Comments on: Erik doesn’t need a new car

By: Justin

Justin — Sun, 10 Jun 2007 18:19:17 +0000

Erik, you are doing great! Keep up the Envelopes system. Read “Total Money Makeover” by Dave Ramsey.
You might also check out the website “Mvelopes.com”. This will allow you to continue to use the Envelope systems but also have the luxury of using your debt card and cutting checks. I have been using Dave Ramseys Plan to get debt free for 2 years not and have also been using the Mvelope website for that long. My success story is that I have gone from $80,000 in debt to having no debt (except for my Mortgage) in those 2 years! I have been married for 6 years and am only 27 years old. I am not about to start changing my life style just because I am debt free. Here is my view on life: Life like no one else….So later you can live like no one else!
Take it as a complement when some one calls you cheap or frugal! Then when you get debt free invite them to your debt free party.
My next step is to pay off my mortgage. This is only going to take me 3 years based on the fact I have a great snow ball of funds after paying off the other debts. The key is that as I have increased my income and reduced my debt I have not increase the amount I spend “like most people do”. You have all heard it…the more you make the more you spend. Well not for me and my family!
I plan on being completely debt free at the age of 30.
And I dont plan on stopping there…

By: Steven

Steven — Thu, 02 Nov 2006 02:45:07 +0000

It’s a myth you need to buy a new car to have a safe car.

Yo can buy a 1989 Acura Legend Coupe for about 3K, or a Volvo 740 or Saab 9000, all safe cars and all a few K.

Also, unlike a SUV, they won’t roll over and kill you.

Old and cheap doesn’t mean a tinny little death trap.

By: debt-free

debt-free — Thu, 06 Jul 2006 23:13:43 +0000

Mateja, Mateja. You totally missed it.

Money in envelopes has nothing to do with earing interest. That money is for their monthly spending. Its going out the door, they’ve just given it a name and choose to spend it in cash (which btw is a great way to curb overspending like you do with your credit card). They’ve spent their money on purpose, its not just this theory in their mind.

“I think keeping a limit on your spending doesn’t have to entail physically limiting yourself from spending.” Now that just doesn’t make any sense. Try this: NO. Here it is again: NNNNNNO. Sometimes, the answer to “Ohhh, I want that!” is “NO”.

You sound like a credit card commercial. Building your credit is a myth. Go deeply in debt so that later you can go… deeper into debt. And your CC rewards don’t outweigh your overspending + the additional risk you’ve taken on. Erik is living the good life in ways you may never understand. Stop playing games with these slimeball CC companies.

Kudos, Erik. I’m glad to see that someother people here understand that no payments = more money in your pocket to save, to spend, to invest, to give…. And look at it this way – at least Erik didn’t need to write a 2,000 word essay, justifying his overspending on something like buying a new car like his buddies did.

By: Daniel Schildt

Daniel Schildt — Sat, 29 Apr 2006 18:26:56 +0000

I find it rather weird that some think that people should always have “the newest and greatest”, when most can keep living reasonable life without too much spending. I know that it is good to have car that works but hey, most of older cars are still OK for many years. While new car has it’s advantages, I wouldn’t buy new because of too high costs. Another thing to consider is amount of repairs etc. needed and estimated cost of them. Anyway, I’m not sure about costs of buying new car in USA, but at least here in Finland goverment taxes make it much more expensive than in countries like USA or Germany (that manufacture huge amount of cars every year).

By: Anastasia

Anastasia — Fri, 24 Mar 2006 05:01:11 +0000

Mateja – I see your point re cash sitting at home not earning interest. However, sometimes it is hard to have self-control 100% of the time, and I think Erik’s plan is good because it reduces the chances of blowouts, which are going to cost a lot more than you would gain by having one month’s worth of expenses in a high-interest account.

By: mike

mike — Thu, 23 Mar 2006 22:12:35 +0000

I agree with Mateja. Envelopes are cute, but an ING acct will earn interest and you have the same protection against knee-jerk purchases.

By: Kiran

Kiran — Thu, 16 Mar 2006 23:47:28 +0000

So I just finished reading the post and I have to say there were some solid points made. It actually reminded me of the other day when I was researching various US cities and reading people’s opinions. For nearly every major city people complained that the cost of living was too extravagant and even warned not to move there because “you won’t be able to afford it”. I am moving to San Diego this summer and the thought of not being able to afford it scared me for a moment, but then I thought “all I really need to do is have a little discipline”. Sure it isn’t easy to buy property and the gas is pricey, but what does this really mean? For the gas it means I may have to decide to get a more fuel conscious car or just be practical about planning out my day so I don’t guzzle gas. As the car example pointed out, what people can afford will shock most if they make even a simple effort.

The barriers and doubts people create that ultimately prevent them from their dreams are ridiculous. I believe what it really comes down to is that people are too lazy and unwilling to change their habits.

By: Mateja

Mateja — Thu, 16 Mar 2006 13:24:32 +0000

This discussion has some really good points. I think that withdrawing money from the bank every month and putting it into seperate envelopes is a bit superfluous. Cash doesn’t earn you any interest, not to mention that having a bunch of cash lying around is a liability — it could get stolen, for example. Instead of real envelopes, how about envelopes ‘in your mind’. A little bit of creative financial planning would save you from having a bunch of cash lying around, and would earn you some extra interest in the long run. Erik, you said the whole idea of keeping cash at home is to control your spending. I think some self-control is in order. Keeping cash in envelopes at home reminds me a bit of my grandmother keeping cash in a sock under her bed. She does this because her generation has learned not to trust banks. In our modern times, however, banks are very trustworthy. I think keeping a limit on your spending doesn’t have to entail physically limiting yourself from spending.

Using credit cards is definitely a good thing, for two reasons. First, it builds credit, and you’ll thank yourself later for this if you need a loan, or you want to rent some property. Second, you can earn rewards for spending money on goods and services which you consume anyway. I use my credit card for everything, but I always make sure to pay the entire balance when the bill comes so that I don’t incur any costs on interest. I’m building my credit, and at the same time, I’m earning miles which I’d buy anyway, since I love to travel. I think your enthusiasm for saving is excellent, but consider my comments. Best of luck to you!

Mateja

By: Wilson

Wilson — Thu, 16 Mar 2006 10:11:21 +0000

Very insightful thoughts, Chris. Safety features are often overlooked as well.

By: Chris

Chris — Thu, 16 Mar 2006 00:11:04 +0000

“This car’s function is to get me from point A to point B and as soon as it can no longer do that safely and reliably, I’ll get rid of it.”

Let’s hope you don’t have a serious accident in the old car: an accident that could be avoided by having a dynamically superior new car.

Or an accident that could be fatal in an older car but not life-threatening in a new car with better safety features.

What’s more important: your money, or your life? Last time I looked, they don’t put your bank balance on gravestones.

I think a little perspective is needed here. I’d say it’s fine to cut costs on household matters, but not matters of life and death.