Operation Homeowners: Getting with the plan!

We, like most young couples, are both working hard on our fairly young careers. I recently had an epiphany that made me sick! About 8 months ago, I started a new job making more money. We kept the family budget the same and said we would put everything that was left in savings for our first down payment. Well, guess how much we had saved? Nada! You gotta have a plan!

We knew better, too. When we first got married, I had about $15,000 in credit card debt...which is horrifying to admit even now! $5,000 here, a few $1,000 department store cards there, and voila: a big, scary pile of debt. We axed our plans to rent small cottage in an upscale neighborhood and rented a garage apartment (aka: the Treehouse) in the same neighborhood. I dyed my hair back to brown and skipped the $200 monthly highlights that made me a blonde. Off came the acrylic nails. Cancelled were the weekly pedicures and the tanning memberships. Costs were cut across the board: we cancelled the cable, I became the queen of making economical soups and casseroles, eating out was all but forgotten, etc. My husband waited tables at night, we lived on almost nothing, and stuck to a detailed plan to pay it off in a year and a half or so.

So, we have a plan for 2009. We've re-budgeted everything and compromised to come up with a family spending plan that balances our priority to buy a house with a level of sacrifice we can live with. We're putting money into my company's 401K, we're keeping the cable, but we're staying in the Treehouse...we can still eat out, but we'll have to plan ahead and be more conscious of our spending. From February 2009-February 2011, we will save almost $30,000 to use as a down payment on our first home.

We're surrounded by people who bought fancy homes with zero down, have enormous amounts of credit card debt and are still taking second trips to Napa, and all sorts of less-than-smart schemes. We needed a little "play time" after we worked so hard to get out of debt. We had to replace an ancient car that couldn't pass inspection and cost more to bring up to snuff than it was worth--we bought a reliable Honda, not a fancy truck or Hummer, but we bought something new with the intention of keeping it long after we paid it off. No one is going to be working a second job this time around, but I'm still a brunette...

Hint for First Time Car Buyers: Credit unions are like wholesalers when it comes to auto loans. Credit unions "sell" auto loans to dealerships, who tack on 2% or so to the interest rate when you finance a car through them. You can become a member at many credit unions by opening a savings account with five or ten bucks. We left our checking account and savings account at our original bank, because we liked their ATM locations and policies better, but you can move everything to the credit union if you're so moved. Then, you apply for an auto loan at the credit union, secure your financing at a lower interest rate, and head out car shopping with it in our back pocket! I'll post more on buying a car later.