My personal financial planner

If you’ve been around this space for a while you know we live by a budget. Bryan does all the monthly work and I try to keep us on track each month. (Haha, and by try I mean I help him by trying  to pay attention to spend.) He tries to track spend halfway through the month so we know what we’ve got left. Last week he was working on tracking and sent me a summary email. The message included notes about categories that we had used up and how to deal with checks that are cashed months later. It was riveting for him to write and me to read.

“See that food is busted. Your dinner Thursday will have to come out of another category. It’s pretty much Abees that killed us this time. We need to stay out of those places that have waiters and waitresses.” Good call, sorry to those who serve food. It’s not worth our spend at this point in our life. We can make food that tastes just as well if not better. And we pay you more.

He signed his name and included a new signature.
Husband, Family Financial Tracker, Dish Washer, Lunch Maker, Dream Killer.

My husband is a funny guy. If you can’t laugh with him you’ll cry about all the dreams that he’s killed. 😉

In all seriousness, budgeting has saved our life. We spent a few years throwing away a lot of money on food and fun. At the end of the year we didn’t have anything to show for all the money we’d lost. Yet, we had all these goals for big items that we wanted to buy and felt like we couldn’t because somehow we didn’t have any money. So we started following Dave Ramsey’s plan and we’re in control of our money! It takes away the stress of finances. (Ok, for the most part. It can still be a little stressful when we want something and are putting our money elsewhere.) If we’ve learned anything about marriage, it is to remove as many stressful obstacles as possible.

Financial Peace: Week 4

Thoughts from the zero budget lesson:
A zero budget is HARD! We’ve still got a week and a half left and we’re still on track, but it’s getting close. I never realized how many “things” pop up. A friend wants to go to lunch, a group gift, a trip to Wal-Mart, a bachelor party, and on-and-on. Things pop up and things add up. It’s going to take a lot of prep work at the beginning of the month to plan out different ways we’re going to spend money. But, I’m glad we’re doing it!

This week…

This week’s lesson was Dumping Debt. I was excited to hear this week’s lesson because I want to get rid of our car payment. (In Dave Ramsey’s steps, debt doesn’t include your mortgage.) Dave talked about a lot of stuff that I already knew about – loaning money to other’s can lead to strain on the relationship, credit card companies make a lot of money off of people, playing the lottery isn’t a wise decision, and banks make a lot of money off of people.

The most important take-away I had from the class was that banks do a great job marketing. You’d think I would have noticed that since I work in the marketing field. But, I had never realized that banks are marketing their products. Sure, I knew that’s what credit card companies were doing with all of their direct mail pieces. But, the housing market? Major marketing campaign! The car industry? Not just dealerships that are marketing us. What a great industry to be in. Society does a lot of the work for them! I grew up only knowing that when you buy a house you have to go to the bank and get your credit approved. When we were planning a wedding, we went into the bank and sat and waited while they ran our credit. We held our breath while they checked to see how much money they would loan us. We were excited once they told us. Wow, they didn’t have to come find us; we walked in and told them we wanted to give them our money. For the next 30 years. The.Next.THIRTY.Years. What a great business to be in! A few months later, we walked out with a 30-year mortgage. In that mortgage, we saw how much we’d be paying in interest over the life of the loan. Bryan was sick to his stomach about it. Our realtor told him not to look at that number. Ignore it, she said. It’ll only make you feel worse. And, buyer’s remorse is completely normal for the next few days. So, since that’s the norm and the rest of society is doing it, hang tight. {I realize that I may sound like a hypocrite because we bought an expensive house. I’m not saying I regret it. At this point in the lessons, I’m not sure I would have done it differently. I just realize that the banks have the upper hand and we help them keep it there.}

So, while we can decide to make extra payments on our mortgage to get rid of it quicker, there are also other ways to be smart about debt. We can pay off our car as quickly as possible, by focusing all of our extra money into it. And we can start saving for another car so next time around we can pay for it in CASH! Does this seem reasonable to you? Here’s why it is to me. We wouldn’t be buying a new car because it loses 70% of its value the first four years. {I did know that it wasn’t a good deal to do this, but I never realized it was that drastic!} So, instead we’d buy a nice, used car for a more reasonable price. What if you want a brand new car? Well, if you’ve got the money in the bank, then it’s a good deal for you because you can afford it! It’s not a good deal to give banks or car dealerships even more of our money. We already know they markup the price of a car. To add more interest on top of that isn’t a good deal for us. It makes the car more than we thought we paid for it. I’m so excited and fired up to pay off our car! Before we took the class, we wanted to pay it off in the next year so we could use that extra money to save up. Except, before the class we were thinking about the fantasy world of saving up that money for another car. But, we talked about using it to put down a good chunk on the car or just getting into the routine of always paying that out for a car payment. We weren’t thinking about using it to save up for the entire purchase of a car! Because, without Dave, we probably wouldn’t really be able to do it.

We can stop giving credit cards our business. Studies show that people spend 12-18% more when they use a credit card instead of cash. I don’t have a hard time believing this. When you use a credit card you don’t have a clear vision of how much money is being taken from you. If you have cash, you might be more likely to hold on to it because it’s tangible. The same goes for debit cards. I know this to be true for me because over the years I’ve spent less time balancing my checkbook and more time swiping my card. I play catch up when I sit down to do the bills. I’m looking forward to the new system! I look forward to not putting anything on a credit card and spending in real-time. My old philosophy was to put things like gas or “extras” on the credit card. I put day-to-day living expenses on the debit card. That gave me a false image of how much money we had. Instead, I’ll keep it all in real-time so I can see it all coming and going. I’m looking forward to class next week because we’re going to cut up credit cards! I’m looking forward to taking the “plunge” and breaking up with VISA.

Four weeks in and I look forward to all the other things Dave will teach us. A lot of it is common sense, but that doesn’t mean it isn’t useful information. I’m excited about taking control of our finances and making them work for us instead of falling victim to them!

Financial Peace, Week 3

Our third week of Financial Peace University was about a cash flow plan. It’s about doing a zero budget. That means that you budget all of your money. All. Of. Your. Money. You plan where everything goes, down to the last penny.

The general budget was easy. Like I’ve said, we’ve done that before. We spend X on the mortgage, Y on utilities, and Z on groceries. When we had that homework, we just had to fill in the sheet from our information on the computer. Easy as that.

A cash flow plan. A zero budget. What? You want me to decide where EVERYTHING is going, at the beginning of the month? Ok, I guess I can do that. Except that meant we didn’t so much budget, but entered in how much we’d spent this month. You see, the general budget was done at the beginning of the month. But the zero budget was done after a few weeks, when we realized our budget might not hold out. So, we tweaked until we had zero money left at the end of the month.

The zero budget wasn’t hard to do. We had tweaked the general budget some to include all of our recurring monthly costs. But, we had never thought to plan out ALL of the money.

What we learned:

  • You really can figure out where your money is going if you do a zero budget.
  • You can budget for double payments on things instead of just talking about doing it.
  • You can decide each month how much money you want to save.
  • You get to change your budget each month. We had wondered about that before. We had talked about if we didn’t have any gifts to buy one month. What would we do with that money at the end of the month? The answer, you plan each month!
  • You get to change your budget every month!

I’m excited to see how this month pans out. We’ve already realized that we don’t always know about impending costs. Or, maybe we need to think a little harder. For instance, there’s a bachelor party at the end of the month. It’s not in our budget, but we do have blow money* that is there for that specific thing. We’ll know when we sit down to discuss April, that we really need to look at our schedule for the month to see if anything is going on.

What we’ve done to change our financial lives:

  • Double our car payments! After months of talking about it, we’ve been motivated to DO it! Looking at our zero budget showed us that we have the money to do it. We just needed to find motivation.

*Blow money – money that has been set aside to blow. Whether it covers an area that goes over, or is used for fun.

Financial Peace, Week 2: A Budget

I’ve decided to take you along on our journey to financial peace. Tune in every (hopefully!) Sunday night as I reflect on the week’s lesson. 

I’m reminded again why a budget is important. It’s not there to track where the money went, it’s there to plan where the money goes. It’s a chance to sit down at the beginning of every month and decide where the money will go. It’s a chance to talk about money, at least once a month. It’s a chance to decide, as a couple, where to give and take from. A budget is a lot more than “saving money.” It’s actually knowing what you’re saving and where the rest is going.

We’ve been on a budget plenty of times. There was a wedding (that could have been a really nice car), a house, living in a new house, buying a car, and having a baby. So, we know a lot about being on a budget. Except, all of those times involved seeing where the money was going and vowing not to spend it on extra things. When we want to save money, the first thing to go is eating out. We don’t go to restaurants much so I mean fast food. Life gets pretty hectic and fast food is a lot easier than cooking a meal after a long day. When we’ve been on a budget, we haven’t actually planned where all of our pennies would go. Instead we practiced thoughtful spending. Meaning, out of chance we happened to have saved money! 

We’ve been lucky (I used this word wisely) that our savings plans have been successful. We’ve been lucky that we have been able to buy what we want. We have been lucky that our way of budgeting reaped great benefits. I take pride in saying that we paid for our wedding with real money. We didn’t put things on credit cards to not be paid off for months. (We did use credit cards for some things. We used the Internet on a lot of things!) Yes, our parent’s contributed, but we saved our money and bought ourselves a wedding!

Now here’s where the confusion begins with a budget. We knew where our money was going and we saved for a wedding. {Awesome!} We thought we were operating under a budget. No one had ever told us to budget where ALL the money was going. No one had ever told us to budget exactly money into savings! {Light bulb!} Before Maximus was born, we mimicked Dave Ramsey’s cash flow worksheet and included the line about savings. {Go us!} But…we were just starting out so we were guessing on what our budget would look like. But that’s ok, he tells you it will take a few months to get it figured out. So, we gave ourselves that wiggle room. And we never looked back. We didn’t sit down the next month and review it. We looked at what we had spent and continued to “save.” Life was looking good because we were saving money. Our budget appeared to be working! You get the drift, right? We didn’t really understand the concept of a BUDGET. We knew the general meaning of it, but we were giving ourselves too much wiggle room. That wiggle room is what has kept us in this tetter-totter motion for so long.

I’m excited to get the real budget up and going. That means tweaking what was created long ago. Here’s to using the budget the right way!