Around 2000 my main financial priority was getting myself out of the $52,000 of credit card debt I'd accumulated during my years of freelancing. In 2003, my main financial priority was paying off my car, which I accomplished in March of 2004. In 2004, my main financial priority was... well, I kind of lost the thread of having a main financial priority. Basically, I felt like I'd worked hard to get myself out of debt and deserved to indulge myself a bit, so I moved to a nicer apartment closer to work, bought a new Macintosh system, and a few other things. In 2005, this trend has continued with my purchase of a Canon EOS 20D digital camera and associated paraphenalia, and a few other things here and there -- that have added up to several thousand dollars. Ulp.
On the other hand, I will max out both my 401(k) and Roth IRA contributions this year, and I have gone through my finances and cut out a lot of unnecessary expenses. For example, I realized I don't watch that much TV and dropped the movie channels on my DirecTV subscription in favor of NetFlix's 1-at-a-time plan, for a savings of $30 a month. I'm on the verge of canceling my T-Mobile service as well and switching to a prepaid provider. Also, I've not paid a penny of interest since I paid off my car and, in fact, I now have a bank paying me money to use their money, which is a good reflection on my recovering FICO score.
I have a few other things I want to buy this year: a couple additional lenses for the 20D, a smaller printer, and a portable computer, either a beefy new PDA or a small laptop -- what I really want is a scaled-down Tablet PC, something like a Sony Vaio U750 or a Dialog FlyBook V33i. But I'd take a Dell Axim X50v, preferably with a memory upgrade. That would really be the smart thing to do, as it'd cost a lot less than the Vaio or the Flybook. Those are the last major things I have gadget lust for. Then it's just books and CDs.
Still, if I want to follow Peter Lynch's advice and own my home, I should stop spending so much money on technology that will be obsolete in a few years and focus on saving up a down payment. Yes, you can get a mortgage with no money down these days, but in the time it takes for me to save up the down, the last few remaining negative remarks will fall off my credit report, thereby getting me a better rate on my loan (even if rates go up, I figure I'll break even). Also, since I'll start with 20% equity, I won't need PMI for the first few years of the loan, which should help offset any increase in real estate prices. And of course having fifty grand in savings (my goal) would be a very nice safety net if I decide not to buy a house.
I haven't mentioned buying a new car. The one I have isn't fancy (it's a Hyundai Elantra) but it is paid for, and it will be under warranty through 2012 or until the odometer rolls over to 100,000 miles, whichever comes first. The hybrid Altima that Nissan has coming out late next year sounds appealing and suitably "green," but I don't need a new car, especially not one that costs thirty grand. I'll revisit that decision after the hybrid Altima has been out for a year or so, but my hope is to put off buying a new car until after I buy a house.
Posted by kindall at July 5, 2005 06:48 PM