Did I Catch The New Car Four Year Itch?

new-car-four-year-itchIn just a couple of months my very first car that I purchased new, my Honda Civic, will be four years old! Well… four years old to me anyway. I don’t know what month it was manufactured in! When I bought my Civic I bought it with the intention of driving it forever… Well, forever as far as cars go. I figured it’d last at least 10 years before it made sense to replace it due to repair costs of maintaining an ancient car.

It seems I’m a rarity when it comes to car buying behavior. Most people, as soon as their car loan is paid off, buy a brand new car to replace the car they just paid off! I guess people like being in debt and having a car payment, but I’m not a normal person. I did wonder, though, if I’d get the new car itch after the first few years.

Am I Looking For A New Car After Four Years?

HECK NO! That’s the short answer. Do I like looking at the new cars everyone else is driving? Of course I do. New cars are fun to look at! In fact, I like old cars too. But that doesn’t mean I want a different car for me.

I carefully selected the car I bought four years ago to meet my long term needs. I bought a Honda Civic because it got great gas mileage, was a reliable car and it’d last me a long time. I thought ahead and bought the 4 door sedan rather than a 2 door coupe because I knew I’d need the extra doors when I started my family, which I hoped to do while I still own my Civic even though starting a family is still a few years away.

When I bought my car, there were other cars that I liked the looks of better, such as a Pontiac Solstice or a Saturn Sky. Of course, there were nicer cars I liked too, such as BMWs, but they were quite a bit out of my price range for a car. So what was my reasoning behind buying my Civic rather than another type of car?

Why I Bought And Will Be Keeping My Honda Civic

I view my car as a method of transportation. It gets me from point A to point B reliably and it does have a few creature comforts for the longer road trips, such as cruise control. However, I do not want my car to be a status symbol of how I see myself fitting into society. I don’t care how fast it can accelerate. I bought it to fit my transportation needs.

Will I ever buy another car? Of course! I don’t expect my little Honda Civic to last forever but I expect it to last at least another 6 years at this point. I might even buy another new car down the road, although I would definitely buy a used car if it is a better deal at the time. Unless I’m wealthy beyond my wildest dreams though, it won’t be a fancy car and will likely only meet my transportation needs for the next 10 or so years!

How often do you end up buying a new to you car? Do you buy new cars or used (new to you) cars?

Don’t Try To Time The Market – You Have To Be Right Twice!

Time-Stock-MarketI have to admit that my investing strategy is rather boring. You see, I’m a buy and hold type of guy. I know that in the long run, and by long run I mean decades from now, my investments will be worth more than they are worth today unless we have a very large disconnect from the last century or so.

Yes, my investment strategy is boring. It’s not sexy. It may seem downright insane to some people that constantly worry about the big dips in the market. Some people think they can get out ahead of these dips and save some money by reinvesting once the markets finish going down. There probably are some people much smarter than I am that can time these things. However, I, like you, am just an average investor and don’t even entertain the thought. Why? I’m glad you asked!

Market Timing Isn’t For Me

If we could all time the market perfectly, we’d all be rich! Notice how we aren’t all rich? That means we can’t all do it. There is a very small population that has a small chance of getting these timing moves right and I’m not in that population.

The problem with trying to time markets to increase your return is that you have to be right twice. You have to be right the first time by selling at the top or pretty darn close to it. If you sell too soon, you might leave a TON of money on the table. If you sell too late, you’ve locked in your losses and likely missed your chance to make more money by timing the markets. If that isn’t bad enough for you, keep reading.

Anyone can be lucky once. The chances of being lucky twice in a row are much slimmer. You must now be lucky twice and reinvest your money at the bottom to be the perfect market timer. Invest too early and you’ll still be losing money. Invest too late and you’ll miss some of the biggest gains in most stock market bounces. If you miss just a few of the best days for the stock market for any given year you could easily miss out on a majority of the investment returns for that year.

I Know Myself Well Enough To Know Timing Won’t Work For Me

I don’t study the stock markets with every spare minute of my time and honestly rarely have a clue why big moves are being made at any given time. I don’t have the intuition to know when to get out of the market before a huge bubble is about to pop or to know when we’re about to reach the bottom and jump back into stocks with everything I have.

I know myself and that’s why I don’t even try to time the market. Could I seek out a bit better of a return if I simply did a little bit of market timing? Possibly, but I’d be constantly second guessing myself and it isn’t worth the hassle to me. Plus, I bet you I’d get it wrong 95% of the time and end up losing more money than I’d ever stand to gain.

What are your thoughts on market timing? Are you brave enough to try to be right twice and time the market? Let me know in the comments below!

Your Priorities Aren’t What You Think – I Have Proof!

This is the third post in our series about turning your finances around. New here? Start at the beginning!

PrioritiesSo you think you know what your goals and priorities are… I hope you’re right. Unfortunately, I have a feeling you’re wrong about what your priorities really are. Why?

Remember how a couple of weeks ago I asked you to start tracking your spending? Then, last week I asked you to come up with some short, mid and long term goals. Now the true fun begins!

You Don’t Put Your Money Where Your Mouth Is

Ok… I hope you don’t eat your money. That is gross. Do you know where your money has been? Second, it is a waste of money! Back to the point…

Take a good hard look at where you’ve spent your money since we first discussed the idea of tracking your money. Where are you spending the majority of your money? Is it on dining out every day of the week? How about paying off debt for things you’ve done in the past but have nothing to show for it now?

Regardless of what your biggest spending category is, it says something huge about you.

Where You Spend Your Money Shows You What Your True Priorities Are

Take a minute and let that sink in. Your true priorities are where you spend your money! You might be offended by the thought that your biggest priority is “owning”, maintaining, insuring and traveling in two gas guzzling cars or that the most important thing in your life is eating at fancy restaurants.

Another common financial priority is living in an over-sized house that has been decorated lavishly. Mortgages or rent will take up a large part of your income, but they don’t always have to be your number one spending category!

We have a decent sized mortgage payment, but we actually save more for retirement each month than we pay for our mortgage. It is possible.

What is your number one priority according to your spending? Share in the comments below!

The Order Of Your Spending Categories

Another eye opening exercise is to look at the order of your spending categories from the highest percentage of total expenses to the lowest percentage of total expenses. It might be shocking to see that your lavish vacations are more important than your child’s after school activities that you say you can’t afford.

There are some categories that are normally going to be at the top of your list, such as your mortgage or rent payments. However, you can make changes to put your spending categories in whatever order you want.

For example if you have a paid off house and car plus you have a reasonable grocery budget, you can set up your spending categories in the order that matches your true priorities. But is your previous spending that you’ve been tracking in line with those priorities? That’s the real question.

What If Your Money Priorities and Real Priorities Don’t Line Up?

Don’t worry, you aren’t alone if your money priorities and your real priorities don’t line up. It is more common than you’d think and can be fixed with a bit of effort. That’s exactly what I’ll be focusing on next week! Be sure to check back and continue along the journey of turning your finances around!

What is your biggest priority according to your spending that you’ve been tracking? What did you say was your biggest priority? How do you plan to change that?

I have to give credit where it is due. This post was inspired by Jacob at iHeartBudgets.net!

photo by: Banalities

Stop Being A Robot! Evaluate Your Goals And Priorities In Life

Quit Being a Robot!

Quit Being a Robot!

This is part of a series of posts to help you take control of your money. If you missed the first post, check it out here.

Wake up. Jump in the shower. Eat breakfast. Go to work. Do you do the same thing every day without thinking about it?

Goals and priorities are what drive you forward in life. Without them, you’d wander aimlessly. You’d continue doing the same things day after day without ever questioning anything. Sounds like a pretty dull life, doesn’t it?

What you might not realize is that your goals and priorities don’t have to be written down on paper to exist. You may not have consciously decided what they are, but they exist. You might be shocked at what your current goals and priorities are!

Think About Your Goals and Priorities

What do you spend the majority of your day doing? What do you spend most time thinking or day dreaming about? These are all potential goals and priorities. In fact, if you’re spending most of your time doing or thinking about them, chances are they are what your current priorities are.

Whether it is driving to and from the office for an hour and a half each day, sitting in a cubicle for eight hours every Monday through Friday or spending hours every weekend trying to figure out how to make your money last until your next paycheck, you have goals and priorities that you might not have ever thought about before. Are those really what you want your goals and priorities to be?

I challenge you to take some time to sit and think for a few minutes. What do you want your goals and priorities to be in life? They don’t have to be the same things that you’re currently spending all of your time doing now. They don’t all have to be long term goals or things that can be done in the next week.

Just figure out what you want to get accomplished!

Short Term Goals

Now that you have thought up some ideas of things you want to get accomplished, pick a couple that you think you could knock out relatively quickly. Set a time frame for when you want to achieve whatever milestone you have set for yourself.

This doesn’t have to be a one and done goal either, a short term goal can be a stepping stone on the way to a much larger goal. They didn’t build Rome in a single day! You shouldn’t expect that for your huge goals either!

Mid-Term Goals

These are goals you want to accomplish in the next year to as far out as three years from now. You can continue along the path of one of your larger goals or you could have a completely unrelated goal for a mid-term goal. Just have something you’ll be continuously working toward over at least the next year.

Long-Term Goals

I like to think of long term goals as things I want to accomplish in the next 5 years. These are pretty big and make you want to work hard to accomplish them.

It is often best if these goals are aggressive, but achievable. You want to ensure you’re moving forward in your life, and setting a stretch long term goal is a great way to do that.

Why Does This Matter?

I wanted to set up a fun exercise to open your eyes about a crazy idea about your money. In order to do this you MUST know what your goals and priorities in life are, or at least have a good idea.

Are you ready to be shocked? Go ahead and read the next article in the series.

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photo by: à voir etc...

Emergency Fund Usage Update

Did We Smash The Piggy Bank?

Did We Smash The Piggy Bank?

Today’s post is by Lance, my husband.

In our last post, Tori mentioned that she may have to dig into her emergency fund. At the time, she did not have a date when she would be able to start working again after getting cleared to return to work from her disability. Luckily, things have changed and Tori was able to go back to work and she’s earning a paycheck once again!

Why We Didn’t Have To Dip Into Our Emergency Fund

There were a few reasons why we didn’t have to dip into our emergency fund, some of which were in our control and others that weren’t in our control.

Tori had a week of PTO that she was able to take, which allowed us to get a little bit of income while she was waiting to be offered a position. This gave us a little bit of extra income before we had to dip into our emergency fund. Every dollar counts when you’re not sure when the next paycheck will come.

The next factor that allowed us to not use our emergency fund was the fact that Tori only had to go two weeks without a position at work. Since we were able to use PTO for the first week, we only missed having an income for one week which was huge! Of course, this wasn’t in our control at all. We were at the mercy of her employer.

Another thing we had going in our favor was the fact that we prepared in advance. Once we knew that it looked unlikely that Tori would actually start on her return to work date we began saving money and cutting our expenses. We also decided to quit making extra payments on her student loan debt. This allowed us to have a bit more money in our checking account that easily got us through the week with no pay.

What You Can Do When The Future Is Uncertain

When your future is uncertain in regards to your income you should begin taking steps to prepare for the worst case. Do what we did and be proactive with your money. Quit spending like you have a stable income that you know will come in every month. Start saving that extra money that you weren’t expecting. Stop using money in discretionary ways, like we stopped making extra payments on Tori’s student loans.

Every situation is different, so these steps may not work for you in your situation. If you have 3 years worth of expenses sitting in cash, you probably don’t need to worry about losing your income for a short period of time. If you have less than $1,000 in the bank account, though, it is time to kick it into high gear and get prepared!

When was the last time you had to dip into your emergency fund?

photo by: Images_of_Money