You may have noticed that things have been just a bit quiet here recently. Life has been keeping us busy and after the Celica broke down this past Wednesday, we have been in car hunt mode. While the timing on the car’s demise wasn’t great, the good news is that we have enough in our savings system to cover purchasing a new car. The bad news is that this has meant that until we buy the car, we have been sharing and that has given me less time to write.
Buying a Car with Cash
Our goal is to pay for this car with cash. While not everyone wants to do that, I will say that not having car loans has been beneficial for us for several reasons.
Smaller monthly expenses. Having a car payment is usually a big chunk on many people’s budget. We had to deal with for it ourselves when we were first married. I remember the relief once we paid it off know that we had some breathing room in our monthly cash flow.
More freedom to allocate money. That few hundred dollars that we don’t pay for the car loan has been reallocated for other goals. Yes, some of it is being redirected towards our car replacement fund, but it’s also giving us a bit more fun money and charity money. The point is we can decide month to month what we want to do with it.
No more pressure to go to the dealership. Now that the car is paid for and isn’t on a warranty, we don’t have to take it to the dealership to get inspected. I don’t have a problem with getting a repair done at the dealerships, but I’ve noticed that I’m strongly encourage to get more services done there that only they could handle.
We still have the goal of paying off the student loan early, so keeping away from new debts is a priority.
Hunting for a Good Car
Since we’re hunting for a car to last for long time, we’ve created a list of what we’re looking for our next vehicle.
Make/Model – In addition to using resources like Consumer Reports, we’re also reviewing Edmunds’ True Cost to Own list to make sure that the car we get won’t cost us an arm and a leg to maintain.
Price – Looking to buy this car in cash, we have a budget that we’ll work to stick with.
Transmission – We were fine with either a manual or an automatic.
Clean Title – It’s easier for us to just focus on clean titles. I know some who are more mechanically talented can find some gems with those without one.
Gas Mileage- With my husband’s commute, getting good gas mileage is important and our minimum is 30 mpg.
When you were shopping for your car, what were deal breakers for you? What were options that you wanted to have?
Car Hunting Soon?
I’d love to hear from you about getting a car. Are you planning on a buying a car this year? How many of you are buying from a private seller?
June is the most popular month of the year to get married, and if you’re planning on tying the knot this month or recently did, the first thing on your list – after paying off debt for wedding costs – should be devising a mutual investing strategy.
If you openly discuss the topic of finances with your spouse and come up with a unified plan, there’s no reason you can’t enjoy a financially comfortable companionship for life.
1. Have the Money Talk
What happened before this point is immaterial. Whether one of you has saved up more than the other, or if one has some credit card or student loan debt, you are now a team.
Communicate clearly and honestly to create an effective strategy going forward. This is where you devise strategies to save, pay down any outstanding debts, and decide whether you’re going to invest aggressively or conservatively.
2. Convert Traditional IRA to a Roth
If you’re currently invested in a traditional IRA, you’re going to need to pay taxes on your withdrawals during retirement. If you expect tax rates to go up in the future – or if you simply like the idea of knowing how much you’re going to have when you call it quits – convert to a Roth IRA, which deducts taxes as you pay into it.
If you convert, however, be aware that you have to pay taxes on the current value of the IRA, as it’s considered taxable income. This is certainly going to have a significant impact on your short-term finances, but if you’ve got the funds, you can fare better in the long-term.
3. Create a Unified Budget
Regardless of your investment strategy, establishing a budget as a couple is a must. Decide who’s going to pay the bills and whether or not you want to merge your bank accounts. Establish spending limits for purchases along with a threshold for when one has to “ask” about a large purchase.
One of the leading causes of divorce in this country is money, so if you don’t want to become a statistic, create a mutually agreed upon budget immediately.
4. Think as a Couple
Although putting one person in charge of finances is generally a good idea, it’s important for both spouses to be involved in all investment decisions. In short, match your investing objectives. If one of you invests in a 401k plan up to your employer’s match limit, the other should consider doing the same. Or if your portfolio is invested aggressively while your spouse’s is more conservative, consider creating some common ground.
No matter how much you save along the way to retirement, if you don’t invest it properly, you’re leaving serious cash on the table. Diversify your portfolio, including all asset classes.
Go with an aggressive strategy when you’re young and transition to a more conservative mindset as you get older. Invest funds slowly and steadily, and when you reach retirement age you can reap the benefits of a life well-planned.
What tips can you offer up for newlyweds?
David Bakke is a contributor for MoneyCrashers.com – he writes about family budgeting, smart shopping strategies, and investment opportunities.
Photo Credit: Katrina.Tuliao