shifting gears from debt repayment to saving

April 25th, 2008

Shifting Gears From Debt Repayment to Saving

I just wrote about my budget busters, just in time for something completely different to waltz right in and bust my budget wide open. It is related to one of the things I mentioned, the lack of experience budgeting – but it isn’t something I was thinking about when I wrote that post.

Argh! Well, now that that is out of my system, on to the explanation. ;)

Wednesday night we had the blower in our furnace running to circulate some air throughout the house. When my spouse turned it off (at the thermostat) before bed, it didn’t turn off. Not being the technically savvy type, we hypothesized it was the thermostat going bad, and went to bed. Yesterday morning, I called our service company and they came out to check things out.

The technician came, and while he was troubleshooting the furnace, the fan turned itself off. Nice timing. The good news is that the technician says the thermostat is fine. The bad news is, he thinks the board in our furnace is going bad. What he said is that he thinks the relay that turns the fan on and off got stuck. The technician said he thought it would be okay until the fall, because it was the heat relay and not the cold relay. But the fan mysteriously came on again last night, so it probably isn’t okay. The only way to completely fix it is to replace the board, or replace the furnace.

The furnace is 22 years old. It has already outlasted its typical lifespan by 2 years and making a big investment of a new board in it would not be a smart long term move. Basically, this is a sign of things to come. A warning, if you will. Hey, I really wanted a more energy-efficient furnace, after all…

Coupled with the fact that I had a medical procedure on Tuesday that is sure to be expensive, we’ve decided to be proactive and shift the priority from debt repayment to saving for a short while until we get some things worked out. At this point, unless we find out the furnace needs to be replaced immediately, the debt snowball or $810.40 will continue to go towards debt repayment, plus a small bit so that we can make double payments to the spouse’s student loan (the debt snowball has $437.59 per month toward the student loan and we will up that to about $470) but all other snowflakes will be going into our savings account for a new furnace plus medical expenses. We’ll know more about the medical expense part after next week when I talk to my doctor about the results of the tests I had. But just the tests will cost money that we would rather save now versus take out of our emergency fund if we don’t have to.

This is all up for adjustment, and we may end up saving everything past the minimum debt payments if we need to of course, especially if the furnace continues to misbehave. It would be nice to continue the debt reduction in some fashion and continue to make the student loan double payments, but I am okay with not doing that if our finances warrant it. Dependent on the results of the tests I had, and our research into a new furnace, we may up the amount we need to save even more. But right now, we are guessing we’ll need about $5000 for the furnace and my tests. Once we put our economic stimulus check into savings, as well as my spouse’s additional paycheck in May (he is paid biweekly and May is a three paycheck month), plus what we have in savings already, we need to save about another $1000 to $1500. If we haven’t replaced the furnace by then, (and that number remains appropriate), we can shift back into significant debt overpayment and slay the student loan. We managed the huge car repair, we’ll manage this too. I knew things were sailing along too smoothly, and there were bound to be more bumps in the road. I was just hoping to get rid of the spouse’s student loan before we hit another one. So it turns out we may become consumers with the economic stimulus check after all, because it seems it will ultimately go towards a new furnace. The world has a funny idea of irony, that’s for sure.

Roll with the punches, I keep telling myself. This whole debt repayment thing is a huge game of adaptation. But, once more… Argh!

The technician who came for the furnace call checked my a/c unit as well and called the whole trip my yearly a/c service, so that was nice. At least I didn’t have to pay anything for that. :) However, the call I make this morning to have them come back… I assume I will have to pay for. But something better actually be completely diagnosed and fixed this time. Or something.

Argh!

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16 Responses to “Shifting Gears From Debt Repayment to Saving”

  1. We had to replace our gas furnace about a year ago (only lasted 17 years) and debated between an 80% or 90% efficient model. We settled on the 80% model since in calculating the savings we thought we would still have paid out more over the next 15-20 years. I now think that was a mistake, given how volatile energy prices are. So……go with the more efficient model when you have to buy one!
    Sounds like a really good idea to start saving. Paying down debt feels good, but it must feel even better to know you can (potentially) cover all those, ahem, blips of everyday life and not generate new debt. Congratulations!
    Oh, and you might want to periodically check with your technician and see if they are offering a discount. If they have a slow spell they might give a little on the price. The power of planning ahead!

  2. It is good to have a balance. I personally believe that before someone should begin paying off debt, they should have a minimum of 3 months worth of expenses put aside. This isn’t a “Uh oh, I’m going to lose my job!” fund, but a “K, if something happens, I can pay for it!”

  3. Sounds like a plan. And if you have any money left over from the whole thing, insta-snowflake!

  4. I’m also slowing down my debt repayment plan (although it hurts not to send that giant check to the credit card company!) My labor union may strike at some point in the next few months, and I feel like it’s more important to pad my $1,000 emergency fund now for a possible lack of earning later. Maybe next fall when and if the threat of strike goes away, I can take that extra money out and make one giant payment to the CC company.

  5. I know the feeling. My snowflakes now have to go to living expenses and any extra money I make to paying a medical bill for an ER visit I made last month. I have a high deductible plan, so will be paying the whole bill, most likely. Fortunately, I have enough savings, but I will need to build up my savings again, once i pay the bill.

    Life has a way of intervening with our best laid plans every once in awhile.

  6. “The spouse”? You call your husband “the spouse”? Ouch.

  7. Um, yes… spouse is a nice word. A happy word. He calls himself spouse. We’re not fans of “husband” and “wife”, personally. We like it. ;)

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