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Money Saving Monday: Reducing Overhead

Big changes a-foot this week. Huge. Major milestones on the Dogs or Dollars Homefront.

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The Refinance. After months and months of muddling this over, and a couple false starts, we are doing it. It will be done. Signing papers today. The last four years of payments on The Big Fat Mortgage will be swallowed by the lower rate and renewed thirty year term of our shiny, new, not-so-big-fat, Mortgage. I have mixed feelings about this. Turmoil even. On the one hand, its going to lower our monthly payment by $400. Talk about reducing overhead in one fell swoop. Unfortunately, my goal was to reduce it by $600. We are a little shy of that. Given the circumstances *cough*makinghomeaffordable*cough*, this made more sense than throwing a bunch of good money after bad for that additional $200 per month.

In a move uncommon around these parts, I am tapping saves for the closing costs. Thats right, you heard me. I am opening up The Emergency Fund. No, this is not an Emergency. Rather, its the proper use for long term savings, which is really what that account has become with it’s bloated balance. It’s putting just a bit of that money to work for us. As opposed to it collecting more dust than interest in its current state.

I told you. Big changes.

The Car. While we’ve got that Savings Account open, I am calling it quits on my car repayment. I can’t take it anymore. No more monstrous payments, please. Uncle! Since October, when I took on my first non-mortgage debt in years, I’ve paid off $10,000 of the $16,000 in $2,000/month chunks. Those have been varying degrees of painful. Technically I have 3 more months to go, including this month’s payment, which is due in just a couple days. Since, I’ve had to pry open the coffers anyway I’m using a little of that money to settle the debt. I probably should have done that to begin with and just paid myself back.

However, I do not like to use my savings. I have held on to this money for years. All through The Layoff and certainly during my 2 jobs, 1 nightmare, I did not spend a penny of it. In fact, I have only ever increased the balance regardless of our circumstances. Even now, with Corporate Sponsorship firmly in place, spending only a small percentage, it makes me nervous.

What’s Different? Why Now? Both of these moves have been on the horizon for some time. I am far from making rash decisions here. I’ve had time to contemplate, and come to terms with this being a proper use of our money. More importantly, I’ve had time to do some additional savings beforehand, padding the blow to our account balances. If I ever hope to exit Corporate Servitude (again, perhaps successfully), I’ve got to prepare. That preparation comes in the form of little things (No Cable, Gardens, Chickens and Grocery Spending) and also in big things. Big things like Mortgage and Car Payments. There is not much I could do with Chickens that would put $2,400 a month back into our available cash flow.

So Yeah, Open Sesame. I am pilfering my savings. I’m saying goodbye to a few long term friends, whose security has kept me warm at night. Sending them off with well wishes to a higher purpose. And looking forward to meeting their replacements on a monthly basis.

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Comments

Luke
Reply

Congrats on going ahead with the big re-fi! We’ve been dragging our feet over doing the same thing for a year now. Rates have started to climb ever so slightly again which makes it all the more hard to pull the trigger. It’s a worthwhile effort and expense though in the big picture. Even lowering your rate by %1 or %0.5 will be a huge difference over the course of your loan.

Katherine
Reply

Congrats! I know when I refinanced about 18 months ago, it almost didn’t seem worth it, even though I was shaving a few years (and a couple of percentages) off the loan. But now, I’m so glad I did. I’m paying that much less in interest over the life of the loan. I’d do it again if I could find little closing costs and do a 10 year – which is what I should have done back then.

dogsordollars
Reply

Thanks for the 18 month later perspective Katherine! I’m hoping I will feel the same way. Right now, I’m still smarting from the much too drawn out experience, and then having to write a monster check at the end.

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