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Author: Lurker1999 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308454  
Subject: Paying myself first Date: 10/28/2007 2:32 AM
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I established a $200 monthly automatic transfer to savings in July 2006, money tasked for projected long-term, high-cost expenses such as a new car and most importantly a down payment, closing costs and moving expenses for a house.

I also started to move money randomly into the account whenever the checking account looked "too full". Over the past year this actually managed to fill up all of the ancillary tasks except the down payment.

I bumped the monthly transfer up to $1000 in July 2007 to hurry things along as the down payment would take decades at a $200/month rate. Tonight I funneled a bit of cash from another account to this savings account and when I totalled things up it hit me.

I'm 25% to my down payment goal.

All of the other amounts in this account are at 100%.

I can actually see the an end in sight.

In the past few months my discretionary spending has risen somewhat so the sporadic deposits have tapered off slightly.

So I made the decision tonight to double my monthly automatic transfer to $2000 a month. I will use a steady paying myself first approach for the majority of the savings instead of depending on sporadic deposits to get me the rest of the way there.

I project I will have enough for the full down payment in 3 years assuming no additional random deposits (which may still happen). I have no desire to buy at present. However once I have the down payment fully saved up I'll have the ability to strike when an opportunity presents itself.

This may additionally reign in some of the discretionary spending so I can get to the 50% mark quicker.
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Author: regattagirl Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263201 of 308454
Subject: Re: Paying myself first Date: 10/28/2007 10:38 AM
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Good thinking Lurk!

Your ideas are motivating to me since I have done something a bit similar toward my next automobile. But now I'm inspired to take it up a notch because my current car has issues that WILL end up being costly.

I am acting as if I'm making payments that go toward the purchase. Then when I actually pull the trigger (stalling because I'm trying to avoid consumer debt) and buy something, the amount to finance will be less. Plus, in the meantime, the saved $$$ are earning interest so it's sort of like the bank is helping me pay for the car rather than me paying the bank.

Regatta

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Author: Patzer Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263203 of 308454
Subject: Re: Paying myself first Date: 10/28/2007 1:09 PM
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Plus, in the meantime, the saved $$$ are earning interest so it's sort of like the bank is helping me pay for the car rather than me paying the bank.

Yuppers. Since retiring my mortgage, I self-escrow for property taxes and homeowner's insurance. The last time I paid my property taxes, I looked at how big the tax bill was and how much I was putting in; it wasn't quite enough, but I had the cash to pay the bills. What gives? I turns out that the interest that I earn on this account pays for more than half of the annual homeowner's insurance premium. It's more this year than last, because my escrow account is where I dumped my 2008 Roth IRA contribution to sit until I'm allowed to put it in the Roth.

What a deal!

Patzer

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Author: Fuma102 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263205 of 308454
Subject: Re: Paying myself first Date: 10/28/2007 4:53 PM
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somewhat OT, but since you bring up budgeting, how do people around here budget for auto work?

progressively more as the car increases in age? the money saved on an insurance for an older car get socked away towards repairs / sticker shock when shopping for insurance for a newer car?

can you guess who has had recent car trouble?

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Author: vkg Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263206 of 308454
Subject: Re: Paying myself first Date: 10/28/2007 5:02 PM
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sticker shock when shopping for insurance for a newer car?

It depends on the car. My insurance did increase, but it was less than I expected.

Debra

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Author: Lurker1999 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263207 of 308454
Subject: Re: Paying myself first Date: 10/28/2007 6:14 PM
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somewhat OT, but since you bring up budgeting, how do people around here budget for auto work?

I have about $5000 set aside for "maintenance". It just sits in a savings account at 4.75%. I'd have to carefully consider whether I'd spend more than $1000 in one chunk for a car that's only worth about $1100 according to Edmunds TMV or $2000 according to NADA.

The main thing going for my car is that I know the entire maintenance history of the car so it is worth more to me than a equivalently priced used car. If it's a single mechanical failure I'd likely opt for something as extensive as a complete engine or transmission replacement. If it's involved in an accident though requiring both mechanical and structural repairs I'd probably just buy something newer.

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Author: xraymd Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263208 of 308454
Subject: Re: Paying myself first Date: 10/28/2007 6:57 PM
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I have about $5000 set aside for "maintenance". It just sits in a savings account at 4.75%. I'd have to carefully consider whether I'd spend more than $1000 in one chunk for a car that's only worth about $1100 according to Edmunds TMV or $2000 according to NADA.

The main thing going for my car is that I know the entire maintenance history of the car so it is worth more to me than a equivalently priced used car. If it's a single mechanical failure I'd likely opt for something as extensive as a complete engine or transmission replacement. If it's involved in an accident though requiring both mechanical and structural repairs I'd probably just buy something newer.


Greetings, Lurker1999, this is what I do and how I think, too (I have somewhat less than $5K set aside but I am getting there). In fact, I put it to the test when I found my car was burning oil. The engine rebuild was about $1400 when my car is only worth maybe $3K as far as the Blue Book is concerned, but it has been my car for 15 years and is totally otherwise reliable. So I went ahead with the rebuild since my mechanic said there was nothing else on the horizon that looked like a major repair to him. I rationalized that the $1400 was maybe 5-6 car payments on a newer (used) car. In 500 more miles I will FINALLY have 100K on the odometer and have not had a car payment since 1994 (car was purchased new in 1992), so my car is *still* my car, engine rebuild notwithstanding. It is going great so far and it was a good decision for me. Now I am intrigued to see just how long I can keep my car going, though I have continued to set aside funds for another one in case the lifespan ends up being shorter than expected. Till now, though, it has been a fount of reliability (*knock wood*) and I do not forsee that changing. And my insurance premiums are relatively tiny, so it is a further win-win.

xraymd
of the much-posted-about 1992 Toyota Tercel

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Author: FiddleDeeDee Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263222 of 308454
Subject: Re: Paying myself first Date: 10/29/2007 8:41 AM
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Like xraymd, I got an engine rebuild on my 1992 Dodge a couple of years ago. Before then, I could pretty much depend on spending $2,000 per year on maintenance work. Now things seem to be percolating just fine and I've just been spending money on oil changes and tuneups.

Having an older car, though, I worry on the years that it has to go through the emissions test (every 2 years in Massachusetts). It bothers me to know my car does not always meet those standards. I am trying to green up my life. While it's great not to have car payments, I want to do something better for the environment. My wish is to be able to wait until I can buy a total electric car. That may be a pipe dream right now - I don't have $100,000 for a tesla! :)

Andrea

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Author: xraymd Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263225 of 308454
Subject: Re: Paying myself first Date: 10/29/2007 8:54 AM
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Greetings, Andrea, has your car in fact failed the emissions test after the engine rebuild was completed? Mine has tested well within the limits even prior to my own engine rebuild (that is one of the reasons I continue to keep the car) - if yours has failed, is it something easy or otherwise not too expensive to fix?

My latest repair expense: my brights are now on 100% when the headlights are on because the switch has failed. The mechanic has ordered a new switch for me (he discouraged me from trying to find a used switch at the junkyard because a used one could be as worn-out as is my own used one) - to the tune of $202.80 for the switch alone, let alone the labor to install it! It is worth it because the switch controls not just the brights but also the turn signal and the car horn. So that is another $300 (budgeted) towards my 15-year-old car that I am still willing to pay because it truly is not overall nickel-and-diming me at this point. I allow for some wear and tear. Indeed, if I were willing to keep driving around with my brights on, the turn signal and horn are both still working, but I am not going to inflict other drivers with my brights, so to the shop it goes this week.

xraymd

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Author: Bweaver Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263230 of 308454
Subject: Re: Paying myself first Date: 10/29/2007 9:17 AM
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Indeed, if I were willing to keep driving around with my brights on. . .

I and thousands of drivers applaud your choice to not "inflict" brights on us.

Your "willing" comment vaguely implies some level of choice in the matter, but dimming your brights is no more a matter of choice or courteousness than is obeying any other traffic law.

Good luck,

Bruce

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Author: xraymd Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263241 of 308454
Subject: Re: Paying myself first Date: 10/29/2007 10:57 AM
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Your "willing" comment vaguely implies some level of choice in the matter, but dimming your brights is no more a matter of choice or courteousness than is obeying any other traffic law.

Greetings, Bruce, actually I see this as you see it. There is no choice but to fix the car so that the brights are NOT on all the time, both as a matter of law and a matter of courtesy. What I was really implying by using the language I did is whether anyone else whose car is doing what mine is doing would be (ahem) skinflinty enough to skip the part about repairing the headlight illumination because, hey, after all, the lights work, don't they?

Nope.

Car goes to the mechanic on Wednesday. It was actually taken there two Wednesdays ago but it took this long to dig up the proper switch. Meanwhile I am doing all I can not to drive in conditions that require my headlights to be on.

xraymd

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Author: xraymd Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263247 of 308454
Subject: Re: Paying myself first Date: 10/29/2007 11:47 AM
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P.S. Bruce, thanks for your nice email. MWAH! (That's a smackeroo of a *kiss* for the acronym-challenged.)

xraymd

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Author: exoticatom One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263494 of 308454
Subject: Re: Paying myself first Date: 11/4/2007 4:47 PM
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...car was burning oil. The engine rebuild was about $1400 when my car is only worth maybe $3K as far as the Blue Book is concerned, but it has been my car for 15 years and is totally otherwise reliable.

$1.4k would buy an awful lot of oil.... and even a tercel trunk has room for a couple of cases!

Bill

(life-long adherent of the "drive-em-into-the-ground" school of automotive excellence)

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Author: xraymd Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 263503 of 308454
Subject: Re: Paying myself first Date: 11/4/2007 11:49 PM
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...car was burning oil. The engine rebuild was about $1400 when my car is only worth maybe $3K as far as the Blue Book is concerned, but it has been my car for 15 years and is totally otherwise reliable.

$1.4k would buy an awful lot of oil.... and even a tercel trunk has room for a couple of cases!

Bill


Greetings, Bill, indeed I could have bought an awful lot of oil for $1.4K but I really like the fact I am no longer polluting and creating a stink trail of exhaust. I am similarly happy that my brights are now repaired and engage or dim at my discretion. Similarly, I plan to get my car detailed soon at a modest outlay for nothing says better that I am proud of my economizing than to do so by presenting a tidy, systems-functioning and ecologically-sound front. There's my adherence to automotive excellence!

xraymd

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