We Paid Cash: A Down Payment

We paid cash!

A testimony from Anne of Modern Mrs Darcy

My husband and I set a big hairy goal more than ten years ago. We wanted to move out of our much-loved starter home (6 people, 1 bathroom, you get it) into a slightly larger place — while keeping our first home so we could rent it out. We wanted to do it before our oldest child — then a toddler — hit the teen years.

We did our research: our banker suggested we borrow a big chunk of change off our first house to use as a down payment for the second, but we didn’t want to. We were uncomfortable with cashing out our equity: the big crash of 2008 was still fresh in our minds, and we didn’t want to give up the margin we enjoyed because of our small mortgage. Besides, once we put our first home into use as a rental, we wanted that place to cash flow. That’s easy to do with a small mortgage, but much harder with a brand-new 80% one.

So that meant we needed to save up a down payment from scratch. While still paying the mortgage on our first home. Yikes!

To make a long story short, we did it. We moved into our new place in May, and our new tenants moved into our old home a week later. Here’s how we did it:

Think long term.

We have known for over a decade that 1. we wanted to move before our oldest was a teen and 2. we wanted to keep our first home when we did.

Richard Foster says that people overestimate what they can accomplish in one year but grossly underestimate what they can accomplish in ten. We were working with a ten-year plan.

Sweat the big stuff.

Most Americans spend the most on housing and cars. We had a low mortgage payment on our first home, and we aren’t car people. (That’s a nice way of saying our cars are old and inexpensive to operate.)

Bonus: we don’t freak out when one of us dings the minivan backing into the stone wall at the park. Hypothetically speaking.

Put it on autopilot.

For years, we’ve relied on automatic deductions to take a portion of our paychecks straight out of our checking account and into savings. This was especially helpful early on when we were lacking in enthusiasm because we had so far to go.

Stick to the essentials.

The closer we got to our goal, the more motivated we became. For the last year we spent very little on nonessentials. The closer we got to the goal, the more we cut out because we were close enough to taste it.

Save dollars big and small.

Unexpected birthday checks, payments from consignment stores, yard sale funds, freelancing checks: whether it was $3 or $300, we banked all those extra income checks in a designated savings account at a not-normal-to-us financial institution that was really a pain to withdraw funds from.

Just keep swimming.

Ten years ago, it was daunting knowing that we needed to save up a big chunk of change starting from zero. But we just kept plugging away.

We were inspired by Crystal’s own journey to pay cash for a house. Like her, progress came slowly at first, and then all at once.

It wasn’t easy, and it took ten years, but paying cash for the downpayment on our new house sure felt great!

house keys

Anne Bogel loves strong coffee, long books, and big ideas. She’s putting a timely spin on timeless women’s issues at her blog Modern Mrs Darcy, where readers engage in an ongoing conversation on womanhood today. A classic INFP, Anne couldn’t choose a favorite book – or child – if you paid her, but she would love to talk about your best-loved titles and what we can learn from heroines like Lizzie Bennet and Anne Shirley all the live-long day.

Have you saved up and paid cash for something — large or small? Submit your story for possible publication here.

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I’m 33 Years Old & I’ve Never Had a Credit Card

I've Never Had a Credit Card

I was inspired by reading this post on Huffington Post to re-share this post that I wrote for another site a few years back.

People are often quite surprised to find out I’ve never had a credit card. In fact, sometimes, they have to ask three times just to be sure they heard me correctly:

“So you’ve never had a credit card?” they ask incredulously.

“Nope,” I respond.

“Like ever?”

“Right, never,” I reiterate.

“Not even when you were younger—ten years ago or something?” They continue to quiz.

“No, really and truly, I’ve never had a credit card,” I reply, again.

Usually people just end up looking at me aghast like I’m from some other planet or something. That’s okay, I’ve gotten used to the fact that I’m weird.

But you know what I’ve also never had? Credit card debt.

Yes, it’s true. I’ve never had to worry about how I’m going to pay off the credit card bill that’s coming due. I’ve never had to hassle with being harassed by credit card companies because my payment was late. And I’ve never had to dread opening up a credit card bill to see how large it was.

Do I think credit cards are evil? No. I have personally seen that there is a small percentage of people who can use credit cards without being tempted to go over-budget. If that’s you, you can skip this article altogether.

However, if you are struggling to make ends meet and you are swiping your card on a regular basis, I want to encourage you to consider switching to a cash budget — at least for a short-term experiment. Here’s why I love using cash:

1. Using cash keeps you from over-spending.

Yes, cash can burn a hole in your pocket and you can blow it. But here’s the thing: if you only use cash, when the money’s gone, it’s gone.

You either learn to pace yourself and your spending so that you have enough money to buy groceries at the end of the month, or you go without buying groceries. If you don’t have any grocery money to spend the last week of the month, you’ll probably think a lot more carefully the next month when you’re tempted to spend all your grocery cash during the first few weeks of the month.

I've Never Had a Credit Card

2. Using cash forces you to evaluate your purchases.

When you use cash, you can’t mindlessly swipe a card—you have to pull green bills out and hand them over. It doesn’t take a month for the purchase to show up on your credit card bill; the pain of purchase is immediate.

This direct correlation can give you a much better grasp on your finances and on where your money is going. And it will probably also cause you to step back and carefully evaluate each purchase.

3. Using cash prevents you from betting on the future.

So many people say, “I treat my credit card like cash and always pay off my credit card bill in full at the end of each month.” That sounds great—in theory. But very few people are truly treating their credit card like cash.

Unless, before you make a purchase, you set aside the full amount of money to cover the purchase in a separate account and never touch that money until you pay your credit card bill, you are not truly “treating your credit cards like cash”.

If you don’t have the money set aside for the full credit card bill, what happens if you lose your job tomorrow or you have a major financial crisis that puts you in a big bind?

By using the bank’s money or store credit to pay for your purchases, you are presuming that you are going to have enough money to pay the bill when it comes. And if you don’t, you could end up getting hit with high interest payments on top of the money you owe.

4. Using cash guarantees you never have to pay anyone back.

When you pay with cash, you can’t buy something unless you have enough money to pay for it. This often means you have to work hard, scrimp, and save up to make a purchase.

This process of scrimping and saving can be grueling, but the satisfaction of exercising self-discipline and waiting to buy something with your own hard-earned money is every bit worth it in the long run.

And you know the best part about paying with cash? You never have to worry about paying anyone back. When you buy something, it’s yours—free and clear!

Am I the only crazy one who doesn’t have a credit card? Anyone else out there NEVER had a credit card?

photo credit; photo credit

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Dear mom who is so tired of living on a tight budget…

Dear mom who is so tired of living on a tight budget...

Dear mom who is so tired of living on a tight budget:

I know that you want to give up.

You’re worn down from watching every penny you spend.

You’re exhausted from carefully calculating how you’re going to stretch your grocery dollars to feed all those mouths that seem to never stop eating.

You wish you didn’t have to wait for ever until that item you need goes on sale for the lowest price so you can make it work to purchase it on your beans and rice budget.

You are tired of re-wearing the same thing over and over again. Tired of praying every time you get in the car, hoping it will start. Tired of having to turn down yet another get-together with friends because there’s no way you can afford to pay for dinner out at a restaurant.

You just want to check out of your money-strapped life and go have a latte and a massage. Or maybe money is so tight right now that you would just love to have a few extra dollars to spend on something you want at a garage sale, instead of having to reserve every nickel and dime for only the basic necessities.

Can I encourage you? The difficult choices and hard sacrifices you are making will be worth it… and they could make a major impact on generations to come.

Not too long ago, I was being interviewed by a magazine writer about raising financially responsible kids. I shared with this interviewer some of the things we’ve done with our kids, such as: letting our children handle money from the time they were young, giving our children opportunities to earn money, and encouraging our children to become givers.

As the interviewer continued to ask questions, she became more and more excited about the things I was sharing. At the end of our conversation, she said, “It seems like you’ve done so many things right as parents. Do you ever make mistakes with money or have you failed as parents when it comes to teaching your kids about money?”

I was able to share candidly with her that, yes, we’ve failed in many ways (see yesterday’s post for an example!), but because of our parents’ and grandparents’ examples, we’ve made a lot fewer money mistakes as a couple.

The sacrifices they made to live on a budget and get out of debt paved a trail for us so that it wasn’t as difficult. In addition, their sacrifices inspired and motivated us to want to stand on their shoulders and do even better than they did. We, in turn, hope to inspire our own children and grandchildren to go even farther than we have or will.

In those moments when you want to throw in the towel, when you are discouraged about your budget, when you are tired of all the short-term sacrifices, when you just want to pull out that credit card to buy something you don’t have room in your budget for, remember this: your children are watching. The example you set before them will impact them in powerful ways — either good or bad.

So don’t throw in the towel. Don’t give up on your budget, even though it’s tough.

Your children and grandchildren will thank you one day for your wise money management… and that will make it all worth it.

Don’t quit! The best is yet to come!

Cheering for you,

Crystal

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