Two Things I Never Want to See Again…

1.) A car payment

2.) An elderly woman wearing pants with ‘Naughty’ crocheted across her hind quarters.

While I can’t stop an octogenarian shopping at my local Target store from reliving her youth inappropriately, I can stop car payments. How?

Our tax refund this year is just shy of $6,000.

We will wipe out 60% of our car debt. SIXTY PERCENT!!

YES!!

Posted by Beks on February 5, 2010 at 9:00 AM in Reducing Debt, Spending Money | 31 Comments »
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Shannon responded:
Posted: February 5th, 2010 at 9:08 am
Naughty Grandma???ewwwwwwwww

Paying off 60% of your car loan?? YAY! YAY! YAY!
NYGIRL responded:
Posted: February 5th, 2010 at 9:33 am
Hahahahahaha!!!! That was funny…the Octagenarian comment I mean…..

Congratulations on the impending dent in your debt…..that must be a wonderful feeling!!!!! You have just motivated me to get my act together here to do my taxes….. stay tuned……
Lizzie responded:
Posted: February 5th, 2010 at 9:47 am
Way to go!!!! Won’t that feel good?!?
Jen responded:
Posted: February 5th, 2010 at 10:00 am
Nice!! About the car loan. The naughty granny? That’s. Just. So. Wrong. Although, I give her points for being noncomformist.
Jean responded:
Posted: February 5th, 2010 at 10:36 am
In my part of the country, we typically don’t see things like that at Target – only at WalMart…

Congrats on wiping out 60% of your car loan – that’s AWESOME! It KILLS me to see how much goes to loan payments every month. I’m paying bi-weekly now (automatic payment tied to my direct deposit) so at least the balance is going down more quickly.

BUT, here’s a question for you: $6K seems like a HUGE tax refund. Would it behoove you to consider raising your number of exemptions so more of that money shows up in your paycheck rather than letting it go to a savings account of sorts at the bank of Uncle Sam? Easier said than done, I know – I don’t want to owe the gov’t ANYTHING, and would rather them owe me @ the end of the year. 2009 was the 2nd year in my house, so I’m hoping that I’ll be able to make some changes to my exemptions this year.
Laura responded:
Posted: February 5th, 2010 at 11:58 am
Congrats!!! Despite giving the government a huge loan, it’s still exciting to get it back and to be able to wipe out a TON of debt!!!

And you’ve helped me save money… I don’t think I’ll be going to the grocery store tonight with that image in my head!
Brandon responded:
Posted: February 5th, 2010 at 12:14 pm
That’s a mighty big free loan your giving the government, nice to get your money back though. Maybe time to adjust the withholdings?
Cynthia responded:
Posted: February 5th, 2010 at 12:30 pm
Yay for huge snowballs being thrown at debt!!
Melanie responded:
Posted: February 5th, 2010 at 12:38 pm
Hahahaha!!! #2 made my day:). Congrats on your car debt! Knock it out!
debtmaven responded:
Posted: February 5th, 2010 at 12:42 pm
Wow. $6K! How do you get that much? Jean is right, maybe you need to change exemptions, or is it due to unemployment?

I’m only gonna get $792 (according to TurboTax). But that’s still an entire month’s debt payment extra!
mikey responded:
Posted: February 5th, 2010 at 3:40 pm
Just totally paid off our car loan with the annual bonus! WOOT!
Michelle responded:
Posted: February 5th, 2010 at 4:49 pm
Hi there! I have followed this blog for a long time and watched your story unfold. We are also very surprised and elated with our tax refund this year that will help us make our first dent in our debt. We are in week 5 of Dave Ramsey’s Financial Peace University…the Tax Refund of this amount (just over $6000) could not come at a better time for us motivationally…we get to kick a tax bill and 4 credit cards to the curb!

All that just to say, YAY you! Great job and I love it when people get OUT of debt!!!!
Michelle responded:
Posted: February 5th, 2010 at 4:51 pm
Speaking of the large refunds…we TRIED to fix our exemptions so this wouldn’t happen again…I already have nothing taken out of my check (elect “9″ on my W-4) and I think we elect less “1″ or something on my husband’s…anyway, we were SHOCKED to get that back this year…but I guess going from 3 to 4 kids any some other tax-free things…helped out.
Mysti responded:
Posted: February 5th, 2010 at 7:03 pm
We adjusted our withholdings so our refund is usually under $1000. We need the money on a weekly basis more than waiting for a big refund.

Congrats on wiping out so much of the car loan though!
Mar responded:
Posted: February 5th, 2010 at 8:20 pm
The refund may have something to do with Beks husband being unemployed for a period of time last year. Less income but the same deductions… If he was getting income tax taken out on a salary of $x during the year, but made only $X minus 30 or 40%, that could be at least a partial answer.

I file as head of household, have one child, and have 8 exemptions on my W-4 and am STILL getting over $2,000 back on my federal taxes. I’m not changing it because I’m concerned that I’ll get hit with the AMT some year, especially if Congress doesn’t continue to pass the annual “patch” to protect middle-income taxpayers.
Joe responded:
Posted: February 5th, 2010 at 10:41 pm
I know the feeling. I’m so close to paying off my car that I can almost taste it!
Mysti responded:
Posted: February 6th, 2010 at 9:18 am
I gave you an award on my blog! Stop by to pick it up.
Forest responded:
Posted: February 6th, 2010 at 10:28 am
Ha ha, this is the funniest short post I have read EVER…. I’m glad you can stop the car payments, well done … I didn’t get a tax refund this year sadly.

Thanks.
Forest responded:
Posted: February 6th, 2010 at 10:28 am
I forgot to tick the ‘Notify me of followup comments via e-mail’ so just doing this comment so I can get them
Nicole responded:
Posted: February 6th, 2010 at 1:43 pm
Nice! Sounds like next year you need to give the government less of your money. We claimed a lot and expect to break even this year. It’s kind of nice because I got my money all year instead of an IOU at tax time.
munchkin responded:
Posted: February 6th, 2010 at 6:35 pm
Thats amazing! I’m jealous
Ryan @ Planting Dollars responded:
Posted: February 6th, 2010 at 11:38 pm
You didn’t get to snap a picture of that!?!
Dollars Not Debt responded:
Posted: February 7th, 2010 at 12:16 am
Nice Snowball! When the stock market is a hit or miss and the bank’s interest rate for a savings account is 1%, The lump sum at the end of the year isn’t so bad. Let’s face it, 90% of Americans would have nothing to show for it if they paid less in taxes throughout the year and got back nothing. I personally enjoy the lump sum because it gives me a big tool to use instead of a bunch of tiny tools. On my blog “Dollars Not Debt”, I talk about my debt free path.

Dollars Not Debt
Jenn responded:
Posted: February 7th, 2010 at 6:38 am
Congratulations! It sounds like this amount of refund isn’t the norm so I’m also assuming it’s related to the layoff as others have suggested.

Isn’t it amazing how your perspective on things changes when you’re firmly in the mindset of truly evaluating where best to spend your hard earned dollars? I’d bet that in the past we’d all have looked at that refund and instead of seeing a 60% loan payoff we’d have seen it instead as an opportunity for a holiday, enormous TV or other splurge, and ignored the debt for another day.

Good on you for making the most of it!
Jenn responded:
Posted: February 7th, 2010 at 7:16 am
Just wondering if when the loan(s) are paid off, are you planning to set aside money regularly to purchase your next vehicle with cash? With the big debts gone there will be a lot of cash freed up to save for the next one. It sounds like you never intend to have another car loan, so I was just wondering if you’d already mapped out the plan to avoid it.

We always buy ~3yr old vehicles with cash and then drive them until they die (or become unsafe and/or too costly to justify). I figure if a car payment would be $300/mth for a round figure, then as long as I’m spending less than $3600/yr on repairs I’m ahead. The insurance sure is cheaper on an older vehicle. I got my 2000 Civic in 2003, so I’m heading into my 7th year with it. Until this past fall, I had spend about $500 redoing the brakes once, and replacing the wiper motor. Other than that it was only DIY oil changes and replacing tires, which I would have done on a new vehicle too, so I don’t count that. This past fall a friend (and Honda mechanic) kept it for a week and fixed up all the little things that had been failing but not stopping me from driving it. $1500 later it’s good as new and I hope to get another 5yrs if the body holds up.

So in total, for the 6+ years I’ve had it, repairs have been $2000 or $333/yr – about the equivalent of one car payment a year! It won’t be pretty by the time I retire it, but it also won’t owe me anything.

I used to say that a used car was all I needed because what I drive isn’t who I am and that it’s just a way to get from A to B. Now that I think about it, I guess it really does represent who I am. It says I’m a frugal person who doesn’t place any importance on a vehicle and instead spends her money on the things she does value.
Divine and Debt Free responded:
Posted: February 7th, 2010 at 9:09 am
Congrats on paying down debt!!
Dollar Bill responded:
Posted: February 7th, 2010 at 1:15 pm
Both of your jobs (I can’t remember if your hubby is back at work) are not secure….shouldn’t you throw some of this in an emergency fund so that you’re not eating ramen noodles or food that has been frozen for a year?
Beks responded:
Posted: February 7th, 2010 at 5:57 pm
Yes, this amount is due mainly to the job loss (we made more than 20,000 less than last year but paid nearly as much in taxes). Even if I expected this refund, I wouldn’t have changed my withholdings. I do better saving via the ‘taxed savings’ than on my own.

Jenn – Yes, we are planning to pay cash for our cars from now on. Once we pay off our debt, we are going to pay ‘car payments’ into a savings account. I’m like you though, I drive my cars until they die!

Dollar Bill – We are currently working to build up our emergency fund again. But since we are both in stable jobs, we are going to put a large chunk toward the loan.

Jean – So true about the Walmart comment!!
Mrs. Money responded:
Posted: February 7th, 2010 at 6:05 pm
D@mn!! That is a huge tax refund!! I hope we get money back this year!
Mrs. Accountability responded:
Posted: February 7th, 2010 at 10:59 pm
I have not yet been able to figure out what we are going to get back this year, not even an inkling because I’m behind on finishing up 2009 for my husband’s businesses in Quickbooks. Hopefully by the end of February… my son is getting back around $1000 because I had him withhold more taxes in his paycheck because I thought we could claim him as a dependent. I missed that one little bit about him making less than $3600 a year. Duh. That’s a nice amount to be getting back though. I’m with an earlier commenter though that suggested beefing up your emergency fund.
James responded:
Posted: February 8th, 2010 at 1:38 pm
I’ve tried to find the answer to this before, Beks…

Why do you have such an expensive car? Did you consider selling it and buying a much less expensive one?

The first car my wife and I bought was ~$11,000. Next was $3,600, then $5,500, then $2,900, then $1,300, and now $1,500. (And only one of those “died”… others we sold or were in accidents.)