creating a debt free life

Posts tagged ‘emergency savings’

Too long without posting !!

I could not believe when I looked and January was my last post !! Wow. We have had a busy year or two.

In 2012 we made the choice to let our daughter and her husband and kids, who had been living with us for a few years after moving to Texas from Calif to restart thier lives, rent our current home. We had owned the house for ten years at that point, and had wanted to move up North an hour away to live closer to my husbands work and see how we liked it up there and figured it would put our house in safe hands, and give them a huge break on rent as our mortgage was well below current rents in the area and they got a much bigger house.

We signed a 14 month lease on a nice apt and settled in much closer to work so my husband could get up an hour later, leave much later , and get home much earlier, shaving about and hour and a half a day off his comute. We loved the pool, and the lovely views off our balcony, we had a creek bed between us the apartments on the other side of the complex

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It was a lovely apartment with a lot of room and other than some neighbor issues , normal in an apartment with others so close, it was relatively quiet, and very comfortable. We even got some snow to enjoy that winter !!

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We purchased new sofas which we did pay off during one year promotional so we paid no interest

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and found this lovely table and chair set, with two leaves , not shown, for a few hundred dollars at a thrift store, so we were living in a lovely place, with some beautiful new things and enjoying our life.

 

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Then the holidays came around and I realized how far away an hour is. I rarely saw everyone, and missed our small town Christmas events we loved so much, and the holidays were just not as fun as normal and we knew we would have to go back. We loved the apartment but we missed our house so much .

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It is old, needs SOOOO much work, but it was ours and we love it. But, the problem was, at that point in time, our kids could not leave it. Our son in laws family had joined them from Calif, to see if they would like to live in Texas. So, no one would have rented to that many people and pets. So, we had a few options.

 

Stay put, not an option, as much as we loved it up there, ( and miss it now ) we  missed our kids, grandkids, house and our cute little town more .

rent a house in town, but with rents so high we really did not want to do that.

Buy a second house to live in while the kids rented ours

BINGO.

So, we thought, it will never happen. We had just purchased a brand new Passet and had a five hundred dollar payment. Not to mention we already owned a house.

But somehow, some way , we bought a house. Cute three bed, one bath house, We figured we would be in it  until the kids could buy a house with his parents,  a couple of years, which was the plan. Then we would rent it out.  We moved in the start of Aug 2013

 

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Well, by November it was clear his folks were not staying and thier plan was to move back to Calif in Jan. So, over Thanksgiving weekend we had the kids over without his parents and jokingly, sort  of, asked if after his parents left they wanted to trade houses. They were so excited and we made the plan to switch houses in the spring after we got a fence up around the property for security and safety for thier kids and pets.

So, middle March 2014 We took one day to switch houses. It took 12 hours almost to the minute and we were back in our beloved house.

So, we have been back in our cute 90  year old cottage for six months now and we plan to get back to our debt repayment again. We spent way too mcuh money on these moves and when we moved into the new house, we bought all new appliances as we had left the washer dryer here for the kids, rented a set at the apartment and then also needed a fridge and bought an amazing one for the new house . The kids have been paying us for the appliances a couple of hundred a month, so that helps at least. They have them almost paid for, at the price we gave them.

So, six months later, we have a ton more debt,  and a house we have to do a lot of fixing up to, which we would have anyway, but  now we see it every day !! No regrets, we are so happy to be home. It feels wonderful. But we are not happy about the debt we see ourselves in .

So, that is our last two  years, and now here we are plannit to restart  our debt snowball again.

We did pay off a lot of stuff before we moved out of the apartment, several credit cards that we have never used again, but we borrowed heavily to get into the house, and now we are starting over with a huge car debt and credit cards we ran up for the move and the appliances and all the little stuff we had to do when we moved ino a house that was very outdated.

The kids are still renting the house, but are in the process of figuring out how to buy it from us. We thought it was an assumable loan, but it is not. According to zillow in one year it is worth a ton less than when we bought it, which does not add up as they said the same price as the appraisal at the time, but now it says it was worth a lot  less when we bought it, so I am confused by that.

The problem we are encountering is, we cannot sell it to them via a home mortgage, as we will lose money. We will have closing costs that we just cannot justify as we will be losing a lot to sell them this house, , some of which we just did not realize but we cannot lose more. So, I am not sure what they will want to do, rent for a while and see if things go up, do a owner finanicing plan, we are just not sure . They want to talk to some banks, but we told them, we cannot sell it to you if it costs us more money. They love the house, they want to buy it really bad. So, we will have to see how we get this situation fixed, but they agree it has to be fair to both sides. When we thought it was assumable it would have been, no cost to us, low cost to them, so we will see. They do not plan on doing anything for a while, they have to figure out what they want and it will be at least the start of the year before we discuss it more. If they were to finance it, thier costs will be much higher as well , closing, down and all that. We cannot help them, both because, we cannot help them and the bank said, we cannot help them, and they have to pay us back at least our down payment as that was the agreement. So, not really sure how it will all go, but I know we will find a way to work it out for all involved.

So, for now, our priority is to get back to our debt snowball in the next  few months, after bringing our savings back up to where we need it  to be. We have about 1500 but we need a lot as emergency because  if my husbands mother , who still lives in Calif ever needs him to go out there for her if she has an emergency or sadly one day when  she passes and he has to spend weeks out there taking care of things with his sister, we have to have a months worth of money in the bank to give him time to do so and it not affect us at all. Work will give him the unpaid time off, but we need the money to cover our expenses . So, I think we are going to do a full months expensies, plus travel expenses, which might be as much as five grand, which would make us feel so much better.We do not plan on needing it for years, she is not 80 yet, and in good health , but we have to be sure we are covered just in case.  Another thing we plan to do is just add a bit to the mortgage each month to get the principal down a bit each month. We have owned it 12 years but refinanced a couple of times to get better terms, not to take out money, you cannot do that in Texas without a ton of equity which we have never had,  adding to the  mortgage, so we still owe a lot and still owe on our PMI for another 14,500 to get to that 22 percent to drop it. So, we have a lot of work to do. 40 bucks a month brings it to 200 a month toward the priciple . That is our goal, to get us 2400 minimum paid off per year.

It is becoming increasingly clear , with retirement just 17 years away if he works until 70, that will have to really work hard to get out of debt, pay off the mortgage and save for retirement. That is for another post, but these concerns have gotten us back on path to saving and paying down debt.

So, life kind of took us on a loop, or we took ourselves on a loop I suppose, they were decsions we made. For now, we own the two houses and look forward to finding a way to sell the one to our kids. If they chose to not buy it, we will rent it to them until they move and buy else where and then rent it out for income as the rent would be more than the mortgage by quite a bit.

We plan to stuff away as much money as we can to get that five grand and then start paying off one debt at a time, as fast as we can per the debt snowball. We do have some promotional   balances to watch so we have some things that may have to be paid out of order  or maybe even before savings are exactly where we want them to be, to keep from getting hit with interest, but only one is due by the end of the year for a few hundred and the rest do not start to  hit until march next  year so we are keeping our eyes on these things and plan to knock each one out before they cost us money.

So, that is where we are at, and I hope to be posting some real debt repayment as well as savings each month. We are very determined and I plan to start reading all the wonderful personal finance blogs I follow and just work hard !!

Thanks for stopping by !!

Stephie

 

 

 

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Stuff happens, be prepared !!

I am so grateful we had just started our program to pay off debt when yesterday happened.  We had a day that you hope does not happen but you should prepare for, just in case.

A car accident.

It was raining and wet and we came around a corner and  my husband was faced with three  vehicle  and a trailer pile up, we both thought we would hit it, but he managed, against all odds to stop about five feet before the accident, we were so happy and then he looked in his side mirror, yelled a swear word, and bam, we were hit.

We were lucky. The full size picked up managed to change  lanes, but in changing lanes quicky, his trailer spun around and wacked the back driver side corner of the car, ripping the wheel off and breaking the axil. Other damage to the back happened as well.

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That is the rear wheel, it is bad. The rest of the car is completely unhurt as far as we could see. Not sure if any debris hurt it, but it seems fine. Side airbag came down and we sat in shock. I was terrified we would get hit again. I sat a bit frozen for a few minutes. David got out and checked and came b ack and told me it was pretty bad.

so, we were certainly not emotionally prepared, but with our 1000 savings in place, we could cover the expenses we incurred. Fifty bucks to the car rental, just a hold until we give it back, our insurance is paying for our rental car.

We did  get fast food after we got the rental car, we were a bit shell shocked and had to go shopping for food, and were not up to it so we got Mc Donalds and went home relax. We had to pay 80 for both of us , to the doctor for after hour appts, but that is much better than the 100 or more each we would have paid for the ER and we got excellent care from our own doctor office. That will be reimbursed almost imediately by our insurance and will be put right into our bank account by them as soon as we get the reciept in to them.

After the doctors we did go to the store and pick up some groceries to make dinner. It was not what we wanted to do, but we knew we had to. So, we did. We were so exhausted it took everything to cook after our day, but we were proud of ourselves for being responsible both with our money and health by eating a home made and healthy dinner.

Whatever happens with the car, we will take any extra money and use it to debt snowball our bills. If the car is totaled, we will not replace it at this time. We will take time to pay off debt and save up to get another car. If repaired, we will take any money recieved and pay it toward the debt snowball, after replacing any money from our emergency fund. I t hink we can actually cover it from our grocery and entertainment funds, we  might not even have to touch the emergency money.

So, even just starting out,  having that emergency money is crutial.  We should know by Monday the fate of our new car. We have not even paid the first payment yet. It is really crazy.

So, make sure before you start your debt repayment to have that emergency fund started. Knowing we had  money in the bank to deal with this situation made it so much less stressful. Words really cannot convey how much it helped our peace of mind.

By Monday we should know if we have our car or not. At that point we can settle the claim as we have no real medical to worry about. My hubby was on vacation and has taken one additional vacation day to recoup. We are still a bit sore , and then Saturday he can return to work. No lost wages, no medical treatment to seek, that helps a lot.

The accident was caused by a big rig stalling, so you just never know what life will throw a curve ball at you. Having that emergency fund there will give you peace of mind when something unexpected happens.

Also, check on your auto coverage. Make sure you have enough,  make sure you are not left high and dry. Get  uninuranced motorist. We have it, should not need it, the guy had a current insurance card, but you never know if they  missed a payment and you are stuck with the bills. Be responsible and protect yourself. You may need it that day and that is what insurance is for.

We are so grateful we are fine. I have sent many thanks to God for that. We walked away .

Many thanks to the firemen and police officers that took such great care of us all. They even took us to a gas station to meet our ride. Never rode in the back seat of a cop car before, very interesting and so uncomfortable. Glad I live a life where that is the only reason I will ever ride in a cop car !!

We were so grateful for the ride, it was cold and far from bathrooms, so it was wonderful and much safer for our daughter in law to pick us up there !!Thanks Melissa, we are so grateful for the ride to the car rental place. We appreciate it so much !!

So, we learned a lot, luckily in a good way as we were prepared. I cannot wait until we are debt f ree and we can build up that emergency fund even bigger !! Having money to help you face an emergency give you such peace of mind.

Thanks for reading !!

Stephie