I Can't Afford It. Or Can I?

Lately I've been finding myself saying "I can't afford it" or "I can't afford it any longer." There's no doubt about it that I have been feeling the squeeze. I've been getting hammered on all sides now. According to this article from The NY Times, apparently, I am not alone. Here's a quote: "Almost everything seems to be going wrong for the American economy at once. People are buying less, but most things are costing more. Mortgage rates are rising, the dollar is falling and prices of key commodities like oil are leaping from one record high to the next."

So, what's to do? What do I do? I have been practicing Voluntary Simplicity for the past 7 years now. Practice time is over. These tight economic times have compelled me to perfect Mandatory Simplicity now. I no longer get to pick and choose how I want to live. I have to switch my mode into survival. At first, it was a bit upsetting. Now, I have just accepted it and keep moving on one day at a time.

To readers who have been following my blog, they know I am debt and mortgage free, live a frugal lifestyle and do everything from scratch or on my own. I voluntarily chose this lifestyle after suffering from the last economic downturn in 2001 when the dot com disaster struck. This recession, however, is dramatically different because I find myself concentrating just on 2 things: food and gas. These two items take up most of my financial expertise. It's a challenge to put food on the table, gas in the fuel tank and keep the house warm.

The food part I've mastered because I cook everything from scratch. This spring I'll be starting a vegetable garden and I will probably be canning some produce for next winter. Granted, yes, I prepare less organic choices, buy more generic products and started using coupons, but nonetheless, I still seem to prepare wholesome, nutritious meals. I've added blown-in insulation (at a cost of $1600) on the second floor of my home, up through the attic which cut down my energy costs substantially. One of my cars is a fuel efficient, manual transmission model that gets 33-35 mpg, so that's another bonus. Which brings me to my second car.

Car #2 was chosen because of it's safety rating. It's an AWD, 7 passenger vehicle that gets approximately 22-25 miles to the gallon on the highway. City driving is another thing. It's not good locally. But it was purchased solely to do long distance driving in comfort and safety. Unfortunately, with gas reaching $3.50 a gallon here and soon to topple $4.00 by the summer, the vehicle was being used less and less and my family was piling into the fuel efficient model more and more. So much for the safety rating. Apparently, fuel costs trumped being safe. It was getting to the point that I would stay home more and more and wait till my DH got back home with the fuel-efficient Ford Focus and use that car for my errands rather than use the AWD. Yesterday, it dawned on me that there was no point in owning a safe vehicle if no one would use it. We've owned our Ford Focus, new from '05, and it's as good now as it was when we first bought it. I did some research and found that the '08 Focus got the greatest fuel economy of all the years so far. (I had originally thought of an '07 or '06). Since I pay cash for all my cars, I had a lot of equity in the '06 AWD. I did some research on it's trade in value and price costs of a new, out-of-the-showroom '08 Ford Focus.

Yesterday I went to my local Ford dealer (DH and I are BIG Ford fans. We will only buy American cars. Never a foreign vehicle because #1 import pricing is higher, #2 foreign vehicles do not fit American bodies, #3 American parts are less expensive than foreign imports thus keeping down repair and maintenance costs, #4 Ford has never let me down). Over the past few years, I have purchased a Contour, Explorer, Freestyle, Focus from this particular dealer. All for cash. I just pay with a personal check. The Ford dealer knows when he sees me, that there is going to be a deal. I was able to trade in my AWD, buy a brand new '08 Ford Focus ($500 off sticker price and $1000 rebate) for only $3000 out of pocket. I wrote out a check from my emergency fund and am back in the driver's seat. Literally.

I know you're not supposed to buy new cars out of the showroom, but gas mileage was all I had on my mind. This new car get 35 miles to the gallon. The '07's and '06's got less. This new car also has 6 airbags, anti-lock brakes, state-of-the-art stereo (I never had that before) and some newer technological bells and whistles. If I had followed my original plan of keeping the AWD till it tanked (say 5 years more), I would have had to cough up $20k by then to replace it. I estimate I can hold onto this car for 7-10 years and delay the next purchase till then, thus allowing me to save up for it over a longer time period. Based on my annual mileage, the new car will be saving me over 34.6% in gasoline prices (or $1000 a year @$4 a gallon). I'll recoup the $3k within 3 years. Who knows where gas prices will be in 3 years anyway. It's guaranteed that it won't be going down. Insurance costs have been lowered with the new car and maintenance costs have been reduced to $48 a year (oil changes). The AWD needed new tires @$500 and an extended warranty @$1200. The new car has a 6 year, 75000 mile warranty so my out-of-pocket expenses have been curtailed for now.

How do I feel? Elated. I will be using less gas (which helps the environment and oil imports), the new Ford Focus has zero pollution (which helps the environment again), is safe (thanks to the steel reinforced doors, anti-lock brakes and 6 airbags) and I can now drive to places I had stopped going to because I couldn't afford the gas. I can attend the free Italian courses at my local community college (that I couldn't go to last semester because I was concerned about the gas). We can drive back and forth to our beach house weekly instead of bi-weekly or monthly. I don't have to stay home more often anymore. I am free!

Finally, I can afford it!

And so it goes.

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