Friday and Finances. . .

Since it is Friday and I try to talk about finances on Friday I am going to talk a little about them today.  You all know how much I like Dave Ramsey and I will start by saying if you have not read his book or at least looked at his website, Dave Ramsey, I highly recommend it.  You may not agree with everything he has to say but he does make a lot of sense about money matters.  I do not agree with everything, but there are areas that he really helped my family.
I would suggest you also check out his "Tools" section on his home page.  He has what he calls "ELP's"  this is an endorsed local provider.  This is a real estate agent, insurance provider, or financial adviser that follows the Dave Ramsey plan but is located in your area.  The hubbs and I looked up an ELP to help us move our kids 529 plan that we had set up years earlier and just to talk to someone else that followed Dave Ramsey.  They have helped us for the past ten years and they were one of the first folks I called when my very sweet hubby was displaced.  We knew we were going to have to move his 401K and possibly his pension and a few other benefits.  We had no clue how to proceed, thankfully these guys knew exactly what we needed to do and they made this part of our displacement very easy.  
One other thing I will point out that was a big benefit to us is Dave's debt snowball.  This helped us get out of debt except for our house and helped us get our emergency fund in place.  That emergency fund is really important because, should the worst case scenario play out, that will pay our bills.  The funny thing is, since they stopped contributions on his 401K and his HSA his severance pay is actually more than when he was actually working.  This has allowed us to add to our emergency fund and to add extra on our house.  I am also still using my envelopes just as I did before our displacement.  The envelope system is great and I encourage you to check it out too.  The envelope system helps you stay with your budget and helps you save for specific items like:  vacation, a car, college tuition, or the braces your kids might need.  I have an envelope for each one of those myself.  I put my college on hold when my dear hubby was displaced but we used my tuition money I had already saved to buy him a new laptop and a printer.  That money did not upset our regular budget because I had already saved it in my envelope.  If you are going to use a particular envelope's money for something other than what it was intended it is very important that you and your partner are in agreement on that move.  A budget and the envelope system only work when both parties are in agreement and work together.
The most important thing to remember is that a budget is a living organism, it grows and changes with each month or even week depending on your life style and where you are in life.   You must look at it each month to make sure you have everything covered.
Have a good weekend!

Budget????

Have you made out your itemized budget yet?  I encourage you, if you have not put your budget down on paper, be intentional and do it.  If it is not on paper you might just float around your intentional spending and mess up your budget.  It is ok if you have to change your budget, it is a living organism and change is to be expected.  I always write mine in pencil for that very reason.  If you are married or are doing your budget with a significant other always talk with them when things come up and you think the budget needs adjusting.   Your budget should be a group effort and if you have kids you should include them in some of the decision making.  There are certain areas you would not consult them in but, things like entertainment and eating out the kids could weigh in on.  If we do not teach our kids that we as adults have guidelines and a responsibility when it comes to spending they will not learn that very important lesson.
This realization hit me right up side the head one day while I was out doing some shopping with my kids.  I had my list of groceries that I needed to buy and I was keeping to my budget.  Sprat picked up something that he absolutely had to have and was not on my list or in my budget.  I had to explain he could not have it and as you can imagine that did not go over very well.   The objections came with, "why don't you just swipe your card, then I can get it."  This opened the door to explain what that card really is.  We do not use credit cards, I do have a debit card and that is the card that Sprat was referring.   I think we send the wrong message to our kids when they see us swipe that card.  We think they understand the concept of a debit card but they really do not.  A plastic card is a plastic card they do not understand where that money comes from.  Sprat, Big T, and I had long talk about what those plastic cards mean and how they really work.  My kids did not know you had to have money in the bank to use those cards they just saw me swipe that card and walk away with our purchases.  I never thought about all of this before, we go about our lives going through the motions of buying groceries and going to the post office and not thinking about all the things our kids pick up on when they are young and go along with us everywhere we go.  We must be deliberate in our spending and in our education of our kids.  They pick up on more than you realize.

Paying Cash and Getting Out of Debt. . . .

I meant to post this on Friday.  Sorry, this is my financial Friday post.

When my hubby and I got married, he was of the mind set that if you do not have the cash to pay for something you do not get it.   Luckily he was willing to have a mortgage.   We moved from an apartment to our first house with in our first year of marriage.  We did not have enough furniture for our new house so we had a few empty rooms.  Our beautiful formal living room was empty, except for a little ficus tree my sister had given us.   Because of my hubbys strong feelings of no credit cards it stayed empty for a few years.   When we had saved enough to pay cash we went furniture shopping.   We found some great deals at a little known shop way out of the way and we filled our living room.   I am telling all of this because a friend has just bought a new house that is bigger than their house now and she was worried about how she  would fill it with furniture.  This brought back these fond memories of our first years together.   I always tell things on myself because I feel like it helps others see that it is ok to make mistakes and that there are other people out there struggling too. There is no reason to go into debt to fill your house with furniture either.   There is no shame in having an empty room while you are saving your money to buy furniture.   You can also find great deals at consignment shops and even yard sales.   My empty living room came in handy one winter when our power was out for a few days.  We pulled our mattress into the living room and laid it in front of the fire place to keep warm.  This was the winter we had so much ice.  Our power was only out for three days, there were others that were without power for much longer.  If we had a  living room full of furniture our mattress would not have fit and we would have been very cold and uncomfortable.
Here is another funny about my empty living room.  This was when Christmas Around the World was popular and they had home parties and such.  I decided I would have a Christmas Around the World party.  The representative came in and set her stuff up, luckily she was also a friend of the family, so there was no judging of the empty space.   We all sat on the floor and played bingo for FREE stuff.   Fun was had by all and nobody minded sitting on the floor.
Save your money and pay cash.

Happy Friday! Topic Today the Big B. . . Budget

Yep, it is time to revisit that nasty word, Budget.   That word always carried a restrictive connotation with me for many years.  It is actually very freeing to be able to sit down and tell each dollar where it is going before you get it.   If you do that you want be wondering where it all went at the end of the month.   I told you when I started this that I was terrible at balancing my checkbook and doing a budget.   I had never balanced my checkbook till I took Dave's class and worse than that I had never really looked at my bank statements before either.  I know, that is the worst.  That is why I tell you, I have made many mistakes and I wish I knew about Dave or anybody else for that matter earlier.  It would have saved me so much money and heart ache too.
Let us get down to the nitty gritty of the big B.  Dave says, managed money is like getting a raise.  That is so true, I would have never thought that before I put together a budget.  Do not look at your budget as restrictive, look at it as spending on paper for a purpose.  (another Daveism) The first thing I did was write out, longhand, what we spent in a month.  Even though we are in the technology age I still like using pencil and paper when working with my budget.   I took old bank statements and looked at each one and wrote down what we had spent to try and compile my budget.  Group your items together for example, restaurants, groceries, insurance, car payments, house payments, utilities, and phone bills etc. . .  Do not forget to put give and save at the top of your list.  Remember what your grandparents always say the more you give the more you receive so, always keep giving at the top.  You also have to remember to pay yourself (save).   If you are at the height of your debt snowball you may think, how can I give and save if I am paying crazy to get out of debt?   You may have to cut back on saving during your debt snowball period.  That is ok because once you are out of debt you will be able to save and give like crazy.  I did not believe it either but it is possible and we are giving and saving like crazy.  We are still paying down our house but it is not like before.    Dave says during the debt snowball that everything should be going to pay off your debt.  He talks about using your savings to get out of debt.  I guess if you were in several hundred thousand dollar debt then that would be understandable, we were not that bad off so we did not use any savings to pay ours off.  We used everything else though and, we never stopped giving.  To me giving was the most important part of our budget.  The old adage stands true the more you give the more you receive.  We are proof positive in that.  I cannot tell you how many times early in our marriage that we did not know how we were going to pay bills but we never stopped our giving and we never missed any payments.
Being able to budget and get out of debt has been a huge blessing and I want everyone to know how to do it.  Imagine a debt free world, imagine the amazing things that could be done if there was no debt hanging over our heads, imagine the lives that could be changed.  That is what I hope for, amazing changes for everyone.

Feeling very excited about Financial Friday

I have told you some of the things I have done that I am ashamed of and I will tell you many more but today I am going to share something I am extremely proud of.  As of today we (my family) are Debt Free!!!!!! except our house.  Wahoooooo!!!
This is why I love Dave Ramsey.  I could not have done this without his class and my wonderful teacher that guided the class.  We paid off our car in 2 years with Daves' debt snowball plan, which is pure genius.  I will share that with you next week.    Today I would like to hash out the envelope system.  Dave gives credit to all of the grandparents for this system because that is how they managed money back in the day.   You were paid in cash and you divided it up into your envelopes to make sure your bills were covered.   I love this.  I told you last week that we started out with our Christmas envelope and we now have about 9 envelopes.   These are my categories, they work for us, you feel them out and see what works best for your family.  
Christmas, vacation,  restaurants,  groceries,  mad money,  entertainment,  clothes,  school, tuition, hair cuts, and prescriptions.  Most of these are self explanatory, mad money is money that I set aside just for me.  My hubby has his mad money too.  It is just for us to spend with no guilt on what ever we wish.  The entertainment envelope covers movies,  putt putt,  bowling, and football games.  School money pays for school fees, supplies,  lunch money, and field trips.  I put money in each of these every pay period according to what I have budgeted.  Just because it is summer does not mean I stop funding the school envelope, this is when I am saving for back to school supplies.   When an envelope is empty there is no more of that till next pay period, which for us is every two weeks.   It was hard for the kids to grasp that, when it came to eating out.  That was our big vacuum, when it came to spending.   Once I put a cap on what we would spend it was amazing how much we could save.  That is not to say we did not have our weak points, because we did.  Your budget is a living thing and it grows and changes just like your family does, that is why you need to look at it periodically to evaluate how it is changing.   The categories I picked for my envelopes fit our family, they may not fit yours.  You should evaluate what you want to pay cash for.   Some have a gas envelope to pay for their gas in their cars.  I do not like having to go in and pay for gas that to me is more trouble than it is worth.   

Dave says that when you pay with cash you feel that pang of the money leaving your hand.  When you swipe that debit card there is no feeling attached to it.   This is true, if you don't believe me pay for a meal at a nice restaurant with cash, you will feel it.  You can set your amounts that you put in your envelopes yourself.  Just be sure you are honest with yourself when you are setting up your budget, do not fudge on how much you spend in certain areas because that will just create a problem in the end.  Remember I have made most of the mistakes I warn you about.   If you are married you should set all this up with your spouse too, the system will never work if you do not work together.  I ask my hubby periodically if he is ok with our budget and normally he says he is fine but sometimes he points things out that I had not thought of and there is where we revisit our budget and tweak it.  He pointed out this year that we needed to re-evaluated our entertainment money during football season.  Both boys play football and going to games and concessions were expensive so the next pay period we upped our entertainment money amount to cover these things.  I love this system, it is ours and we can change it to suit our needs and so can you.  I would suggest that you pick one thing and try it out before you dive head first into all the envelopes we have.   I would love to know what envelopes you will have.   Good Luck and we will talk about Daves' debt snowball next week.  

Financial Friday. . . Background on Why. . .

If you are going to talk finances you should go to someone that has made lots of money because they are obviously doing something right.   My favorite financial person is Dave Ramsey, and just be warned you will see,  Dave says a lot on here.  I am not being paid by Dave or any other financial person, the things you will read here are my heart felt beliefs about money and some of my personal experiences along with what I have learned from Dave.  I do not have a background in finance but, goodness knows I have made enough mistakes to have learned what not to do.
I like Dave a lot, I like his Christian approach to handling money.  He is the only financial person that I have seen that lays out a budget with giving at the top.  
I was invited by my friend Beth to go to a Dave Ramsey class and I took her up on that opportunity.  It was one night and they were talking about investing, something I did but very minimally.  I was intrigued right off the bat and a big thank you to Beth for inviting me, this started my following of Dave with regard to finances.   I went to the Library and checked out one of his books, I loved it and I ended up buying it at our local used book store.  Notice I did not go out and buy his book without  checking it out at the Library first and when I bought it, it was used.   It was two years before I took Daves' Financial Peace University class.  During that two years I read everything I could get my hands on, from the Library and the used bookstore, about finances.   I was very intrigued by Dave's envelope system.   That was the first advice I tried and it helped.  I only used the envelopes for certain things, we started out with a Christmas envelope.  We put $20 a week in an envelope for Christmas.  Our first year we did this we got a little late start so we did not have enough money to pay for all of Christmas but it helped.  The next year we started earlier and that year we paid for Christmas in cash, with the exception of things we bought online.   The next year I was able to officially take the Dave Ramsey class.  I was so excited, I was like a kid at Christmas.
One of the first things we talked about in class was a budget, I am ashamed to say I had never done a budget before.  We did a "quick start" budget, this catches the major things, paychecks coming in and bills going out.  I always thought of a budget as being evil and very restrictive.  It is actually, you telling your money where to go rather than wondering where it went.  I was a wonder where it went kinda gal for many years.  Oh, I wish someone would have told me how to do this sooner.  I was actually relieved when I did that first budget and a little surprised at where we were spending all of our money.   I will tell another ugly truth about myself, I was not someone that balanced the checkbook either.  Now, I do a budget every two weeks and balance my checkbook every time my statement comes in.  Yayyy me!!  If you are a financial person you may think that is no big deal.  To someone that did not do either of these things for so many years it is a huge deal.   If you are doing both or just one of these kudos to you, you are already rolling in the right direction.   There are lots of places to go and find budget software or budget forms.  There are a lot of them on Pinterest.  I personally like Dave's forms for budget.  Check out his website www.daveramsey.com
Also check out your local used book stores and Library, they are full of good free information and I am all about FREE.   Here is something to think about for next Financial Friday:  what are some things that you could pay cash for?  Groceries, restaurants, clothes, school supplies or barber or salons.

Living on a Budget. . . .

     Have you ever actually written down a budget?  Have you ever followed a budget?  I ask these questions not to judge anyone, because I had never sat down and made a budget myself until two years ago.  I wish I had approached this concept much sooner.  The word budget seems to bring forth many emotions;  fear, panic, anger, and a thought of restraint.   I learned two years ago, when I took the Dave Ramsey Financial Peace class, that budget is not a dirty word.  I also learned that by making a budget I am telling my money where to go instead of wondering, at the end of the month, where my money went.
    The first budget I set up was crazy because I did not know what I was doing but I learned the budget is not set in stone.  It is a living organism changing as life changes and little things come up.   The first few months I had to go back and adjust our budget several times.  Now that I have been doing this for the past two years I rarely have to change it up or re-adjust it during the month but, I know that I can if I need to.
     I was so afraid of setting up that first budget.   I set it up and filled it out and then dear hubby and I went over it.  If you are married it is important to include your spouse in the process.  I am the CFO (Chief Financial Officer) of our family but, hubby and I both make major decisions together.  A major financial decision for us  is anything over $250.   When I set up that first budget I found where a lot of our money was going.  We spent a lot of money eating out.  I am sure there are a lot of folks that do the same thing and don't even realize how much they spend.   It made me sick to my stomach when I realized how much money we had wasted eating out.
     Dave Ramsey also explains his envelope system.  I love the envelope system and use it for our cash only items.    When you set up the envelope system you set aside a certain amount of money to be spent on certain items.  My envelopes are:  groceries, restaurant, clothes, entertainment, hair cuts, vacation, pet supplies, and home repairs.  Each time my hubby gets paid I put a certain amount in each envelope, the amount comes from how much I had budgeted for each item.   When we go out to eat we use the envelope money and if the envelope is empty then we eat at home.   My kids know this now and realize that we cannot go out to eat 5 times a week.  I am not saying this is easy because it is not.  Our first run with the envelope  system met great resistance from my kiddos and we had to stand firm on the decision to stick to our budget.  Using the budget, every dollar has a name and restaurants only get a certain amount.  We give, save and spend a certain amount each month and we do not exceed our income.
     I am amazed at how much we have saved  and given in the two years we have been doing this.  I wish I had known about this when my dear hubby and I were first married.   We are older and wiser now and live on a budget and that is not a dirty word.  It is our plan to save money so that we will be able to do the things we have always wanted to do.   We also do not use credit cards, debit cards yes but not credit cards.  We are paying off our car and house at a rapid pace.  I want to be debt free!! That is for another post.
    For more information on Dave Ramsey I highly recommend you google him and check out his site.   You don't have to do everything he says, you can pick and choose what works best for you.  Try out some of his recommendations and see what happens.

Christmas and Dave Ramsey. . .

No I am not spending Christmas with Dave Ramsey but I am using his principles this season.   Dear hubby and I have tried to save each year for Christmas and pay cash.  We have been doing that for around nine or ten years.  We would take $20 each week and put it in a cup and that would be our savings for Christmas.  There were always weeks we did not put that money aside but for the most part we stayed on schedule.   You don't have to follow Dave Ramsey to follow how that works out.   I feel great relief at the end of the Christmas season knowing that I did not blow our budget out of the water.   There are always things that come up and we end up using our debit (NOT CREDIT) card and that's ok because we had been using our cash up to that point.  Another good point of paying cash for everything is, you don't have to worry about those unscrupulous folks out there trying to steal your account numbers.  One couple in my Dave Ramsey class had their debit card number stolen while they were at the Beach.  A waiter where they had eaten was using it to pay for his car repairs.  The gentleman has friends in the police department and they were able to trace it back to their waiter.  They tracked him down and found he had a notebook with many other credit card and debit card numbers from other people just like you and I.   Another good reason to pay cash when eating out. 
Now back to Christmas, we have been saving this year for our Christmas giving and I hope we don't have to dip into the old checking account.  If we do though, it won't be that big of a hit.  Dave also has a special Christmas budget work sheet he has put on his webiste.  You can down load it for free.  www.daveramsey.com   and no I am not getting kick backs for recommending him, I just believe in what he is doing and want to share with everyone how great it is when you don't have huge debt looming over you all the time.   He has great articles on his website too.  If you are interested in his books you can find them at your local Library or at used book stores.   I am hoping this year will be a wonderful Christmas for all and a debt free one as well.   Christmas is only a little over 5 weeks away.