Letting go and embrasing the smarter move

So my 12 year car has been going into the shop more more over the last couple of years. Finally after my latest maintenance they quoted some repairs that exceeded the current worth of the car $8k.  Now my wife was been trying to get me to replace it for awhile. One because of the cost and second she couldn't really dive it; due to it being a manual.  So when a engine light came on I sadly came to the realization it was time. 

We talked about different ways to do it.  Can we go to one car. No even though we work close to each other our schedules were different enough it would of been very stressful.  Do I ride a bike to work. We live about 8 miles from work, but it is mostly street driving and trail would take over an hour to get to work. My wife didn't like that idea, plus it snows here. So only option is to get a new car. 

One of my many flaws is I like to get new things and keep them forever. With our current expenses and having a nanny this year I knew it wasn't in the cards.  So I looked at used cars in the Goldie Locks zone of 3-5 years old.  This is were the cars lose most of it's value, but still have warranty and have lower miles. I found one in great shape in the price range we were looking for with very low miles.  The only optical would be how much my car would trade-in for.  No matter what I buy I like to keep it in the best shape as possible.  If it wasn't for an older body style you would of sworn it was new.  Awesome car and I still like looking at it walking away.  This was truly hard and I've gone through so much in the car. I though I would keep it forever. Sadly timing made that not possible and the reliability was becoming an issues and increase cost of repairs. 

So I took a day off of work and now I have a new "new to me" car.  It is a great little car not as nice as my old one, but as my wife says the technology brings me into this century. 

I know in the FIRE community loans are not good and you should only buy what you have in cash. I was fully intending to buy this car in cash. This would of required me to sell stocks and wait a week or so for all the transferring. I went to the dealerships site and looked for discounts.  I noticed for the CPO (Certified Pre-Owned) they had $500 off if you previously took our at loan with them. Which is fine, but not worth it at a 2-7% interest rate, but then I see this cooperate discount of 36 month 0.9% interest rate if you previously finances in the past 10 years and get a CPO of 2017-2018 which I was. In fact I paid off my old loan 9 years ago. So I couldn't turn down .9% interest plus 500 credit.  That actually put me ahead by $150 since the total interest amount was $350. I don't think anyone can criticize me for that one. 

 

The family love the car and kids think it is great.  I feel like a lost a friend and miss that old car. But that is life and I'm sure I will grow to maybe not love the car, but at least enjoy it.  Being on the path to FIRE doesn't mean you can always do what you want, but making smart choices can help you live the life you want to live.

Create the path for 2nd Gen FI

 As a parent of two first graders I was thinking what I could do to help them along there life path.  The first and easy is to build credit history. If you didn't know this, but adding someone as an authorized users helps them build credit history. You are responsible for there spending, but they are building the history. Mean by the time the kids turn 18 they will have over 10+ years of credit history.  I know this work because this is what my parents did for me.  

2nd Gen Life Hack #1

 This is really the easiest this you can do for you kids.  I wouldn't not recommend this if you are working through credit card issues and have trouble paying them off.  There you have two options:

1.  Take an existing card that you plan to never close and add them as an authorized users. Note some cards that have a membership fee add a fee for each authorized user. This will create a card in there name. Once it comes in activate it and then shred it. 
2. Open a new card like an airline card to get the points, and then hit you spend limit and lock away the card or shred it.   

 

That's it.  So easy!! The kids will now have a head start on all there peers.   I am sorry Dave Ramsey. I know credit cards are bad and you should never get one.  Maybe it's just me but it seems credit/credit score all one of the key points used by everyone and are become more important everyday.  Employers to applying for an apartment look at your credit history to determine if you are a good candidate.  To me having good credit and credit score is an easy win in life.  I don't want to missing out on good rate, travel rewords, and getting that apartment.

 

The best example I have on this is a comparison with my friend. We both work similar jobs and pay.  He grew up in a household of Dave Ramsey devoted people. Which is awesome to live by all dept is bad and pay everything is cash.  He lived with no debt, bought car in cash, and only open a credit card in the last couple of years. While I on the other hand and not debt, could of bought car in cash instead tool a very low interest rate loan (.9%) and kept 2 years to build credit, and has a credit card since 18 and history of a card since I was 10. Both in the same place but got there in two different ways.  This difference came in when looking at mortgage rates.  I was able to qualify for best rates possible with good credit scores and credit history. Which he was able to get a good rate, but was told this credit history made it more difficult to get the best rate. I know this is a small difference and for some it doesn't matter, but how easy was it for my parents to give me a leg up by doing this small step.

2nd Gen Life Hack #2

Building a good family money philosophy.  My friends parent build a great philosophy that dept is bad and get ride of it as fast as possible.  I can see internal conflict with my friend when I talk about credit card reward and traveling for free and having a 30yr mortgage to build cash for opportunity gain.  He was told to pay off as quickly and aggressively as possible. Which is good and many should do this.

I feel for kids building in a foundation of responsible saving and spend early helps balance the two worlds.  It is important for kids to feel responsible about there money and not just get what they want. To not here no or telling them we can't afford that.  Build in delayed gratification and find what they value.  This can be done through allowance or chores.

What I've started to do is give them allowance equal to there grade level.  So first grade they get a dollar a week. They are required to save 50% in a jar and 50% is theirs free to spend.  They way they save and buy those Pokemon cards and can see there savings grow for the future.  Throughout the year I will introduce investing and compound interest.  Probably using some of chooseFi foundation education program. 

 

If you know anymore let me know.  I know there are what I can elite hacks. These usually take dedicated time and effort to pull off.  An example of this would be to have your kids help in your business and get paid for it. Then they can open an IRA to fund there future.

 Remember it isn't just that you found a way to live and are working toward FI it is you are creating a framework that is easy for you kids to follow.  The things that motivated you to start this path may not exist for them. You family may have struggles with money or you got into huge debt and decided you didn't want to live that way.  You kids may not have those obstacles and may see and feel that life is easy. They get what they want when they want and doing see that foundation behind the scenes.  I fully believe that is why 2nd and 3rd generation FI is so hard.

 

 

School is starting and the kids are not going - journey for a nanny - Reflection

 To start off we hired a nanny.  This was one of the most difficult things for me to do.  I find it very hard to hire someone to do something you can do for yourself as well as letting someone into our home that I don't know.  

Our decision came process  went like this:  REASON, NEEDS, AFFORD, WAN

• REASON: First school is starting and do we feel it is a good idea to send them with the uncertainty of school. Will school stay open all the whole time and will they be safe even though we know the school is doing there best and we are doing our best. We don't trust other families to do there best. Sad I know but true. Just walk around the parks or a store. 
• NEEDS: Second can we keep splitting our schedule like we did all end of last year and summer?  No! We did a great job helping the kids through school and summer. I took on most of the schooling and the kids showed progress, but I felt I was not doing them justice in working full-time and teaching them 80% time which my wife doing the other 20%.  We had a school teach friend help out for a few weeks over the summer and they really focused better and responded more to planned lessons. 
• AFFORD:  Can we afford to only go to a single salary to cover and do we want to do that.  In sort could be, maybe but it would of been tights and we would of basically put a spot on retirement savings. Then with the economy tanking we felt it wasn't the best time to make this big move. 
• AFFORD:  How much could we afford to get someone how could fill in as a nanny as well as assist with there education entering into first grade.  Lucky for us we had friends hiring there own nanny to assist with there kids as well. So we were able to leverage some of there resources. Two things we had to consider was number of hours worked and hourly pay.  Originally we talked about 30 hours a week, but it required us to still have a split schedule which negated some of the needs to decided on.  We ended up on a range 35-40 and depending on the hourly rate we would talk about the total which we settled on 35 hours a week.  For the hourly rate we leveraged hour friends and care.com that placement agency.  They performed all the background checks and posted our position.  We felt a nanny is pay what you get. With our needs and two kids with potential of being a full-time teach we were definitely will to pay more then what Glassdoor and such say are average salaries.
  
• WANT: He did have pretty high requirements since we were taking the kids out of school because of the virus we wanted someone that took protection seriously. Need some type of experience either teach, working with kids, or nanny.  We lucked out and interviewed two great candidates and hired one of them.  Did the whole negotiation on hours and hourly rate and signed a contract.  We settled on a salary and for us it will make the next year do able, but not easy. We will have to cut back, but we already were cutting back due to the lock down. 
  

 All of these things had to work our for us to hire someone. The worst part about this was we needed to make a choice about in-person learning or at-home learning pretty early on.  In fact the schools didn't know how they were going to handle in person learning yet.  Which didn't make the choice any easier. 

So far three weeks in our nanny is great.  She has similar teach methods and ideals as we do and she is able to compliment the online teacher very well.  She had previous experience at a per-school, worked over seas creating lesson plans for schools in 3rd world countries, and just earned her teaching certs.

Here are some hidden expenses that we didn't really put into our calculations

• Nanny tax which is Employer Social Security and Medicare, as well as federal and state unemployment insurance
  
• Worker compensation insurance. Some states require this. Probably best to just get it
• Food. Nanny has to eat and if they are staying in your house 7-8 hours a day and helping make meal for the kids. They got to eat.  Now this is kind of a write off since we usually have some small portion of food either expire or go bad. - we all have something to work on
• Payroll service - Since we were new and had a lot going on we farmed this out to a company called poppinspayroll.com 
• How to best save the money to pay the taxes when they come due each quarter.
  

Cutting the financial fat

Cell phone service shopping

Life is ever changing.  Sometimes events cause you to take a step back and reevaluate what you value. 

I recently jotted down a list of subscription and monthly payments we had.  They ranged from membership to a running club to cellphone.  We made sure to keep things we valued like the zoo and local museum even though we know were are not going to be using them as much this year. They not only provide us joy, but provides support to good causes.

 

Here is a list of things I either total cut out or reduced 

 

 

 

Cut 

• RoadRunner membership
• Football club membership
  
• Shampoo delivery
  
•  SkyZone - kids
  
•  Gymnastics x2 - kids
  
•  Yoga - Wife
  
•  hair cuts - now self cut
• Car wash subscription - usually only kept in winter
• Bullymake - dog treat subscription
• Consumer Reports
• Disney movie club
  

 Reduced

• AT&T Cell phone 98 pm (per month)  to 62 (total wireless)
• Mortgage Insurance - Changed companies
• Mortgage - Refi
• Internet - called company
• Amazon Subscribe and save - re-looked at what we have overstocked and cancelled
  
• Milk delivery - every 3 weeks instead of weekly

 

This are things I haven't closed, but I am considering

• 24hr gym - have a grandfathers prices, but haven't used it since COVID - maybe cut in half and leave the discount, but remove the bonus gym stuff
  
• Amazon FreeTime - tables we use for the kids are getting old kinda suck
• True Green (lawn care fertilizer) 
• Amazon Prime - probably keep, but no to look if it is still worth it
• Sirius Radio - The SUV doesn't have AM radio, but our phones can pretty much cover this
• Harry's shave club - probably keep due to being cheaper then buying at store

 

 

Our family has a lot of subscriptions now that I've gone through them. Mostly provide either convenience to our daily life or provide value.  Some we have had to long and needed to go.  This took a lot more time then I would of expected. I've wrote these all down with the cost in a google sheets doc.  This way when I update our quarterly net worth figures I can update these and make sure we still value them.