Tuesday, April 1, 2014

food for finance: we paid CASH for our minivan!

"Success occurs when your dreams become bigger than your excuses." I have no idea who coined this phrase but it is one of my favorites. Our dream is to become totally debt-free.

We are MINIVAN owners as of March 27!
This REALLY happened people (no Aprils fools joke!)

This shock comes to me 2-fold. 
1. I am THAT mom I said I'd never be. I'm driving a mini-van. Never say never. Kyle has always wanted one, even before kids. He is weird, I know, but I love him. Plus I have 2 pretty cool kids (a 4 week old and 18 month old) that override the minivan stereotype! They make the minivan in style! 
2. We saved our money and paid cash for it! Another financial goal met! 

It's not a secret that we are on Dave Ramsey's plan to become totally debt-free. I've talked before on how I want to document our journey for accountability and so our kids can read about all the hard work we put in for our future. I want them to know that this is no walk in the park. It takes hard work, discipline, communication, and missing out on some things. 

How we paid cash for our minivan
We did the Dave Ramsey baby steps. To re-cap, we paid off all of our debt but our house (baby step 2) and have a 3-6 month emergency fund (baby step 3). After we reached those goals, we created some of our own baby steps (save for taxes and save for our minivan) and paused the rest of Ramsey's plan (which he recommends if you need to make a big purchase). 

Do you see what happened to our goals? Yes-we beat 2 goals! We had moved a retirement plan over to a Roth IRA and we thought we would have to pay taxes on it. Well come to find out, they took the taxes out when it was rolled over! So we ended up getting a tiny tax refund. We added our "would have been tax money" to our already existing car fund and had enough! That enabled us to have our minivan fund in place (11 months early!) The reason our car goal was for 2015 is because I am on maternity leave and will not be getting paid here soon. So we knew that without my income, we really couldn't save as much as we would've liked. 

I'm not sure which he is more excited about: paying with cash or owning a minivan. I think both! 
We got a 2005 Toyota Sienna. It only has 74,000 miles on it. It looks brand new!! We bought it from a couple that are in their 60s and they bought it brand new. I test drove it and I admit, it is nice. I'm still in shock. 

Why did we save up and pay cash for a vehicle?
In a nutshell, we ran the numbers and instead of paying interest on a car loan, we flipped it and had (compound) interest work for us.  And of course we are trying to get totally out of debt so a car loan would just set us back. A brand new car was not an option. We don't have a high enough net worth to justify the loss in value that new cars lose within the first 4 years. 

Doing it this way takes a lot of commitment and determination on our part. We both drive 12 year old cars. They are paid for so all we had to do was keep up with the maintenance, which was in our budget. We had extra money set aside because we knew that having older cars with a lot of miles means things would go out (like the starter!) 

I keep saying it but I'm still in shock. Our goals are becoming a reality! Thank you for all the encouragement. This is not easy but it's totally doable! The small victories lead to bigger ones and that is what keeps me going. I want our kids to know what a big deal this is. So kids, (me talking to them 15 years from now) THIS is a big deal! 

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