A Blissful, Simple Life

Every morning, I assemble two lunches. The lunch sack containing a sandwich and chips isn't glamorous, but it saves my husband and I $3,000 a year. (Two $6 fast-food lunches, 5 days a week, 50 weeks a year)

In the evening, we snuggle in and watch a TV episode on DVD, or show on Hulu. We can't join the conversation about the latest Office or American Idol, but for over $700 a year for the basic cable channels, I'm OK with being out of the loop.

The cars we drive may have around 100,000 miles on them, but they are paid for. No debt on the cars, no debt on the credit cards, no debt on the school loans- interest on what we owe works against us, and I avoid it like the plague.

In our home, only our desk and our nightstands were bought new- every other piece of furniture was bought second-hand, handed down to us, or hand-made. Our guests are none the wiser.

On the weekends, a home improvement project often consumes our time- whether it's painting or re-flooring or siding or something else on a huge list. We could hire out the work, but my husband enjoys working with his hands and taking care of our home (and he does a great job!).

Rather than vacationing during the summer, we're busy in our yard. The backyard garden provides produce that continues to feed us throughout the year. Green beans, applesauce, herbs, potatoes, pears, peaches, pickles- all these things I haven't had to buy since they were last in season, and probably won't have to for a while.

Why live like this? If I can afford to buy a new car or furniture or processed food, why not go the easier route? Because I believe in living mindfully- Mindful of what we consume. Mindful of being a good steward of what we have. Mindful of being in debt to no one. Mindful of our impact on the earth.

Thanks to this mindfulness, and living below our means, we can ride out the ups and downs of life. When a refrigerator started leaking, we were able to save up and get a new one fairly quickly. When a car was caught in a bad hail storm beyond repair, we were able to incur no debt to replace it. A pipe burst in our home, and the panic was only due to the water pouring out of the hole in the wall, not how we were going to afford a repair. This year, we were able to give more than ever to those less fortunate than ourselves, and that was thrilling. Life is good. Blissful, even.

This is my entry into Inexpensively.com's contest for a Blissdom '10 ticket. I'd love it if you popped over there between the 14th and 20th and gave me a vote. Also, Heather's site is a huge help while working to live this blissful, simple life. Go check it out.

A Case for the Car Maintenance Fund

Kacie at Sense to Save posted recently about considering whether to have a specific Car Maintenance Fund, or to rely on an existing emergency fund for unexpected vehicle expenses. We've gone from one opinion to the other over the last six months. Let me tell you why.

• Last October, we had to put tires on one of our cars. The tires were worn and we wanted them to have better tread for the winter. It was time. We were happy with the service and price we got at Costco, but the bill came out to about $525.
• As our luck would have it, less than a week later, the other car with mostly-worn tires (not in dire need of being replaced, but getting there) got a flat. Rather than have one new tire and 3 old ones, we replaced them all. Again, we were happy with Costco's service, and the bill was about $525.
• Our garage (apparently?) has narrow openings. My husband has run into the sides of the garage, knocking off a mirror, twice so far, and one other time injuring a bumper. All of the times, he was pulling out a car I parked- I guess I park closer to the wall than he does! He's a good driver, promise. He was able to fix all of these himself, but the bill for all of them together for parts has probably been close to $100.
• We knew we needed the timing belt replaced on the older of our two cars, but when smoke started spewing out the tailpipe, there was something else wrong. The engine needed to be rebuilt, plus the timing belt replaced. To make sure it was done right, we went to the dealer. The bill: $2,300
• A couple weeks ago, our third vehicle (the "farm truck") had its brakes go out. My husband replaced the master cylinder, but couldn't replace the brake lines with his equipment. We took it to our mechanic. The bill: about $300
• According to Mint, over the last 6 months, we've had other maintenance-type costs totaling $500. This would include random replacement parts and oil changes for our 3 vehicles. I feel like I'm forgetting something major, but I can't figure out what it is.

This last brake problem with the truck was the last straw. We need to stop depleting our emergency fund. Yes, we've had the money on hand every time. Yes, the emergency fund has served its purpose. No, nothing has gone on the credit card, and we're still debt-free. Watching the emergency fund get depleted over and over is discouraging, though.

Starting last month, we started funding a Car Maintenance/Replacement Fund. This will cover 'emergencies' related to cars in the future, and eventually will allow us to buy a new car. And we have lost no time in this.

There was a hail storm last night. We now have a car covered in hail dents. The insurance company has been notified, and our deductible is $500. I'm taking it in to get a quote right now. And I'll continue to be thankful we gave some forethought to this 'emergency' and have money in the bank to cover the deductible!

What do you do in regards to car repairs? Do you have an emergency fund, put the repairs on the credit card, or have some other strategy?

The Importance of Tracking

Budgets are hard.

Some people say that budgets just don't work for them, and throw the whole idea out. Others insist, to be responsible, every single penny must be accounted for. As for me, I'm a budgeter. I like to know where my money's going and approximately how much I have to spend in a variety of categories. I'm not as legalistic as some about it, and I appreciate that my husband and I see eye-to-eye on the matter.

Budget or no, an important first step when working to get out of debt (and stay out) is to track your spending. If you don't know where your money's going, you have no idea what needs to be fixed! For the last six months, I've given a free online tool called Mint.com a try.

Mint is different than other services I've seen because of how automated it is. There is no time-consuming saving-of-receipts and manually-entering-data. Mint is able to connect with your bank, credit card, investment and loan companies electronically and download account activity each time you log on. The downside to this feature (for me) is the fact that I'm giving all my most important passwords to one database, one company- one place for them all to be discovered if it is ever hacked. This took me a while to get over, and I didn't sign up for the service. When my husband decided he wanted to try it, I relented- and I was very, very pleased with the site!

Why I like it:

• Allows me to see, in one list, all my accounts- my brick-and-mortar bank, my online bank, my mortgage, my credit card, my investment accounts, even Paypal!
• I don't need to log into 6 different websites to track all of these accounts (because, seriously, that's what it would take)
• Pulling my expenditures from all of these together gives me a full picture of where I am financially.
• Categorizations gives me an idea of what I spend on groceries, home improvement, etc each month, letting me know how reasonable my budget is.
• Graphs are pretty. Seriously, though- the graphs showing how my investments are doing or how much I'm spending in different categories give me an at-a-glance idea of my financial health.
• Recently added: the ability to add "assets" like the value of cars and houses into the "Net Worth" calculation.
• There's also a feature that allows you to compare your spending in any category to those in your city (or whatever city). I take this with a grain of salt since I'm not sure others tag their purchases as carefully as I do.

Overall, Mint has helped my husband and I stay to the same page and both watch our finances carefully, with minimal hassle.Since we've been using it for six months, we'll hopefully sit down this weekend and crunch some numbers, to see what we really spend in our budget categories, and adjust accordingly. In my mind, budgets are living documents rather than rigid ones, and can and should be adjusted to reflect reality. Tools like Mint are useful in tracking how 'reality' is matching my budget on paper.

What's "Normal"?

I had a conversation with my husband last night about our frugal endeavors.

We're both "Savers," but, in every relationship, there's a Saver and a Spender. On a Spender-Saver scale where zero is "Spends Everything" and 100 is "Scrooge"- he's an 80 and I'm a 98- so he's the "Spender". Ha!

Anyway, I read all these frugal blogs and see how we could be eating for $30 a week and turning the heat off & bundling up in the house and all these other things... and I see all these ways we're spending money unnecessarily. He, on the other hand, sees his friends who bought more house than they can afford, are dealing with car loans, living paycheck-to-paycheck, and thinks we're doing great! I grew up with parents who paid off their house when I was in junior high and always bought new cars cash, so I have a high bar set as the "norm." He's seen his parents cut corners to make ends meet, and still deal with health-related credit card debt, so his idea of "doing great" is living well under our means, with an emergency fund.

The issue at hand: I always feel bad (and often voice it) when we go out to eat. Whatever meal we get when we eat out I know I could make at home (maybe not as well!) for about 1/6th the cost. My husband says that this is our only form of entertainment (we very rarely go to, rent, or buy a movie, pay for a concert, or anything entertainment-wise) so it's worth the splurge. Sigh. He's probably right.

This week, while we were talking to an elderly friend, she expressed so much surprise that we were debt-free, had paid off our school loans, and used cash-only as much as possible. I later asked my husband- are we so unusual? Apparently so. I thought I was struggling to be "normal" and stay above water, when what we're doing- living below our means and debt-free- is the exception rather than the rule. I've had a very good, apparently atypical, example set for me, so my view is skewed.

Still, I don't want to be "normal." My husband is right, though, I probably can stop trying to compete with all the Ultimate Frugalistas on the Internet. We can settle into whatever is a comfortable place for us, for now.

Transportation Troubles

Just a few days ago, my husband expressed excitement at our growing emergency fund. This may sound weird- but we set milestones for ourselves. "Save For a House Down Payment", "Pay Off The Student Loans", and "Save for a Once-In-A-Lifetime Vacation" are three that we've set, kept at, and accomplished over the last 2-3 years. Next up is "Create a 6-Month Emergency Fund" followed by "Pay Down Mortgage". I admit, we set pretty boring goals, but we're excited for them- that's what counts, right?

Anyway, so, finally, our Emergency Fund was growing at a decent rate. It seems inevitable, though, that as soon as we have this cushion, that something will happen to deplete it. In this case, it is the car.

We have two solid cars- a Honda and a Toyota, a 2004 & 2000 with average miles. We haven't been saving a car replacement fund because we were sure each of these would last us many more years. Until last night.

Last night, we were headed on a date night in the 2000 Toyota when the car started with a bad noise and a plume of white smoke out the tailpipe. A smell of oil was evident, and my car-savvy husband quickly made a preliminary diagnosis- the car is leaking and burning oil. The smoke, smell, and wetness near a valve supported this hypothesis. We took the car to the dealership this morning to get an expert opinion, but even the guy we dropped it off with, when my husband described the symptoms, came to the same conclusion. "Burning Oil" is a death sentence for a car- or, at least, a very, very expensive repair.

We've discussed how much we want to spend on the repair, about half of what the car is worth if we were to sell it on our own. If the number comes in later today higher than that, we have some decisions to make. Here are the options:

1. Fix it. Put money into a car that ought to be reliable, to the tune of more than half of what it is worth.
   
2. Buy an "in the meantime" car. Spend one to two thousand on a car that will function as transportation, but not much else, while we save up a car fund and buy the car that we really want and need.
   
3. Replace this car. Spend more like seven or eight thousand and replace the car we have with something that has comparable miles and is a comparable age, but is a model we can foresee meeting our needs for a few years in the future. To pay for this car, we'll either need to:
1. Deplete our emergency fund to a level we're not totally comfortable with in this economy, or
   
2. Take out a 1- or 2-year car loan and pay it off as quickly as possible.
   
4. Get by with one car. I haven't mentioned it, but we do have a third vehicle- an old truck that we use to tote stuff for home and yard projects. It's older but is working just fine, so my husband could drive this to work, and I drive the Honda, until we have a sufficient car fund saved to buy the car we want. The truck will use more gas on the long drive to my husband's job, but it's what we have for now.
   

We haven't really considered #1 or #2. I prefer #4, but my husband cares more about cars, so "making do" with one isn't his first choice. He's open to #3.2. I'm pretty averse to car loans, and I'm enjoying being totally debt free right now, besides the mortgage. I'd even prefer #3.1 to a car loan. I realize this is all pretty premature, since we don't even have word from the repair shop on the problem, but we like to plan. A lot.

Can you think of any other options? What would you do?