financial zen

Seeing Debt Hater’s post reminded me to check my tax refund – and behold – it’s there! State and federal taxes, in my bank account. What shall we do with this cash?

Pay down debt, of course! But what else?

The Wife and I are taking a much needed vacation to Niagara Falls, for a weekend of relaxation the end of this month. We’ve not had a vacation since after we found out about our son’s coming (back in November of 2006) and this year we decided Niagara was the place to see (I’ve never been). This year, I’ll have to mind my finances closely, as I’ve got three weddings to attend – one in Denver, Colorado, one in Brooklyn, New York, and one in Columbus, Ohio. A lot of travel, mostly in the middle to end of the year time frame, so we’re going to try and have “mini-vacations” all year long.

But at what expense?

We thought about how much money we’d have to spend on these trips, and since we picked up a new car, we’ve decided to drive – at least for Niagara – since it’s a six hour drive. We’ve landed a decent deal on a room (could’ve done without all the bells and whistles, but do to a strong vacation fund, we’re letting that slide). I recognize I need to update my networth – a lot of things have changed!

In fighting debt, one thing you should always do is establish an emergency fund.

Of course, in my venture, I’ve got a mixed response:

• I’ve got a built up (and building) 401k retirement account.
• I’ve got an emergency fund (albeit, a small one).
• I’m two months ahead on my mortgage payments.
• I’ve paid ahead on bills!
• I’ve got debt!

This is kind of a “no-no” – why wouldn’t it be great to be ahead of some bills, especially my mortgage?

It’s showing that I’ve lost track of my finances!

I’m overpaying when that money could be better cycled into paying down debt! To fight this, I plan on taking some of my emergency fund, my extra cash from my mortgage gap, and my wife’s income (all of it!) and paying down debt. Basically, my excess influx of cash goes – debt/mortgage principal. Back and forth. Pay down the big one and hammer away at the rest.

One small step at a time, but as I get things in order I’m slowly moving back in track.

I’ve mentioned before you should have an emergency fund – and I hit one of those snags that shows how important it is to have one. We have two cars (both Honda Civics) which both needed major repairs – timing belts, water pumps, and exhaust work. My car – the old beater – was less than $400 (which also goes to show – find a trustworthy mechanic! I was quoted $600 at the first place I went to!)

The nicer, newer car? Nearly $1000. Needs a new exhaust manifold. That, needless to say, was a shocker. With the new baby, I really hate having only one car available at a time, and “exhaust leaks in the front of the car” cause me some concern when I’ve got a growing boy in the back seat, so of course I had him fix it (and I use this mechanic repeatedly because he’s always straight, never lies, and has been a friend of my wife’s family for years).

Luckily, we’ve got nearly $5000 set aside for emergencies, so this will greatly offset any ding that it would’ve otherwise caused. See how important an emergency fund can be when you’re prepared? $1400 is more than my mortgage payment – which means if I wasn’t prepared, this would go onto a credit card, which I couldn’t pay off immediately, giving me interest charges for the next few months (more than likely!)

Because I was prepared – I can pay off these charges right away, without worry! No worrying about not meeting any bills, no worries about “how can I handle this” – a true moment of Financial Zen. My wife was taken back by my tone when I initially told her – and through no fault but my own she was concerned. We try and talk weekly about our finances, but with the baby being born it’s sidetracked us both – but because we are prepared, it’s a non-issue.

Whew!