Surprise expense woes

[DizMe]

Another reason to do the car 1st and cancel vacay...the 2nd car will also have follow-on extra expenses, like increased insurance/gas/inspections/maintenance that you'll need to account for...depending on your state, driving record, and car purchase, these might not be insignificant to account for...you may need the vacation money to also cover these...

True, but you know there will ALWAYS be another expense. Sometimes it's worked into the budget, sometimes it comes out of nowhere and you have to figure out how to cover it, but there is always going to be an appliance that dies, a pipe that bursts, a car that has issues, etc.

 

[Windjammer]

If you have equity in the car you already own, consider selling it, combining the equity with the cash you have, and get two less expensive cars. If that does not clear all the money you need, perhaps it will give you enough so that you can take a budget trip.

 

[Hikergirl]

I'm really kind of shocked to see people on the budget board suggesting going on the trip and taking out a loan. I know it's WDW but really is postponing a year so you don't have to take out a loan really a big deal in order to get closer to being debt free?
OP you just have to ask yourself what is more important, taking a trip NOW or not adding another monthly expense to your budget? Neither is wrong, you just have to decide what it is you really want.

 

[StarlitNight05]

Personally, I'd keep the trip and make it a challenge for myself to get the budget for it as low as I could, and also try to earn some extra money. If side hustle jobs aren't a possibility (food delivery like Doordash, ridesharing like Uber), I'd see if you could get some money by selling on eBay or Poshmark (clothing, accessories), or even a garage sale. You could do survey sites as well like Swagbucks and/or Mypoints to try to accumulate some GCs for the trip.

 

[Penny McMouse]

I really did not expect people to be so passionate about this and I appreciate all of your insight and opinions.

After talking to over with DH we're going to go on the trip at a slightly lower budget. We'll also be getting a truly new car, eventually. The local Kia dealer runs a sale a couple times a year where you get 5000 trade in value for any car as long as you can drive it to them. So the plan is to look for a cheap but mechanically sound (we'll check that with our mechanic) car with the money we have. Next time the sale comes around we'll trade it in for more than we have in it. During the time while we're waiting we're going to shift some savings priorities around and see how much cash we can come up with to put down on the car. I had done this years ago and walked off the lot with equity in that car and got an amazing interest rate through my CU. I'd probably still have that car if it hadn't gotten wrecked.

It won't kill us to have a second car payment, it will mean we can't pay double on our current one. But we'll have a car under warranty that we trust to drive long distance.

 

[tink89]

We'd be adding a couple years to paying off everything. 3 years from now we would have had the money saved up. We do have an emergency fund but DH thought he'd break his arm and hit his head while running and it turns out our insurance is crap when it comes to ER's. Now we have both an emergency fund and a medical fund.

I would not take out a loan just to be able to go to Disneyland. And if I had $0 in my emergency fund i would worry about that first especially before going on vacation since you never know what expenses can add up during your trip. I would have put the trip on hold after DH used up the emergency fund and hurt himself.
Is your trip already being paid or just planned out? If no payments have been made i would first look for a car or continue to save for a car. Once all that has been settled and there is $ in the emergency fund i would see how much i have left to go on the trip and move the trip to a date where i could save a little more.

If you are still going to go on the trip no matter what then i would do everything to minimize expenses. Personally vacations are meant to be relaxing and i would not be able to relax knowing i spent all the savings on the vacation and i do not have a car.

 

[MomToOne]

The local Kia dealer runs a sale a couple times a year where you get 5000 trade in value for any car as long as you can drive it to them. So the plan is to look for a cheap but mechanically sound (we'll check that with our mechanic) car with the money we have. Next time the sale comes around we'll trade it in for more than we have in it.

Just be aware that when a dealer makes an offer like this, it generally results in them being less willing to negotiate on the actual price of the car. Let's face it - they have a certain profit margin they are going for. In the end, you probably won't be saving as much as you think you are on the deal. My local Kia dealer is offering up to $8000 off list on some cars now, no trade in required. My guess is yours wouldn't have that same level of discount with the $5000 trade in offer too.

You may also lose some money by paying tax twice in some states (although not all - some states only make you pay tax on the difference between your trade and the new car so in that case you basically would only be paying it once).

 

[starry_solo]

YOLO....

 

[barkley]

YOLO....

true but depending on the events that occur during that 'once' your priorities can change-

i look back on and enjoy the vacations dh and i (and down the line our kids) have taken but in the grand scheme of things i value much more that we were/are conservative in spending money on vacations and such b/c when totally out of the blue and unexpectedly in my early 40's i had 2 strokes that left me both unable to work and unable to be alone my husband could stay home with me because of the financial choices we made. we had the savings (and vacation accruals) to not only withstand the loss of my income (yeah-we had some disability insurance but there are waiting periods before it kicks in) but also withstand the loss of his income when his accruals ended and we ended up with him using unpaid fmla.


i think allot of my habits have been shaped by life experiences.

my dad died within 5 months of a cancer diagnosis-i was 19. he had lots of plans for his retirement and so he/mom/me didn't do allot of vacations nor did they spend much on what they perceived as non necessitates but i don't believe my mom regretted it for a moment given that their savings coupled with a modest 1980's based social security allowance and small pension supported her (and myself for a few years) for the next 30 years. that was a learning experience but what really brought it home for dh and i was a co-worker's tragedy. late 20's and 8 months pregnant. she and her dh made good incomes and enjoyed those incomes-big wedding (on their own dime), big honeymoon, big annual vacations, big dream home.......everything planned out so she would have the baby and stay home for a couple of months b/c their new mortgage required both their incomes to pay..............


8 months pregnant and she decided to finish watching a tv show one evening while her dh went to bed.......30 minutes later she goes to bed to find him still and cold to the touch-massive heart attack just shy of 30. no life insurance, no savings, still paying off the last vacation in addition to the car loan and the credit cards... she's a mess so all the sick leave/vacation time she had saved for maternity leave gets used up. by the time the baby is a year old mom has lost the house, lost the car(s), filed for bankruptcy, grandma has shortchanged her retirement by resigning her position to be able to provide childcare. 25 years later and facebook posts indicate the drastic changes in anticipated lifestyles for the mom/child/grandma, none of which i suspect they feel were worth the vacations that the couple took in lieu of saving/not accruing additional debt.


YOLO but you have a wealth of opportunities to make sound choices that can tremendously impact your standard of living.

 

[DizMe]

true but depending on the events that occur during that 'once' your priorities can change-

i look back on and enjoy the vacations dh and i (and down the line our kids) have taken but in the grand scheme of things i value much more that we were/are conservative in spending money on vacations and such b/c when totally out of the blue and unexpectedly in my early 40's i had 2 strokes that left me both unable to work and unable to be alone my husband could stay home with me because of the financial choices we made. we had the savings (and vacation accruals) to not only withstand the loss of my income (yeah-we had some disability insurance but there are waiting periods before it kicks in) but also withstand the loss of his income when his accruals ended and we ended up with him using unpaid fmla.


i think allot of my habits have been shaped by life experiences.

my dad died within 5 months of a cancer diagnosis-i was 19. he had lots of plans for his retirement and so he/mom/me didn't do allot of vacations nor did they spend much on what they perceived as non necessitates but i don't believe my mom regretted it for a moment given that their savings coupled with a modest 1980's based social security allowance and small pension supported her (and myself for a few years) for the next 30 years. that was a learning experience but what really brought it home for dh and i was a co-worker's tragedy. late 20's and 8 months pregnant. she and her dh made good incomes and enjoyed those incomes-big wedding (on their own dime), big honeymoon, big annual vacations, big dream home.......everything planned out so she would have the baby and stay home for a couple of months b/c their new mortgage required both their incomes to pay..............


8 months pregnant and she decided to finish watching a tv show one evening while her dh went to bed.......30 minutes later she goes to bed to find him still and cold to the touch-massive heart attack just shy of 30. no life insurance, no savings, still paying off the last vacation in addition to the car loan and the credit cards... she's a mess so all the sick leave/vacation time she had saved for maternity leave gets used up. by the time the baby is a year old mom has lost the house, lost the car(s), filed for bankruptcy, grandma has shortchanged her retirement by resigning her position to be able to provide childcare. 25 years later and facebook posts indicate the drastic changes in anticipated lifestyles for the mom/child/grandma, none of which i suspect they feel were worth the vacations that the couple took in lieu of saving/not accruing additional debt.


YOLO but you have a wealth of opportunities to make sound choices that can tremendously impact your standard of living.

I totally get what you're saying. It's a good thing to keep in mind that we never know what's around the corner, as I learned last year when almost the entire town near where I live burned down. We were evacuated for weeks and didn't know whether or not our house had survived (it's in a canyon some miles from the town and it was one of the homes that made it, though we did lose some property). I too find it beyond foolish to spend lavishly with no back-up plan and no way to get out from under should anything happen to one partner. However, you simply cannot figure for every single contingency that might arise. You may do everything 'right' and find yourself with nothing and you may do everything wrong and be perfectly ok. Part of it is just luck of the draw, but hedging your bets is the best idea. I don't think OP choosing to spend a couple thousand on a vacation is going to drastically alter much, but each of us has his/her own comfort level and I can certainly understand where you're coming from. I also think it's very important for each partner to have a skill/occupation, whether both are currently working or not, in case of hard times. And I've seen so many couples (especially the younger ones) make the mistake of being sucked into the conspicuous consumption trap, which I think is the greatest danger. Saving, spending frugally, but indulging once in a while in something well within your budget that is personally meaningful and not just a showy display is basically what I do. We have used vehicles, old furniture and a house that could sure use updating, but it's cool and unique, our 5 kids are happy, and dh and I have been able to take them to other states and countries. We consider it an important component of both their educational development and our family bonding.

 

[barkley]

I totally get what you're saying. It's a good thing to keep in mind that we never know what's around the corner, as I learned last year when almost the entire town near where I live burned down. We were evacuated for weeks and didn't know whether or not our house had survived (it's in a canyon some miles from the town and it was one of the homes that made it, though we did lose some property). I too find it beyond foolish to spend lavishly with no back-up plan and no way to get out from under should anything happen to one partner. However, you simply cannot figure for every single contingency that might arise. You may do everything 'right' and find yourself with nothing and you may do everything wrong and be perfectly ok. Part of it is just luck of the draw, but hedging your bets is the best idea. I don't think OP choosing to spend a couple thousand on a vacation is going to drastically alter much, but each of us has his/her own comfort level and I can certainly understand where you're coming from. I also think it's very important for each partner to have a skill/occupation, whether both are currently working or not, in case of hard times. And I've seen so many couples (especially the younger ones) make the mistake of being sucked into the conspicuous consumption trap, which I think is the greatest danger. Saving, spending frugally, but indulging once in a while in something well within your budget that is personally meaningful and not just a showy display is basically what I do. We have used vehicles, old furniture and a house that could sure use updating, but it's cool and unique, our 5 kids are happy, and dh and I have been able to take them to other states and countries. We consider it an important component of both their educational development and our family bonding.

i'm in agreement with you. the whole 'yolo' concept being used to justify overextending ones self/family financially drives me crazy though-the reality is you don't only live once, you live each day and will have to live with the financial decisions you've made on the previous days. if a person feels like they will be o.k. living with months or a couple of years of new/continuing debt as a trade off for a multi day vacation then that works for them. for me personally it would be a less enjoyable vacation (i just enjoy them more when i'm not having to pay for them after the fact). a scaled down vacation would be much more in line with my comfort level.

 

[Starport Seven-Five]

With the length of time until the trip have you looked into travel hacking? We did a trip in January 2019 with hotel/flights and the majority of our tickets funded by CC rewards. Total out of pocket was ~1k for a week (including food and a few souvenirs).

I mirror what someone said above about the "5k trade in" deals. Terms are generally that you pay sticker price which offsets a lot of that 5k. A quick search shows dealers advertising prices of $3,000-$3,500 off a $24,000 2020 Kia Soul.

 

[karen4546]

OP, I like your plan of scaling back the trip and the car.

But, the "deal" that the dealership has is not really a deal. It is gimmick to sell more cars. It is a way for them to manipulate the numbers. They will raise the price of the car to give the buyer more for their vehicle. And, many times they will advertise a great deal on a car and then when you go in, they pull the old bait and switch.

Enjoy your trip.

 

[focusondisney]

but what really brought it home for dh and i was a co-worker's tragedy. late 20's and 8 months pregnant. she and her dh made good incomes and enjoyed those incomes-big wedding (on their own dime), big honeymoon, big annual vacations, big dream home.......everything planned out so she would have the baby and stay home for a couple of months b/c their new mortgage required both their incomes to pay..............


8 months pregnant and she decided to finish watching a tv show one evening while her dh went to bed.......30 minutes later she goes to bed to find him still and cold to the touch-massive heart attack just shy of 30. no life insurance, no savings, still paying off the last vacation in addition to the car loan and the credit cards... she's a mess so all the sick leave/vacation time she had saved for maternity leave gets used up. by the time the baby is a year old mom has lost the house, lost the car(s), filed for bankruptcy, grandma has shortchanged her retirement by resigning her position to be able to provide childcare. 25 years later and facebook posts indicate the drastic changes in anticipated lifestyles for the mom/child/grandma, none of which i suspect they feel were worth the vacations that the couple took in lieu of saving/not accruing additional debt.

Certainly a tragedy for your coworker but come on. Doesn’t sound like vacations were the whole reason for her financial difficulties. Sounds like they made several decisions to live out side their means. Big wedding, big honeymoon, big vacations, credit card debt & a dream home in their 20’s? Sounds like they were stretching themselves in many ways. And the no life insurance might just have been their biggest mistake. But you know what, maybe she isn’t sorry about the vacations. I know if my DH died unexpectedly, I would be glad to have the memories from our Disney vacations.

But either way, you have to be able to balance all the different aspects of your finances. We always finance our cars. And we have taken vacations all throughout our marriage too. But we didn’t buy a McMansion. Bought a house we could afford on one salary & stayed in it for 35 years now. No huge SUVs & our vacations started small & got bigger & more expansive as went along. And all the while we put money in savings & retirement accounts. It’s all about balance.

 

[leebee]

From looking at your numbers, it seems like even if you cancel the vacation, you are still going to have to borrow some money for the car. Honestly, I'd make single payments on the existing car loan and get another car loan for the new-to-you car, and scale back the vacation. I know everyone says a new car is not a great deal (depreciation and all that), but I bought my 2015 Kia Soul brand new, because I was able to get a 5 year loan at 0% through Kia. I put down a couple grand and my payments are about $200 a month. It is costing me NOTHING to pay off this vehicle over time. Used car loans don't always have the best interest rates, so if you can find a "cheap" new car that has a good warranty and a decent repair history, with a good interest rate, I'd consider using the money you have towards the down payment on that so you have a manageable monthly payment... especially if you can stop doing double payments on your existing loan. As someone mentioned, mortgage and car loans, if you aren't looking for the biggest shiniest most overwhelming house/vehicle, are actually "good" debt as opposed to credit card debt. I'd choose this, because, you know, you DO only live once and you DON'T know what's around the corner. It's a question of responsible balance, IMO.

 

[SharonZ]

In your situation, OP, I wouldn't even consider going on the vacation - cancel it and reschedule for a later date, when you can really enjoy it.