Do you live within your means?

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JLCecilia

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I am having a major internal struggle with the fact that we are getting a new car today. We recently paid off our car and have been car payment-free for 6 months. It has needed several hundreds of dollar of work, but I still concede that we won’t spend in repairs in the next 5 years what we would on a new vehicle. But, as soon as DH showed me the pics that his friend sent him from the dealership, I knew it was a done deal.

So here’s my qualm. I’ve grown accustomed to buying used clothes, accepting hand-me-downs both for me and my kids and driving a junky old car and I’ve made my peace with that. In fact, it’s a great source of pride to be able to say that we don’t use credit cards and I love dishing about the latest deal I got on whatever item. We live in a shoe box and live fairly humbly, but we have everything we need.

I have the biggest problem (esp with FB and my closest friends), seeing other people’s designer clothes, perfectly done hair and nails, new car, new home and furnishings, semi-annual vacations and so on. I try not to judge, but part of me is thinking, “yeah and I bet they’re making payments on all of it.” Even though I intend to keep all of my other miserly habits, I feel like a fraud getting a new car that we can’t really afford. When I say afford, I mean, we have to make payments on it. I feel as though I’m contributing to and perpetuating the same false impression as everyone else. I had pie-in-the-sky dreams after paying off our car that we would save up and pay cash for the next one.

When I told DH that I didn’t want to be 40 and still making car payments, he said “you’ll always have a car payment.” Then when he started talking about the need for debt to earn a credit score, I channeled Dave Ramsey and had to cut myself off before I really lost it. It breaks my heart that he doesn’t share my goal to strive to live “honestly” as I consider it. I appreciate that material goods are important to him to show people that he can take care of his family, but I’m more akin to the idea that we don’t need to incur debt to impress other people who are little or no part of our lives. I think “used” has become part of my identity 😛

Anybody else strive to be “different” and swim against the current?
 
I can’t honestly say that we always manage to live cash on the barrel. For example, we just took out a small line of credit from the bank in order to pay for a termite treatment we really need. It costs more than we want to take out of the savings, right before our baby is due, but we can’t exactly have termites nibbling away at our walls while we save up enough cash for the treatment.

I did insist on purchasing our cars free and clear, and yes, people basically told us we were crazy. My husband and I have a set salary though, and we know how much money we are going to get. We don’t have any reason to expect a Christmas bonus or extra commission coming in. Therefore, I insist of saving money up and purchasing the car afterward. In the long run, we save a great deal on interest by doing that. Because we don’t have a car payment, we have more money to put in savings each month, but we also have more wiggle room if something unfortuitous should occur. I don’t really feel envious about other people buying on credit. I’m comfortable and I don’t have to worry about not being able to make payments.
 
I would agree with you on not spending above your means, not spending frivolously, etc.

However, it’s not actually WRONG (or sinful) to buy on time, making payments.

. Yes, you incur interest. Yes, there are pros and cons to doing it on time or saving and buying outright. There are pros and cons to new vs. used cars. Pros and cons to keeping an old car. And on an on.

This is, at the end of the day, a *prudential judgment *on the part of you and your husband

I think when you actually feel bad or guilty for a choice you’ve made such as this, you’ve put too much pressure on yourself in the other direction. Dave Ramsey is a good financial resource, but he’s not God. Take what he, and every other financial guru, says with a grain of salt. What works for you may be a little of this and a little of that.

Just as you don’t need your FB friend’s approval, you also don’t need Dave Ramsey’s.
 
Thanks peeps! I have to be honest, DH laments about our home not being big enough or nice enough to have people over and I think my mentality towards buying a new home bled over to the car decision: I’m not buying anything new till we can do it on one income (i.e. you can have your new “stuff” when I can stay home with my babies). I feel like a car payment is a contract tying me to my desk for another 5 years. Not that there’s any promising miracle on the horizon in terms of DH’s income, but at least without a car payment and when school starts we can quit supplementing out of savings just to pay the sitter and breath a little. Commence breath-holding again!

DH’s recent raise was a pittance and I have maxed out of my hourly wage for my job and haven’t seen a raise or bonus in years. We too have a fairly fixed income, unless DH feels like working OT. But we’re still operating at a 25-30% loss these last 3 years while DH finished school and is working for experience for a better-paying job (someday).
 
We live in an area that has been ravaged by layoffs. We were not spared either. My DH was part of a huge 2013 layoff. However, because we always lived blow our means, we didn’t need to make significant adjustments in our life. We saw foreclosures left and right, as well as people declaring personal bankruptcy.

We also live in the most expensive county in our state. Our house is really small compared to the 5000 sq ft monsters around us. However, we have a small mortgage that we could pay off if we wanted. DH found an even better job than the one he lost. We haven’t adjusted our lifestyle to accommodate his salary increase. Rather, we did the opposite. We decided to be even more frugal because the economy is still not where it should be.

If people want to brag about their possessions, that’s great. Personally, I rather live a simple life with no bling or the latest whatever. As someone once told us, if your friends don’t like your lifestyle, get new friends. Don’t change the lifestyle to suit them.

Hope this helps.
 
JLCecilia said:
I am having a major internal struggle with the fact that we are getting a new car today. We recently paid off our car and have been car payment-free for 6 months. It has needed several hundreds of dollar of work, but I still concede that we won’t spend in repairs in the next 5 years what we would on a new vehicle. But, as soon as DH showed me the pics that his friend sent him from the dealership, I knew it was a done deal.

**It’s not too late to bail on this!

If you have the money for the payments, you have the money to save the equivalent of the payments (minus repairs).

(That’s if you have two junky cars, not just one–I realize that just one junky car can be a source of constant drama, whereas you can switch back and forth between two.)**

I have the biggest problem (esp with FB and my closest friends), seeing other people’s designer clothes, perfectly done hair and nails, new car, new home and furnishings, semi-annual vacations and so on.

**Their hair and nails are perfectly done, what, once a month? At most, twice a month? The other 28 days a month, they’re just like you.

Also, almost nobody posts their collector calls, credit card bills, or marital money fights on Facebook. So, you’re not seeing the whole picture.

If they don’t make 2-3X as much as you do, they can’t afford it.

In fact, we have a very healthy household income (a lot more than yours), and what we can afford is a 2004 Ford sedan with a big crunch on the fender and a 2011 Kia. And a visit to family out-of-state and one night at Great Wolf Lodge a year. That’s it (at least in those categories).
**
I try not to judge, but part of me is thinking, “yeah and I bet they’re making payments on all of it.” Even though I intend to keep all of my other miserly habits, I feel like a fraud getting a new car that we can’t really afford. When I say afford, I mean, we have to make payments on it. I feel as though I’m contributing to and perpetuating the same false impression as everyone else. I had pie-in-the-sky dreams after paying off our car that we would save up and pay cash for the next one.

When I told DH that I didn’t want to be 40 and still making car payments, he said “you’ll always have a car payment.”

**No. We don’t have a car payment. We paid off our first car about 6 years ago and when we bought our second car last year, it was all cash. (We were having fairly regular large repairs on the first car, but we just started saving around $200 a month. If we needed to repair it, we repaired it, if we didn’t, we saved the money, and eventually we had the funds for a new-to-us car–with a windfall or two, of course.)

I don’t think my grandparents have ever had a car payment. (And my grandpa was a sawmill worker/small rancher–not a professional.)

If you have the car payment money, you’ve got the car repair and car savings money. **

Then when he started talking about the need for debt to earn a credit score, I channeled Dave Ramsey and had to cut myself off before I really lost it.

**GAH!

Just ask him something like, “What are you going to do with that credit score, honey?”

If you have poor credit, you can improve the numbers by paying your bills. You don’t need to create more debt in order to fix bad credit. **

It breaks my heart that he doesn’t share my goal to strive to live “honestly” as I consider it. I appreciate that material goods are important to him to show people that he can take care of his family, but I’m more akin to the idea that we don’t need to incur debt to impress other people who are little or no part of our lives. I think “used” has become part of my identity 😛

Anybody else strive to be “different” and swim against the current?
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I think I would try to be a little less moralistic about it with your husband. But:
  1. Talk to him about the math of payments versus car repair/car savings. It is the gospel truth that if he can afford the payment, he can afford to spend the same total sum on repairing your existing car and saving the difference.
  2. You are right to think that a car payment is not a life sentence. With some exertion, some planning and some luck, you can get ahead of your car needs and stay ahead.
  3. Ask him to explain the “need to build credit” thing to you. Also, google stuff like “how to build credit for a mortgage without a car payment” and I’m pretty sure you’ll find lots of stuff.
  4. If he insists, say something like, “Let’s talk to an accountant about this!” and agree to abide by an accountant’s recommendation. You’re probably talking about at least a $10k investment (and way more than that if he plans to keep you in car payments forever). If you can’t afford $100 or $200 to talk to an accountant, there’s no way in heck you can afford half a decade of car payments, let alone a lifetime of them.
  5. At a minimum, when you are two little old people, you need a paid off car and a paid off house. Paying car payments and a mortgage out of Social Security is going to stink!
Good luck!
 
JLCecilia said:
Thanks peeps! I have to be honest, DH laments about our home not being big enough or nice enough to have people over and I think my mentality towards buying a new home bled over to the car decision: I’m not buying anything new till we can do it on one income (i.e. you can have your new “stuff” when I can stay home with my babies). I feel like a car payment is a contract tying me to my desk for another 5 years. Not that there’s any promising miracle on the horizon in terms of DH’s income, but at least without a car payment and when school starts we can quit supplementing out of savings just to pay the sitter and breath a little. Commence breath-holding again!

DH’s recent raise was a pittance and I have maxed out of my hourly wage for my job and haven’t seen a raise or bonus in years. We too have a fairly fixed income, unless DH feels like working OT. But we’re still operating at a 25-30% loss these last 3 years while DH finished school and is working for experience for a better-paying job (someday).
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That does not sound like a situation where a car payment will bring you joy.

It sounds like a ticking time bomb, actually.
 
My views on money and finances are pretty well known on this forum. I think even if I had the money for a new car, I probably would not buy one out of principle - it would make more sense to me to buy a used car without many miles on it, because the big depreciation already happened before I got it.

But at the same time, if you have the money, I think you’re free to spend that money as you choose. Some people really like nice cars, and really like new cars. I don’t, but I would probably buy my own library and other people would likely think that’s weird.

Based on what you’ve said, it sounds like you and your DH disagree about financial priorities and whether or not you can afford the car. That would be the thing to work on - not necessarily persuading him, but does he know how much you hate working? Is your staying home a priority for him? Is there a reason you could not find a compromise and settle on a used car that is still newer than what you have, and have payments that are lower? (I agree with you about having payments at all, and so far we’ve been able to drive decent cars without ever needing a car loan, but if he’s the kind of guy who will just bring a car home regardless of how you feel about it…you need to start somewhere else.)
 
I’m a reformed spender myself, so I understand where the OP’s husband is coming from.

One way to think about this is that debt means spending tomorrow’s money on today’s problems, so that when tomorrow comes, there may not be enough to cover tomorrow’s problems. By consistently living within your means, you can spend yesterday’s money on today’s problems so that today’s money will be available to deal with tomorrow’s problems.

By doing a good job this month (for instance by saving a little for Christmas and a little for car repairs and a little for house repairs, etc.), we can make tomorrow easier and happier.

Also, it’s important to think about goals that he values, rather than just goals that you value (like staying home with the kids). Would he like to spend more on Christmas gifts? Then let’s start saving for Christmas now! Does he want a bigger house! Then let’s save for a bigger house! Help him make the connection between his dreams and your financial situation this month, and whether his current financial choices are moving you closer or further away from his long term goals.

Good luck!
 
Also, have you guys done a budget and figured out where this car payment fits in the budget?

I wouldn’t touch a pen under any circumstances until he explains where the car payment fits into your overall monthly budget.

People often grossly overestimate how much they are spending on car repairs. A $500 repair 2X a year is $80 a month. Woohoo!
 
Xantippe said:
I’m a reformed spender myself, so I understand where the OP’s husband is coming from.

One way to think about this is that debt means spending tomorrow’s money on today’s problems, so that when tomorrow comes, there may not be enough to cover tomorrow’s problems. By consistently living within your means, you can spend yesterday’s money on today’s problems so that today’s money will be available to deal with tomorrow’s problems.

By doing a good job this month (for instance by saving a little for Christmas and a little for car repairs and a little for house repairs, etc.), we can make tomorrow easier and happier.

Also, it’s important to think about goals that he values, rather than just goals that you value (like staying home with the kids). Would he like to spend more on Christmas gifts? Then let’s start saving for Christmas now! Does he want a bigger house! Then let’s save for a bigger house! Help him make the connection between his dreams and your financial situation this month, and whether his current financial choices are moving you closer or further away from his long term goals.

Good luck!
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I remember it was very helpful for DH, who had no idea why I was so reluctant to spend money on things, when I had him help me build an Excel spreadsheet for our budget (before that I had done a paper one every month and he would barely look at it). But after putting in the formulas and showing him just how much things could be affected if we overspent $50 a month, or if we managed to throw that toward our debt instead, he got the picture.

He knew that we had enough food because we had it in our pantry, that our utilities were never turned off, etc. But he had to see the numbers and see exactly how I put it all together, for him to understand why I would say, “I don’t think that’s a good idea right now,” or, once I showed him my price book, why I would say, “That’s a bad price for that - wait until next month when those types of things go on sale.”

(Car prices, especially at dealerships, tend to fluctuate based on time of year. We’ve never bought from a dealer so I’m not super familiar with it, but you might ask too if there is a better time to buy and do some research.)
 
1990Domer - I have feelings similar to your lifestyle. I have told DH before that I do not want to constantly be living on the outermost parts of our income. If he makes more, I want to go DO more, not just HAVE more. There’s no sense in paying more for a bigger, nicer home that we never have the free time to enjoy b/c we’re chained to our jobs in order to pay the loan.

Xantippe - I tried explaining to DH that paying your bills on time is really all that’s essential for a good credit score. I don’t know if that’s factually accurate, but I had a vague memory of Dave Ramsey’s schtick on that. IMO, the mentality that you need debt to earn a credit score is a poor man’s thinking b/c you’re contantly carrying debt around for the all holy credit score. The truly wealthy people are those who refuse to settle for the mainstream mentality and don’t need a credit score to pay cash. We have a mortgage, is that not enough debt to keep our credit score in check?

Pensmama87 - believe me, DH KNOWS how much I hate working. He SAYS my staying home is a priority, but decisions such as this car say quite the contrary to me.

For the record, the car is used, it’s 8 years old. We’ll pay as much for it as we did for our current car that’s worth next to nothing now. It’s one of those owned-by-an-older-couple-who rarely-drove-it kinda thing.
 
JLCecilia said:
believe me, DH KNOWS how much I hate working. He SAYS my staying home is a priority, but decisions such as this car say quite the contrary to me.
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Have you told him that specifically? If you haven’t, I would. Ask him how adding in a car payment would fit into a plan to get you to stay home (and I would get on paper a plan you both agree to on how to do that.)
JLCecilia said:
For the record, the car is used, it’s 8 years old. We’ll pay as much for it as we did for our current car that’s worth next to nothing now. It’s one of those owned-by-an-older-couple-who rarely-drove-it kinda thing.
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That’s the way we like to buy cars - from old people who barely drove them. 😉 You don’t have to share the numbers, but it does bother me a bit to think that buying an eight year old car would necessitate a loan. Even on a very tight budget, you should be able to save up for that within a reasonable amount of time (like Xantippe mentioned - you have a set amount you put away for repairs every month and if you don’t use them for repairs, then at some point you’re going to have enough put away to buy a decent used vehicle.)
 
Xantippe - the car payment will replace what we’re paying the sitter now, but when next summer rolls around . . .well, you do the math. We start paying on his student loan next month and I had hopes of paying it off in 2 years, but we’ll see how that goes now. I told DH that I don’t want a car payment above what we paid before and he said he’ll see what his friend tells him, we’ll pay down some out of savings if we have to (that’s already been earmarked). I asked him, “honestly, at what point to you tell you’re friend ‘that’s too much’ and walk away?”

We haven’t actively saved since he took his paycut. Our tax return is our savings and we spend it to zero every year. I think he thinks the solution is more money. I think you can estimate my response to that.

Jesus, Mercy!
 
Xantippe said:
Also, have you guys done a budget and figured out where this car payment fits in the budget?

I wouldn’t touch a pen under any circumstances until he explains where the car payment fits into your overall monthly budget.

People often grossly overestimate how much they are spending on car repairs. A $500 repair 2X a year is $80 a month. Woohoo!
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I agree. On the few occasions Mr. Allegra and I had to have a “come to Jesus moment” regarding our immediate financial goals, it really helped to show him where the money was coming from and how the budget worked in order to meet our goals.
 
JLCecilia said:
Xantippe - I tried explaining to DH that paying your bills on time is really all that’s essential for a good credit score. I don’t know if that’s factually accurate, but I had a vague memory of Dave Ramsey’s schtick on that. IMO, the mentality that you need debt to earn a credit score is a poor man’s thinking b/c you’re contantly carrying debt around for the all holy credit score. The truly wealthy people are those who refuse to settle for the mainstream mentality and don’t need a credit score to pay cash. We have a mortgage, is that not enough debt to keep our credit score in check?

**Oh, you have a mortgage!

That completely changes the picture. I was thinking that you were renting and hoping to buy soon, so your husband might have some sort of point.

But with a mortgage, you have lots of credit history, and it’s ridiculous to go for more.

Look up your credit score and have a look at your credit history. There may be some problem areas (bad bills, late bills, etc.) that you can genuinely improve. That’s where I would start. **

Pensmama87 - believe me, DH KNOWS how much I hate working. He SAYS my staying home is a priority, but decisions such as this car say quite the contrary to me.

**Yeah. I suspect that your husband just isn’t prioritizing at all.

Ask him, what is our game plan to get me home? Make a plan and then do that.**

For the record, the car is used, it’s 8 years old. We’ll pay as much for it as we did for our current car that’s worth next to nothing now. It’s one of those owned-by-an-older-couple-who rarely-drove-it kinda thing.
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How many payments are we talking about? If it’s more than 2 years of payments for an 8-year-old car, that doesn’t sound like progress.

If you only have one car currently, having a second car could greatly increase your flexibility.
 
JLCecilia said:
Xantippe - the car payment will replace what we’re paying the sitter now, but when next summer rolls around . . .well, you do the math. We start paying on his student loan next month and I had hopes of paying it off in 2 years, but we’ll see how that goes now. I told DH that I don’t want a car payment above what we paid before and he said he’ll see what his friend tells him, we’ll pay down some out of savings if we have to (that’s already been earmarked). I asked him, “honestly, at what point to you tell you’re friend ‘that’s too much’ and walk away?”
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Yeah.

The fact that it is a friend makes this awkward.

You guys are not in an emergency right now. You don’t need to buy this car right now.

Also, how about starting the student loan payments and then seeing how much wiggle room you have in your budget?
 
Xantippe - my thoughts exactly, one debt at a time!

That said, I must bow out and ask your forgiveness for the husband bashing.
 
Credit cards make you money if you use them the way you would a debit card.

Economical new cars aren’t necessarily a bad investment if you use them for X number of years, and then can still sell them at a decent price to buy another car. The downside of old used car is the investment you’re making in car repairs, plus for gas mileage purposes, you’re better off with a 21st century car than an older one. For a 4-door car, you ought to be getting over 30 miles to the gallon on the highway.
 
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