How to suck the fun out of $10k

Ok, well, the title might be a little bit misleading. After all, I think the following is fun! However, I'm a nerd :)

I mentioned in the previous post that we are receiving nearly $10,000 back with our tax refund. That's a full third of all the money we made last year! The exact number is $9,586 of basically found money.

I want you to think of the 22-year-olds that you know. Now think of handing one of those people 10 grand. Are you shuddering? I thought so.

However, Lubby and I are not your typical twenty-somethings. Hence the title of this post. We've already spent this money on paper, on purpose, before even getting it. The following is a break-down of how we've sucked the fun out of this huge amount of money.

9586
-195 tax preparer fee
9391
-2516 pay off carpet debt
6875
-5000 finish off emergency fund (3+ months)
1875
-1800 "pay back" to ourselves (we had to borrow personal fun money to live on sometimes)
75
-75 nice dinner somewhere
0

Now, I know this isn't as exciting as a whirlwind trip to New Zealand. Yet I get butterflies of excitement knowing that we will have our emergency fund finished and be ready to dump all of our extra income into IRAs, saving for said trip to NZ, and our mortgage.

Yes, I know you are amazed. I will consider coming to speak to your 20-something son or daughter about the virtues of financial wisdom. First you must be really nice to me :)

In all seriousness, though, why is our financial picture so far out of the norm for our demographic? It CAN be done, and it's not like we even make very much money. If you know someone just getting started in life, or someone who's lost hope in young America, or anyone really who might be inspired by our journey, please pass this blog on.

Net Worth-- May 2008

Unfortunately, I will be unable to give a budget-breakdown for the last few months. Truth be told, I've/we've been somewhat rebellious with the uber-tight budget. The end of May found us at a restaurant nearly every day (sometimes twice a day). Thankfully, Lubby's steady part-time work and my three part-time jobs made for more wiggle room than I remember having ever in our married lives.

Follows is an update on where we stand as of the first of June:

Assets:
Checking: $3,000
Savings: $1,005

Liabilities:
Car: $2,435

Net Worth:
$1,570

**********

Would you look at that! A positive net worth! In only a few short months of focused dedication, we can not only afford to live, but pay down our debts and own more than we owe as well! Exciting! This net worth number is excluding student loans. Both my husband and I are blessed to have parents who shoulder that load for us. Should the time come when we take on that responsibility, I will add it to the "liabilities" list.

June is going to be a 'survival' month. We likely will not make as much money in June as our budget requires (about $1700 with Lubby's school). Fortunately, July looks like it will be much more lucrative-- we only need to make it until then. I shall explain how our budget allows for this 'short' month in an upcoming post. Until then~

For a look back, see February's update and January's initial post.

Dave Ramsey wouldn't approve...

I do admit that I am a pretty big fan of Dave Ramsey. I like his no-nonsense, common sense approach to personal finance and his Biblical/charitable perspective is no turn-off either. Still, I did break a cardinal rule a few months ago-- I bought a car using credit instead of cash. Here is why I believe Dave to be wrong in this particular case.

Dave would say I should have sold my car, bought a clunker, and saved for a newer car and paid in cash.

Here's the scenario-- I already drove a clunker. It looked decent, but it had who knows how many miles on it (the odometer broke 5 years ago at 144k+), everything leaked, and was getting *horrid* gas mileage. Our gas budget at the time was $600/month. Yikes! I was in school at the time and worked very little (the program I was in specifically forbade working); Hubby worked two jobs and our out-go was still 100% of our income. We had zero room to 'save up' for anything, even though I budgeted the blood out of every penny we got. Ask anyone who knows me-- if there was room to be saving, I would have been saving.

We had about enough money in the bank to pay for exactly the same car I already had or to make a pretty darn good down payment while leaving a $1,000 emergency fund. We shopped around for a while, found this car and got a payment of $103/month. The car gets decent gas mileage (24ish) and we were able to drop our gas budget in *half.*

So, we added $100 to our monthly bills, but saved $300 per month in gas. This means we could make 3x payments and be out of debt very soon. Plus, the sale of my old car brought an injection of cash roughly equivalent to 1/5 of the original balance.

I am very debt-averse and I grew up in a family that does not believe in car payments. No one is foolish enough to buy something that loses half it's value as soon as the deed is done, or so I thought. However, with some research, I was able to find a vehicle old enough to be price-stable and new enough to last a good long time, priced where I could sell it in a year for about the price I paid if I wanted to. We specifically got something family-friendly so that I could drive it for ten years if I so choose.

We are dumping this debt as soon as possible. We don't even own a credit card (although if we had longer to pay on the car I would consider a 0% for that purpose only...). Although I agree with Dave 99.9% of the time, I really believe that we made the best decision for us at the time. I will drive this thing into the ground and never have a car payment again.