Being {Financially} Different

It’s not easy to be different. We learn that in the awkward middle school and high school years. Most people don’t have a goal of standing out because they are different. As an adult, I never really thought about being different or fitting in. I guess that means I’m fortunate to have found people who I had connections with – in college, in my career, and as a parent.

Seven years ago, we decided to be different and took Dave Ramsey’s Financial Peace University course. We learned that it’s ok to be weird with your finances and we wanted to be different. We made decisions about our future and our financial goals. We’ve been faced with a few tough decisions over the years, where peer pressure felt pretty strong. Admittedly, it’s a struggle in the beginning with wants over needs versus long-term goals. Our long-term goals have us living a future life that we get really excited about. It can be really hard to pass up a fun opportunity now for a future that you can’t quite touch. But, after some time to really think about it we both come to the same conclusion…most temporary things aren’t worth the financial setbacks when we think about our long-time goals. Sticking to a budget and our financial “morales” of not spending cash that we don’t have will always be the right thing for our family. If we really “need” it, we can save up for it.

One of the things I’m most proud of is our focus. We haven’t gotten distracted by exciting new things. We may not always create a monthly budget and we may have months we spend more than we realize, but our focus doesn’t change. We have multiple savings accounts with automatic monthly transfers to ensure we continue to fund our dreams. From 401K to college for the boys to car fund to holidays/gifts and even a basement fund. {Another thing I’m REALLY proud of. Paying outright to finish our basement. The majority of it has been done by my husband, but the things he has hired out came from our basement fund!} We both have wants and it can be a bummer when we “can’t” buy them, but after a few days of wanting you realize that you don’t actually need it. We have a house full of stuff that I’m constantly putting away, sorting, organizing, and cleaning. We aren’t deprived of anything.

The latest fashion or car isn’t something we needYes, we have our wants for a giant SUV vehicle. We’ve wanted it for more than five years {and maybe I’ve wanted it for most of my life}, but we don’t need it. Right now, a minivan {also not in my original life plan} works perfectly for our family. One of my children has spent the past year crashing his door into my van every time he gets in or out of Bryan’s car. Both of our vehicles are used and we’ve had them for more than 5 years. If they were new, we’d both be sick about it. But instead, it’s part of living with small, reckless children. And also proof of why one of our vehicles doesn’t have doors they can open…We’ll get our dream vehicle one day, when everyone in our house can appreciate and respect the vehicle. But also after we’ve saved for the vehicle. Because those are the things that are important to us. Living a life that’s a little different and maybe not as fun now so we can truly live a life we deserve later.

You won’t always find yourself surrounded by people who share the same opinions. The beauty of life is that everyone gets to make their own decisions and live the life they want. I do hope you are surrounded by people who respect you and your “weird” life choices. You can swap out “finances” with anything – type of school, health beliefs, fitness, food, clothing, anything. It’s important to surround yourself with people who are supportive of your dreams and lifestyle – no matter how weird they are.

Do you have any lifestyle preferences that make you different from your friends? Or do you surround yourself with like-minded people? 

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Shopping on a budget can be fun!

We recently went on a BIG shopping trip. It was one of those trips where you pile all the bags on your counter when you get home. A trip that could have been overwhelming. With a budget, we found that neither of us felt bad after a day of shopping. I was tired, but not feeling remorseful about the purchases.

Bryan used to have anxiety about spending any amount of money on clothes or shoes. He’d always cringe when the total came up or decide not to buy something. I was used to the back-to-school shopping totals and expect a day of shopping to add up. I didn’t have anxiety, but have always wished I had some quality shoes yet never wanted to spend the money on them. We’ve been living deliberately for a while now. Telling our money where to go instead of looking back and wondering where it all went.

Last month I had money for maternity clothes and couldn’t find anything. After trying very hard, I decided to buy a pair of shoes that I had wanted for over a year. When spending money randomly, I had never wanted to put up the money. I felt guilty even thinking about it. Since I had built it into the budget, I decided shoes was where I wanted to put my money. I think I love those shoes even more that I get to enjoy them completely guilt-free!

This month we had a lot of birthday and baby shower gifts along with clothes for Bryan and I. We set out for a day of shopping with our list and amounts on-hand. We walked away from a Target trip having spent a lot of money, but realized that only $36 was our “blow money” for household / random items. Normally, that kind of trip would have caused major anxiety for Bryan and he would have wanted to eliminate any more purchases. Instead, we ticked off the items on our list and set out for the mall to buy things for us. As the day went along, we tallied our purchases up in our head and always knew how much we each had left in our allotment. I couldn’t find the maternity clothes I was looking for so I used up the last of my clothing budget on the boy’s bathroom. {Hey unborn boy! I’m decorating your bathroom. It’ll be done when you get here.}

Like I said, it was an awesome feeling to go home that night and have accomplished so much. We bought all the gifts in one stop. We had already planned out the month for spending so we were able to be prepared for the birthdays and showers. {I’m usually the one who buys the gift last minute.} We splurged on ourselves and each got things that we had been wanting. And we came home with extra stuff that wasn’t planned but was included in the budget!

A week later, we have no remorse about our big day of spending. We laughed that our checking account saw more action in one day than it does in most months. But, it was money we had and we don’t miss it! Some months Bryan says he feels constrained by creating and tracking our budget. After our shopping experience, he decided that it’s well worth it! Because our spending habits don’t change much from month-to-month, he doesn’t have a lot of tracking to do but we like to see if we’re staying consistent with things like household items, eating out, and groceries. We haven’t gotten it perfect yet.  Every month we go over in one account and way under in another and never spend all the money we thought we would, so we’ve got some room to grow when it comes to creating a realistic budget. But, we both like the leg room that we have to do that and consider it a win if we don’t spend all the money. That extra money either goes into general savings or towards one of our major goals and that is definitely a good thing!

I may have to turn people down or not eat out as much as my lazy self would like, but in the end it’s much better to make your money work for you instead of working for more of it! I was amazed at how much money “disappeared” before we started tracking it. Even when we thought we were being more considerate of money, we still wasted a lot of it on things that we don’t even know. I’m fearful that most of that money was consumed by way of food and drink. We’ve learned that we can live whatever kind of life we want to live, we just need to plan for that way.

It’s a family philosophy to not get carried away or swept up in material things. This family grows on love and affection, not possessions. But, we both agree that spending money on possessions is much more enjoyable when you weigh the benefits of giving away your money versus the value of having the item. It’s less about blind purchases and much more about need and enjoyment. Following a budget can be fun! Our family will be sporting new Iowa State gear this fall to prove it! 🙂

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!

{Guest Post} Financial Peace

Today, I’m featured over on Mary’s blog. I met Mary a few years ago. When I met Mary she had just ended her career as an accountant so she could stay home with their son. I’ve been watching (and Internet creeping) from the sidelines as she became a stay-at-home mom, became a Mary Kay consultant, used the Internet to share God’s word, moved to a new town, had another son, and now is using the Internet to share her financial advice. As luck (or God’s urging) would have it, I had just added Mary’s CPA blog to my Google Reader. I was getting so much out of her other blogs that I knew this one would be good too. I knew Mary had the background for this blog, she was an account, had kept up on her certifications, and had recently gone through Dave Ramsey’s Financial Peace University. So, I knew this was a link I wanted to keep up on! The other day she posted a Tweet asking for guest bloggers. She wanted to know what people had learned from Dave. Her goal was to build up with guest posts this week until this weekend when she can shout that she’s DEBT FREE! I excitedly told her that I had just gone to my first class that evening. She asked me to write about why we decided to take the class. To see my post, head over to Mary’s blog! 

http://sieverscpa.wordpress.com/2011/03/03/bryan-and-kyley/