used and still runs good.  So we looked into what it would cost to fix it up and get the dents out and the paint re-done.  When the dents were new we took it to a supposedly Christian place in the metroplex and they wanted nearly $4000 to fix it.  Now we have a local guy out here in Clyde who really knows how to fix dents and not just replace the panel.  His estimate to do all the work we want done was under $2000.  Hmm.  Compare that to the cost of payments for the next 5 years and it's a no brainer.  We're gonna keep driving our good ol' trusty van.  Chances are we'll need to spend money on it again over the next 10 years, but I bet we can keep it running for less than $50K.  And it will be as pretty as any 15 passenger van can be.

If the day ever comes that I can drive something smaller, we won't buy new.  We'll save until we can afford a new-to-us vehicle and then we'll get something used but in good condition.  It's just not worth it to us to pay a huge amount of money for the fanciest car around. 

Same thing with credit cards.  If we don't have the money in the bank to pay for what we are buying, we don't buy it.  We don't assume we can pay the payments and eventually be done.  That's debt and it's not fun.  Debt is a stressful thing and we have enough stress in our lives already, thank you.  Besides, that cute new outfit or that cool cd on sale is not as good of a deal when you add in the interest you'll pay on the credit card if you can't pay it in full.

But I do like having a credit card.  I like the Reward Points.  And I like the convenience of just swiping it at the cash register when I have a pack of kids with me.  We have used a debit card more frequently because it's easier to be sure we don't overspend that way, but recently Roger rented a car to go to his sister's college graduation.  He figured out that the cost of the rental that got good gas mileage plus gas was less than the cost of gas in his truck or suburban. So he went to rent the car and they wouldn't take a debit card.  So there's another benefit to at least having a credit card.  I use it for things like orthodontist payments, too.  I've already allotted that amount to be spent each month, so if I put it on the card I can get reward points for it yet know that I can pay it in full when the bill comes.

Being debt free can be hard to achieve, and there are sacrifices you make along the way. But once you get there, it's such a great feeling you'll never want to go back!

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