What the HECK are you DOING?!?!

Photo courtesy of Whysteriastar

The title says it all… it’s the number one question I get from family and friends when they ask how we’re doing with “the debt thing”.

Four years ago, my financial routine was as follows: To spend nearly all of my money on multiple pairs of the same sneaker in the same color, a PlayStation game or two, and the latest DVD release from Best Buy for that week. Once those major priorities were taken care of I’d make sure I had enough money left to cover breakfast, lunch, and dinner from McDonald’s, and enough gas money to get me back and forth to work. No savings, no 401k, no responsibility. I didn’t even know HOW to budget, let alone consider following one! But me? Man, I was living THEE LIFE! …Right?

My how life has changed! Before we started this journey to evict our debt, I was barely making a salary above $40 Grand… but flash forward to today and we’ve paid off $46.5k! (Stop it, you’re making that face again.)

So what changed? In short, it’s a simple phrase but in practice it’s anything but simple:

“Live like no one else, so that one day you can LIVE like no one else.”

Over the next few posts I’m going to introduce you to what that really looks like in my everyday life.

In the next episode: “You want me to do WHAT?!?”

@W

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Simple Secrets: Understanding CashFlow

Photo courtesy of ‘morena7

Cashflow is simply the way money moves (or flows) into and out of your household.

Just as it’s not safe to play in a swelling river if you don’t know what you’re doing, if you don’t understand the cashflow dynamics of your financial situation, you will get swept away by the current of your currency. (Admit it, you liked that phrase lol.)

This simple principle is not to be underestimated. For instance, if you and I have the exact same budget and the exact same income to work off of, but only one of us has a grasp on the power of cashflow, our situations will go in very different directions.

One thing that is crucial to learning how to master cashflow, is gaining the understanding that cashflow planning and budgeting are not the same things, although they do work in concert.

Budgeting is telling the money where to go.

Cashflow planning is telling the money when to go.

That’s it!

Effective cashflow planning can mean the difference between consistently coming up short each month for a bill, or having enough for that same bill and maybe one or 2 others.

So in a few quick steps I want to give you a template for finding the sweet spots in your cashflow.

First, analyze the due dates for your expenses, especially the problematic ones. Also make sure those due dates are listed on your budget when applicable. Is there a bill being paid at the start of the month, that isn’t due until the end? Consider moving or splitting that expense across more than one check. I’ll explain splitting more in the following points.

Second, for constant expenses such as gas, food, groceries or blow money, I’d recommend splitting them into equal amounts across the paychecks you receive for that month. For example, if your house brings in 4 checks each month and you have a budget of $200/mo for groceries, split them into $50/check increments.

Third, for items that are constant monthly expenses, but are just too large to pay in one paycheck (like a mortgage or rent) split the total amount into amounts that are more manageable on a check-by-check basis. Allocate more towards the payment amount on larger checks and less on smaller checks .(Say, if the amount per check is not the same, or if you work more than one job.) As the month goes along you will envelope the funds as you build them up to the full payment amount. *Unlike step 2 the goal of this suggestion is not to split evenly across your checks. **This type of method almost always works better if you are already using a Zero-based budget.

Fourth, watch out for expenses that may not happen on a monthly basis like car insurance, smarttag fees, or even oil changes. For these you either want to create a line in your budget that is enveloped towards. Whether you do this on a monthly or per check basis will be up to you. *This can also be done for one-time annual fees such as membership dues – just take the total amount, divide it by 12 and let that be your “monthly” payment amount for that expense.

Fifth, watch out for ‘Leaks’. A leak is any seemingly small expense or habit that drains your income over time. A leak can come in the form of anything that you purchase but do not document or budget for. Do you frequently get chips out of the vending machine at work? Or pick up a lotto ticket while pumping gas? Or maybe you decide to get that tabloid on a whim while standing in the checkout line. When you add up how much you’ve spent on that expense at the end of the month, you’ll quickly identify your leaks… and trust me, you’ll be shocked.

Like I’ve said a few times in this post, understanding your cashflow just cant be stressed enough. I hope some of these pointers will help you financially “stem the tide”!

Until next time,

@W

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A Near-crash Course In STUPID TAX!

Photo courtesy of rollingtheberries

I messed up royally yesterday…

Stupid Tax can be defined as anything stupid you do that ends up costing you money. Simple as that. It can be that get rich quick scheme that is so “foolproof” that you used your rent money as the down payment. It can be that $700 white Prada bag you accidentally spilled nail polish on (let’s have a moment of silence for the ladies, I know they felt that one. lol)

So yeah, I messed up yesterday. It’s almost a shame because otherwise it was a truly PERFECT day! We got to church early. (A rarity.) We took communion. (MUCH needed.) We spent time with our friends and church family. (Always a pleasure.) And then we decided to drive across the Potomac and check out the newly opened National Harbor.

It was nice over there but we didnt stay because my wife didnt have a change of shoes and I didnt want her feet to hurt. So we were headed back to VA, and while trying to merge onto 95 South, I saw a muffler lying in the middle of the lane. The car in front of me centers their car and rides right over it without incident… I try to do the same… center my car over it and…

The muffler somehow nicks the inside wall of my front driver side tire… instant blowout.

See friends, THAT’S stupid tax lol. Like I alwasy say: If you’re gonna fail, fail epicly! lol

But here is the amazing difference between the stupid tax I used to pay with regularity, and the stupid tax I occasionally have to pay now: There is no pain, and there is no panic. Instead there is peace, Financial Peace, because I’ve already budgeted money for my mistakes. It’s called our emergency fund, and this situation is a prime example of why you need one.

We have money in our emergency fund to cover replacing the blown tire. And that’s all there is to it. We just pay to replace the tire and keep it moving! No wringing our hands. No being caught financially unprepared. No flared tempers with the wife and no arguing.

Financial PEACE.

Once again, my wife was effortlessly calm, and supportive. Her disposition in times of adversity truly humbles and awes me. We were on the side of the road laughing and cracking jokes as I put the spare tire on! Once I finished putting it on, we spent the rest of the afternoon driving the long way home thru DC. We just had a BLOWOUT, this is supposed to be serious emergency stuff and we’re both as carefree as we were at church earlier!

On that note, I’m certain that our taking communion earlier at church played a large part in the peace we felt in this situation as well.

Isaiah 26:3 (KJV) says: Thou wilt keep him in perfect peace, whose mind is stayed on thee: because he trusteth in thee.

The Word aint no joke! That’s exactly where my mind was (On Him), so I know that’s where the real peace came from… peace that not even all this money talk can’t buy.

Thank you Jesus,

@W

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Food Bank: A Global Perspective

photo courtesy of PatL

The picture above is the one I started to use for my last post, but the comment attached to it was just too powerful to ignore. Clearly after reading it you will agree that it deserves it’s own post. So, at the risk of being called a plagurist, I’m reproducing the entire comment of the person who provided me with the photo I was going to use for that post. There is not a single thing that I can add to what PatL says there.

Here is a link to PatL’s photostream on Flickr.

Please be careful the next time you complain of being bored with your eating habits, or claim there’s ‘nothing’ in your fridge to eat.

“Rice and money – mundane things, right? According to the World Bank, 2,700,000,000 people (2.7 billion, nearly half the world’s population) live below the poverty line, earning less than $2US per day. And rice is the sole or primary sourced of food for almost half the world’s population as well, with estimates of annual consumption ranging as low as 100kg per person.

Not quite 10 oz. of rice per person per day is consumed by half the world’s population as their primary form of nourishment.Sources: aDollaraDay and Food and Agricultural Organization of the United Nations“

$2 per day. And 10oz. of rice per day. That’s a budget that NOONE should have to live within! Take a moment and think about how many times you can divide the number 2 into the amount of money you spent today…

@W

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Food Bank: 5 Ways to REALLY Boost Your Food Budget

Photo courtesy of shine_dorydevlin

You’ve heard yourself say it a time or two… “I cannot possibly cut anything else out of this budget!” But just humor me by going along with this mental exercise.

The biggest and often most overlooked place for savings is your food expenditures. There is no way around the truth in this statement: “You ARE what you EAT.”

If you have expensive tastes, your bills will be too. This can quickly be compounded when you are married with no kids, because you will most likely eat what your spouse eats in the evening. So if he/she has a thing for eating out frequently… good luck!

It is with this in mind that I came up with 5 simply profound ways to impact how much money you spend on food. This applies to both your grocery shopping and dining out. If you even try just 2 of these I promise you’ll see a noticeable drop in what you spend.

If you don’t have time to read each of the 5 points below, I think I can sum them up in one sentence.

Don’t spend money buying things that are available for FREE!

While reading these points ask your self how that statement applies. Except for point #3, just don’t do it.

1. Drink more WATER

Water is the cheapest most plentiful food resource we have available to us. Usually it can be found for FREE where ever you may be. If ‘public water’ is just a little more adventurous than you can handle, invest in a filtration method for your home. They can easily be added t your sink, or you can buy various pitchers from Brita or PUR on the cheap.

Drinking water throughout the day will also help you eat less, loose weight, and stay properly hydrated.

2. Buy less COFFEE

I’m not Anti-$tarbuck$ or anything… but $4? Everyday? Plus a pastry or sandwich or CD….

7-Eleven, Dunkin Donuts, Panera, McDonald’s, Seattle’s Best, & Bengal Traders (Exxon) are not exempt either… it’s a ripoff!

I would venture to say there is not a workplace in America that doesn’t offer free coffee and tea. Does it really taste better just cause you paid for it?

3. Stop buying ALCOHOL… period

Literally, It’s one of the oldest sayings in the book, (and yes I AM talking about the bible)

“EAT, DRINK, and be MERRY”

It’s found in Luke 12:19 (NIV) , but it’s not an endorsement for “buying out the bar” as hiphop loves to proclaim. In fact it’s the opposite. Let’s read it in context:

18″Then he said, ‘This is what I’ll do. I will tear down my barns and build bigger ones, and there I will store all my grain and my goods. 19And I’ll say to myself, “You have plenty of good things laid up for many years. Take life easy; eat, drink and be merry.” ‘
20″But God said to him, ‘You fool! This very night your life will be demanded from you. Then who will get what you have prepared for yourself?’

I just have one thing to say about that…OUCH!

If you drink socially, odds are you pay almost as much per alcoholic drink as you do for your entree… and lets face it, who buys just ONE drink? (Whew, I thank God I don’t drink alcohol anymore!)

4. Stick with the Small or Medium sized “Value Meals”

Since the start of the year I’ve really cut down quite a bit on eating fast food. (It helps to mention that I’ve completely QUIT drinking soda as well, as this truly makes a difference.) Ah but Wendy’s still has a hold on me. Sometimes when standing in line, I hear other people order a #6 (mmm the Homestyle Chicken Breast meal…) but they make one mistake. They order the “Great-Big-Ole-Biggie” size for the soda and fries. When they do this it ends up costing nearly $8 bucks! Then later when I’m eating in the restaurant, I see them toss the half-eaten meal in the trash.

Solution: Stick with the small. I only buy one meal from Wendy’s now. The “DoubleStack Attack”. It’s $3.49 and it’s more than enough for me to eat as a lunch meal. I just ask them to add lettuce and tomato (which they do for FREE!) and I’ve got the equivalent of whatever ‘Feature’ burger they’re offering.

Another tip that I’ll throw in for free is to not buy a ‘meal’ at all and just get the sandwich. I do this when I go to Burger King. I get 2 Whopper Jr’s, no cheese. (They charge .40 cents per slice!, which after tax drive the cost up a full dollar.) 2 Whopper Jr’s = $2.10 and I’m FULL! Need something to drink with it? Wait till you get home to eat it! I know you have juice/soda at home c’mon.

5. Brown bag it

It’s unfashionable, It’s borderline miserly, and it can be boring. But it save a whole heckuva lot of money! (and time)

The only con, if you can call it one, is that you have to prepare this ahead of time. But it’s time well spent, rather than money spent poorly eh?

I apologize I know this post was a bit lengthy, but as I said if you incorporate just 2 of them you’ll see improved results.

God Bless ya,

@W

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@ Risk Theater: I’m A Compulsive Shopper…

I saw an absolutely brilliant episode of TRUE LIFE on MTV last night.

The episode was called “I’m a compulsive shopper” and it did a great job of documenting 2 teenage girls who have literally become addicted to shopping! I copied the episode summary so please see it below. I’ll also be contacting MTV Networks to ask permission to post the full episode here shortly. It’s not up on MTV.com yet but I certainly recommend seeing sometime when it airs on the network. For now here are a few photos from the show*…
All materials are taken from MTV.com*

Full Summary

It’s no secret that teenage girls love to shop. Trips to the mall to find that perfect dress or take advantage of a blow-out sale are no oddity among teenage girls and their friends; but what happens when those shopping trips become a little too frequent? For Gabby and Ali, shopping has become so addicting that they are no longer able to lead healthy lives. For these girls, shopping has gone far beyond a form of retail therapy-it is their only way of life.

Gabby is eighteen years old from Queens, NY, and her life is all about what she wears. Her closet is so stuffed with clothes that she can barely see what is in it-but she does manage to find a pair of unworn designer jeans she bought for three hundred dollars with the tags still on. Gabby’s mom has multiple sclerosis, so since she has always been unable to make trips to the mall with her daughter, Gabby starting using her parents’ credit cards from a very young age. Now, years later, her so called “normal” use of her parent’s plastic has turned compulsive, and as a result, she has put her family in about ten thousand dollars worth of debt. In order to support her shopping addiction and pay her bills, Gabby works two jobs and lives from pay check to pay check. Every two weeks simply means more money that she can spend on new clothes and accessories-and for Gabby, that means every last penny. Gabby’s father, frustrated with what Gabby has done to the family, demands that Gabby see a therapist, but Gabby refuses to admit she has a problem. And besides, why would she waste a trip into Manhattan to see a therapist when she could be shopping on Canal Street? Things start to look up when Gabby finally decides she wants to start saving money. However, deciding to save money for breast implants is probably not the best solution for curing her compulsive spending habits. Will Gabby ever be able to pay her parents back for the enormous debt she has caused them? And will Gabby ever be able to remove herself from the ruthless cycle of making more money just so that she can spend more money?

Ali is nineteen years old from Columbus, Ohio, and she shops whenever she can-whether or not she has the money. She works hard on her image and figures if she keeps it up she will eventually live up to the likes of Paris Hilton or other pop divas and finally start believing in herself. Ali works the door at a strip club, and unlike Gabby who has to wait two weeks for her next cash flow, Ali bypasses the anxiety about waiting for a paycheck by taking home a nightly wad of cash. However, despite this constant flow of money, Ali still manages to run out of money, and in order to satisfy her “shopping fixes,” her boyfriend, Kyle, ends up footing the bill. As a result of her constant need to shop, Ali has let her bills accumulate for the past 4 months-which means a debt accumulation of almost eight thousand dollars. While Ali acknowledges she should pay off her debt, the high she gets after a shopping spree makes it hard for her to change her behavior. Ali starts going to Debtors Anonymous meetings twice a week, and while she would like to think she is changing her behavior, she doubts if she really is-especially after she spends every last penny when shopping for her birthday. Eventually, Rent-A-Center comes and removes all her bedroom furniture which Ali never paid for, leaving Ali’s room a cluttered mess of clothes. Despite this reality check, Ali still continues to shop and rack up her debt- now totally almost 15,000 dollars. Will Ali ever realize life is not just about the shopping and purchasing? And will she ever be able to find the money and confidence she needs to get the intensive therapy she recognizes she needs to get her life back on track?

Watch True Life: I’m a Compulsive Shopper to find out what happens to these two girls when they literally shop till they drop.

This show gave me plenty to consider and some ideas for topics to cover this week. I hope you’ll make time to check it out.

Thanks fam!

@W

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A Look Inside Our Weekly Budget Meeting

Photo courtesy of rubymatt

My wife came up with this great idea for a post: a brief walkthru of our weekly budget meeting.

I’m sure some of you out there who are just starting out have experienced the ‘thrill’ of the 2 hour budget meeting, but I assure you it will get better. The more consistently you meet, the faster the meetings will go in the future. You will soon find that both you and your spouse are improving the way you both approach and communicate about finances.

I remember back in October when we first started having meetings…. pure disaster! It would take forever for us to get through it, and just the thought of how our finances looked at the time caused a great deal of tension. Many nights we didn’t even want to sit down and look at the budget because we just KNEW it was going to end in silence, or frustration, or that defeated feeling when you know you’ve got more ‘month than you do money’.

BUT YOU MUST KEEP AT IT!

You have to consider the first few meetings like Training Camp. When the team gets together to shake off the rust of the off season and learn what direction the team wants to grow for the season. You learn your routes, learn to read your teammates, and learn how to respond to game time pressure. This is where you solidify your financial chemistry with your spouse which is extremely important because…

How you arrive at decisions about your money is just as important as paying down the debt.

If you are married, this must be a team effort and you both need to have equal say. If you both can’t agree how to proceed, Husband it’s your call. God made you the head of the household for a reason and this is one of those times when it counts. BUT it usually doesn’t even have to come to this point because there is almost always a mutually agreeable solution… or at least there should be. However if it does come to this point, I urge you husbands to make your decision in a way that will best serve your family, not just to ‘have your way’ or make a point. Sometimes the wisest decision a husband can make is to listen to what his wife says and act on it.

Time is of the essence…

Your weekly meeting should not be a long drawn out event. In fact the shorter the amount of time you take, the better as long as you cover the basics of your meeting. The meeting should be viewed as a tool to keep you motivated and informed of your progress from week to week. I cant stress enough that the first few weeks wont look or even feel good, but soon after you will see the progress, the preparation, and the peace that comes from being on the same page with your spouse.

To help you increase the impact and efficiency of your budget meeting, I’ve broken this post down into a few sections.

- Establishing an agreeable meeting time.
- Finding a place outside of the home where you can meet.
- The tools you should have handy.
- The Objectives you should meet at every meeting, NO EXCEPTIONS.
- Goals to set for the next meeting.

Times that you should NOT be meeting:

-Late at night – It can RUIN you sleep for the night…

-Early in the morning – It can RUIN the day ahead…

-When either of you are sleepy, cranky, hungry or watching ‘the game’ or Iron Chef. lol

Any time other than the three I mentioned is highly recommended.

Rendezvous Point:

Where you meet helps determine how effective you meeting will be. I don’t recommend doing them at home because you can easily be distracted, or tempted to multi-task other things at the same time. Instead, I recommend meeting at a coffee shop, restaurant of public library (my personal favorite). It’s good to find a relaxing environment, but not a cozy one. Or if the weather is decent you can meet outside, the fresh air will help you concentrate.

Tools of the trade:

-Prayer, always start with it!

-An agenda of the items you want to focus on.

-2 copies of the budget. *You will both need your own copy for note taking, doodling, and editing, because your budget NEVER stays as it was first drafted.

OR

-Paper to take notes. *Trust me by the 2nd day you’ll have forgotten everything if it isn’t down on paper. This saves you from recapping all of last weeks’ meeting this week! lol

-Resource materials such as The Total Money Makeover, or the book/program you may be following. *This is optional, but helpful to have at the ready. Don’t try to do it all yourself, there is plenty of help out there available to you, most of it free.

Prime Objectives: (If nothing else gets discussed, these are a MUST…)

Naturally there are topics that you should strive to discuss every time you meet. Here are a few, but your list depends on how you both approach things.

-”The 4 Walls”: Food, Clothing, Shelter, Transportation.

-Know your next payday.

-Know what dates each expense/payment is next due.

-Know who does what: who’s calling the creditor, writing the check, withdrawing the cash, dropping off the payment, addressing the envelope, putting the stamp on it, purchasing the stamps if you don’t have any, and who’s placing the envelope in the mailbox. *The ‘who’ does not and should NOT have to be one person. This is a team effort!

-Know when each of the prior items should be done by.

Close with a look ahead to the next meeting:

-Have tangible goals you would like to see completed by the time you next meet.

-Discuss payments, conflicts, possible problems you foresee on the horizon.

-Propose changes in strategy or format. *This can be helpful because your partner wont feel like a suggested change has been ‘sprung’ upon them. It gives them enough time to think and digest the suggestion in time for the next meeting. It’s both a considerate and fair way to voice your objections if you don’t like how something is going. And it also means your not just ‘complaining’ about the process, your bringing a solution to the table.

Well that’s about all there is to it! If you take some of these things into consideration going forward, I’m sure it will help smooth parts of the process out for you. And as always if you have any suggestions of how you and your family do something differently, please let us know in the comments section!

Till we ‘meet’ again… get it? lol

@W

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June is the LAST month we spend $500 on FOOD!

photo courtesy of cycrolu

Dont you just love epiphanies? I had one yesterday while preparing for the ‘weekly’ budget meeting with my wife. (She’ll get a laugh out of the ‘weekly’ part lol.) For what seems like months I’ve been looking at our budget trying to see what else I could squeeze out of it. I could never see it, but I could just sense that I was missing something that was staring me right in the face. And boy was it ever, it was the $500 we’ve been spending on food each and every month! $500 as in a car note on a brand new 5 Series BMW… $500 as in a PS3 and 2 games! For the record, right now it’s just the 2 of us, no kids and no pets! I know of couples with 3 children that get by on spending less!

I know just how we got in this bind, and sadly I know we’re not the only ones. Sure our situation may be slightly different, but the symptoms are completely the same for anyone who is overspending on food or any other area of your finances. For me it’s a word called COMFORT, that simple, inviting killer of many other positive C words: conviction, concentration, character, courage, & chutzpah!

It might not be called the same thing for you, but you need to understand that no matter what you’re calling it, IT is keeping you from that next level in your debt dumping experience. See there are basically 3 factors that determine the relationship you have with money: Emotion, Psychology, and the Numbers. I was reading a great article over at Zenhabits.net yesterday called: How I Paid Off $35,000 in Debt, and How You Can Too.

In the article the author was debating the logic of paying your debt off in order of interest rate from highest to lowest, versus paying your debt in order of account balance from lowest to highest. Both approaches have their benefits depending on your psychology towards money. And it was while he was explaining this that he threw out a quote that hit me like an uppercut!

“Many experts advise paying your high interest debts first. Obviously, this makes the most sense mathematically. But if money were all about math, you wouldn’t have debt in the first place. Debt is as much about emotion and psychology as it is about math.”

When we started this budget back in October, I was eating fast food almost daily, and my wife was on a weight-loss program. Because of this, we made the decision to split our food money into His and Hers envelopes. The deal was supposed to be $50 per person per check for personal food, and another $50 every other check strictly for non-food groceries such as cleaning products, toiletries, etc. This worked ‘fine’ for us because we could basically expect one of us to be paid each week, so it equalled $50 per person each week. That might not sound like much at all right? $50 divided by 7 days is $7.15/day… But when you look at it on a month to month basis, it works out to about $200 per person just for our food allowance, and $100 each month for non-food groceries.

I never needed $200 just for food, it just a comfortable dollar amount for the types of food I wanted to buy. Everybody knows it’s cheaper and healthier to prepare and cook your own food than it is to eat out all the time. And everybody also knows that it’s far cheaper to brownbag your lunch each day rather than frequenting McDonalds, Wendy’s, Burger King, and Taco Bell and letting them hit you up for $6-$8 per meal!

While everybody (myself included) might have already known this, yesterday I was finally willing to admit it to myself. My Emotion (wanting to be comfortable) was not in keeping with my Psychology (Kill off this debt by any means) or my Numbers (Spend less on wants, and more on needs and debt elimination). The three have to be in agreement for things to work at an optimum clip.

By the end of the budget meeting, my wife and I decided that we could do away with the His and Hers food money, and also do away with $150 of that $500 tab each month. We both feel very good about it, because we both realize not much is being lost, but a whole lot is being gained by the change we just made. We basically just created some extra income where there was none by curbing our wasteful spending and thinking outside of the box.

I’m sure there are ways you can do the same if you take the time to balance the Emotion, the Psychology, and the Numbers to work to your advantage.

So here’s your homework till the next time we meet up: I want you to A) Find a name for your emotion towards your money or B) Give a name to the emotion that prevents you from whipping your financial picture into better shape. And if you care to share them, feel free to use the Comments section, we’d all love to hear you perspective!

Be Blessed till next time,

@W

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Pending Transactions or "When $16.05 costs you $86.05" Part II… Finally!

Photo courtesy of TW Collins

Here it is folks! The long awaited sequel to the smash hit article “Overdraft Fees, or “When $16.05 costs you $86.05″ Part I” !!

There’s an old adage that goes a lil something like this: “Cash is King!”

For years I refused to accept it while I was using my debit card to purchase everything under the sun that I both could and could not afford. But more recently I’ve come to know and love that saying in a very special way.

Dave Ramsey calls it the Envelope System, and it’s just as simple as it sounds… If you know how much you’re budgeting towards an expense, withdraw that amount in cash, place it in an envelope, and spend it…. but once it’s spent, you get no more until the next check shows up. If your budget is $100/week for food, and you eat out on Monday spending $75… then it looks like you’ll be eating PB&J for the next few days!

Yes it takes discipline to place yourself on this type of system, but not nearly as much as you would think. Now, back to that saying “cash is king”… here’s where it comes into play with the envelope system. As you spend your money out of that envelope, it allows you to instantly assess, inventory, and prioritize that next purchase. As you see that money dissolve in real-time out of your envelope, it forces you to question whether you really NEED to spend money on that next item you intend to purchase.

But what I truly love is that the envelope system is maybe the closest you can get to experiencing personal-finance-instant-gratification! There are no pending payments, no waiting for a payment to clear your account, and no getting caught up in the ODF cycle. You take the Russian out of the Roulette! And you gain a big portion of your financial control back! All by stuffing your cash in some envelopes and sticking to the script.

I’ve become somewhat of a celebrity at my local bank branch because of the envelope system. Ok, so maybe I just threw in the celebrity part, but each time I come around they know me by name. They’ve given me the nickname “Cash-man”. So what if it’s not the freshest moniker, at least they know me for something positive!

See when I walk in, I already have a very specific breakout of how I’d like to receive my cash. I know the exact number of $100′s, $20′s, $10′s, $5′s, and $1′s I’d like to withdraw. Unlike many people I don’t just let the bank give me 100′s and 20′s, if that’s not exactly what I NEED. After all if I’m banking with them, then I’m their customer, and that means that them giving me the exact amount I need is part of servicing the customer! ( WHAT A CONCEPT, eh?!)
I’m writing this as a follow up to an incident that happened to us in April (read the title of this post to get the gist) because banks are literally milking us for all we’re worth as a nation. My wife and I are sick of being caught in this vicious cycle where only the banks and oil companies are having all of the fun with this money thing!

Too many of us are living right on that line of financial ruin. If that whole Overdraft experience had happened to us before we got on Dave Ramsey’s TMM, things would’ve quickly spiraled WAY out of control. One overdraft fee would cause some other pending payment to come up short, which would cause another overdraft fee and on and on…That’s what living check to check and far beyond our means has done to us as a society. It’s the root of the credit crisis, the mortgage crisis, the stock market volatility and it just spreads like mold from there. They are making Trillions off of us because of the trap we’ve allowed them to spring on us.

I tell ya what, if this sounds a little too drastic for you to try all at once, Dave Ramsey suggests starting out with putting only your Food money under the envelope system. So this means that on payday, you decide how much you realistically want to spend on food for the week, you withdraw that money in cash, mark an envelope with the word FOOD, and ALL food purchases are made from this envelope for that pay period. If you run out of money before the next payday, tough luck! 1) It means you need to evaluate where your food money is going. 2) you should explore more cost effective ways to stretch that dollar amount. Or 3) you need to increase your Food amount but decrease some other aspect of your spending. After doing that for about 3 pay periods, you will know how much you can realistically spend out of your pay check towards food. And this knowledge will help you curb the habit of chronic overspending.

Dave Ramsey’s program is all about achieving Financial Peace. And I really must say there is a profound sense of peace in knowing how far we’ve come in just a few months of doing the program. That experience was not nearly as damaging as it could’ve been because we now envelope virtually all of the money that we budget from each check. None of the panic of worrying what check might bounce next. Why? Because we withdrew all of our expenses in cash to avoid that. Now we just have peace…

Financial peace….

Peace,

@W

To get the full impact of this follow-up article, please take a moment to go back and re-read the original post about how our bank made $55.00 in profit off of us from only $16.05 in purchases.

The $10 Blessing: Integrity Pays in Your Business Dealings

photo courtesy of snacktime2007

**I bet the title had you thinking I was about to post a chainmail message huh? lol

Ok it’s Friday and I don’t have time for a long post so I’m gonna give you the quick and dirty:

Yesterday I made a large cash withdrawal so that I could envelope our funds for the week. Everything was kosher until I got to the car. While I was allocating the funds into the various envelopes, I kept coming up with an extra $10 bill… so I sat in the car and wondered what to do. Return it? Keep it? Tithe it back to the Lord as thank offering for providing the ‘increase’? It was a simple decision. I walked back in the branch walked up to the teller I banked with and said “I’m not sure… but I think you made a mistake,” producing the $10 spot at the same time. He looked confused, but said “uh, ok…”. I then said, “I’m pretty sure about it, just check your drawer when you close out this evening.”

Fast forward to a few hours later… it’s 8:40pm and I’m RUSHING home to catch the start of game 4 of the Lakers vs. Celtics …. but before I can go home I need to stop and pay one more bill, which is cool cause it’s on the way, not out of the way. Long story short: My wife and I are standing at the window and the teller is counting the money we’d like to have applied toward our bill… BUT HOLD UP SON!! It’s short $10 dollars!!…. @W messed up the count yo!!…. what to do?!? I dunno but it’s now 8:53 and the “Lake Show” comes on in 7 minutes lol!! So I pull out $10 from my personal money, pay the man, and say to my wife “I’ll straighten it out with the bank tomorrow, I know just what happened.”

So today I return to the scene of the crime to get my rightful $10 spot back… I had my “combat face” on and walking into the place like I was about business! I’ve seen this type of situation swing both ways too many times… both for and against the combatant — er customer. And plus — let’s be real here– I’m trying to get money ‘back‘ from the $BANK$. You’ve seen what I’ve had to say about them in other posts… So anyway I walk in, ask for the branch manager, and tell him the situation. We both walk over to my favorite teller, and before I get there he’s like “Mr. Wright, I check my drawer last night at closing time and came up $10 over, so I just deposited the money into your account for you.”

Cool. That was that. Romans 8:28 did it’s thing again. “All things work together for the good…”

I’m thankful for the number of blessings that came out of that simple miscounted $10 bill. 1) I acted with integrity when given an opportunity to ‘get over’. 2) I established trust with my bank teller by acting honestly. 3) They did the same with me in return by depositing the funds into our account. 4) The Envelope System once again proved it’s worth to us. I might not have noticed so easily where the $10 should’ve been if I was just banking online and paying with my debit card.

This experience gives a new meaning to the saying “Count your blessings” right?

Now back to what I was saying about the chainmail… if you forward this to 10 people as fast as you can, you will broaden my readership and I will instantly thank you! “Thank you!” (See how fast that was? I did my part…lol)

God bless,

@W