I haven’t talked much about our personal life on the blog lately but Lisa and I are expecting our 3rd child, a daughter, in July. It’s an exciting time for our family and we’re excited to welcome our baby girl into the world! But it is also an expensive time in our lives and baby #3 will probably end up being our most expensive child yet.
It’s not her fault by any means as there are various things we have to buy that we didn’t need to with our boys. Our house only has three bedrooms, and our boys will be sharing the largest room so we will be purchasing a new bunk bed for the boys to share. We are also going to be buying a new dining room set that can hold at least five people at a time. But most importantly we knew we needed to buy a new vehicle. Lisa’s 2002 Honda Civic has been great to us, but it can’t handle three car seats.
Since our family doesn’t do car payments we were going to pay cash for the new vehicle. After doing some research we decided that a mini-van was the best option for us. Now we’ve bought cars with cash before but this was a little different because we wanted something a little newer that would last us for a while. This was also the first vehicle that I would purchase from someone other than a family member. Add those things up and we’d end up spending more money than our previous car purchases.
After looking around for a few weeks we found one that we liked. It fit our needs the best and most importantly it matched what was in our budget. We were able to write a check in full for the purchase amount. It turned out though, that other than the down payment for our home, which came from the sale of our previous home, that it was the largest check either of us had written. Also because the proceeds came from our checking account it was a strange feeling seeing our bank account dwindle.
To be honest it took me a little bit to get over the shock of it. But eventually I snapped out of it and it made me realize that’s why we saved up the money in the first place. Not to hoard it and watch our balance grow, but to pay for things that we need in life.
But just for fun I took the purchase price of the van and determined what our monthly payment would have been based on four year and five year loans. Then I took those two payments and compared them to our budget. You know what I noticed? I had a hard time deciding what we would have had to cut from our budget. Basically we’d have to give up on one of three items in our monthly budget and none of them were appealing.
- Paying extra on the mortgage
That exercise was a great reminder as to why we’ll never have a car payment. I’ll be talking about this more in detail on a future podcast, but I have no idea what we would have chosen to cut out of our budget. It was great visual evidence to me that debt takes away one’s options and it reinforced a belief that cash is king and that for us, cash is the only way to go when it comes to purchasing a vehicle.
Have you ever purchased a car for cash? If so did it feel weird writing the check? What has paying cash for a car done for your finances? If not, what is holding you back from paying for a car in cash?