How many of you have said “I’m always going to have a car (or credit card, or student loan) payment”? Ten years ago, I was definitely one of those people, and I know a number in my family still think that way, and I’m sure some friends and other associates do as well. Even if it’s not in the forefront of your mind, you may not be able to imagine your life without a payment, even including a mortgage payment.

Basically, for most of us, we CAN live a life without payments, even if we’re earning barely more than minimum wage. You may not like what you hear, and it probably won’t work in all situations. For example, I can imagine a single parent with multiple kids barely making it by paycheck to paycheck or on government assistance aren’t really able to do much with their finances, but this article isn’t necessarily to cover those situations yet. But for others, we can look back upon what years of financial and frugality blogs have been telling you.

The main tenets for living a life WITHOUT payments

I’m sorry about how simple these sound, but you’ll also recognize how difficult they are to implement into your lives and finances:

1. Cut out your discretionary expenses.These are WANTS not NEEDS. You WANT cable TV. Most of us just WANT a smartphone plan (you only NEED it if you’re self-employed or in 24/7 support). You WANT air-conditioning, but unless you’re old, sick or living in the deep south, opening a window will work just fine.Think about how much you spend on some of these expenses. Cut down your cable plan to the minimum and maybe save $100 per month. Drop back (if possible) to a regular phone plan and save $30 or so a month. Cut out your A/C or reduce your heat demand (and use blankets and more clothing) and save a few hundred a year. Imagine how much $1200 per year for cable, or $360 for a data plan, or however much for heating/cooling would make a dent in your payments.Remember, there are NEEDS (sometimes internet does fall into that, especially or someone like me who works from home) and WANTS (I don’t need cable except to get a cheaper rate on my internet…and to keep the wife happy!). But even bigger in the wants/needs conversation is this next one…
2. Stop spending so dang much! I’ve chronicled how I’ve spent wayyyyy too much on cars, especially starting with my first one. If you need a car, buy what you NEED and deal with it. Buy something used so you don’t get smacked with the instant depreciation. Know your financing options and your credit rating so you don’t get swindled by the dealer’s finance department. Don’t only think of things in terms of payments, but rather the whole cost. You don’t NEED leather. You don’t NEED navigation. Heck, you don’t even NEED an automatic transmission. You do NEED safety items like ABS, traction control and a certain number of airbags. If the car has a few dings and dents, it’s still what’s underneath that counts and how dependable it will be for you, so don’t look for a shiny new (or even used) BMW because you’ll just be getting yourself stuck further in a hole. Did you know that there are more auto loans over 5 year terms now than under 3 year terms? It’s a combination of wanting too much, focusing on payments rather than total cost and overall poor decisions.Some of you have other spending problems like pricey groceries, clothing, gadgets, bottled water (cause, oh my GAWD the city’s water isn’t good enough for me!), but if you want to get out of debt and payments, CUT BACK YOUR SPENDING!!!
3. Sell Sell Sell!!! Want to get out of debt? Sell the crap you have, including your overpriced or over-optioned car. If you’re in the hole on a loan, figure it out (I think I did an article on your options a while back, but talk to your bank to find out your options anyway). If you’re REALLY in over your head with, say, your mortgage, then it’s time to look at selling, even if that involves short-selling or foreclosure. BUT, don’t take those last 2 options lightly because it will haunt you for many years to come. Those are drastic measures for drastic situations only. Ultimately, if you can sell off everything you own except a pot and pan to cook with, a mattress to sleep on (or sleeping bag), etc. and use that money to get out of debt and start over, it’s a crazy, crazy idea, but I challenge you to look around and see how much stuff you could throw on Craigslist, eBay, consignment, etc. and never miss.
4. Stop racking up more debt! Again, it’s tough if you’re barely hanging on paycheck to paycheck, or especially when you don’t have any income and you feel you have to use credit to get by, but when you take care of #1, 2 and 3 above, you should also work on not accruing more debt and continuing the cycle. Heck, did hear about the woman who had to postpone becoming a nun for almost 10 years because she had to get out of debt first? Even those of us who feel a higher calling are pulled down by the realities of debt!

So the lessons are stop spending needlessly, get rid of the stuff you have (for a price) to pay down your debt, stop racking up more debt and just try to get back to a fresh start with your financial life if you can.

This plan doesn’t work for everyone. Got 3 kids? Gonna be hard to explain to them you have to sell all their toys, right? But you CAN cram them all into a sedan rather than a big 3-row SUV or minivan. Before vans and SUVs (aka, in the 20th century), EVERYONE did it! Granted, child seats were smaller (or not required), while today they’re these massive roll-cage devices that can withstand a nuclear explosion.

But strapping junior to the roof is still an option, right?

As you know, I love cars, yet I’m trying to force myself not to get a new one (I’m slowly losing the battle though). As part of my love for cars, I subscribe to a number of car mags and numerous car blogs. Every so often, I’ll also peruse books and other publications for information. Back in 2005, Consumer Reports published a book called Smart Buyer’s Guide to Buying or Leasing a Car. They compiled a list of common car shopping mistakes and a few ways to avoid them. Since I have fallen for a few of these, I’d like to share them with you and comment on them from my own experience:

Falling in love with a model

No, I’m not talking about Heidi Klum; I’m talking about becoming so focused on a single brand or model that you become biased for that model or against any other model. Buying the car of your dreams is nice, but make sure that reality lives up to your dreams. Quite often, they don’t match up. For example, my wife loves MINI Coopers and has stated she never wants another type of car again. That’s great that she LOVES her car, but the reality is MINI is on the bottom of the reliability list, and if we didn’t have the extended warranty or maintenance plan, we’d have spent a couple grand right out of the gate with our most recent MINI (bought used in 2010).

Another example is a friend of mine who wanted me to help him find a 3-row crossover/SUV. I went to the DC Auto Show twice (the 2nd time with him) to walk him through the offerings and point out the pros and cons of each model. We almost settled on a Volvo XC90 because of the price, features, longer maintenance and warranty plan than, say, BMW, and their offer to send you to Sweden, all expense paid, to tour the factory and pick up your car (and ship it home for free). But he had one problem: He later told me that he “always dreamed of having 2 BMWs in his garage). He already has an older BMW M3, so he was completely biased towards the BMW X5, regardless of price, amenities, etc. We did do some test drives together (e.g. Audi Q7), but he would always find something wrong with the competitor and nothing wrong with BMW. He ended up with the BMW in the end (used), but he could have had a better fit vehicle if he hadn’t fallen in love with the BMW brand.

Skipping the test drive

Oh man, I can’t stress enough how important a GOOD test drive is. If you buy a car on appearance and specs alone, you might be in for a shock. Even if you’ve ridden in the car, this is one you’ll be driving and owning, so you MUST get behind the wheel. Also, during the test drive, don’t just stick to the salesperson’s route. Get it on the highway, local roads. Stop and go traffic, parking decks and grocery store lots and any other situation you often find yourself. I can have an entire article (and I might) on how to conduct a good test drive, but let’s get back to the basics.

You might think you want a bigger vehicle (or a smaller one), or more (or less) power, etc., and you may have even picked out a specific model and you’re ready to buy. But if you don’t get your butt in that seat and drive it, you could be in for a rude awakening when you drive off the lot.

Granted, there are many big and small things you’ll find to love or loathe in your vehicle that you may never have found during a test drive, but would you spend thousands or tens of thousands of dollars on something you never tried out? Would you buy a house without stepping foot into it and doing an inspection? (The answer should be NO). But people quite often put more effort into selecting the right lawn fertilizer than they do in buying a car. You can regrow grass, but it’s almost impossible to return a car or even sell it right off the dealer lot without losing thousands of dollars. GET YOUR BUTT IN THAT SEAT AND DRIVE!!!

Negotiating down from the sticker price

Let me clarify this one. Negotiating isn’t a mistake; rather it’s either NOT negotiating or not negotiating ENOUGH. I’ve never paid MSRP for a vehicle, and I never will. If the dealer won’t take money off, and neither will any other dealer, the car isn’t worth having. That means they’re banking on others that MUST have the newest, biggest, fastest, etc. to pay full price (and sometimes much more!), but you shouldn’t be one of those buyers. Wait a few months or even a year, and you’ll be able to negotiate. The only time you won’t is when something is very limited edition, and unless you’re a collector willing to garage and maintain it (and never drive it) and sit on it for 20-30 years, it’s not worth your money.

To quote from the book:

A salesperson may offer you a deal that’s, say, $500 below the sticker price, and many consumers will conclude, often mistakenly, that they’re getting a good deal. Unless the vehicle is in big demand and short supply, you can often get an even lower price by negotiating up from what the dealer paid for the vehicle.

I go to Edmunds.com and look at the invoice price and that becomes the maximum price I will pay. There’s also something called “dealer holdback” that they can dig into (but that really does take out of the salesman’s pocket a bit too far), as well as manufacturer and dealer rebates and incentives.

For example, I was looking at a Ford F-150 Platinum Edition. Price is about $53,000 sticker, fully-loaded. It’s basically a luxury truck. But right off the bat, I’m looking for a $6000 discount to get to invoice price, and the dealer offers that. But that’s not enough for me. They wouldn’t come up on my trade, so no deal (plus it’s a friggin $50k truck!), but that’s a different story.

Focusing only on the monthly payment when negotiating

Oh wow, soooooo many people fall into this one, big time. When I was negotiating on that truck, I didn’t care about the monthly payment because I knew I had enough in the bank to pay off the balance. And even if I didn’t want to pay from savings, I have enough disposable income to pay the truck off in just a couple months, so payments are a non-issue for me.

But the salesperson didn’t get it. I even told her I care about how much I’m paying for this truck total, not each month. But she kept talking about “this will only increase your payment by $10 a month”. I was getting angry, but I knew I had the power in this deal because ultimately it’s a buyer’s market all the time with cars and if she wanted my business, she would have to speak on my terms. She didn’t, and she lost the deal.

But even in my family, I’ve found that when they ask me for advice on buying a car, they talk about payments. They want more car than they can afford, so they try tactics, like I used to, of lengthening the loan term or banking on a lower interest rate or some even crazier schemes that I still don’t understand. In the end, buy a car you NEED first, and if you can afford the WANTS in your budget, then go for it, but focus on the total cost, not the payments. Think “should I be spending $50k on a pickup truck” rather than “ooh, I think I can fit $600/month into my budget for this truck” (the payment wouldn’t be that low without a lot of money down).

Buying the “deal” instead of the vehicle

So, you got a ton of money off, and it fits into your budget. You should buy, right? No. Piece together what I’ve told you to this point:

• It should be affordable
• It should be a car you like, but not a biased decision
• You should have driven it AT LEAST once and in many scenarios
• It shouldn’t be based on the payment

Waiting until you’re in the dealership to think about financing

First, I’ll say you should try to only buy when you’ve saved up enough to pay cash, but few can or will do this. Moving on, most of you will opt for financing, but few actually walk into the dealer ready with a pre-qualified auto loan from a bank with an excellent interest rate. You’ll probably just let the dealer tell you what options you have, normally steering you towards the options where they get the most kickback (usually from the manufacturer).

Even if the dealer can get financing through the same credit union you would have gone through, you should check whether you can get a better rate directly from the credit union (or bank) than through the dealer.

Underestimating the value of modern safety features

Ok, some new safety features may be standard in 10-15 years, but they just seem a bit unnecessary to me. For example, blind spot warning systems. Nice, but you can buy a blind spot mirror to attach to your side mirror for a couple bucks versus the hundreds for the electronic system. Not as nice looking, but does the job. Cars shouldn’t be considered as lounges where you don’t need to pay attention; you should always be aware of your surroundings, the flow of traffic, your speed, your alertness, etc.

But today’s cars MUST have a few features we thought were frivolous decades ago such as antilock brake systems (ABS), electronic stability control (ESC), and as many air-bags as you can fit. This one is simple, if every other car on the market has it, then the car you buy should have it (and that especially goes for used cars). While most of us can’t imagine buying a car without an airbag, some people are looking anywhere they can to save money and will do without such a safety feature that saved me a major headache when I totaled my mom’s Honda Civic back in 1995.

Buying unnecessary extras

There are needs and there are wants. I need a vehicle that gets me around safely (ignoring that I can often use public transport here in DC), but I want a vehicle with cooled seats, navigation, satellite radio, USB port, and sharks with laser beams mounted on their heads swimming around in a pool in the back. But honestly the extras are bundled up and sold as packages for wayyyy more than you would spend outfitting them yourself. For example, a nav system normally runs $1000-2000 easy. Sure, it integrates with the car and gives you a nice big screen for your radio and other features, but how much is an awesome Garmin? About $400 at Costco INCLUDING a lifetime update deal. You’ll still have to pay about $100 a year for DVDs or hard-drive updates for your in-car nav system.

And then there’s extras like VIN etching (stupid), rustproofing (unnecessary as most new cars have excellent paint coatings already) and fabric protection (you can buy a bottle of this stuff from Walmart yourself for a couple bucks).

But I’m not immune to the tom-foolery that dealers play in your head. For both my truck and our MINI, I bought the extra wheel and tire warranty for about $400. For the MINI, they used the scare tactic that the tires alone are $250 each, and for the truck, the wheels are $500 or more to replace. In the end, I realized I spent hundreds of dollars on foolish warranties. Granted, when I got new tires from NTB or Merchants, I paid the few extra bucks for the tire warranty, and it’s paid off twice on my truck, but that’s a few dollars versus hundreds. Oh, and I’ve fallen for the paint and fabric protection on our 2005 Malibu and I think on another car, but I can’t remember which.

Not researching the value of your current car

When you’re not in any rush to get a new vehicle, which most people aren’t if you really consider it, you can take the time to try to sell it on your own. Sure, there are risks, scheduling and effort involved, and that’s why most people will just take the trade-in price for their car rather than sell on their own, but I’ve sold 3 cars so far for thousands more than I would have gotten on trade (I got them appraised by dealers and Carmax first).

Ultimately, know the value of your car. Know that unless it’s brand new or has been garaged and maintained perfectly for a couple years, it’s not in “excellent” condition. Know that in the market, you can expect Fair or Good value, and when you try to trade it, they’ll lowball the heck out of you. For example, the Ford dealer offered $9500 for my truck, when KBB, Edmunds and others on the market were all quoted around $14-15k. Sure, they need to make a profit, but I’m not letting them make $5-6k off of me. I don’t let them BS me with “we have to spend a grand getting it to the quality of sale blah blah blah”. No, they fix what is glaringly wrong, give it a wash, buff, vacuum and polish and hope for the best. They have in-house mechanics and they aren’t paying them what you would pay per hour, and they’ll get discounts on parts. Don’t let them fool you into giving you a lowball offer on your car.

Not having a used car checked by an independent mechanic

Again, another one I could write an entire article on, but basically, unless you’re a qualified mechanic, you should take a used car (that you’re on the verge of purchasing) to a mechanic for inspection. Most of us aren’t trained on how to spot accident repairs, water damage, electrical problems or powertain issues. We just listen to see if it sounds right and the cosmetics look nice.

Don’t expect to get this done for free though. That’s why I say you should be serious about buying the car, so this should be in the final stages of negotiation because you should expect to pay about $100 or so to a mechanic to give it an inspection. It will be well worth it. Even if they find something, it might not be a deal-breaker, but you’ll know what is wrong when you buy it and how long you have till you should fix it.

What other mistakes have you made (or seen others make)? What are your “horror stories”?

I’ll start off by saying I use to be a cute skinny kid up until the age of about 5 or 6 years old. Blame it on TV or moving back to PA with my Gram and her Italian cooking (“You have to eat everything on your plate!”) or my own lack of self-control (probably more of the last one), but I became the heaviest kid from probably 1st through 12th grade, excluding the heavyweights on the football offensive line. I was fat, and I knew it and was picked on for it for all of my childhood and some of college (I put an end to that quickly, but that’s another story).

So, needless to say, I was a pretty inactive kid. Sure, I had a city playground literally in my backyard, but I preferred to stay inside and read books and play video games. My parents tried to get me active by enrolling me in Karate, Wrestling, Baseball (which is NOT an active sport!) and Football. The first two just weren’t my style, although I did win a couple wrestling trophies, but that’s because the other team had to forfeit that weight category

I did do pretty well in baseball, but never got past minor league. Plus, my weight and playing catcher didn’t work out together and I suffer a weird-looking knee to this day. I couldn’t keep up with the running in high school football compared to the 4 years of football before, so I dropped out and became the waterboy. It was embarrassing, but I was used to the abuse by then. I hated running and would do anything I could to get out of it, including faking injuries.

But then I got into running around age 27. Why? Because my wife wanted to run a marathon before she hit 30, and since I agreed to help her train, I figured I would sign up too. We gave ourselves 5 months from couch to 26.2 miles. My wife has a runner’s body, while I had a, um, football fan’s body. The kind of fan who is too lazy to go to the stadium for a game so he stays at home and watches on TV. Needless to say, it was a tough 5 months.

If you were here for my first post back in 2006, you would have read about whether I think running is really a bonding activity for couples. I wrote that back when my wife and I were training for our first marathon back in 2006, and for us, no, running is not a bonding activity. But for others, it definitely is. Why?

Well, I hate talking when I run. When I run, all I think about is “how much longer do I have to go?” or “am I breathing right, how is my posture, etc.?”. But most often, my mind is just blank, and I love that. I don’t like distractions because I need to focus on my pace, breathing and everything else my body is resisting.

Prior to about April 2006, I never ran more than a mile, and even then, I think I cheated out of a couple of laps back in high school. Every one of those training runs was torture, whether it was 3 miles or 23 miles (yes, we did one of those). The hardest part was starting and the best part was finishing…or the nap I would take later in the day. I didn’t train properly, although we really stick to the training schedule.

I started training for the marathon at 226lbs, and on the day of the marathon, I weighed in at 226lbs. I know marathon training isn’t a weight-loss tool. If you’re losing weight, you’re training wrong. It’s all about endurance and keeping the body stable, so if you’re losing weight, something is wrong. But when you’re 5’10″ and 226lbs, you can stand to lose a few pounds, but I took the opportunity to take in the extra calories I was burning.

Why Do I Still Run?

So let’s get to the point. I hate running, so why do I do it? Like I said, the best part for me was the end, and the nap, but I went about 5 years since that marathon without running (and I herniated a disc because of it). But I learned that I love the pain. It sounds weird and sadistic, but I love knowing that the effort that I’m putting into the activity will yield results: faster times, longer distances and burned calories.

Over the last year, I’ve lost 25+ pounds and finally got under 200lbs for the first time since maybe early high school or earlier. The marathon was my first and only race until last year when I ran a 5k “obstacle course” filled with mud, fire, barbed wire and lots of pain. I said I would never do that again, but when you’re relaxing on the grass afterwards eating your turkey leg, you think “I think I can do that faster now that I know the course”. I recently ran a true road-course 5k to find out my base time, and met my goal by seconds. I’m even signed up to do another marathon, and I hope to knock off an hour or more. I’m doing this one solo though.

I’m not a competitive person with others. Some people think I am, but in reality, I’m competitive only with myself. I might use others’ times or achievements as benchmarks, but I’m not out to “one-up” them. If I did a 5k in 30 minutes, the next one I want to do in 29 or faster. If I did the marathon in 6 hours, I want the next one done in 5 or faster.

And this translates to the rest of my life. I’m not competitive with others in my job, but rather I rely on benchmarks I set for myself, whether based on experience or someone else, to try to attain more. I’ve nearly tripled my income since graduating college, and it was a a slow progression of job improvements, salary negotiations and, of course, job skill enhancements. We’ve gotten rid of $200,000+ in debt over the last 6-7 years or so, and that was through constant improvement and testing our wills and commitment.

I don’t run because I love the breeze in my face, the companionship of a fellow runner or the endorphins released during the run. I run because it’s painful but I know that pain yields results. I want to test my limits every time so that I can raise the benchmark and do better next time. I have to force myself to get off the couch and run, and when I’m running I have to force myself not to give up when my body is tired, but in the end, after I’m home, showered and changed, I feel really good about what I just accomplished.

The fat kid has run a marathon, two 5k’s and will be running another marathon this year. I never, ever would have thought I would or could be that person when I was younger.

(Guest Post by Heather C. Stephens)

You know that pit in your stomach feeling you get when you’ve been hit with an unexpected car repair? You don’t have the money to fix it, but you’ve absolutely got to have a car to get to work? Add to it that you’ve been working arduously to pay off your credit card debt, so charging is not an option. What do you do? If you’re like me, you try do to it yourself. Sometimes it works…this time it didn’t.

Read on to hear how I turned a money-saving DIY auto repair failure into an opportunity to realize my financial success with a little inspiration from a post I read on Budgets are Sexy.

Here’s the story…

I’m a girl who’s not afraid to pick up a tool and attempt to fix something myself. My dad was a stickler for teaching us girls the practical things in life we may need to know someday. For the most part it’s served me well, although sometimes my confidence trumps my skill.

I can’t cook to save myself, but I love to save money when I can fix things by myself. I’ve been known to rewire part of our 85 year old home, fix the washer and dryer while my husband was out of town, sweat pipes, remodel a bathroom, etc.

Oil Change Leads to True Love

I actually met my husband after one of his friends tripped over my feet while I was changing the oil in my car in the dorm parking lot at college. He was shocked when I rolled out from under the car with a rag in my hand and he asked me what I was doing. He was into rebuilding old cars and was impressed that I (you know, being a girl and all) wasn’t intimidated to change the oil. We became buddies, he introduced me to my husband and we lived happily ever after.

Fast forward, 17 years–I now pay for my oil changes, but that willingness to try to fix it myself before calling in the pros has stuck with me. My husband cringes when I get an idea to start a project because I’m always willing to take on more than he is. Sometimes I’m right…this time I wasn’t.

Financial Failures Opportunities for Improvement

While I seemed to have been able to master most things my dad taught me, I have never felt confident in the areas of budgeting and personal finance. I lived by the attitude that if Visa could fix it, it wasn’t really a problem and I handled emergencies by charging them if we couldn’t pay for them out of our checking account.

Since I started blogging for the online coupon site, FatWallet, I’ve started reading financial blogs, the finance forums, and putting the things I’ve learned into practice. We’ve really worked hard to cut our spending, shop smarter, and get our personal finances under control with a simple budget. We’ve been rapidly paying down credit card debt and I’ve been super diligent to not charge a penny.

Mom’s Money Saving DIY Auto Repairs

So when our electric window on the driver’s side of the car broke last summer I told my husband that I’d just live with it until we could afford to fix it. It was inconvenient going to the bank or a drive through, but overall it wasn’t an issue. That was, until I took it to get the oil changed and the mechanic rolled the window down and we couldn’t get it back up.

There was no way we were going to be able to work the extra $400 to fix it into the budget without dipping into our emergency savings account or hitting the credit card. So I looked up some YouTube videos to see if we could fix it ourselves. My husband didn’t want to attempt it, but I used my feminine persuasion to talk him into it.

We took a trip to the auto parts store (one of the coolest little stores I’ve ever been in, that looks like it hadn’t changed in 40 years!) and bought a new motor for the window for $80 and a tool to pop the door panels off.

Would you believe there were only four bolts and a couple of electrical clips to undo to swap out the motor? And because we brought the old motor back into the auto parts store to be rebuilt for someone else, we got $40 bucks back!

Yup, a $400 repair for about $50 bucks and a Saturday afternoon I got to spend with my sweetie sharing a few micro brews while watching the kids create chalk drawings on the garage floor.

That’s an auto repair DIY project I’ll attempt again. We also just replaced the broken side mirror on the car. Easy-peasy.

Mom’s DIY Project Gone Wrong

This week, I was wrong. Our “family truck-ster” minivan is approaching retirement, but we’re about a year away on our debt payoff plan from being ready to buy a new car. So with (overinflated) confidence from our past successes, we attempted replacing the radiator.

Taking it apart was not so bad with the help of YouTube, but we felt like we were living the minivan version of The Money Pit. Every part we removed led to something else that needed to be repaired. After tearing it all apart we decided we were in over our heads.

We called the mechanic (actually I begged my husband to call) who was super understanding about it and told us we weren’t the only ones this has happened to.

My 4 year old son was so excited about the tow truck coming so we stood out there holding hands while I answered a million of his too-honest questions about us “breaking” the car. I felt like a failure watching the tow truck driver pull the minivan up onto the flatbed truck and drive away.

It got worse when I heard the mechanic’s voice mail message the next day. “Buddy, I am confused as to what you’ve got going on here, why are there are two old radiators in the back of the car? Where’s the new one you said you had?” Turns out we got an old radiator from the auto parts store by mistake. I did actually laugh at that one, since it’s how the whole job had gone!

It ended up costing us $587 for the tow and to have them replace the radiator. Quite a bit more than the $165 in parts we were planning on, but less than the $670 we were originally quoted without the tow. I assume this is because we did the disassembly. However, even though it’s more than we planned on, because we’ve been budgeting for almost a year now, we can pay for it without charging it or dipping into our emergency fund.

It’s a great reminder to me that the financial baby steps we’ve been making along the way really do add up. That’s a DIY project I’m really proud of!

————–
Heather C. Stephens is a serial blogger who writes for FatWallet, sharing money saving shopping tips and deal guides to help consumers know what to buy when to get the best deals. You’ll also find her online blogging about social media marketing for small businesses, and her many adventures as a mom of three.

I always have to repeat this for new or one-time readers, but I’m a car nut. If it has 4 wheels, I have an opinion on it, and there’s a good chance I’ve considered buying one.

So, needless to say, I’ve been saving up for a “new” car (to me, new might mean brand new or used), whether as a replacement for my 2006 Honda Ridgeline truck (almost 90,000 miles) or a second “fun” car. We do our banking at ING Direct (post a comment if you want to get $25 for opening a new account and I’ll email you privately), mostly because I got money for opening the account, rates were MUCH MUCH higher than my BoA savings account, which is long closed, and I can open new “sub-accounts” easily for specific savings goals.

I had sub-accounts for Emergency, Travel, Car and Home, and was plunking random amounts into each as I had extra money after each pay. The amounts were getting so high, especially my car account, that I was wondering when I should stop saving versus when I should buy something. I won’t say how much I saved, but it was enough to pay cash for a brand new, fully-loaded compact of some sort.

However, as I began to see the amount go up and up, my attitude changed. I got more addicted to seeing our savings account increase than caring about a new car! What in the world is wrong with me??? I still dream of a new car, but when I see that much money continually growing, I can’t help myself and want to throw more into the account. In fact, I’ve rolled all the sub-accounts into a single savings account just so I could see the number get even bigger. I’ve thrown out our separate savings goals and just have one lump account.

The Car Market

After thinking a bit about why the change in attitude, one reason is that there are too many good options, but I know the options will keep getting better. I’d love a new truck, but I know engines will get more fuel-efficient and interiors will get nicer. I’d love a fun, sporty car, but I know more options are coming out, and there are tons more on the used market. I just can’t decide, and I know that my cheapest option is the truck I already have, even with its poor fuel economy. I love my truck, and outside of a few odd sounds coming from the exhaust system and a lighting issue, it’s been great (oh, and the MPG sucks). It has the space I need, the versatility I want, but only lacks in fuel economy and some newer luxury and technology features.

I’ve taken my truck on road trips to Texas and back, to Florida and back and a few shorter trips with no problems with comfort or space. So, my biggest problem overall is justifying giving up my truck for something else, especially something that isn’t a truck. For those who don’t own a truck (but own a home), you should know that once you own a truck, it’s hard to imagine not owning one. Doesn’t matter if it’s a beater Ford Ranger or top-of-the-line F-250, when you have a truck, you know you can tackle your home projects with less planning.

So overall, I’m conflicted on WHAT I should buy and even IF I should buy something…and WHEN. The Acura I replaced with my truck 6 years ago had about 96000 miles on it, so I haven’t owned a car with over 100k miles (except an inherited Pontiac from my wife), so I get antsy knowing that the value goes down when it crosses that 6 figure mark. I also know right now is the best time to sell a used car because supply is short and dealers are looking to stock up their lots for the Spring and Summer sales. If I’m going to sell, it has to be in the next couple weeks, but I’m just not ready.

How about you? Are you ready for or wanting a new (or “new to you”) car, but can’t justify it or can’t decide? Have you been saving for this goal? Are you ignoring other goals (like paying down debt) in order to save for a car? Tell me in the comments!

Thanks to whatever genes I inherited, I’m a hairy man. Unfortunately, though, that hair doesn’t necessarily translate to my head as I’m also balding. Luckily I’m already married cause my chances in “the wild” would be severely reduced unless I had one heck of a personality! There’s some debate about my personality…

So anyway, Norelco contacted me to see if I wanted to get a couple of gadgets they’re promoting for hair trimming/shaving. Since I cut my own hair, and have tried a variety of shaving techniques including wet shaving, I knew this was the promotion for me.

What did Norelco want me to try?
1. The Philips Norelco 3d Electric Shaver
2. The Philips Norelco Do-It-Yoursel Hair Clipper

I couldn’t turn down free stuff, but I warned them my only other experience with an electric razor, about 15 years ago, wasn’t good. It left me razor-burned and took too much time. Would this experience, with a razor costing almost $200 ($150 right now on Amazon) be any different? Can it supplant the good old Fusion razor as my preferred shaving instrument? And what about the hair clipper? Why do I need something different than the $40 kit I bought at Kohl’s, or even the $20 kits they have at Walmart?

I should add that my beard stubble is extremely thick. It’s like I have 2 hairs coming out of every pore or something, and they’re double thick compared to anyone else I know. It’s crazy and annoying. I seem to have a 5 0′clock shadow at 9am. If I shave against the grain, I might extend it out to 2pm. So, I figured having a portable electric unit would be good, since I may meet with customers in the afternoon and don’t want to look like a scruff.

First Up: The Philips Norelco 3D Shaver

You can watch the videos of the weird British (or Australian?) guy on Amazon to get the full details and how it differs from the 2D, but basically, this is their top-of-the-line shaver that has 3 heads that not only pivot inward, but also outward, can wet-shave (using lotion), has a battery timer and lock feature, a flip-out trimmer and can probably drive you to the nearest barber when needed. You can also get a self-cleaning system if you wanted to go that route, but it doesn’t look like you can buy it separately and I didn’t get it with my sample.

I’ll be blunt. I wasn’t expecting magic out of this razor, but I was expecting a quick, clean shave. I got the clean shave, but it took FOREVER! And that’s because of my thick stubble. Period. I was able to do a 2-pass razor shave and get better results in less than half the time it took to get all the last hairs shaved off with the Philips. But again, this is a problem between me and all electric shavers. At least I didn’t have as bad of razor burn, and when I did a wet shave with shave gel, I didn’t have any burn.

In the end, I found out my dad just bought a 2D version and I said return it and try out my 3D. He has much thinner stubble and CAN’T shave with blades (medical stuff), so he had to get an electric razor. I asked him this past weekend how it was going and he said the razor was great. He has a beard, but keeps his neck clean shaven and also uses the pop-out trimmer to keep everything else clean. With the 2D version, it’s a different head you need to swap on for the trimmer and the heads don’t swivel outwards.

So in the end, I don’t think any electric shaver option is right for me, but I did find that the heads bending in AND out really got all the contours of my face nicely, the shaver was very quiet, cleaned easily and was very versatile and modern. How does it compare with the market? I have no idea as I wasn’t researching other options before this opportunity, so I’d like to hear your feedback.

Up Next: The Do-It-Yourself Hair Trimmer

When the PR agent told me they were sending me a hair cutting kit, I thought it would be something like the barbershop clippers with the different heads for each length, etc. I’ve gone through 3 of them in the last 10 years or so, and they seem to work fine until you break the main guard that you use for your entire head. You see, I shave with either a “1″ guard or no guard at all. My wife used to style my hair with 1′s, 2′s a comb, a taper guard, etc., but no more. I just want something quick and easy to cut my hair.

So how surprised was I when I saw the following show up (see image):

Here are some of the key features I found that differentiate it from the regular barbershop clippers:

1. It’s rechargeable and battery-powered, so I don’t need to have an extra long cord. I like to cut my hair in the tub so cleanup is easy, but that’s also dangerous with a wired trimmer!
2. The head swivels to 5 positions (the one shown, and 90 degrees to either side). This helps when you’re cutting your sides or back of your head and can’t get your wrist to bend properly. Just swivel the head and no more contortions!
3. There are 3 guards, plus a trimmer head. Rather than have a case full of guards, you rotate a dial on the head to get the length of guard you want. The first guard is 0-1. The second is 1-5 and the third is 6-9. They slip on and off easily and are washable, as is the head.

How does it stack up against a barber-style trimmer with traditional guards? Well, it’s MUCH more convenient without the wires and all the different guards, and the swivel head makes trimming the back of my head much easier. However, keep in mind I trim my hair down to the scalp almost. I did test longer guards first and they worked great as long as you don’t push down hard (a habit of mine I got from using barber units).

I cut my hair about 3 times since receiving the unit, then this past weekend, I cut my hair with my normal barber unit (with no guard as usual). It took about two-thirds the time with the high-powered barber unit than with the battery unit, and the barber unit was smoother, but when you need the guards and you’re cutting your hair yourself, or even if your spouse/friend is doing it for you, I highly recommend the Norelco Do-It-Yoursel Hair Clipper. You can travel easily with it, dial a guard length, run it on battery and swivel the head. Put it all together, and I think Philips has thought up a great idea.

How do you cut your hair? Do you do it yourself? Think about doing it yourself or having your partner/friend do it? How much do you spend per haircut and how often do you get it cut? I haven’t gone to a barber since 2003 right before our wedding.

I’m glad our story of getting out of debt (except for 1 mortgage remaining) has been inspirational to many of you, including the following reader:

Hi there! Very much enjoy your site. I have a question about your 2nd mortgage that you paid off early (congrats!!). We have a second mortgage that we are paying on, and it has a balloon payment due in 2020. If we pay off the mortgage early (our monthly payment is mainly just the interest), can we then start making payments on the balloon payment that is due in 2020? Is that what you did? Or did you just right one check for the balloon?  Confused about this. Right now, we’re socking away as much as we can into that monthly 2nd mortgage payment so that we can tackle the scary balloon payment.

Great question! Our 2nd mortgage was about $80,000, amortized over 30 years, but with a balloon at 15 years. However, when you say “pay off”, it should mean the loan is gone. There’s a chance our mortgages have different terms in the contract, but in our case, our monthly payment included the balloon payment (hence the “amortized over 30 years).  Call your mortgage company to find out what your payment goes towards, and if there’s a early payoff penalty.

If your monthly payment is mostly interest, then you’re probably just in the early stages of the loan, and it sounds like it’s a 15 year balloon payment. I would check into whether your payments are going towards the full mortgage amount or just some up-front amount. Ours was the former (the full mortgage amount). If you can put more money towards the loan, then do so, but try to do it in the same payment as your regular monthly payment. Check when the payment hits to make sure the overage was applied to the principle, not the next month’s payment or the interest. 

I recommend sending extra money with the regular payment because many mortgage companies have a different address for extra payments. If you send an extra payment between mortgages, you might find the company automatically deducts interest from it as if it was a mortgage payment and then you’ll have to call and go through the hassle of getting it resolved like I did. Call and ask how your company handles extra payments and take note of the 2nd address if they use one.

If your mortgage is like ours was, then each payment you send reduces the principle, which then accelerates the amortization (if that’s the right terminology) where each subsequent payment is composed of more principle and less interest. That’s how we accelerated our payoff. The payment didn’t decrease, but the composition of principle vs interest did as we started paying off more and more.

Feel free to comment when you find out the details as I’d love to know your full situation. And thanks for reading! I hope my answer helped!

I won’t claim I’m a tax professional at all. I barely get by on doing my taxes properly using TurboTax as they’ve gotten much more difficult in the last few years since owning my sites, increased income at work, bonuses, etc. But I do know one thing, but I’ll get to that.

My wife was having a conversation with a friend and coworker about taxes. She was saying how we were having difficulty this year because we had to wait for a corrected W-2 from my employer and will probably owe a couple thousand dollars. In fact, we’ve owed thousands every year for the last 4-5 years. Sound wrong? It’s not!

Her friend expects a refund every year and always has plans for it. How many of you also do this? I did it for years. Everyone in my family does it. Many of my friends expect a refund. I bet most of you do too. She actually told us we were doing our taxes wrong because we owed money instead of getting a refund!

BUT YOU’RE ALL WRONG!

The answer is simple. When you get a refund, that means you’ve given the government a free loan. You think they would do the same for you? You might enjoy getting hundreds or thousands in the mail each year and plan your family vacation or some other big expense around it, but you’re forgetting one thing: the money was already yours!

If you would just plan appropriately at the beginning of each year based on last year’s results, and earnings and deduction expectations for the coming year, you could result in breaking even. However, I always make sure I have more than enough in savings to cover what I’ll owe. If you want to figure out how to fill out your W-4, use the IRS Withholding Calculator, but also consult an accountant in complex situations.

Last month, TurboTax had a happy hour for financial bloggers, and while I wasn’t able to make it, J Money at BudgetsAreSexy.com was nice enough to give me one of his free TurboTax Premier online codes to give away (he just gave away 4!).

I’ve been using TurboTax for about 3-4 years now since switching from H&R Block and I’ve stayed very happy with their questionairres and help pages. My taxes have gotten less complicated, or should have, except my new employer (end of 2010) decided to take the wrong state taxes out and I’m still waiting on a corrected 2010 and 2011 W-2. It turns out, though, that I can submit returns with corrected W-2′s online through TurboTax. Also, TurboTax only charges if you eFile, not if you print out your taxes and mail them in.

And if you’re into the whole mobile thing, file your taxes on your cell phone or file your taxes on your iPad.

Now Time For The Giveaway!

Up for grabs is a Free TurboTax Premier card – a value of  $49.95. TurboTax Premier includes everything in Deluxe, plus additional features to help you get the most from your investments and rental properties:

– Import Your Investment Info. Save time by automatically importing participating investment info directly from your financial institution.
– Get Help Accurately Reporting Investment Sales. You’ll be walked through reporting sales of stocks, bonds and mutual funds. TurboTax will automatically calculate capital gains/losses and keeps track of those that carry over to future tax returns.
– Your Cost Basis in Three Easy Steps. Find your accurate purchase price for stock sales, in three easy steps.
– Get Help with Employee Stock Plans. Get guidance in reporting sales. TurboTax automatically determines your correct basis for selling shares purchased at different times or different prices.
– Maximize Your IRA Savings. TurboTax will show you exactly how much you can save on this year’s taxes by opening or contributing to an IRA.
– See Your Best Rental Depreciation Method. Simplify reporting rental property depreciation. You’ll be shown which depreciation method will get you the biggest tax deduction.
– Maximize Refinancing Deductions. You’ll be guided through deducting points, appraisal fees, recording costs, and more so you don’t miss a single chance to save.
– Get Help with New Rental Properties.Get step by step guidance in how to set up new rental properties.

How to Enter to Win One:

Answer this question below in the comments, and you’ll be entered to win any the card:

What is your tax planning strategy? Do you just enter a number on your W-4 and hope it’s correct, use an accountant, or something in-between?

Throw your answers below!  Make sure to get ‘em in by Tuesday, the 20th, and I’ll use Random.org to pick the results so it’s nice and fair.  Good luck!! Big thanks again to TurboTax too.

SORRY BUT THE CONTEST ENDED. Congratulations to Paul for winning the TurboTax Premier code! Keep checking back for more giveaways!

In the never-ending quest to convince myself not to buy a new car, I had a revelation. Of course, it was from other frugal friends and blogs repeating it over and over until it sunk in:

Your cheapest new car is the one you already own

Granted, there’s a disclaimer that if you bought a $500 clunker and you’re spending thousands per year to keep it running, it’s time for an upgrade, but consider the following:

1. When I say “time for an upgrade”, it might be a $1000 “commuter car” rather than a cheaper clunker, if you can even find those anymore. I don’t mean go from a 1990 Ford Escort with 200,000 miles to a 2012 Ford Mustang GT500.
2. Compared to a NEW car (not a used car), the money that you spend in payments, interest, or even cash if you pay in full, is going to be significantly more than most things you would buy for your car (unless you’re driving luxury German or Italian car), including a transmission and even a new engine. Seriously.
3. If you’re swapping in your gas guzzler for a smaller, more efficient car, you’re an idiot. That’s unless you bought your guzzler used and someone else took the big depreciation hit, but with current prices, you’ll still take a hit. If you’re trading in a newly purchased vehicle (1-3 years old), you’re going to lose a chunk on depreciation right off the lot plus a lot because people are shying away from guzzlers.

If you own your vehicle(s) outright, like I do with my 2006 Honda Ridgeline and 2007 MINI Cooper S, and you keep it maintained regularly, it can last 10-15 years easily. And if you follow the news, owners are keeping their cars for a record 10+ years on average. I wonder if they’re just using average age of vehicles registered on the road to get that number because I can probably name 1 out of 10 people who actually have owned their car 10 years or more. I’m at 6 years this month with my truck and that’s a record for me.

Now, let’s throw out another disclaimer about my statement that what you got is cheaper than what you could buy new. If you own something you can’t afford, it’s not worth keeping. If you bought a BMW 5 Series but can really only afford a Chevy Sonic (it’s a good car by the way), then you might want to try to sell it on the market, take the depreciation hit and get yourself into a more affordable vehicle. If you can’t afford paying off the remainder of the loan (cause you won’t get what you owe on it), you might be stuck negotiating on a trade-in, but saving $30,000 or more on a car is usually the more economical thing to do, even if if it hurts and you have to pay off the depreciation for some time.

Here are other bonuses of keeping your car:

1. You know it’s history
2. You know it’s strengths and weaknesses (like how it rides in bad weather, etc.)
3. If you’re thinking about a new car because it has a flashy multimedia system, you can spend much less on buying one on the market and installing it yourself or at an expert center. New wheels? Cheaper to buy outright. New paint color? Cheaper to repaint the car. However, put them all together and yes, it might be cheaper or smarter to get a new car.