How We Paid Cash: Braces… Not a Car

We paid cash!

A testimony from Karen

After six years of living cash-only on a modest salary, I thought I had learned all the lessons this way of life had to teach.

I was wrong.

Two years ago we decided that with two aging cars, we needed to begin saving. After a year we were close to having enough for a decent used car.

However, while refinancing our house we discovered an outstanding credit card debt that somehow had fallen through the cracks. We needed to use the car savings to pay that debt.

While that was difficult, we knew for certain at that point that after three years of hard work we had paid off over $200,000 in debt and were now debt free except our mortgage.

With my teacher husband home for the summer, I took on a full time summer job so we could save more; and in 4 months we were able to save $4,000!

We began to get excited and projected that in a few months we would be able to buy a car.

And then we learned our daughter needed braces. Not the vanity kind of braces to make good teeth perfect, but the palette-expanding-there’s-not-enough-room kind of braces. After insurance we owed $4.700.

My husband and I had meltdowns. It wasn’t pretty. You see, along with a car there are many things on our wish-list. House projects. Vacations. Retirement funds. College Savings. Not braces.

We outlined our options and made the difficult decision to use the car savings to pay for the braces.

Here’s why:

  1. The orthodontist offers an 18 month no-interest payment option, but because they also offer a discount if you pay in full, that option really costs $250 – the amount of the discount. Technically, this is borrowing.
  2. We could pay for the braces out of our emergency fund and keep the car savings on track, but this wasn’t an emergency. We don’t need a car, we want one. If one of our cars breaks down, then we’ll have a real emergency and can consider those funds.

So we start again at ground zero, armed with two valuable lessons.

Appreciation

It was through the experience that I was able to make a mental/spiritual shift from focusing on what I didn’t have to an honest, deep contentment for what I did have.

I realized that if I never had anything more than I had at that moment I would be happy because I was blessed beyond measure in so many ways. How could I truly think I needed more?

Living Our Values

Making the tough decision to delay buying a car forced us to examine our values and make the choice that supported those values.

We have done it for years every month when we make our budget, but had never thought about the fact that we were doing it.

It feels good.

Much better than a new car would!

Karen Lasher is a chef and writer who teaches how to bring peace, calm and serious creativity to everyday meal preparation at Joyful Dinners.

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

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How We Paid Cash for a Rental House

We paid cash!

A testimony from Jackie

We are determined to pay cash for everything — even big ticket items. So while my husband and I were getting completely out of debt, I set another long-term goal: to pay cash for a rental house once we were debt-free.

The plan was to buy the rental property within a self-directed IRA. (That’s a type of retirement account where you’re allowed to decide what you want to invest in, so long as you stay within the IRS rules.)

Small amounts add up:

I started contributing to my 401k at work. At first I just contributed 3% to see what my check would be like with that amount gone. Once I adjusted to that change, I increased my contribution by 1-2% every few months. I kept that pattern up until eventually I was contributing 30% of my check!

I invested in the options available to me in the 401k, and also got a very small company match. I had in mind that I would be quitting my job at some point in the (then-distant) future to go and work for myself. Once I did, my plan was to roll the 401k money into a self-directed IRA and then buy a rental house within it. The IRA would own the rental property on my behalf.

But before I could do that, the company I worked for was acquired. That meant I could roll the money over to a self-directed IRA earlier than I’d expected. I went ahead and did exactly that. Then I went house shopping!

Finding the house:

I had managed to save up about $80,000 over about 7 years, so I set my rental property budget at $50,000 or less. (I wanted to have extra cash available for repairs and unexpected expenses.)

In order to find a house for that low price, I had to look outside of our area. I found an older home listed at around $40,000 in a small town about 40 miles away. I had my IRA make a full-price cash offer, sight unseen, that was contingent upon inspection. (The property was occupied, and they didn’t want people inspecting who weren’t serious.)

After inspection, I had my IRA withdraw the offer. The house needed a LOT of work. I got a few estimates, and then had my IRA make a new offer at about half the asking price due to the repairs that would be needed. They accepted. Suddenly my IRA owned a rental property, and I’d paid cash for a house.

house

How it feels to pay cash:

The first time you make a large purchase with cash is amazing! So is every time after that!

Living a debt free life may not be considered “normal”, but it’s awesome — and something I believe everyone can do once they get their finances into shape.

We’re regular people who struggled with debt for years, and we finally beat it. You can too!

Jackie Beck is an entrepreneur and the mom of one college-age son. Her husband is a software tester and avid reader. You can read about how they paid off over $147,000 in debt at TheDebtMyth.com.

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

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We Paid Cash: A Month-Long European Family Vacation

We paid cash!
A testimony from Jessica who blogs at Life as MOM and Good Cheap Eats

My husband and I honeymooned in France and assumed we would return every year. Then life happened. Graduate school, unemployment, a baby, a house, miscarriages, more babies, more debt, more stuff got in the way of our newlywed dreams of travel.

After we paid off all our debts, we started dreaming big dreams again — a trip to France for a month with our six children to commemorate our 20th wedding anniversary was one of them.

Folks looked at us like we were crazy!

Not only had we dared to do something big like to travel with kids, we notched up the crazy by saving up the money to do it. It took two years, but we pulled it off.

Here’s what we did to make it happen:

1. We said it out loud.

Part of the success of a goal is to be brave enough to put it out there publicly. We talked about it enough that we would have been really embarrassed if we didn’t pull it off. Sometimes, pride is a good thing.

2. We envisioned our kids.

Just like when we did the really hard work of getting out of debt years earlier, we explained our plans to our children so that they would understand why we were making cuts to our spending or doing extra things to increase our income.

3. We created a budget.

I planned a hypothetical trip and calculated all the price quotes. The total was staggering, particularly when I added extra to allow for inflation and a weak dollar.

4. My husband worked overtime.

Getting up at 4:30 a.m. on a Saturday wasn’t his favorite thing to do, but my husband did it.

5. We opened a separate bank account.

I opened a dedicated account in a different bank from where we do our regular banking. I also chose not to get an ATM card. I wanted that money liquid but as inaccessible as possible.

6. We put all other vacations on hold.

We put off other travel plans, instead banking the money for France. Staycations and family visits were a great way to do family travel while we worked toward a bigger goal.

7. We socked away all extra income.

Even though we have two incomes, we choose to live on one. Any income that came in over our regular expenses went toward the France fund.

8. We deferred lots of “extras”.

There is a lot of excess in our lives, lots of things that are fun, but that we can certainly live without. We cut back so we could divert that money toward our vacation instead.

Now that we’re home and finally unpacked, it’s been so encouraging to look back at what we pulled off and the great memories we created as a family. It was an amazing trip, one we plan to do again in 2016!

Jessica Fisher is a happy wife and a homeschooling mom of six kids under 18. She loves French cheeses, sandy beaches, good books, and Jesus. Not in that order, of course. Catch up with her on her blogs, Life as MOM and Good Cheap Eats.

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

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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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We Paid Cash: A Family Vacation

We paid cash!

A testimony from Sara

My husband and I recently took our ten-year-old daughter on our first family vacation. We started planning two years before the trip so that we could save enough cash to be able to enjoy the trip without having to go into any debt.

How We Saved:

We set aside any overtime pay my husband was able to get, as well as the twice-a-year bonus he receives from his employer.

We decided on a road trip as a more frugal option. We drove from Minnesota, where we live, to Pennsylvania, and then to New Hampshire. My husband has family in both states and our daughter was able to meet them for the first time!

A few months before we left, I began collecting non-perishable snacks and bottles of water to pack in the car so we would not need to purchase expensive gas station snacks. By starting early, I was able to watch for sales and use coupons for the snack items.

Our lodging costs were offset as my husbands family generously offered to let us stay with them while we were visiting. That really helped the budget not having to stay in a hotel the whole trip.

Finally, we were able to save money on food because we had a kitchen that we could prepare a lot of our meals and did not have to eat out as much.

It felt so good to just be able to enjoy our family vacation and not have to worry about how we were going to “pay for our trip” once we got back!

We had a great time!

family photo

Sara is a wife and mother of her ten-year-old daughter. She also works part time at a busy optometry office. In her spare time she enjoys reading, baking and running.

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

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We Paid Cash: A New-to-Us Car

We paid cash!

A testimony from Victoria

With 2 young boys, our growing family wanted a bigger vehicle. It was complicated trying to pack 2 boys, 2 carseats, a stroller, and all the bags that go with young children into the trunk of a car!

I wasn’t ready for a minivan, and neither was my husband, so we began searching for an SUV with a third row.

Finding something in our price range was extremely difficult, but after a few months of searching, we found a vehicle that we loved. It did have more miles on it than what we wanted, but the price was right!

outlook

We were able to pay cash for this vehicle, while still maintaining a healthy emergency fund because my husband sold his beloved four-wheeler, and we put our entire 2013 tax refund towards the vehicle. We also got a nice trade-in value for our car, which helped a lot.

Helpful Hint: I suggest trading-in over selling privately. When you trade in, the trade in value comes off the purchase price of the car, therefore you pay much less tax!

Because we saved so much by paying cash and because the vehicle did have over 100,000 miles on it, we were also able to pay cash for a 4-year, bumper to bumper warranty. We hope this will also save us money some day!

Victoria is a wife and mother to two busy boys! She also works full-time as a mission trip coordinator for a non-profit in Indiana (best job in the world!). In her spare time she enjoys running, camping, and attempting to re-decorate her home.

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

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