Buried in Debt   1 comment

Or at least that’s how I feel, especially after catching up on my frugal living blog reading and making a car payment today. And especially since we are FINALLY moving forward on buying a house now that the bank is done twiddling it’s thumbs and has approved the short sale.

I am, by nature, a saver and not a spender. I hate shopping and I don’t really like spending money. I need a very large savings cushion to feel comfortable, and large transactions make me very nervous. I am also not comfortable with debt. After college I accumulated a $10k car loan for my beloved Prius, and in grad school I accumulated approximately $2k credit card debt to cover emergencies and travel to a good friend’s wedding since I had no savings cushion. Within months of getting a job after grad school I had the credit card debt payed off, and within a year the car loan was done. I was then able to ramp up my savings, reaching almost 30% of my take-home pay. When my husband and I got married we were able to pay for the entire wedding ourselves without endangering my savings cushion. I was really proud of myself, and my ability to manage my finances. Now I feel like it is all crashing down around me, and I have to own up to the fact that maybe I’m not good at managing my finances.

Last year, my husband and I financed a new car. We needed to replace his pickup truck with a more family-friendly vehicle (read: a vehicle that seats more than two), and took advantage of a $5,000 cash back weekend. Unfortunately, we had to buy a car that cost $5,000 more than we wanted because Toyota doesn’t actually make the basic model of the Highlander Hybrid, they only make the models with the “popular packages”. Not buying a hybrid was not an option for me (well, I would have happily bought a biodiesel, but my husband vetoed that option and it is his car). Buying a small car was not an option for my husband (I totally understand wanting to be higher off the ground). Neither of us had any inclination to buy a used car that someone else broke in (we want this car to be the car that our teenagers drive in 20 years). Our savings had not quite recovered from paying for our wedding, so we didn’t put down a very large down payment and are therefore left with a large loan. In the months afterwards I started realizing that financially we had made a dumb move by buying before we could put down a larger down payment. It embarrasses me to no end to ‘fess up about the amounts, and for that reason I am going to do it here and now and get it off my chest. The principle on the loan was $36k. We had put down $5k. We have been making double payments on the car loan in an attempt to limit the overlap of car loan & mortgage & new baby expenses. This month we reached a milestone and the amount of the car loan is now down to $20k.

But now we are buying a house. Every day I panic. “Can we really afford this?” “Are we making the biggest mistake of our lives?” And then I open up Quicken, and I look at my spreadsheets and I say “yes, we can do this, we’ll be ok.” Things will be a little tight for a while, but I know we can do it. And I know we can do it without making compromises that I cannot live with. When I read personal finance or frugal living blogs I sometimes get anxious and defensive, especially about the car loan and the $17k wedding. Truly, I am at peace with those large expenses, since I would not have been happy with less than what we got in both of those cases. Buying used cars may be a tenet of the frugal living world, but I stand firm on our decision to buy new. Paying cash for a car may also be a tenet of the frugal living world, and I will own up that we messed that one up (but in 10 years when we buy our next car it will be payed in cash). Buying a conventional car may be more “cost effective” but I am proud to be an experimental owner of a 2001 Prius and proud to be a member of a two-hybrid household (can you tell that I believe strongly in hybrid techonology?). Having a private wedding would have been easier, but we wanted to celebrate our love in a big party with our family and friends and we did (even if I did sell my soul and have the reception at a country club). Renting may be easier on the budget, but I have been dreaming of owning a house for over a decade and I want to raise my family in a healthy home, where I am the one making the decisions not some cheep or faceless landlord.


Posted May 6, 2010 by mayakey in frugal living

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One response to “Buried in Debt

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  1. There is more to life than being frugal. One needs some balance. We can always look back and second guess our decisions but what we cannot see are the second guesses of a decision we did not make. If you had had a frugal 5 K wedding, you may be having more second guesses than you can possibly count.
    I’ll have to remember that when I second guess myself.

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