Within the next five years, we want to buy a car, buy a home, and start a family. These are all big goals and we need to be financially stable to accomplish them. So–what’s the plan?
First–you all know I am not a Dave Ramsey fan. I don’t think he lives in reality. Or at least he doesn’t live in southern California. According to Dave Ramsey, we would have to pay off all our debt first, and by then we’ll definitely need a new car and have to pay cash upfront for that, and then saving up for a house down payment will be pushed back even further and it may never become a reality because of everything else that needs to paid. I don’t know how you can save up for a car and a house at the same time.
If we were to put 20% down for a home, we would need $80,000. And that’s seriously the minimum for a starter home in Orange County, CA in the cities that we would be willing to live, where homes tend to start in the $400,000’s. So how are we ever supposed to save that much and buy a car and have an emergency fund and pay off debt?
Anyway, good thing I don’t care what other people think, and I’m doing my own plan.
Here’s the rundown:
1. Pay off car and credit card debt.
We are thinking of paying off my car by the end of this year (so yeah, next month). This will remove about $4,000 of debt. And then in the first few months of 2012, we will pay off the rest of our credit card (which is currently at 0% interest until April 2012). This will leave us with just my student loans left.
2. Save up for a house down payment.
With the card and the car paid off, we will have an extra $500 to put toward savings. Since we were pretty easily contributing $1,000 a month toward savings this past year, we are hoping to contribute $1,500 a month in 2012 for total savings of $18,000 by the end of the year. (But we hope to finish with a strong $20,000).
3. Move out of the Love Shack.
After saving $20,000, we hope to move out of this love shack. We moved in here because we knew we were going to have to live off one income while Eric was in the fire academy. We prepared for it by downsizing into this shack, but now, after a year of living here, I think it’s safe to say we’re over it. We’ll stick with it for another year to pump up the savings, but then we’re going to try and find an actual townhome to lease with a yard and a washer/dryer and a dishwasher, and –oh I dunno–an actual bedroom with a door? Those are my new non-negotiables. We are wiling to increase our rent by $500, lowering our monthly savings to $1,000 a month after the move.
4. Continue saving for a home and buy a new car.
This is where Dave Ramsey pisses me off. We are going to need to buy a new car in the next few years and unless we use our house down payment fund, we won’t be able to pay for the car in full. Eric’s car has over 115,000 miles on it. And with his new job about a 45-minute drive away, he’s going to be putting a lot more miles on it. Plus it’s a two door–same as mine. What does a two-door car mean? You can’t fit a baby seat in it! Duh. Ok, Eric and I have had the “baby talk” and I swear, the older I get, the longer I want to put off having babies. When we were first married, it was all “oh definitely by the time I’m 30” now that I’m 27, it’s more like “Oh maybe more like 32″…there’s just so much we want to do. And once you have a baby, you can’t put them back, you know? But we will need to buy a bigger car…eventually. We’ll put it off for as long as possible or until Eric’s car dies on us. Whichever comes first.
5. Eric gets a firefighter job, we buy a house, we pop out babies (in that order)
I don’t want to buy a house until Eric secures a firefighter job. Now that he is actually hired by a firefighter company (although as an ambulance driver, not an actual firefighter), his chances of getting hired increase a lot. I still think it will be another two or three years before he is hired, though, depending on the economy. But once he is hired, we will have the savings to buy a house, even though it may not be a full 20% ($80,000), it will still be something substantial. When Eric is hired, I will feel a lot more comfortable with the idea of having a mortgage now that we will have two sturdy and stable incomes.
I still want to travel as much as possible before we have kids. And even though our honeymoon to Costa Rica won’t happen this year, it will one day. I also want to go to Europe. I want to try and fund our travels through a separate “extra” fund. Meaning, any extra income we earn that doesn’t come from our immediate income, such as mileage reimbursement checks from work, mystery shopping money, blog advertising, and tax returns.
Do you have a five-year plan? What do you think of our 5-year plan?
*Every time I make plans, God laughs in my face. Hopefully, He doesn’t laugh at me for a while.*
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