Sunday, April 7, 2013

Our New Plan!

I think it's important to have a plan.

We look at our plan from time to time and tweak it as needed. We've done this quite a bit since we started on our debt repayment journey, about 2.5 years ago now.

We've had some recent changes in our lives that made us decide to re-evaluate our plan... we finished paying off our credit card debt, bought a new car, and I started a new job which gave me a sign-on bonus. Our previous thoughts were to use the sign-on bonus to pay for the new car, then budget about 1k per month to have it paid off in full within a few months. We also planned on taking a few vacations this year, while saving up for a house.

Well, the new job has some uncertainties that make us feel a bit uneasy. There is talk of furloughs, layoffs and restructuring. Without having a safety net (aka - a good sized savings account) to fall back on if these things happen, my husband suggested we hold off on paying off the car and save the sign-on bonus instead.

I had a hard time seeing how this would be a good idea at first because whatever savings account we put the money into we would not get interest higher than we were paying for the car. After being focused on reducing or eliminating our interest payments for so long, I couldn't imagine willingly paying interest on something. Plus, when we got the car, we planned on it being paid off fast, so we didn't haggle for a super low rate. The dealership gave us 5.49%. They said this was the best they could offer since we were taking advantage of some other discounts they were having. We figured over the course of a few months, our interest payments really wouldn't add up to too much. But, if our plan was to now save the bonus and pay the car off slowly, then those interest payments would surely add up fast!

I knew that the only way I could get on board with slowly paying off the car, would be if we could get the interest rate lowered. Well my new company has a credit union which offers a much lower rate, 1.69% if you have an account with them. I decided to apply for the loan and was approved. This helped me get on board with the change in plan and to reduce our payments a bit.

So, we now have two car payments (gulp), but they are doable. We also now have a savings account. We have decided to reconsider the trips we we thinking of taking later this year. We want to be smart and be prepared in the event that something bad happens at work. This is progress for us. This is especially progress for my hubby. He's a guy that lives in the moment and figures "it will all work out somehow." For him to be the one pushing for us to have a safety net and be thinking of the "what if's" says a lot.

My, how far we've come!


  1. “I think it's important to have a plan.” When it comes to paying off debts, there's no question about it. I think regularly looking over your repayment plan and tweaking it as needed is a smart approach. We can make budget plans all we want, but there are times when there are additional expenses that need to be paid that would throw everything off. While you now have a second car to pay off, it looks like you've already figured out how to deal with it, so don't be intimidated. Thanks for sharing, Stephanie!

  2. I think you have the best plan in place considering all that is happening and what a great deal on the interest rate!! Thank goodness hubby is now on board and thinking about the future. I wish I could say the same for Michael!