In class we were reminded over and over that this was really about changing behaviors. And damn it I am not so sure I like the behaviors it is changing! What the hell do people do when they feel down and frustrated if they can't shop? Eat? I can't do that either!
So life is definitely throwing some lemons my way right now. My job (thanks to the Governor) is in jeopardy. My job is grant funded. Each year I get to play this game where I (with help from others) write a grant application to the state and after a month or so we get word on whether we are funded or not. Well this year, the rules of the game changed. WE were so used to the old rules, these new rules won't really allow us to be a good player in the game.
So as you can imagine, I'm a little stressed. I might be categorized as an emotional person, on a good day. So add a little (or a lot) of stress and well you've got a stress ball on your hands. A stress ball that just might burst out in tears at a moments notice. (Why do I use SO so often???)
Typically when feeling this way I would do one of two things...or both things really. 1) Shop 2) Eat. After losing 40lbs earlier this year, I'm not really eager to begin stress eating. But I did bake some pretty darn good pumpkin cookies the other night. My next logical thought is, shop, when can I go shopping? (I almost started with SO again, I have to stop that). With it being so close to Christmas, going shopping is like killing two birds with one stone. I get to medicate my stress with shopping, while actually being productive and getting Christmas gifts. I start thinking this is great!
Then I hear Dave Ramsey's voice in my ear as if he's the little angel sitting on my shoulder "did you save for that?" No Dave I did not save for my emotional melt down. But damn it now your voice is in my head and I won't enjoy shopping. Thank you very much (seriously thank you...my wonderful habits would have added to my waistline and our debt)!
Some day we will get to the point that we have extra money that we don't have a SPECIFIC plan for. Some day I will get to shop whenever I want to, within reason. For now I guess I'm stuck learning how to change my behaviors.
Again, I ask, what do people do when they are an emotional wreck? PLEASE, please don't answer exercise, because I can tell you that is not happening! Yes, that is a behavior I need to change too, but I seriously doubt that it will bring me the type of satisfaction I once found in food and shopping.
Friday, October 12, 2012
Friday, October 5, 2012
Can you worry and have faith?
I started this post about 2 weeks ago and keep thinking I need to get back to it. Today full of even more worry then I was 2 weeks ago I've decided it is time to finish. Maybe if I get all the worry out I can put it aside and let God take care of it.
I don't know if you can tell, but I'm a worrier. I even own a book called The Worrier's Guide to the Patron Saints. Maybe I should consult it. I wonder if there is a saint that would help me stop being a worrier. I don't really know where the worry comes from. I had a pretty stable childhood, for a child of divorced parents. But as long as I can remember I've worried about things. No matter how many great quotes I see about worrying or about putting your faith in God, this is one thing about me that I can't seem to change. Don't get me wrong, I have a strong faith in God and I know that God is watching over me and listening to my prayers. The thing is, God and I don't always agree on timing.
I imagine your wondering, what the heck does the fact that you are a worry have to do with you and your journey to become debt free? (if you haven't read my last entry...you might want to do that now, and you will have your answer) Becoming debt free is a part of a plan. A plan for our future and our children's future. I worry because I want the best for my children and I'm afraid that I won't be able to provide it particular because of decisions I have made in my past. Decisions that were made before they were even a glimmer. I worry because I've chosen a certain career path, and although I know I have the power to change it, I don't know that I want to. For the past 12 years I have worked in grant funded positions. Meaning about once a year I don't know how much longer I will have a job. We've hit that time of year.
When I think of making a financial plan for the future my career definitely plays a part in why I worry. We are making great strides right now, but what if January 1, I don't have job? What then? I know logic says worry about that when it happens, but something in my gut says, worry about it now. If the economy was better, if there didn't seem to be an attack on early childhood education in KS and MO, I might not worry so much. I have great skills that are applicable to many different situations but I thrive in early childhood education. But that doesn't mean I will find a job that suits me or pays enough to support our family in the way we have been acustomed.
It is some what humurous that I worry about this and can't just seem to put it into God's hands. He has provided for me so many times in my life. Each and every job has seem to come when it was time. I've had wonderful opportunities. I know he will provide when the time comes again. BUT...at the same time I believe in the philosophy that God helps those who help themselves. My fear is that I will be like the man who is sitting on his roof top as the water rises and when help comes he says God will take care of me. Then when he finally drowns and goes to heaven he asks God why he didn't save him, and God replies I sent you help, you didn't take it. What if I don't recognize God's help when it arrives?
The Dave Ramsey class has definitely been a gift from God, my own personal "clue". He has opened our eyes to an error in our ways and has helped us develop a path to fix that error. We aren't perfect but we are making strides. I know life happens and it could put a kink in our plan, a tree in our road, but we will get around it. Even with my faith knowing that we will somehow make it through, I can't stop from worrying. Doing our monthly budget stops me from worrying so much about our finances, but honestly not completely. I think it has stopped the day to day worry but hasn't really chased away the future finance worries.
I know there shouldn't be room for worry when I have strong faith in God and God's plans for me. Jeremiah 29:11 For I know the plans I have for you," declares the LORD, "plans to prosper you and not to harm you, plans to give you hope and a future." Somehow I need to make this my mantra and know that God is for me, and if God is for me, who can be against me. Old habits die hard! I will try to hold strong to his message and push out the worry. I can be like the little blue engine and each day say, "I think I can, I think I can, I think I can." That's all I can do, try.
I don't know if you can tell, but I'm a worrier. I even own a book called The Worrier's Guide to the Patron Saints. Maybe I should consult it. I wonder if there is a saint that would help me stop being a worrier. I don't really know where the worry comes from. I had a pretty stable childhood, for a child of divorced parents. But as long as I can remember I've worried about things. No matter how many great quotes I see about worrying or about putting your faith in God, this is one thing about me that I can't seem to change. Don't get me wrong, I have a strong faith in God and I know that God is watching over me and listening to my prayers. The thing is, God and I don't always agree on timing.
I imagine your wondering, what the heck does the fact that you are a worry have to do with you and your journey to become debt free? (if you haven't read my last entry...you might want to do that now, and you will have your answer) Becoming debt free is a part of a plan. A plan for our future and our children's future. I worry because I want the best for my children and I'm afraid that I won't be able to provide it particular because of decisions I have made in my past. Decisions that were made before they were even a glimmer. I worry because I've chosen a certain career path, and although I know I have the power to change it, I don't know that I want to. For the past 12 years I have worked in grant funded positions. Meaning about once a year I don't know how much longer I will have a job. We've hit that time of year.
When I think of making a financial plan for the future my career definitely plays a part in why I worry. We are making great strides right now, but what if January 1, I don't have job? What then? I know logic says worry about that when it happens, but something in my gut says, worry about it now. If the economy was better, if there didn't seem to be an attack on early childhood education in KS and MO, I might not worry so much. I have great skills that are applicable to many different situations but I thrive in early childhood education. But that doesn't mean I will find a job that suits me or pays enough to support our family in the way we have been acustomed.
It is some what humurous that I worry about this and can't just seem to put it into God's hands. He has provided for me so many times in my life. Each and every job has seem to come when it was time. I've had wonderful opportunities. I know he will provide when the time comes again. BUT...at the same time I believe in the philosophy that God helps those who help themselves. My fear is that I will be like the man who is sitting on his roof top as the water rises and when help comes he says God will take care of me. Then when he finally drowns and goes to heaven he asks God why he didn't save him, and God replies I sent you help, you didn't take it. What if I don't recognize God's help when it arrives?
The Dave Ramsey class has definitely been a gift from God, my own personal "clue". He has opened our eyes to an error in our ways and has helped us develop a path to fix that error. We aren't perfect but we are making strides. I know life happens and it could put a kink in our plan, a tree in our road, but we will get around it. Even with my faith knowing that we will somehow make it through, I can't stop from worrying. Doing our monthly budget stops me from worrying so much about our finances, but honestly not completely. I think it has stopped the day to day worry but hasn't really chased away the future finance worries.
I know there shouldn't be room for worry when I have strong faith in God and God's plans for me. Jeremiah 29:11 For I know the plans I have for you," declares the LORD, "plans to prosper you and not to harm you, plans to give you hope and a future." Somehow I need to make this my mantra and know that God is for me, and if God is for me, who can be against me. Old habits die hard! I will try to hold strong to his message and push out the worry. I can be like the little blue engine and each day say, "I think I can, I think I can, I think I can." That's all I can do, try.
Sunday, September 16, 2012
Hmmm...why are we doing this?
Tonight in class (FPU Class) we talked about baby step 4 saving for retirement and tuition. As class began I was thinking, great these are two things we need to know about. Let me back up a second and remind you (and me) what the first three baby steps are: 1) $1000 emergency fund, 2) debt snowball (paying down debt with gazelle intensity) 3) fully funded emergency fund (3-6 months expenses). So first you complete steps 1-3 before beginning step 4. Makes sense.
Dave Ramsey suggests that you invest up to 15% of your salary into retirement, putting up to the max allowed into a Roth IRA. Ok, seems reasonable. This is where I started doing math in my head and my pulse started quickening. Dave talked about the ins and outs and dos and donts with IRA's. I really understood it all. I've been putting money in my IRA since I was 22.
After retirement we began to talk about tuition for the kiddos. Apparently you can put up to $2000 per kid in an ESA. So, two kiddos, $4000. (I think this is where I started breathing heavy). In my workbook you can see the scribblings of my quick math.
IF...big if....we were to invest in our retirement and save for the kids college at the rates suggested, we'd need to be saving/ investing way more then we are currently paying on debt. Feeling the big cloud coming over my head now. Feeling the rock crushing my chest. Can't breath. Want to cry.
The point that Dave drives home each class is that you live like no one else so that later you can LIVE like no one else. So if I do what I am supposed to do, pay down my debt, keep living in the hood where I'm afraid for my family, invest in my retirement fund, save for the kids college, where will we be? In the same f-ing place we are now.
Why should we bust our ass to get this debt paid off so that our quality of life stays the same? Once the debt is paid and we work on the next baby steps, we still won't have extra money to do any kind of living. So Dave, tell me how I'm going to LIVE like no one else. If we turn around and put the money we're paying to debt to retirement and to tuition, there still won't be the things I want for my family. No vacations. No different house in a better school district. No Hubby quitting his second job and spending more time with us.
It's days like this that I want to give up. We are only having two children so we can give them a good life. But we can't even give them a good life. So why do this? Why? We could just keep going on our merry way and pay for things with credit card, go on vacations on credit. ENJOY LIFE.
Writing this now there are tears in my eyes and I feel like I can't breath. We were supposed to be living like no one else so we can LIVE like no one else. I want to be able to provide the world for my children. That's why we are doing this. I want to be able to show them the world, well at least parts of th US. I want to travel outside of the US with my husband some day. But instead we will pay off our debt and begin working on steps 3 & 4 and we will continue living month to month (but saving for the future). What's the point?
Dave Ramsey suggests that you invest up to 15% of your salary into retirement, putting up to the max allowed into a Roth IRA. Ok, seems reasonable. This is where I started doing math in my head and my pulse started quickening. Dave talked about the ins and outs and dos and donts with IRA's. I really understood it all. I've been putting money in my IRA since I was 22.
After retirement we began to talk about tuition for the kiddos. Apparently you can put up to $2000 per kid in an ESA. So, two kiddos, $4000. (I think this is where I started breathing heavy). In my workbook you can see the scribblings of my quick math.
IF...big if....we were to invest in our retirement and save for the kids college at the rates suggested, we'd need to be saving/ investing way more then we are currently paying on debt. Feeling the big cloud coming over my head now. Feeling the rock crushing my chest. Can't breath. Want to cry.
The point that Dave drives home each class is that you live like no one else so that later you can LIVE like no one else. So if I do what I am supposed to do, pay down my debt, keep living in the hood where I'm afraid for my family, invest in my retirement fund, save for the kids college, where will we be? In the same f-ing place we are now.
Why should we bust our ass to get this debt paid off so that our quality of life stays the same? Once the debt is paid and we work on the next baby steps, we still won't have extra money to do any kind of living. So Dave, tell me how I'm going to LIVE like no one else. If we turn around and put the money we're paying to debt to retirement and to tuition, there still won't be the things I want for my family. No vacations. No different house in a better school district. No Hubby quitting his second job and spending more time with us.
It's days like this that I want to give up. We are only having two children so we can give them a good life. But we can't even give them a good life. So why do this? Why? We could just keep going on our merry way and pay for things with credit card, go on vacations on credit. ENJOY LIFE.
Writing this now there are tears in my eyes and I feel like I can't breath. We were supposed to be living like no one else so we can LIVE like no one else. I want to be able to provide the world for my children. That's why we are doing this. I want to be able to show them the world, well at least parts of th US. I want to travel outside of the US with my husband some day. But instead we will pay off our debt and begin working on steps 3 & 4 and we will continue living month to month (but saving for the future). What's the point?
Friday, September 14, 2012
A Snowball's Chance...
I feared this when I started writing this blog, that I wouldn't be good at making it a very regular thing. Sorry it has been a while since I have updated our progress.
Baby steps. This journey is all about baby steps. Baby steps to changing behavior. As if that is an easy thing to do. I have tried many times in my life to make changes to behavior but often end up back where I began. True these behaviors were different then the ones we are changing now, but I fear we will end with the same result. The result of slowly slacking and letting old habits creep in, and bringing their friends with them. I am curious if I will learn lessons from these behaviors that we are changing that I can apply to others, or if I can even compare the two. You may have guessed the behavior I am talking about....eating.
Let's compare them for a moment, eating and living in debt. How are they similar? Eating tasty good foods will add to your waistline. Buying things on credit adds to your debt. Eating good foods and buying things when you want them feels good in the moment, but often ends in some sort of remorse. Both are easy to rack up, pounds and debt, but hard to take off.
A good friend once told me that in life you have to repeat lessons until you learn them. At the time she was talking about my ability or inability to work with someone who is passive aggressive. Today I see how this statement/philosophy fits my struggle with both my weight and our debt. I have recently lost a significant amount of weight, but have been on hiatus for a couple months as we have been working on the beginnig of our debt free journey. In those couple months I have kept some of the behaviors that helped me lose weight, while letting old bad behaviors creep back in. I wonder if I can learn my lesson this time? I wonder if I can finally break the cycle of letting bad choices influence my health, both physical and financial.
We recently started on our debt snowball. Paying off our debt, smallest debt first, increasing each months payment as we eliminate each debt. I wonder if our debt snowball has a snowball's chance in hell to accumulate the funds needed to pay down the debt. I feel good about our journey and our successes so far. We have paid down our first 2 small debts, and after this month we will move on to the next. But sometimes the desire to "have" overrides the desire to pay down debt.
These days there are so many things that can sabotage your goal of becoming debt free. Each day I get emails telling me about this deal or that deal. They seem so hard to resist. THEY WILL SAVE US MONEY, the devil on my shoulder says, then the angel replies THEY AREN'T SAVING YOU MONEY WHEN YOU DIDN'T PLAN TO BUY IT IN THE FIRST PLACE. Devil: "But you need it." Angel: "You can live with out it another day" (holy moly I have mutiple personalities!) And don't get me started on Nebraska Furniture Mart. Stupid 30month no interest. That just fuels my desire to buy stuff I/WE don't need. I tell you what though, the day I get an email that says a trip to Ireland is like $350...all bets are off! :) I will not be able to be held liable for my actions on that day.
I know if we are going to be successful in this we will have to learn to build in money for fun, and for life. We were successful in doing that this month. Hubby and I knew we were going to go to the Irish Fest (it's kind of our thing) so we built money in the budget to go and enjoy ourselves. It did mean buying less crap from the shops. We normally each would have gotten something and maybe something for the kids. But we had a great night out. I konw we can't plan for everything and I guess that's where your emergency fund comes in. I can't wait for the day when that is fully funded at 3-6 months of income.
Earlier I compared this to changing the habits of eating. I thought I was going to say that this is easier. Truly they are equally hard. I love food! And I like having what I want when I want it. I know to be successful in both it comes down to discipline and making a plan. The days/weeks when I have a menu planned, I eat better. The months we have had a budget, our money went further and we started paying down debt and stopped incurring debt. Now if I could just start doing my menu when I do my budget, maybe we would start killing 2 birds with one stone. Then if we killed 2 birds we could have dinner for 2....wait I took that a little too far.
So as of right now I give our debt snowball a pretty good chance at getting bigger and covering a lot of ground. We are lucky we have people who have been there, done that, who can remind us why we started. OR we can look at the face of our beautiful children and be reminded why it is so important that we continue our journey.
Let's compare them for a moment, eating and living in debt. How are they similar? Eating tasty good foods will add to your waistline. Buying things on credit adds to your debt. Eating good foods and buying things when you want them feels good in the moment, but often ends in some sort of remorse. Both are easy to rack up, pounds and debt, but hard to take off.
A good friend once told me that in life you have to repeat lessons until you learn them. At the time she was talking about my ability or inability to work with someone who is passive aggressive. Today I see how this statement/philosophy fits my struggle with both my weight and our debt. I have recently lost a significant amount of weight, but have been on hiatus for a couple months as we have been working on the beginnig of our debt free journey. In those couple months I have kept some of the behaviors that helped me lose weight, while letting old bad behaviors creep back in. I wonder if I can learn my lesson this time? I wonder if I can finally break the cycle of letting bad choices influence my health, both physical and financial.
We recently started on our debt snowball. Paying off our debt, smallest debt first, increasing each months payment as we eliminate each debt. I wonder if our debt snowball has a snowball's chance in hell to accumulate the funds needed to pay down the debt. I feel good about our journey and our successes so far. We have paid down our first 2 small debts, and after this month we will move on to the next. But sometimes the desire to "have" overrides the desire to pay down debt.
These days there are so many things that can sabotage your goal of becoming debt free. Each day I get emails telling me about this deal or that deal. They seem so hard to resist. THEY WILL SAVE US MONEY, the devil on my shoulder says, then the angel replies THEY AREN'T SAVING YOU MONEY WHEN YOU DIDN'T PLAN TO BUY IT IN THE FIRST PLACE. Devil: "But you need it." Angel: "You can live with out it another day" (holy moly I have mutiple personalities!) And don't get me started on Nebraska Furniture Mart. Stupid 30month no interest. That just fuels my desire to buy stuff I/WE don't need. I tell you what though, the day I get an email that says a trip to Ireland is like $350...all bets are off! :) I will not be able to be held liable for my actions on that day.
I know if we are going to be successful in this we will have to learn to build in money for fun, and for life. We were successful in doing that this month. Hubby and I knew we were going to go to the Irish Fest (it's kind of our thing) so we built money in the budget to go and enjoy ourselves. It did mean buying less crap from the shops. We normally each would have gotten something and maybe something for the kids. But we had a great night out. I konw we can't plan for everything and I guess that's where your emergency fund comes in. I can't wait for the day when that is fully funded at 3-6 months of income.
Earlier I compared this to changing the habits of eating. I thought I was going to say that this is easier. Truly they are equally hard. I love food! And I like having what I want when I want it. I know to be successful in both it comes down to discipline and making a plan. The days/weeks when I have a menu planned, I eat better. The months we have had a budget, our money went further and we started paying down debt and stopped incurring debt. Now if I could just start doing my menu when I do my budget, maybe we would start killing 2 birds with one stone. Then if we killed 2 birds we could have dinner for 2....wait I took that a little too far.
So as of right now I give our debt snowball a pretty good chance at getting bigger and covering a lot of ground. We are lucky we have people who have been there, done that, who can remind us why we started. OR we can look at the face of our beautiful children and be reminded why it is so important that we continue our journey.
Thursday, August 30, 2012
Envelopes and Snowballs
Along the road to becoming debt free, life happens. In the first couple weeks of our journey my car battery died and hubby had to take a trip to the ER. It became real clear to me how much we needed our Emergency Fund, and as I wrote last time, we have successfully completed our $1000 emergency fund. Some day will get back to that fund and start saving 3-6 months of expenses. That comes after baby step 2, the Debt Snowball.
I've mentioned in other posts about using envelopes. I thought I would take a minute to explain the envelope system in case anyone is curious. Since we have started budgeting and attempting to pay down debt we have stopped using our debit card except for a few things and started paying cash for most things we can pay cash for. The one thing we have continued to use the debit card for is gas. Although it would help to pay for it in cash, I refuse to unload the children out of car seats, carry them inside to pay for the gas, and then load them back up, then pump gas. So we still use the debit card.
When we create our budget each month we have a line item for everything we could spend money on, well maybe not everything. Things pop up that you think, hmmm what envelope would that come out of. So here are some examples of the line items we have: Food/House Hold Items, Dining Out/Entertainment, Misc, Gifts and Clothes. We also have a category for blow money. Blow money is for whatever you want. Hubby and I each have our own blow money. At the begining and middle of the month we withdraw the cash from the bank and put it in our envelopes. Then through out the month when we need any of the things in these line items, we get the cash from the envelope and pay cash. (and then you are supposed to track on the envelope where you spent the money and how much...we are still perfecting this step)
I know you are thinking, how does this really work with groceries. Well at the beginning of the month, I take all the cash that I have in the envelope with me to the grocery store. I make my list based on the ads that week and what we need. Then I buy the groceries. We have yet not had enough money to buy what we need. Now as the month goes on, we have to be really cautious and selective of what we buy, so we stay with in our budgeted money. I'm not going to lie, I have used money from other envelopes to buy food if we got to the point that we were out of grocery money. Which does happen, because diapers suck up way too much of my grocery/household cash.
You are probably thinking this sounds like a pain in the butt. But I tell you it has really helped keep us in check. We use the debit card much much less. And the cash we have is the cash we have. We may move money from one envelope to another, but we never withdrawal more. We stick to what we budgeted.
I feel like an addict though. I miss my credit cards! I do. It feels like every day I have to recommit to not using them. Something will pop up that wasn't in our budget and I will think, I could just put that on the credit card we almost have paid off. Isn't that crazy??? We are paying down debt, and I'm still thinking how I can get what I want without having to pay for it today. So when I see that great groupon for a massage I have to talk myself down and say, no, when we are debt free, or when I save up my blow money, then I can buy that. I'm still not used to making sacrifices in other areas to get what I want. But I am working on it.
Baby step two is the Debt Snowball. This is the babystep we are working on. I think B must know we are on this baby step. He seems to have stalled in his learning to walk. And we will be on babystep 2 for quite some time.
What is the debt snowball? Well it is the method you use to pay down/off your debt. You begin by listing out your debt, minus your mortgage. Arrange the debt in the least owed to the most owed. Then you begin making minimum paymetns on the items you owe the most. Then you take all the money you would have normally paid to these items and add it to what you would normally pay on the least owed item, and make one big payment until you pay it off. For example, say you have budgeted $500 to pay on debt this month. And you have 5 items to pay on. Lets say you have 2 school loans, each you pay $75, and you have 3 credit cards, 1 you can pay a minimum of $25, and one you pay a minimum of $50. This would leave you $275 to pay on your least owed debt/credit card. Once you pay off that credit card or debt, you add the amount you were paying on the one you paid off to the amount you budgeted for your next least owed debt. Therefore each time you pay something off it gives you more money to pay on the next item....creating a snow ball effect.
We are kicking butt on this debt snowball. We paid off our lowest debt (ok, it was just $100, but that's $100 that we can now put toward something else) and in September we will have our next debt/credit card paid off too!!!!!!!! It feels awesome! It is the fact that we are making this progress that helps me recommit every day to not use that credit card when AMAZING deals that I just can't live without pop up.
Back to my original statement at the begining, life happens on your road to becoming debt free. Have we strayed from time to time from our budget. Yes. Did we get back on horse...probably side saddled, but we are on. This road is the one that is less traveled these days. But some day we are going to look back and think it was an amazing ride!
I've mentioned in other posts about using envelopes. I thought I would take a minute to explain the envelope system in case anyone is curious. Since we have started budgeting and attempting to pay down debt we have stopped using our debit card except for a few things and started paying cash for most things we can pay cash for. The one thing we have continued to use the debit card for is gas. Although it would help to pay for it in cash, I refuse to unload the children out of car seats, carry them inside to pay for the gas, and then load them back up, then pump gas. So we still use the debit card.
When we create our budget each month we have a line item for everything we could spend money on, well maybe not everything. Things pop up that you think, hmmm what envelope would that come out of. So here are some examples of the line items we have: Food/House Hold Items, Dining Out/Entertainment, Misc, Gifts and Clothes. We also have a category for blow money. Blow money is for whatever you want. Hubby and I each have our own blow money. At the begining and middle of the month we withdraw the cash from the bank and put it in our envelopes. Then through out the month when we need any of the things in these line items, we get the cash from the envelope and pay cash. (and then you are supposed to track on the envelope where you spent the money and how much...we are still perfecting this step)
I know you are thinking, how does this really work with groceries. Well at the beginning of the month, I take all the cash that I have in the envelope with me to the grocery store. I make my list based on the ads that week and what we need. Then I buy the groceries. We have yet not had enough money to buy what we need. Now as the month goes on, we have to be really cautious and selective of what we buy, so we stay with in our budgeted money. I'm not going to lie, I have used money from other envelopes to buy food if we got to the point that we were out of grocery money. Which does happen, because diapers suck up way too much of my grocery/household cash.
You are probably thinking this sounds like a pain in the butt. But I tell you it has really helped keep us in check. We use the debit card much much less. And the cash we have is the cash we have. We may move money from one envelope to another, but we never withdrawal more. We stick to what we budgeted.
I feel like an addict though. I miss my credit cards! I do. It feels like every day I have to recommit to not using them. Something will pop up that wasn't in our budget and I will think, I could just put that on the credit card we almost have paid off. Isn't that crazy??? We are paying down debt, and I'm still thinking how I can get what I want without having to pay for it today. So when I see that great groupon for a massage I have to talk myself down and say, no, when we are debt free, or when I save up my blow money, then I can buy that. I'm still not used to making sacrifices in other areas to get what I want. But I am working on it.
Baby step two is the Debt Snowball. This is the babystep we are working on. I think B must know we are on this baby step. He seems to have stalled in his learning to walk. And we will be on babystep 2 for quite some time.
What is the debt snowball? Well it is the method you use to pay down/off your debt. You begin by listing out your debt, minus your mortgage. Arrange the debt in the least owed to the most owed. Then you begin making minimum paymetns on the items you owe the most. Then you take all the money you would have normally paid to these items and add it to what you would normally pay on the least owed item, and make one big payment until you pay it off. For example, say you have budgeted $500 to pay on debt this month. And you have 5 items to pay on. Lets say you have 2 school loans, each you pay $75, and you have 3 credit cards, 1 you can pay a minimum of $25, and one you pay a minimum of $50. This would leave you $275 to pay on your least owed debt/credit card. Once you pay off that credit card or debt, you add the amount you were paying on the one you paid off to the amount you budgeted for your next least owed debt. Therefore each time you pay something off it gives you more money to pay on the next item....creating a snow ball effect.
We are kicking butt on this debt snowball. We paid off our lowest debt (ok, it was just $100, but that's $100 that we can now put toward something else) and in September we will have our next debt/credit card paid off too!!!!!!!! It feels awesome! It is the fact that we are making this progress that helps me recommit every day to not use that credit card when AMAZING deals that I just can't live without pop up.
Back to my original statement at the begining, life happens on your road to becoming debt free. Have we strayed from time to time from our budget. Yes. Did we get back on horse...probably side saddled, but we are on. This road is the one that is less traveled these days. But some day we are going to look back and think it was an amazing ride!
Monday, August 13, 2012
Baby Step 1- CHECK!
The other night I had the realization that we had made it one month without using a credit card, and without running out of money. The past month I've never had to worry when I use my debit card if there will be enough money in the checking account. So, what changed? We made a plan for our money, we told our money how to work for us, instead of watching money fly out of the account and not really knowing where it was going. Holy crap was that freeing. You would think living by a budget would be restricting and frustrating. But in reality it was freeing. I was able to stop worrying. Stop worrying that the debit card would be declined when I bought food or gas. Stop worrying about having money for things we needed and wanted. I knew we had the money and it had a place to go.
Right about now you are thinking, what does this have to do with baby step 1? Or at least I would be if I had read the title then got to this point in a story. The other thing we have accomplished is saving $1000. This is money just for emergencies. In less then 2 months, we have saved over $1000. Not only have we been saving for our emergency fund but we've been saving to pay our personal property tax on the cars that will be due in November. In previous months we would have borrowed about that much from savings (which was until we started this, empty). When we began I thought, no way, no way in the world are we going to save $1000 very quickly. We just can't do it. But we did. Baby step1- save $1000. CHECK!
Now we are on to baby step 2 - the debt snowball. (As in there's a snowball's chance in hell that we are going to get the debt paid off anytime soon.) I didn't realize until recently why the Emergency Fund was so important. The Emergency Fund is there so you don't use credit while working on your debt snowball. I know I have said this before, but they suggest cutting up your credit cards and closing accounts as you get them paid. I am sooooooo not there. I have a long intimate relationship with these cards, they have seen me through some tough times. They have been there for me when no one else was. They even helped me make friends in Chicago, when I seriously was all alone. So cut them up, I don't think so. I will get there. I will feel more comfortable with giving them up as I see the money owed to them disappear and as I feel more able to buy the things we need without using credit. But for today, even with the $1000 emergency fund, I will keep my cards intact.
OK, so I drank the Kool-Aid. I believed going into this Financial Peace University that it would work if we did it. If my friends and co-workers could do this, surely we could as well. Is it hard? No its not just hard, it's one of the hardest things I've done in my life as well as one of the easiest. I know that probably doesn't make sense to you, but it is what it is. In the beginning I related FPU to trying to lose weight, you really do use some of the same principals. You start to question how much you want some things versus other things. The other night I learned that is called opportunity cost. Who knew it had a name. I thought it was just me over thinking things, but no it really has a name. Let me explain a little better: Opportunity Cost is what you give up when you buy something else. So when trying to pay debt or save money you start annalyzing everything. If I go out to eat I will spend $20, but if I don't, what could I do with that $20? Pay off debt? Save it? Invest it? When trying to lose weight it is the conversation you have with yourself, if I eat that now, I won't lose weight. I'd rather lose weight then to eat that (and so on). It begins to get harder and harder to spend the cash in your pocket when you put that much thought into it. Before FPU I might put that much into rationalizing why I needed something, rather talking myself out of something.
The biggest similarity between becoming debt free and weightloss, is discipline. It takes a lot of discipline to stay on track. But if you have discipline you will succeed. During the first two weeks of this month, we lacked discipline. Our envelope system is seriouly screwed up and we have probably spent more then we intended. We did this by using the debit card for things we had started paying cash for. A week into the month I tried to reconcile the envelopes, but in the end I don't know that I did. We just started another two week period of this budget. We might be able to get things figured out, if we are lucky. It was encouraging when I told hubby that I'm a bit nervous about how we are spending versus what we budgeted, he said, but the good news is we know how to fix it. He's so right. Every day we have the opportunity to fix it. You just make a new plan. Just like when you are changing other habits, if you fall off the wagon, you just get back on. I can't wait for this all to become second nature (someone please tell me it will be second nature, someday).
Baby step one complete...6 more to go. I think we will be on step 2 for a while. So come along for the snowball fight, I mean ride.
Tuesday, July 31, 2012
Birthday vs Budget
Ok so I am going a little out of order here, but it's my blog and I can do what I want.
Tomorrow is my baby's first birthday. Where has the year gone? Along with the first birthday comes the first birthday party. It's a big deal! The party, the gift, the pictures, the balloons. It all has to be perfect! The baby only turns once in their life and in this instance it is the last time one of my children will turn one. Its the last first birthday party. Its not only a big deal for B, but for me.
Its been five weeks since we started our journey to be debt free. (Only five weeks, holy moly, it definitely seems like longer.) You might remember in my last post I shared that I had a major breakdown including some super water works, resulting in the puffiest eyes I have ever seen. The anticipation of the birthday while trying to live on a budget and not use credit cards was more then I could bare at that moment.
I know you are thinking, this chick is crazy, what's the big deal. Well, the big deal is/was that up until now I have purchased whatever I wanted/needed for the kids with minimal thought about the money in our bank account or the balance on the Kohl's card- because that's where I do most of the kids shopping. I was a good shopper. I don't know the last time I bought anything full price. I never really went overboard when it came to the kids, but at the same time I just bought without over thinking. (clue number 147 to how we got into debt) In my brain I started to feel like a bad mom, that because I needed to stick to a budget I was not going to be able to provide the same type of first birthday experience to the baby as I did his sister. He's going to grow up thinking we played favorites. I already haven't had his picture professionally taken as often as his sister. I thought about throwing this whole debt free living out the window. We can't become debt free at the sacrifice of our children.
OK! OK! You can stop yelling at me now. Stop the pity party Jen! The pity party started and ended somewhat quickly, with some kind words from my husband. (Thank God there's at least one calm rational person in our household, he is doomed though, 3 against 1).
Luckily the next homework assignment was to create our cash flow plan and budget, and it was coming at the right time, pay day! So I took all that energy I had been wasting on crying and feeling bad about not providing the best to my son and put it into creating our budget for the last 2 weeks of the month. I hate to admit it but it was the first time in my 37 years that I had actually made a plan for my/our money. (I've been working since I was 16. That's 21 years of wasted money.) It was the most amazing thing, after I completed the budget and hubby and I reviewed it, it felt like this huge weight was lifted. The boulder that I had placed on my chest, worrying about money and the kids and having enough for them, it rolled off. It was like when you are pregnant and the baby is taking up all your lung capacity, then the baby drops or you deliver, and voila you can breath. I could breath!!!!
Not only did we have a plan for the 2 weeks, but we were paying all our remaining bills for the month, AND I budgeted for the baby's party, present and pictures. The budget helped me make sure I had the things I felt were important for the kids. It helped me keep things in perspective. It didn't cut off my hand like I thought it would, rather gave me a helping hand in doing all the things I wanted to. We were able to get B's pictures taken. We spent less then we have in the past and pictures were 100x better. We only bought B one present, and if I do say so myself, I think it was his favorite. He received plenty more. I made his cake- which I still can't decide if that was economically the best choice, but he will never forget it.
It was our first couple weeks using the "envelope system" as well. If you've never tried paying for most things with cash, you should try it. You would be amazed at how hard it is to spend cash. Not that people won't take your cash, you just won't want to let it go. I will say we weren't 100% successful. We did borrow money from one envelope to pay for items we wanted from other envelopes...mainly food. But we didn't take out anymore cash then we originally budgeted, so that's not too bad for our first try. I will explain more on the whole envelope thing next time. As of right now we are in need of reviewing the budget we created for August and putting some money in our envelopes so we can do things like grocery store shopping.
Oh for those of you who are still stuck on the fact that I was a big blubbering moron earlier and feeling like a bad mom, I don't anymore. I really do get the big picture. That the sacrifices we are making now, changing our bad habits, actually makes me a better mom. The mom that will provide an amazing future to her kids (I am writing this from my point of view, but I am certainly not doing this alone, my husband is a great father and is making all the same sacrifices, so please don't be offended when I say I did this, I really truly mean WE). Getting ahold of our finances is probably one of the hardest things we have done, and oddly enough it seems it comes with using the most common sense that your parents and grandparents gave you. If I had only listened...
In this episode of Birthday vs Budget, it was a draw! We had an excellent birthday and didn't break the budget!
Tomorrow is my baby's first birthday. Where has the year gone? Along with the first birthday comes the first birthday party. It's a big deal! The party, the gift, the pictures, the balloons. It all has to be perfect! The baby only turns once in their life and in this instance it is the last time one of my children will turn one. Its the last first birthday party. Its not only a big deal for B, but for me.
Its been five weeks since we started our journey to be debt free. (Only five weeks, holy moly, it definitely seems like longer.) You might remember in my last post I shared that I had a major breakdown including some super water works, resulting in the puffiest eyes I have ever seen. The anticipation of the birthday while trying to live on a budget and not use credit cards was more then I could bare at that moment.
I know you are thinking, this chick is crazy, what's the big deal. Well, the big deal is/was that up until now I have purchased whatever I wanted/needed for the kids with minimal thought about the money in our bank account or the balance on the Kohl's card- because that's where I do most of the kids shopping. I was a good shopper. I don't know the last time I bought anything full price. I never really went overboard when it came to the kids, but at the same time I just bought without over thinking. (clue number 147 to how we got into debt) In my brain I started to feel like a bad mom, that because I needed to stick to a budget I was not going to be able to provide the same type of first birthday experience to the baby as I did his sister. He's going to grow up thinking we played favorites. I already haven't had his picture professionally taken as often as his sister. I thought about throwing this whole debt free living out the window. We can't become debt free at the sacrifice of our children.
OK! OK! You can stop yelling at me now. Stop the pity party Jen! The pity party started and ended somewhat quickly, with some kind words from my husband. (Thank God there's at least one calm rational person in our household, he is doomed though, 3 against 1).
Luckily the next homework assignment was to create our cash flow plan and budget, and it was coming at the right time, pay day! So I took all that energy I had been wasting on crying and feeling bad about not providing the best to my son and put it into creating our budget for the last 2 weeks of the month. I hate to admit it but it was the first time in my 37 years that I had actually made a plan for my/our money. (I've been working since I was 16. That's 21 years of wasted money.) It was the most amazing thing, after I completed the budget and hubby and I reviewed it, it felt like this huge weight was lifted. The boulder that I had placed on my chest, worrying about money and the kids and having enough for them, it rolled off. It was like when you are pregnant and the baby is taking up all your lung capacity, then the baby drops or you deliver, and voila you can breath. I could breath!!!!
Not only did we have a plan for the 2 weeks, but we were paying all our remaining bills for the month, AND I budgeted for the baby's party, present and pictures. The budget helped me make sure I had the things I felt were important for the kids. It helped me keep things in perspective. It didn't cut off my hand like I thought it would, rather gave me a helping hand in doing all the things I wanted to. We were able to get B's pictures taken. We spent less then we have in the past and pictures were 100x better. We only bought B one present, and if I do say so myself, I think it was his favorite. He received plenty more. I made his cake- which I still can't decide if that was economically the best choice, but he will never forget it.
Oh for those of you who are still stuck on the fact that I was a big blubbering moron earlier and feeling like a bad mom, I don't anymore. I really do get the big picture. That the sacrifices we are making now, changing our bad habits, actually makes me a better mom. The mom that will provide an amazing future to her kids (I am writing this from my point of view, but I am certainly not doing this alone, my husband is a great father and is making all the same sacrifices, so please don't be offended when I say I did this, I really truly mean WE). Getting ahold of our finances is probably one of the hardest things we have done, and oddly enough it seems it comes with using the most common sense that your parents and grandparents gave you. If I had only listened...
In this episode of Birthday vs Budget, it was a draw! We had an excellent birthday and didn't break the budget!
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