Tough spot, decided to lease a car

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Topic Author
technofox
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Tough spot, decided to lease a car

Post by technofox »

Hi everyone,

I know it's been a while. I have gotten myself in a tough spot that put me at odds with a long time financial advice that I have been given to never lease a car. Due to unfortunate circumstances of really bad luck, my new wife and I had to make a lot of tough financial decisions, some bad, some good. Here is a brief history of how I got from point a to b:

1. Ex-wife racked up a lot of debt and left me with the bills before she was served.
2. Meet an awesome girl, after getting cheated by an ex-girlfriend, bought a house.
3. The guy who is responsible for calculating taxes messed up and we had to borrow $1,600 from the bank to pay for it.
5. Got married.
6. Appliances failed and other house maintenance, about $4,000 to $5,000.
7. My car with 6 months left on the loan (about $2k left) has had about $1,600 in repairs and come to find out there are camshaft issues, which Toyota refuses to acknowledge with my model (Matrix '09).
8. After all bills are paid, we have $500 discretionary income.

We owe $25,000 in personal debt ($6k left from my ex-wife's $12k that she left for me, plus the loan on the car, I got stuck with both). I hate the fact that we had gotten this much personal debt, but this was not due to frivolous spend (except the ex-wife part). We also have about $200,000 in student loans (being in my field and my wife's isn't cheap) and owe about $160,000 on our 30 year mortgage. Lastly, my wife's car loan is about $14,000 and my current car loan is about $2,000. So as you can see we owe a lot of debt for a family bringing in $116k of gross income a year (take about a little over a third away of income for taxes and health insurance).

I am upset, because I have invested wisely since I have learned how to save and invest, but it seems like life just keeps on kicking me to the nuts these past two years. So after doing the math, especially with my current car being unreliable, I have realized that a 5 year car loan is not wise for buying used cars (unless you have a 20%). I realized that on average you should expect expensive repairs on a car after about 4 years of driving; thus a four year loan is the max that anyone should get, with little to no down payment. So based on those calculations and being unable to afford a new or reliable used car within the parameters that I wanted (e.g. 35k miles or less, must be from a reliable brand like Honda, etc), leasing ended up being the best option while I wait out these financial problem, especially given my current car's issue. I don't even have to pay for maintenance until the last year of the lease, except for tire rotations. I also don't drive much.

I must also mention that we are having our first baby on the way (I was trying to time it so that my car would have been theoretically paid off before it is born). So there you have it.

What are your thoughts???


I appreciate any input or advice.
bs010101
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Re: Tough spot, decided to lease a car

Post by bs010101 »

Do you have any money saved - emergency fund or taxable accounts? What does your monthly budget look like? Does your wife currently work?
Topic Author
technofox
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Re: Tough spot, decided to lease a car

Post by technofox »

My wife works and I work two jobs. Everytime we have saved money, something would break or another unexpected expense (like one of my wife's best friends getting married), wipes out anything we save.

I have only $350 left in taxable savings in the form of stock. Other than that all of my saving is in my retirement, which I have stopped saving for due to having a pension and trying to pay off debt.

Monthly budget leaves us with $500 to buy clothes, eat out, buy gifts and whatever else. We have been using it to pay down debt, but the frequent car repairs have been setting us back. With the baby on the way, I have to get that $500 to $1,200 to pay for day care and other necessities.
niceguy7376
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Re: Tough spot, decided to lease a car

Post by niceguy7376 »

So where does 116K Gross go if you have taxable savings of $350? You explained the debts that you have and the income that you two bring but not where the money goes.

Also for a field of education that costs to have 200K in student loans, the income (total of 3 jobs among you two? "My wife works and I work two jobs.") of 116K+1/3 of 116 = 155K Net) doesnt sound a good ratio. Just curious as to the field of education/work.
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mmmodem
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Re: Tough spot, decided to lease a car

Post by mmmodem »

For perspective, we make combined under $90k with 2 children. We have a $275k mortgage (HCOLA). We max out retirement and have no debt. New doesn't mean reliable. Used doesn't mean unreliable. We have no car loans because we purchased used cars until we saved up the money to buy new cars with cash. Contrary to your research, used cars at 4 years do not have to have major repairs. If you keep up standard maintenance following the owners manual you'll be fine. If I were you, I would soldier on with the Matrix and repair it. When the baby comes in 2 years, then you may have a nice sum of money from not having to make car payments to get a safer vehicle to bring your child home. And I stress WHEN the baby comes. Never purchase a vehicle because you PLAN to have a baby. You may find out nature does not follow your schedule and you drive an expensive SUV unnecessarily.
likegarden
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Re: Tough spot, decided to lease a car

Post by likegarden »

It seems your social life is very fast, messy and expensive and produced the debt. You need to slow down. Divorce, former wife overspends, former girl friend, new wife and baby, used house, all in 2 years cost a lot. I was able to do only one of those things every 2 years. I hope you will settle down in your new life and are able to start saving. I.e. cars, we run a 2004 Buick Century, which cost me less than $500 in car repairs (besides brakes, tires, gas, etc.).
Last edited by likegarden on Tue Nov 04, 2014 10:04 am, edited 1 time in total.
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technofox
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Re: Tough spot, decided to lease a car

Post by technofox »

likegarden wrote:It seems your social life is very fast, messy and expensive and produced the debt. You need to slow down. Divorce, former wife overspends, former girl friend, new wife and baby, used house, all in 2 years cost a lot. I was able to do only some of those things every 2 years. I hope you will settle down in your new life and are able to start saving. I.e. cars, we run a 2004 Buick Century, which cost me less than $500 in car repairs (besides brakes, tires, gas, etc.).

You know I didn't realize how much has transpired since my divorce end in very early 2012, lol. I don't charge anything, if I can help it, for social life stuff. Any debt incurred would have to be either car repairs, healthcare, or house repairs. My wife and I try to refrain from using credit cards for non-essentials. It's a long standing agreement that we have made over time.

It just sucks that we have had so many major expenses in such a short time span. We had a nice emergency fund, but flooding of the basement and plumbing issues ate that up fast. We just haven't had a chance to truly recover. I am planning on using the $2k of equity that I have left from trading in my lemon to throw at credit card debt. We only have 1 credit card with a balance at 7.9% interest, which is all but $600 is from my ex-wife. $11,000 left on a debt cosplidation loan to payoff repairs and the rest $6,000 at like 9% or less interest is from recent repairs and budget shortfalls due to unexpected expenses. Basically once I trade my car in, we will be down to $23k of personal debt. Hopefully my wife's car will hold up and we can pay off another $2.5k next year's January. I am trying to be optimistic, but a bout of bad luck always seems to be just waiting to hit us. Luckily next year the loan for the taxes will be paid off and and with our taxes lowered, we should see further boosts to our income for saving and paying off more debt. My wife's credit has improved drastically thanks to her having me manage her loan payments and automating her bill payments, so that they are always on time. There are positives, but it is literally taking a lot out of me. It seems so hard to get a head of debt.
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Aptenodytes
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Re: Tough spot, decided to lease a car

Post by Aptenodytes »

The car question is embedded in a bigger budgeting question. My guess is that if you want solid advice you should give a more complete picture of your budget, both what it is now and how you envision it unfolding over the next five years.

Out of context it is hard to know how to respond.

You are asking Dave Ramsey / Suze Orman type questions, which aren't the main focus here. But people are good-spirited and I'm sure will be willing to offer advice.
deikel
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Re: Tough spot, decided to lease a car

Post by deikel »

As for the general budget questions, go here for some idea: www.mrmoneymustache.com/

You seem to blame everyone and everything, but yourself - so thats a bad start. Life might have dished out some bad stuff, no doubt, but you can work your way out.

- sell the house and rent a one bedroom appartment close to your work to not need a car.

Yes, this is tough, but fixes a lot of your issues until you are out of debt. One bedroom is fine even with a baby (in fact it may sleep with you anyway) - so for the next 2-3 years that is a doable situation. You are in no position to own a house IMO.

This also answers your car question. No car needed when walking, biking or using public transport from an appartment close by.
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bloom2708
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Re: Tough spot, decided to lease a car

Post by bloom2708 »

Don't go out and lease a car. Spend $10 and buy The Total Money Makeover by Dave Ramsey. Read it cover to cover.

This is an opportunity to get control of your income and spending and fix things permanently. "Renting" a car for 3 years will not fix anything. It will lock you into 3 more years of payments that you can't afford.

If your wife's car is reliable, then sell the Matrix if it is not worth repairing. I think repairing is the best option. If you have to sell it, you need a "Dave Ramsey beater". This is a grandma driven car that is clean and older that will get you from A to B for as little as possible. These cars are for sale on Craigslist every day.

It sounds like you have had a Whirlwind couple of years. I agree with a previous comment that you simply need to calm down, say no to some things and fix this. Look at every expense. You should not need a monthly clothes budget. Cut cable. Examine every expense. Starting tracking your spending daily (Personal Capital or Mint). If your appliances break, you don't need $4,000 stainless steel versions. I want you to have those things, but only when you can really afford them.

The Total Money Makeover will give you a plan to follow that works. If you buckle down and get to it. Bust out your "gazelle intensity".
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
bs010101
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Re: Tough spot, decided to lease a car

Post by bs010101 »

I would definitely recommend checking out Dave Ramsey's plan - the Total Money Makeover book is a good place to start. There are so many things going on at once that it is hard to see straight, and his plan will help prioritize things one at a time.

The most immediate need seems to be to come up with a budget that allows building up a cash cushion, and stick to it. Once you have a cash cushion, emergencies like car repairs won't be devastating. This is hard as you've been through a lot, but I also would encourage you to attempt to take control of your life and your decisions. A friend's wedding is not an emergency nor a reason to wipe out all your savings, and plenty of people on this board drive old, reliable, paid-for cars (myself included).
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climber2020
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Re: Tough spot, decided to lease a car

Post by climber2020 »

Can you post a detailed monthly budget?
bungalow10
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Re: Tough spot, decided to lease a car

Post by bungalow10 »

Technofox - I read the post you deleted. You may have read TMMO, but you didn't understand it. Do NOT borrow to buy another car. Do not lease a car. Buy a beater that gets you from A to B. DH and I drive two beaters. His was purchased for $7k seven years ago. It's an 05, my car is an 06. We haven't had a major repair in seven years, although we might have some coming up (which we have budgeted for)... not bad for two cars with 300K+ miles between them.

Another suggestion is to start using YNAB.

I haven't read anything about your situation that would make TMMO not work for you. The only prerequisite to a budget is an income.
An elephant for a dime is only a good deal if you need an elephant and have a dime.
TFinator
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Re: Tough spot, decided to lease a car

Post by TFinator »

Even after your last post, I think getting a handle on your budget is needed. Post it here if you want. I don't have debt, but I make roughly 75k gross before health care (that's me and my SO combined) and still put away $1400/month in savings. So at 116k gros I would think you could put away at least another $1000/month.

For your car - you keep saying that a good used car is 5 years of loans... what used car is 5 years of loans?! Last Summer we found my girlfriend a Civic with 45k miles. It was $7k (~$6k + tax + initial repairs). Just look hard and get a used car - you say you don't drive much and then mention your awareness of risk - how much risk is there in a used car if you don't drive much?!

You can probably reply that I am missing a bunch of angles, and I probably am. But you haven't given us enough information to really see the whole picture. Your OP reads more like you just want someone to complain to than you are actually asking for help. Actually, every post since then seems the same way. What do you want out of this discussion? Give us all the info and I hope we can help - if you want or need it. As others have said - detailed monthly budget!

Good luck!
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Uncle Pennybags
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Re: Tough spot, decided to lease a car

Post by Uncle Pennybags »

Why do you have to drive a new car?
niceguy7376
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Re: Tough spot, decided to lease a car

Post by niceguy7376 »

OP, you still are mad about your matrix repairs and your intention to lease a new car that you are not looking at the big picture, namely your savings rate compared to your income. Looks like you lost a minimum half of the forum by not providing any details of your expenses to provide good guidance.

As a matter of fact, it looks like you are not open to considering the feedback that is being provided to you. You are providing reasons as to why you decided on leasing a car. I dont know if there is anything that this forum can provide to support your decision. All the best!!
Zecht
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Re: Tough spot, decided to lease a car

Post by Zecht »

There are a handful of real options you have with regard to your situation.

First off, I would recommend looking into an Au Pair arrangement. They aren't available in all areas, and they aren't for some people, but it would seriously cut down on your childcare bills while you and your wife work. Who knows, you could also end up helping someone get through school while you get very low cost childcare.

Secondly, how much interest is on your various debts? This will be a marathon to get out from under, but you have a great opportunity to mitigate the interest through various means, such as personal loans or other interest-reduction means. Obviously if the interest isn't bad this is a moot point, but I would strongly suggest looking at options to reduce it. Also, review how your student loans are characterized, and see if they will qualify for the various loan programs out there to reduce and/or defer payments, interest, etc. for various circumstances. Also, I am personally opposed to the Dave Ramsey way of paying off low principal debt first, but that's mostly because I'm very mathematically inclined and less psychologically disturbed when I understand the math of paying off the highest interest debt first.

Thirdly, you indicated that you are planning to lease a car. Leasing is a great way to mitigate repair risks, particularly if you are suffering in the savings department, but it will likely be more costly in the long run. I would recommend you study some material on leasing through various "gearhead" blogs like Jalopnik; they have a lot of good resources to help you get the best bang for your buck and avoid a plethora of problems if you choose to continue down the leasing path.
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tainted-meat
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Re: Tough spot, decided to lease a car

Post by tainted-meat »

If I were you, I would cut all costs humanly possible and live like a monk.
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technofox
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Re: Tough spot, decided to lease a car

Post by technofox »

Some of you are right. I am probably ranting a bit and not really taking advice into consideration and I do apologize for it. All of these setbacks may have clouded my judgement. The truth is I am leading to mitigate the repair risks, because I can't afford to take a risk of taking on a used car that could end up being a nightmare like my current one.

The truth is. I have budget, even with $100 a month to set aside for savings. Unfortunately that savings gets wiped out due to repairs or other unforeseen expenses. I am sick of debt, loans, and repairs. I have a wife who can't stay on budget to save her life and we end up over spending because of it.

Here is our budget:
$1,620 mortgage (including taxes)
$1,500 student loans
$450 all combined personal debt
$150 energy bill
$250 for my failing car
$290 for wife's car, she is going to get a cheaper car soon
$120 cable
$20 gym membership
$120 car insurance
$10 Netflix
$130 cellphones
$30 garbage
$600 food, including Friday night pizza
$520 for gas
$10 Newspaper
$100 for savings

Net Income $6,520 a month.

Left for clothes, gifts, shopping, and other stuff is $504.

I hope this helps. I guess what I am asking for, is how do you find the balance between paying off debt and living life?



My wife I know, will not give up cable, Starbucks, and attending social functions such as weddings for friends, especially family, and parties where she feels obligated to attend to. Myself, I won't give up my broadband internet, because I earn money through my second job through it. Luckily the social events have been subsiding, but with Christmas coming we have another big expense. We budgeted $600 this year and limit it to cash only, no borrowing - we'll see how my wife handles that.

P.S. I would never buy used car with more than 35,000 miles. The risk of expensive repairs increase the closer you get to 100,000 miles. It's a rule of thumb that I will never stray from. I also would only buy certified pre-owned cars because of the warranty. It's just my personal preference.
bungalow10
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Re: Tough spot, decided to lease a car

Post by bungalow10 »

What I see in your budget....

Lots of debt. Student loan + consumer debt + two car payments = $2490. <-- huge opportunity for improvement! Think of how great it would be to have these monkeys off your back.

Gas - $520/month? That seems very high. Are you both commuting two hours a day? Anyway to cut this down?

Cable... yes. Can you convince your wife to do the baby steps with you and cut this out until you have eliminated the $2490/month in other debt payments? It's a means to an end.

No daycare costs? eta - I see the baby is on the way. How much do you think daycare will be and how will you pay for it?
P.S. I would never buy used car with more than 35,000 miles. The risk of expensive repairs increase the closer you get to 100,000 miles. It's a rule of thumb that I will never stray from. I also would only buy certified pre-owned cars because of the warranty. It's just my personal preference.
This preference is going to cost you a lot of money in your life. I encourage you to do some research, because these feelings aren't being driven by facts and will likely cause you to spend money unnecessarily.
An elephant for a dime is only a good deal if you need an elephant and have a dime.
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technofox
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Re: Tough spot, decided to lease a car

Post by technofox »

Zecht wrote:There are a handful of real options you have with regard to your situation.

First off, I would recommend looking into an Au Pair arrangement. They aren't available in all areas, and they aren't for some people, but it would seriously cut down on your childcare bills while you and your wife work. Who knows, you could also end up helping someone get through school while you get very low cost childcare.

Secondly, how much interest is on your various debts? This will be a marathon to get out from under, but you have a great opportunity to mitigate the interest through various means, such as personal loans or other interest-reduction means. Obviously if the interest isn't bad this is a moot point, but I would strongly suggest looking at options to reduce it. Also, review how your student loans are characterized, and see if they will qualify for the various loan programs out there to reduce and/or defer payments, interest, etc. for various circumstances. Also, I am personally opposed to the Dave Ramsey way of paying off low principal debt first, but that's mostly because I'm very mathematically inclined and less psychologically disturbed when I understand the math of paying off the highest interest debt first.

Thirdly, you indicated that you are planning to lease a car. Leasing is a great way to mitigate repair risks, particularly if you are suffering in the savings department, but it will likely be more costly in the long run. I would recommend you study some material on leasing through various "gearhead" blogs like Jalopnik; they have a lot of good resources to help you get the best bang for your buck and avoid a plethora of problems if you choose to continue down the leasing path.
I might talk to wifey about the Au Paire. I will never except an interest rate over 10%, ask chase they learned the hard way when I canceled a few of their cards - they decided it wasn't worth it after that and realized if it is over 10% it gets closed. Most personal loans are about 8% to 9%, nothing too bad. Your thirds paragraph is what lead to me taking the opposite approach, one that I too thought I would never do, but I had to weigh the risks and leasing ended up being the best option.
It's not a decision that I had taken lightly as others on this forum would assume. You are talking to an individual who has more money saved for retirement than most of his peers, and an avid saver. It takes a lot to convince me to go contrarian, but like what you have said - I am in mitigation mode. As for my student loans, 3.5% fed and 8% private, wife is just 4.5% fed, 8% private. Her car loan is at 6% and mine is at 2.5%.


My wife will be trading in her car for a cheaper car and payment. With her credit rating better, she should be able to get a nice low interest rate. It will be used and hopefully certified pre-owned.
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technofox
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Re: Tough spot, decided to lease a car

Post by technofox »

bungalow10 wrote:What I see in your budget....

Lots of debt. Student loan + consumer debt + two car payments = $2490. <-- huge opportunity for improvement! Think of how great it would be to have these monkeys off your back.

Gas - $520/month? That seems very high. Are you both commuting two hours a day? Anyway to cut this down?

Cable... yes. Can you convince your wife to do the baby steps with you and cut this out until you have eliminated the $2490/month in other debt payments? It's a means to an end.

No daycare costs? eta - I see the baby is on the way. How much do you think daycare will be and how will you pay for it?
P.S. I would never buy used car with more than 35,000 miles. The risk of expensive repairs increase the closer you get to 100,000 miles. It's a rule of thumb that I will never stray from. I also would only buy certified pre-owned cars because of the warranty. It's just my personal preference.
This preference is going to cost you a lot of money in your life. I encourage you to do some research, because these feelings aren't being driven by facts and will likely cause you to spend money unnecessarily.

You are speaking to the choir about the debt. If it was all gone tomorrow, I would sleep great at night. I know we have too much consumer debt, kidding me, $1 in consumer debt is too much debt. The gas is high because my drives a lot for work and for boxing classes she takes. She won't cancel boxing classes, because it keeps her fit (she used to be a big girl before I met her, so that is out of the question until baby is born). I think the traveling expenses will decrease after the baby is born, because we won't be able to afford to go out.

As for day care, I have no idea how we are going to afford that, given my wife's personality and spending habits. I think my second job, which brings in an additional $5k may help, but only God knows. You throw in $6,400 for the the third pay check periods that we use for big expenses and the $5k from my second job and I think we may be able to swing it. Another reason why I need a car that has a warranty for expensive repairs.

I may reconsider what you have said. I have always been big on warrantees, because I like the peace of mind that if something breaks, it's covered (supposedly anyway). Next year I will be trying to pay off as much debt as possible, hopefully without having a ton of set backs. I am planning on throwing out tax money, three paycheck periods and anything else I can before the baby is born. After that, we are going to have to budget differently. If Hulu carried real house wives and other stupid shows she likes, I think canning cable would work.
bungalow10
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Re: Tough spot, decided to lease a car

Post by bungalow10 »

technofox wrote: If Hulu carried real house wives and other stupid shows she likes, I think canning cable would work.
A seasons of Housewives can be purchased for $20 on Amazon. It's less than $2/an episode. She can buy a whole year's worth of all the RH franchises with what you spend on one month of cable.
Last edited by bungalow10 on Tue Nov 04, 2014 12:19 pm, edited 1 time in total.
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BL
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Re: Tough spot, decided to lease a car

Post by BL »

technofox wrote:My wife works and I work two jobs. Everytime we have saved money, something would break or another unexpected expense (like one of my wife's best friends getting married), wipes out anything we save.

I have only $350 left in taxable savings in the form of stock. Other than that all of my saving is in my retirement, which I have stopped saving for due to having a pension and trying to pay off debt.

Monthly budget leaves us with $500 to buy clothes, eat out, buy gifts and whatever else. We have been using it to pay down debt, but the frequent car repairs have been setting us back. With the baby on the way, I have to get that $500 to $1,200 to pay for day care and other necessities.
Yes, you are in a tight spot right now, but you need to do everything possible to put yourself on a super tight budget for a year or so until much of the debt is under control. That might mean super cheap phones, no cable, no eating out, not buying new clothes, not leasing new cars, and lots of other things that you may buy automatically. Unless you both get involved in working on this, you are not going to have a peaceful life any time soon.

I think that $350 in stock needs to be in a savings account where it will not crash just when you need it. It also needs not to be spent unless a real emergency presents itself. Have a certain amount automatically go to it every payday, even if you have to start with $10/pay check. Then try to increase it ASAP. Do you have any savings in a Roth IRA? That could be considered an emergency fund (for real emergencies).

We don't have any debt, have income less than yours, and don't spend anywhere near $500 for clothes, eating out, gifts, etc. We have been known to spend some money for clothes at thrift stores, clearance sales, etc. Being creative can lower the costs of gifts, and if you don't have money, you don't need to buy gifts at this time. Having a child can be expensive unless you get into a pattern of being frugal. Children's clothing and toys can be found used, either free or very cheap, through friends and relatives, etc., if you make the effort to let them know you are looking for used items. Only your egos will stand in the way; the baby doesn't care!

Do you put money into a 401k to get a match? That should be a goal ASAP.

Good luck on getting out and getting ahead. I also suggest the Dave Ramsey plan.
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technofox
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Re: Tough spot, decided to lease a car

Post by technofox »

tainted-meat wrote:If I were you, I would cut all costs humanly possible and live like a monk.

If only life was that simple. I did that to pay off over half of my ex-wife's debt. Now I own a house and have a wife who is all about friends and family. I am easy to convince on saving money and finances, she is stubborn. Getting to realize that if you can't pay for it in cash, means you can't afford it at all is a tough sell when she thinks she needs new clothes or attend a social event. She isn't spend thrift, but she also isn't an avid saver.

Her opinion is that we are not in a position to save money, because we have too many expenses. If I was single, I wouldn't have this dynamic to deal with, but it would also mean missing out on an otherwise great relationship.
Frugal Disciple
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Re: Tough spot, decided to lease a car

Post by Frugal Disciple »

It looks to me like you really need to evaluate your priorities and how your spending fits in to those priorities. A lot of these personal preferences that you have are going to keep you a debt slave for the rest of your life. I know that it is easy to say, but a lot of what you are paying for is completely unnecessary. This can be a painful process to go through, but you are letting your lifestyle rule your financial life. I pray that you truly think about what brings you happiness and fulfillment in order to focus your spending in those areas.

Also keep in mind that your child will behave as they see you behave. If you "need" these new things, they will learn to need the newest best things as well.

Your family has more than enough income to live very comfortably, but you have to stop trying to keep up with your friends and neighbors, because you will only end up bankrupt.
**Insert witty and/or insightful quote here**
surfstar
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Re: Tough spot, decided to lease a car

Post by surfstar »

You need to get both of you to stick to a tighter budget than you currently have, or you will never get rid of these recurring debts and payments.

Trading in for a "cheaper" car payment, isn't a way to save money. Leasing a car, isn't either. I've NEVER bought a car with under 80k miles on it! I think anything under 100k is "like new"! My family is the same, and we've never had any major issues and put on 20k+ miles per year. You'd be money ahead to find a used engine and an indy mechanic to install it for your Matrix. Heck a 2009 is 4 years NEWER than my newest car. Do some Google research on what you think your car's issue is and get educated on how best to fix it.

Not to mention the $120/month to watch desperate TV :oops:

Here, watch this one night instead: http://www.ted.com/talks/dan_gilbert_as ... e_we_happy
1 - its free - along with TONS of other entertainment options online now
2 - you might realize that ditching cable and some other "necessities", will result IN NO CHANGE to your happiness (give it 3 months and see), YET, you will have more money left over, which would go a long ways to reducing stress and maybe actually making you both feel happier, especially if you need to budget for kids.

You need a philosophy change, not a new car lease. Harsh. Sorry, but it needs to be said.
Topic Author
technofox
Posts: 290
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Re: Tough spot, decided to lease a car

Post by technofox »

BL wrote:
technofox wrote:My wife works and I work two jobs. Everytime we have saved money, something would break or another unexpected expense (like one of my wife's best friends getting married), wipes out anything we save.

I have only $350 left in taxable savings in the form of stock. Other than that all of my saving is in my retirement, which I have stopped saving for due to having a pension and trying to pay off debt.

Monthly budget leaves us with $500 to buy clothes, eat out, buy gifts and whatever else. We have been using it to pay down debt, but the frequent car repairs have been setting us back. With the baby on the way, I have to get that $500 to $1,200 to pay for day care and other necessities.
Yes, you are in a tight spot right now, but you need to do everything possible to put yourself on a super tight budget for a year or so until much of the debt is under control. That might mean super cheap phones, no cable, no eating out, not buying new clothes, not leasing new cars, and lots of other things that you may buy automatically. Unless you both get involved in working on this, you are not going to have a peaceful life any time soon.

I think that $350 in stock needs to be in a savings account where it will not crash just when you need it. It also needs not to be spent unless a real emergency presents itself. Have a certain amount automatically go to it every payday, even if you have to start with $10/pay check. Then try to increase it ASAP. Do you have any savings in a Roth IRA? That could be considered an emergency fund (for real emergencies).

We don't have any debt, have income less than yours, and don't spend anywhere near $500 for clothes, eating out, gifts, etc. We have been known to spend some money for clothes at thrift stores, clearance sales, etc. Being creative can lower the costs of gifts, and if you don't have money, you don't need to buy gifts at this time. Having a child can be expensive unless you get into a pattern of being frugal. Children's clothing and toys can be found used, either free or very cheap, through friends and relatives, etc., if you make the effort to let them know you are looking for used items. Only your egos will stand in the way; the baby doesn't care!

Do you put money into a 401k to get a match? That should be a goal ASAP.

Good luck on getting out and getting ahead. I also suggest the Dave Ramsey plan.

I think you misinterpreted what I was saying. We don't always spend the $504. It is literally unbudgeted money, discretionary. I thought that should be enough to handle any spending including car repairs, but my wife doesn't understand that even after numerous discussions. She see we have $500, she would over spend her half $250 on things like boxing, Starbucks, gifts, stuff for her job, etc. I spend within my allotment or less, check the account only to see she overspent. This doesn't happen every month, but maybe two or three times a year. It's infuriating when she does, because I try to budget so careful to balance getting out of debt versus having some money to enjoy life (in her mind).

So it is tough when you have a spouse that isn't on the same page 100% with you. Luckily we has reduced our spending, but we still have expenses that are unavoidable because of her perception that it is a necessity to buy gifts for family and/or friends on special occasions. Whereas I am of the mindset, if I can't afford it I look for some other way to offer something for a special occasion. It just sucks.

How would you handle a wife who is like that?
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BL
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Re: Tough spot, decided to lease a car

Post by BL »

Is she willing to sell the house and move to a rental near your job so she will have money to spend on her "necessities"?
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Uncle Pennybags
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Re: Tough spot, decided to lease a car

Post by Uncle Pennybags »

technofox wrote: How would you handle a wife who is like that?
With a prenuptial agreement and separate bank accounts.

It has been said that "a wasted youth is better by far than a wise and productive old age". That's true only if you die young. If I knew I was going to live this long I wouldn't have bought that brand new 1968 Barracuda. If I invested that money I would have car services driving me around today.
Last edited by Uncle Pennybags on Tue Nov 04, 2014 12:43 pm, edited 1 time in total.
EnjoyIt
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Re: Tough spot, decided to lease a car

Post by EnjoyIt »

technofox wrote: How would you handle a wife who is like that?
You either change her or divorce her while it is still cheap to do.
If you don't agree financially you will argue a lot.
A time to EVALUATE your jitters: | viewtopic.php?p=1139732#p1139732
Topic Author
technofox
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Re: Tough spot, decided to lease a car

Post by technofox »

I am not trying to keep up with the joneses. This decision to lease is based on risk, not on appearance. If I knew an 80k car would last me years with minimal repairs and maintenance, I would buy it in a heart beat. After this bout of bad luck, I can't take that chance. I don't gamble for a reason.

This again goes back to dealing with my wife's spending habits. I can't convince her that we should wait until her car is paid off, nor spend money on non-essentials when we don't have the money. She wants a family car with or without my support she will go ahead and do it (or make my life a living hell if she can't get a new car). So how would you handle this?


I am all for canceling cable, seriously. I opened up out budget as best I can to make it work for her, but there are something's she is unwilling to compromise. I see the problem, but the tough part is the relationship dynamic in terms of priorities.
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technofox
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Re: Tough spot, decided to lease a car

Post by technofox »

BL wrote:Is she willing to sell the house and move to a rental near your job so she will have money to spend on her "necessities"?

You speak in jest, correct?

No, she won't do that. I even mentioned the idea and it didn't fly.
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Uncle Pennybags
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Re: Tough spot, decided to lease a car

Post by Uncle Pennybags »

technofox wrote: If I knew an 80k car would last me years with minimal repairs and maintenance,
:oops:
niceguy7376
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Re: Tough spot, decided to lease a car

Post by niceguy7376 »

Do you have any retirement (401k) accounts for you and your wife?
How about IRAs?

You had an ex-wfe, cheated ex-girlfriend and a new wife (currently pregnant) within a span of less than 5 years and it looks like the common trait of all of them is over spending. So who is to take responsible for that? (You are asking: "How would you handle a wife who is like that?")

I cannot fathom me ever talking about 8 and 9% interest rates as "JUST 8% or 9%".
Frugal Disciple
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Re: Tough spot, decided to lease a car

Post by Frugal Disciple »

technofox wrote:
How would you handle a wife who is like that?
This is what I would do:
Pick a book that discusses personal finance and suggest that you and your spouse read and discuss each chapter. You need to have some really knock-down drag-out discussions that get to the root of your issues. Being on the same page with your spouse is the most important thing to get your finances in order. Several people on this board have recommended Dave Ramsey, but if you don't like him there are many other books that would help you. (Your Money or Your Life, Rich Dad Poor Dad, etc.) Here are a few more with reviews: http://www.mrmoneymustache.com/the-mmm-reading-list/

Next set a day each week where you commit to read and discuss part of the book. This will help keep you accountable to reading and discussing with your spouse. My wife and I did this and it helped us stay accountable to doing this.

Finally after you have finished the book, suggest your wife pick a book she wants to read/discuss and repeat.
**Insert witty and/or insightful quote here**
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Ged
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Re: Tough spot, decided to lease a car

Post by Ged »

Your problems are completely self-inflicted. You keep taking on debt with cars houses etc. without any real thought of the long term implications.

1. Sell house and rent a cheap apartment. I know someone who has 3 kids in a 2 BR apt.
2. Stop all discretionary expenditures. Real Housewives? :oops:
3. Do not take loans to buy cars.
4. Eat ramen lots.
5. Get prepaid flip phones. Cost should be 1/5 of what you are paying now.
6. Cut up credit cards.

It sounds like you didn't do your due diligence before getting married. A good wife is a life partner who contributes to all the aspects of your life together including the finances. She has to shape up or you will be miserable forever. People say your most important financial decision involves house or career. Umm no. Your most important financial decision is who you marry.

Once you are debt free things will be a lot easier.
Last edited by Ged on Tue Nov 04, 2014 12:51 pm, edited 1 time in total.
deikel
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Re: Tough spot, decided to lease a car

Post by deikel »

technofox wrote:Here is our budget:

My wife I know, will not give up cable, Starbucks, and attending social functions such as weddings for friends, especially family, and parties where she feels obligated to attend to. Myself, I won't give up my broadband internet, because I earn money through my second job through it. Luckily the social events have been subsiding, but with Christmas coming we have another big expense. We budgeted $600 this year and limit it to cash only, no borrowing - we'll see how my wife handles that.
$1,620 mortgage (including taxes) - thats 1620 you could spent into a rent vs the bank
$1,500 student loans
$450 all combined personal debt - this needs to increase
$150 energy bill - you could save 50 USD if you rent
$250 for my failing car - no sepnt if you live close to work
$290 for wife's car, she is going to get a cheaper car soon - one car is plenty
$120 cable - waste of money since you will soon need no entertaining anymore
$20 gym membership - since you will walk to work, no need
$120 car insurance - reduced by half since only one car
$10 Netflix - I give you that
$130 cellphones - insane, get pay phones and only use in emergency
$30 garbage - included in rent
$600 food, including Friday night pizza - keep it, just for fun
$520 for gas - reduced to half since you ....see above
$10 Newspaper - why ? you have internet AND netflix
$100 for savings - you mean paying down loans, right ?

Efectively, you have almost 1000 USD savings possible in your current budget, not touching your beloved internet (although the slowest speed would do for two people easily) or your wifes social comittments....from the equity of your house you could pay of the consumer debt and hopefully some more of your student loans.

And if your wife feels that cable is required for a good life and still takes out Starbucks coffe in your current financial situation, (instead of brewing her own coffe at home), than maybe there is no understanding of the severity of your situation, which needs to change...

HOw about reading your money or your life - its older, but fits your problem rather nicely.
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.
Drew777
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Re: Tough spot, decided to lease a car

Post by Drew777 »

technofox wrote:
BL wrote:
technofox wrote:My wife works and I work two jobs. Everytime we have saved money, something would break or another unexpected expense (like one of my wife's best friends getting married), wipes out anything we save.

I have only $350 left in taxable savings in the form of stock. Other than that all of my saving is in my retirement, which I have stopped saving for due to having a pension and trying to pay off debt.

Monthly budget leaves us with $500 to buy clothes, eat out, buy gifts and whatever else. We have been using it to pay down debt, but the frequent car repairs have been setting us back. With the baby on the way, I have to get that $500 to $1,200 to pay for day care and other necessities.
Yes, you are in a tight spot right now, but you need to do everything possible to put yourself on a super tight budget for a year or so until much of the debt is under control. That might mean super cheap phones, no cable, no eating out, not buying new clothes, not leasing new cars, and lots of other things that you may buy automatically. Unless you both get involved in working on this, you are not going to have a peaceful life any time soon.

I think that $350 in stock needs to be in a savings account where it will not crash just when you need it. It also needs not to be spent unless a real emergency presents itself. Have a certain amount automatically go to it every payday, even if you have to start with $10/pay check. Then try to increase it ASAP. Do you have any savings in a Roth IRA? That could be considered an emergency fund (for real emergencies).

We don't have any debt, have income less than yours, and don't spend anywhere near $500 for clothes, eating out, gifts, etc. We have been known to spend some money for clothes at thrift stores, clearance sales, etc. Being creative can lower the costs of gifts, and if you don't have money, you don't need to buy gifts at this time. Having a child can be expensive unless you get into a pattern of being frugal. Children's clothing and toys can be found used, either free or very cheap, through friends and relatives, etc., if you make the effort to let them know you are looking for used items. Only your egos will stand in the way; the baby doesn't care!

Do you put money into a 401k to get a match? That should be a goal ASAP.

Good luck on getting out and getting ahead. I also suggest the Dave Ramsey plan.

I think you misinterpreted what I was saying. We don't always spend the $504. It is literally unbudgeted money, discretionary. I thought that should be enough to handle any spending including car repairs, but my wife doesn't understand that even after numerous discussions. She see we have $500, she would over spend her half $250 on things like boxing, Starbucks, gifts, stuff for her job, etc. I spend within my allotment or less, check the account only to see she overspent. This doesn't happen every month, but maybe two or three times a year. It's infuriating when she does, because I try to budget so careful to balance getting out of debt versus having some money to enjoy life (in her mind).

So it is tough when you have a spouse that isn't on the same page 100% with you. Luckily we has reduced our spending, but we still have expenses that are unavoidable because of her perception that it is a necessity to buy gifts for family and/or friends on special occasions. Whereas I am of the mindset, if I can't afford it I look for some other way to offer something for a special occasion. It just sucks.

How would you handle a wife who is like that?
My wife used to be the same way, and honestly what worked best was just education. She just didn't understand money, budgeting, compound interest, savings, etc. It took a while, but now she is actually the more frugal one. I would recommend showing her some scenarios of possible future circumstances comparing the road you are on now with her frivolous spending vs. if you make some serious changes now, get rid of the debt, start saving more, etc. Does she really understand in her head that if you get rid of that debt that extra spending money will increase from $500 to $3000? Even after you increase your E-fund, boost retirement savings, etc, she would be able to spend a heck of a lot more than she can now. Of course the hard part is getting her to understand delaying gratification. She needs to understand that a habit of buying things you can't afford now means you will never be able to afford anything. Ask her to give you a thoughtful, thorough plan to get out of debt if she doesn't like your plan. As you know, mixing finances and emotions is a recipe for disaster.

Unfortunately financial issues are the primary cause of divorce. Coming to an agreement really isn't an option if you want to stay together. Learn to pick your battles. It probably isn't worth fighting about a $2 purchase (depending on the frequency or course), but you can't give in on a $40k SUV at this point in your life if you expect to make progress.
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climber2020
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Re: Tough spot, decided to lease a car

Post by climber2020 »

technofox wrote:I am not trying to keep up with the joneses. This decision to lease is based on risk, not on appearance. If I knew an 80k car would last me years with minimal repairs and maintenance, I would buy it in a heart beat. After this bout of bad luck, I can't take that chance. I don't gamble for a reason.
Can you reference some actual scientific evidence for this statement? It seems like most of your perceptions are based on anecdote.
niceguy7376 wrote:You had an ex-wfe, cheated ex-girlfriend and a new wife (currently pregnant) within a span of less than 5 years and it looks like the common trait of all of them is over spending. So who is to take responsible for that? (You are asking: "How would you handle a wife who is like that?")
Based on prior descriptions, these all sound like exactly the same person.
Drew777
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Re: Tough spot, decided to lease a car

Post by Drew777 »

User avatar
Uncle Pennybags
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Re: Tough spot, decided to lease a car

Post by Uncle Pennybags »

deikel wrote:
$1,620 mortgage (including taxes) - thats 1620 you could spent into a rent vs the bank
What's your estimate for rent that will pay off the landlord's mortgage? That's money that is gone forever with no write off.
Topic Author
technofox
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Re: Tough spot, decided to lease a car

Post by technofox »

EnjoyIt wrote:
technofox wrote: How would you handle a wife who is like that?
You either change her or divorce her while it is still cheap to do.
If you don't agree financially you will argue a lot.

Do you have kids? LoL seriously, a divorce now = me $25k debt plus child support. Loss of home and a relationship that is otherwise good.


Changing her is hard. She isn't that spendthrift, but she tends to spend regardless if we have the money or not when she does spend. It's competing priorities that is our problem.
dolphinsaremammals
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Re: Tough spot, decided to lease a car

Post by dolphinsaremammals »

You ask for advice, and then you stick with your unnecessarily expensive car prejudices. I have a car twenty years old and an even older one, and they do not cost me big bucks in repairs.

The maintenance of the house and other issues that seem to you like thunderbolts from the sky are (1) expected when you own a house, and (2) probably could have been solved more cheaply.

You say you spend little on your social life, but the reality is your ex-wife took you to the cleaners, it's not clear what the girl friend did, and you now have a wife who is a spendthrift. When the poster up above mentioned your social life costing you money, that, I believe, is what he meant.

What you most need is to think rationally and frugally about your situation. You are not doing that now.

p.s. Get rid of the cable. Have a talk with your wife about spending.

Update: I see people above have already said this.
Last edited by dolphinsaremammals on Tue Nov 04, 2014 1:22 pm, edited 1 time in total.
Topic Author
technofox
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Re: Tough spot, decided to lease a car

Post by technofox »

deikel wrote:
technofox wrote:Here is our budget:

My wife I know, will not give up cable, Starbucks, and attending social functions such as weddings for friends, especially family, and parties where she feels obligated to attend to. Myself, I won't give up my broadband internet, because I earn money through my second job through it. Luckily the social events have been subsiding, but with Christmas coming we have another big expense. We budgeted $600 this year and limit it to cash only, no borrowing - we'll see how my wife handles that.
$1,620 mortgage (including taxes) - thats 1620 you could spent into a rent vs the bank
$1,500 student loans
$450 all combined personal debt - this needs to increase
$150 energy bill - you could save 50 USD if you rent
$250 for my failing car - no sepnt if you live close to work
$290 for wife's car, she is going to get a cheaper car soon - one car is plenty
$120 cable - waste of money since you will soon need no entertaining anymore
$20 gym membership - since you will walk to work, no need
$120 car insurance - reduced by half since only one car
$10 Netflix - I give you that
$130 cellphones - insane, get pay phones and only use in emergency
$30 garbage - included in rent
$600 food, including Friday night pizza - keep it, just for fun
$520 for gas - reduced to half since you ....see above
$10 Newspaper - why ? you have internet AND netflix
$100 for savings - you mean paying down loans, right ?

Efectively, you have almost 1000 USD savings possible in your current budget, not touching your beloved internet (although the slowest speed would do for two people easily) or your wifes social comittments....from the equity of your house you could pay of the consumer debt and hopefully some more of your student loans.

And if your wife feels that cable is required for a good life and still takes out Starbucks coffe in your current financial situation, (instead of brewing her own coffe at home), than maybe there is no understanding of the severity of your situation, which needs to change...

HOw about reading your money or your life - its older, but fits your problem rather nicely.
I get a write off by owning my home, so renting is out of the question.

Walking is out of the question, because I live in the country, seriously NRA, deer, 4 wheeling, farm across the street country. I am lucky if my road is plowed before leaving for work during winter.

The newspaper we use for coupons, but I may cancel it, because she doesn't use it enough to justify it. The gym, I maybe able to cancel, but I need to stay fit.

Internet, need for second job that earns me thousands extra in cash. So that doesn't work.

Netflix saves us from going to the movies or even renting movies and TV shows. I can't cancel it, because it saves us untold hundreds of dollars.

Cable, maybe able to convince her to cut the DVR. Starbucks is battle that is not worth going into, when she may only buy herself a drink once or twice a week. It's not the coffee she buys, it's the refreshers.

Other than that, I am going to try to reduce the cost of our cellphone bill. Also what are pay phones? (Just kidding, they don't exist in my area any more).

I think switching to prepaid at $50 a month may work for us. $30 month savings right there, assuming I can convince her to cancel.
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Aptenodytes
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Re: Tough spot, decided to lease a car

Post by Aptenodytes »

Spending more than you earn is not a question of different priorities, it is a question of being out of touch with reality. Saying you can't save because your expenses are too high is a sign of highly delusional thinking. The logical approach is exactly the opposite (it is the highly frugal people who can't save; the spendthrifts have all kinds of opportunities to save).

Although I like the idea of having her read books about money, the way you describe the problem I don't think that will be enough. You may need some couples counseling along with the book-learning.
inbox788
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Re: Tough spot, decided to lease a car

Post by inbox788 »

FOREST:
Aptenodytes wrote:The car question is embedded in a bigger budgeting question.
Absolutely! OP, you need to change your mindset and understanding about budgeting or you will not get a handle on the real problems.

TREES:
technofox wrote:So after doing the math, especially with my current car being unreliable, I have realized that a 5 year car loan is not wise for buying used cars (unless you have a 20%). I realized that on average you should expect expensive repairs on a car after about 4 years of driving; thus a four year loan is the max that anyone should get, with little to no down payment. So based on those calculations and being unable to afford a new or reliable used car within the parameters that I wanted (e.g. 35k miles or less, must be from a reliable brand like Honda, etc), leasing ended up being the best option while I wait out these financial problem, especially given my current car's issue. I don't even have to pay for maintenance until the last year of the lease, except for tire rotations. I also don't drive much.
This makes no sense to me. Please show your work. Are you using assumptions or have you been denied credit? What is your credit score? Have you done the math (including being approved) for a lease? What is the Money Factor (i.e. interest rate)? Is this for factory lease or 3rd party lease? How many miles a year do you drive? I'm not among those that believe all leases are bad, but those that don't drive near the number of miles allocated (either much more or much less) are generally not good candidates for the lease.
technofox wrote: $120 cable
$130 cellphones

$520 for gas
$10 Newspaper
Cut the cable. Prepaid cell phones. Have you heard about the internet? Who still reads newspapers. The exception is if you make money with newspapers. Do you clip coupons? https://www.youtube.com/watch?v=mmo91UUAXH4

For someone "who doesn't drive much", you use a lot of gas!
I would never buy used car with more than 35,000 miles. The risk of expensive repairs increase the closer you get to 100,000 miles. It's a rule of thumb that I will never stray from. I also would only buy certified pre-owned cars because of the warranty. It's just my personal preference.
I'm not trying to change your mind, but you sound like an easy mark for Whole Life Insurance. Do you buy extended warranties on new cars? What I just want to point out is that there is a cost or price to anything you buy or trade off (new vs used; certified with warranty vs no warranty), and getting a good value is more important IMO than following some arbitrary rule (i.e. no cars with more than 77,777 miles for me because it's more than my lucky number).
Last edited by inbox788 on Tue Nov 04, 2014 1:24 pm, edited 1 time in total.
Topic Author
technofox
Posts: 290
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Re: Tough spot, decided to lease a car

Post by technofox »

dolphinsaremammals wrote:You ask for advice, and then you stick with your unnecessarily expensive car prejudices. I have a car twenty years old and an even older one, and they do not cost me big bucks in repairs.

The maintenance of the house and other issues that seem to you like thunderbolts from the sky are (1) expected when you own a house, and (2) probably could have been solved more cheaply.

You say you spend little on your social life, but the reality is your ex-wife took you to the cleaners, it's not clear what the girl friend did, and you now have a wife who is a spendthrift. When the poster up above mentioned your social life costing you money, that, I believe, is what he meant.

What you most need is to think rationally and frugally about your situation. You are not doing that now.

p.s. Get rid of the cable. Have a talk with your wife about spending.

Update: I see people above have already said this.
I don't consider her spend thrift. She does only get that way in specific times.

As for prejudice, you are lucky. I know some people who are lucky like you and others who have crap luck like me. It's a gamble.
Miakis
Posts: 395
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Re: Tough spot, decided to lease a car

Post by Miakis »

It's up to you to decide whether or not to take your financial situation seriously. Your budget looks like this:

1. Debt Repayment: 30%
2. House and related expenses: 30%
3. Cars and related expenses: 20%
4. Savings: 1.5%
5. Everything else: 18.5%

The only way to reclaim your debt repayment portion is to pay it down quickly (with some short term sacrifices).
The only way to reduce your house and related expenses is to sell your house.
The only way to reduce your cars and related expenses is to make intelligent car purchases.
The only way to increase savings is to reduce "everything else."

If I were you, I'd be attacking every line item to find the money to pay off the debt and free up 30% of your income.

A cheap, fuel-efficient car will cascade through your direct car expenses, fuel, insurance and taxes. I drive a 2006 Honda Civic Hybrid. You know what's wrong with it? Nothing. It's worth all of $5,000. If it blows up in a fiery ball of destruction tonight, I will go out tomorrow and pay cash for a different car without blinking. You know why? Because of all that money I save by not gassing up my new 5-year-financed SUV to drive to Starbucks.

Deikel just told you where to find your money. Except he was generous on your wasteful food spending. I spend $400 per month for two people, including a dinner out once a week and fancy coffee beans. And $600 for Xmas? Are you being serious? You don't even know how you will afford childcare.
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Aptenodytes
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Joined: Tue Feb 08, 2011 8:39 pm

Re: Tough spot, decided to lease a car

Post by Aptenodytes »

You fear about car repairs I think is traceable to the lack of an emergency fund. Without an emergency fund, any irregular expense adds to your debt, and you correctly want to get out of debt. That's one reason you need a big-picture solution, not a car-lease solution. With an emergency fund, you can ride out the irregular expenses such as car repairs without suffering a catastrophe. In the long run you'll come out far far ahead than leasing a new car every 35K miles.
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