Simple Secrets: Paying on it vs. Paying it OFF

Photo courtesy of Tea & Jam

Ok folks. In my last post we went over the basics of the 7 Baby Steps that have helped us pay off over $53,000 in debt in the last 20 months. But today, I’m going to let you in on a little secret: There should actually be 8 baby steps!

Step Zero: Stop using currently established and available forms of credit, and also stop accepting NEW forms of credit.

This step contains the key to your Total Money Makeover, and it’s such a radical shift from ‘the norm’ that it causes many to fail even before they start. Some folks just cant get their head around living off of CASH.

When you really get the point of this program, you will soon realize that you really don’t need credit at all. Not for credit reports, or FICO scores, or for your cash back rewards. You don’t need it.

Minor tangent: Speaking of cash back rewards… how much CASH are you really getting BACK when the creditor is charging you interest for the use of your credit line? Think about it!

Now, in my last post I promised to tell you why we REALLY chose to stick with this system, and here is the reason: Because at first we felt like we were doing something WRONG. And when I say ‘wrong’ I mean we felt like we were being disloyal to the credit industry in some way. It’s hard to articulate, but Visa and MasterCard have become so prevalent in our society and in our spending habits, that it felt truly odd to simply make the decision not to use our charge cards! How sick is that?

The entire credit system is propped upon the fact that they NEED you to NEED them. They constantly send the message that if you aren’t using credit in some way, you simply will not be able to ‘compete’ with or keep up with the average consumer. It’s a very Pied Piper mentality!

Once we realized why it felt so wrong, it lit a fire in us! And it opened our eyes to the many tactics and tricks that are pressed upon the average consumer.

THIS IS A WAR PEOPLE! And if you haven’t noticed, take a look at what this nation has been through in the last 16 months as proof. The housing market collapse, the banking and financial institution implosions, the economy woes, the employment issues. They are all mutations of one virus: CREDIT…

Credit tells you it’s ok to spend more than you actually possess. Credit tells you it’s ok to borrow against your future, to acquire something today. Credit can erode your character and your sense of delayed gratification, and it can also ease you into a place of irresponsibility and ‘living for the moment’ emotional purchasing.

Because of this, you are required to make a change in your approach toward money. This is where the title of my post comes in. People who are comfortable with debt, have no problem “paying on” something far longer then they ever intended to, because they get lulled to sleep by the convenience factor of a payment plan.

Meanwhile, those who have had enough of this game of debt become addicted to “paying off” things as quickly as possible so that they can free up their income and truly live a life that’s not dictated by a three digit score, and the limits on their cards.

Thanks for tuning in, I hope you’re enjoying this expose’ series.

Next up: “The $1,000 Scramble”

You are worthy of the journey!

@W

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These "Baby Steps" AIN’T for Babies!

Photo coutesy of Bettina.Schwarz

In the last 2 posts I’ve kind of gone thru a sort of ‘reset’. Maybe it’s a second wind of sorts? I dont know. But I’ve felt the need to simplify the emotions and actions WE (my wife and I) faced when we first started out so that YOU can duplicate them as much as possible.

In the first post of this mini-series, I laid out exactly what we’re doing and how it has helped us pay off $49,000 in debt in only 19 months! In the second post I continued to zoom in on the mindset and underlying philosophy of “Living Like No One Else”.

Luckily we never felt overwhelmed with the process, and I think that is in part due to what I intend to share with you in this post. In his book The Total Money Makeover, Dave Ramsey calls them the Baby Steps. They are meant to be simple bullet points on your journey to debt freedom.

But please dont sleep! Just because these steps are simple, doesnt mean they’re for ‘simple’ people. It takes vision, committment, and perseverance to see these steps through to completion!

I want to take a few moments to list them out below, but I’ll delve deeper into each step in future posts.

Step One: Save $1000.00 CASH as quickly as you can to start “Emergency Fund”

Step Two: Pay off ALL debt in order from smallest to largest using “Debt Snowball”.

Step Three: Save 3-6 months worth of expenses, to fully fund “Emergency Fund”.

Step Four: Invest 15% of income into Roth IRA’s and Pre-tax retirement.

Step Five: Begin funding your childrens’ College Educations.

Step Six: Pay off your home early

Step Seven: Build Wealth & GIVE! (Mutual Funds, Real Estate, ect.)

Step “Zero”: STOP using any forms of credit and accepting new forms of credit.

Pretty simple and straight forward right? Well yes, and no. Yes, because they set a framework for you to follow. No, because if you dont follow the framework that has been set… you’ll only be making it harder for yourself. In addition, these steps can’t tell you how aggressive to be in your Total Money Makeover. The intensity level must be left up to you.

The downfall to the simplicity of this plan is that so many “SMART” people in this world think they need to re-invent the wheel and make it more sophisticated. But as the saying goes “K-I-S-S” (Keep It Simple Stupid).

As I said before, I’ll be breaking each step down and explaining why the order is so important. I’ll also be sharing exactly why we REALLY chose to stick with this system. As you become more and more familiar with the steps, you will inevitably feel that something is “wrong” about them. This is natural! At first, I did too, until I realized how CONDITIONED i had become by the FICO scores and the credit card industry! They NEED you to NEED them, and they’re NOT going to make it EASY for you to cut them loose!

We’ll talk about that further in my next post where I’ll address the ‘objections’ I’ve heard toward getting out of debt. The reason objections is in quotes is because the people objecting were spitting out all the BS that is fed to them daily by the media and credit card industry.

Next Episode: “Paying On It VS. Paying it Off”

You are worthy of the journey!

@W

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The Passion of the Price… (tried to rhyme with Christ)

Photo courtesy of jennipenny

Ok, so It’s confession time… How much did you spend on Christmas gifts?

For the 2nd straight year, my wife and I have budgeted only $150 TOTAL for Christmas gifts, and for the 2nd straight year we’ve come in under budget! We decided only to buy for immediate family members and a select few friends.

I’ve gotta tell ya, it’s pretty liberating to spend such a small amount and still find quality gifts to give to each person. It really hurts me to watch people in the check out line spend the same $150 on just 2 sweaters from Banana Republic and then complain about how they dont have any money to spend on gifts for others.

This year we focused on giving relevant books as the main gifts. And ironically few things have been more relevant to so many people this year as the state of the economy has been. With that in mind we decided to gift copies of Dave Ramsey’s Total Money Makeover. We hope it doesnt come off over zealous, but we simply feel that with the amount of success we’ve had doing the plan, it would be grossly neglegent of us not to impart that information to our family and friends!

It’s similar to when you first fall in love (and hopefully stay in love) with Jesus. You just want others to know how it feels to be on the winning side! But honestly, the thing that would have truly made this a wonderful christmas for me, would have been if we could all agree not to exchange gifts at all this year. Not because my wife and I couldnt handle it (oh yeah $150 on gifts just PLUNGED us back into debt haha.) but because some of our friends and family still make a ‘thing’ out of buying gifts even when they cant afford to and then get themselves in financial trouble trying to appease everyone with a gift.

That’s just not us anymore… call us weird but we’ve had it with the whole Giftmas gimic that’s been shoved down our collective throats!

If you didnt get on board with us in keeping the Christmas budget down this year, you’ve got 364 days to get on board for the 2009 Holiday Season… there’s no time like the present.

Merry Christ-mas,

@W

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We’re Getting PUMPED!!

Our budget is finally about to pack on some serious muscle in this war we’ve waged on our debt!

The Lord is aligning a number of things at JUST the right time as far as our finances are concerned. My wife just got a DREAM of a part-time job. (Ka-ching $$) My job just assigned me to a large overtime project. (KA-ching $$$) And largest of all in the next few days we’ll be paying off a major loan that will push an extra 5 ‘bills’ ($500) straight to our debt snowball! (KA-CHINGY ching chang $$$$!!) LOL

Now usually our budget meetings have become pretty fluid and pain-free, but last night took it to a whole new level. We were actually GIDDY talking about out finances! We were joking around and giving each other funny lil nicknames. For instance, because I’m the one that actually plots out our budget spreadsheet, and withdraws the cash ect. I made a joke that she should call me the “Comptroller”. And since she’s so great at filing our budgets, papers, and bills as well as keeping track of the decisions we make, as well as the follow-up involved so that we can ACT once we have the money in hand, I said I’m gonna call her the “Administrator” lol. Well to make a long story short we settled on the fact that she’s the “Commissioner”, and I am the “Mayor” lol! (right honey?)

So anyway, as you can see this new turn of events has us STOKED! And we are both certain in the fact that the Lord is blessing our efforts in ways we could only dream of! For the longest time both of us have been ‘worried’ about our Gazelle Intensity, because certain circumstances prevented us from generating any extra income. We ‘wanted’ to get to a point where it could be realistic, but even a recently as last month it just didn’t seem possible.

We knew the loan would be paid off in November and that had us amped enough, but we didn’t know where else we could squeeze out more income. For the time being that no longer appears to be an issue and I truly and openly praise God for making a way. We’re so undeserving of how well He’s protecting and accelerating our efforts! WOW!

Which brings me to my point for today: It’s really true that He will make ways for you, when you start moving His way! (Oooh I LIKE that one, did that really just come from ME?! lol)

Mmm, I think I can stop right there for now, that’ll preach all by itself!

For those of you who are attempting a Total Money Makeover, and really giving it your ALL, THIS is for YOU. It doesn’t start out easy, and it doesn’t always feel easy as you’re going through it, but I can GUARANTEE that it is EASILY worth the effort! (Man I’m just on a roll today with the good quotes! lol)

You will suddenly see things open up in amazing ways as you continue in this process as long as your heart is in it for the right reasons. Not to BE RICH, or to flaunt your newly reclaimed income potential recklessly. No not at all! Chasing those things is what got you here in the first place! Instead, once this process takes ahold of the way you think, feel, and interact with your money, you wont even WANT all of the things your money will now be able to afford you! Yes, when you get to the other side of this thing – when you are finally able to scream “WE”RE DEBT FREE!!!!!!” by all means celebrate and enjoy your accomplishment. But I promise you, you wont be out to blow your extra income on every DVD that Best Buy carries, or every new toy for your car, or every color that Gucci bag comes in. I just don’t think it’s possible to go through this process and hold on to that type of materialistic mentality.

I’m not saying you wont get nice stuff once your debt free. Oh yes you will, but you wont be living your life slaving to acquire those things, because you’ll be in a position to safely afford them while living within your means. And there’s a BIG difference between the two.

“If you live like no one else…one day you will live like no one else!”

Lord, I cant wait for that day. But thank you in the meantime for what you are allowing us to do with each day you give us between now and the day we pay off that last bill! And Lord you know this isn’t just about the money for us. I love you for what you are teaching me as a steward and a husband. I love that what we are learning can be just as easily applied to how we steward our TIME, or set our PRIORITIES, or how we manage all of the other resources you’ve given us. My marriage is stronger for us having gone through this. I am stronger in my trust that you will provide in EVERY circumstance what is needed for me to rely totally on you. If I wasn’t going through this process, I don’t know how else you would have shown me all that you are teaching me. But I’m thankful that you chose to call us to bear witness to this message. Thank you for your ways and your mercy towards me and my family. We do this to honor YOU… because you really do own it all!

Your servant,

@W

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@Risk Theater: FPU Plasectomy Edition

Photo courtesy of SmittyToday

One of Dave Ramsey’s claims to fame is a simple ritual called the Plasectomy.

At the end of his Financial Peace University course he allows families to come up on stage and forever exorcise their credit card debt by slicing up their plastic in the most creative ways possible.

Check out the video below as an example:

One day very soon this will be us… um well maybe not this exact way, but the day is coming when we’ll take part in this ritual too! You gotta love it! lol

Now that’s what I call Gazelle Intense!

@W

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Full Circle: How Our TMM Began…

Photo courtesy of ZaksterNT

Over the past 2 weeks I’ve taken a break from the blog. I needed to clear my head because I’ve been overwhelmed by the resonsibility I feel towards you as my readers. See I want to reach you, but most of the time I dont know how effectively I’m doing that. I thought about extending this ‘break’ for the blog through the rest of the year. I thought about quitting it altogether. But something happened last Saturday that changed my mind.

I’ve often heard the saying: “When you feel you’ve reached the end, try going back to the beginning.”

Last week my wife and I went away for the weekend with a group of married couples for our annual Duets Retreat. On Saturday morning, my wife shared a portion of our financial testimony with the group and it was incredibly powerful to hear it from her.

No sooner than my wife stopped talking, the couple next to us tapped her on the shoulder. They wanted to know more. A few hours later, while walking with another couple, the conversation again turned to the testimony she gave. We spent the rest of the afternoon sharing with them just a few of the blessings we’ve experienced since this journey began for us. There is something beautiful about witnessing someone hungry to change their life for the better, and it continually blesses us to be a part of moments like that.

There was something I kept identifying with in that couple. It was an urgent need for change. It made me realize that it was a year ago this week that we were first exposed to Dave Ramsey’s TMM. The similarities are strangely alike the more I think about it.

This time last year my wife and I were just getting back from our Honeymoon, which we celebrated at the same location as this year’ Duets retreat. The next week at church, a young couple ran up to us in the lobby and happily pushed a bag into our hands. The couple was on the leadership council for the ministry, and had taken extra special care of us at the retreat. Inside the bag, was a book wrapped in tissue paper… The Total Money Makeover. At the time we were more grateful for the thought and gesture than we were for the actual book.

A month went by. It was now September and we had never given the book a second glance, but we were now in the greatest financial challenge of our young marriage. We prayed over who to call, who to open up to about the trouble we were facing, and the Lord directed us to them again.

So on September 13th (my birthday) we called and explained the situation to them and they proceeded to share their amazing testimony with us. All we were looking for was Godly counsel from people who had been in our shoes before, nothing else… but by the end of the conversation they had offered to gift us a portion of the money we needed for our situation. (And not a small gift either!) A few days later, we went over to their house to pick up the gift, and they had another one waiting for us to go along with it. It was Dave Ramsey’s 13-cd Financial Peace University set.

From that moment on we became students of this movement, and stewards of the message. We began our makeover officially in October when we did our budget, and started having weekly meetings. But the seeds were planted in August and September when they handed us the book (that we never looked at tsk tsk tsk…) and again when they gave us counsel and set an excellent example of generosity through their cheerful giving.

In Revelations 12:11 (KJV) is says: And they overcame by the blood of the Lamb, and by the word of their testimony; and they loved not their lives unto the death.

NEVER discount the power of your testimony! I never thought we would be here, or at least not this early in our marriage. I was thinking we would reach it maybe 10 years from now… maybe. But within the next year we will have erased ALL of our debt with the exception of our mortgage. All within 2 years of grinding and putting off the instant gratification this world tries to shove down our throats daily. And the only reason I’m online typing this out to you is so that you can KNOW you can do this too. That’s it. That’s our tesimony in a sentence! We are doing this because we know that YOU can do this.

And so now it has come full circle for us a year later. Now we are on the leadership counsel for the couple’s ministry. Now others are seeking us out for the same counsel we sought. And now we get to be the couple gleefully pushing a bag into another couple’s hands with the book inside.

Today, I’m honored to push this post into your hand with the same energy and enthusiasm as it was handed to me!

…And to think I almost gave that up.

@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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How To Remain Generous In Your Giving While Getting Out Of Debt

Photo courtesy of monoculaire

The title of this post is a little oxymoronic, isn’t it? For those of you who are on the debt-dumping warpath, I’m pretty sure you’ve struggled with how to continue your generous ways while seemingly pinching each and every penny till it screams.

Well, below I’ve listed a few observations that I’ve learned from people I consider to be generous givers who also just happen to be turning their finances around at the same time. I’ve noticed these traits frequently enough, and across a broad enough swath of people that I thought it warranted listing them for all to see. (If you think of any that I missed, please let me hear from you in the comments!)

*Also a quick note of clarification: When I refer to ‘generosity’ here, I mean separate from Tithes and Offerings given in church. I’m talking about street-level, everyday, practical giving.

1. Generosity is a character trait – Getting out of debt is not.

Being charitable for most people cannot be turned off and on. Either you are a giving person or most likely you just aren’t. Now you can become more frugal and still maintain your generosity, but you cannot be stingy and expect to still be considered generous at the same time. Being frugal means that you are simply more considerate of getting the most value out of your money and the resources you acquire with it. Being stingy means you are miserly, or selfish with your money and usually have little regard to the true value your money holds.

2. Generosity often has little to do with just money.

Too many people equate generosity with how much money you donate to charities, and other philanthropic foundations. But I’d venture to say that financial giving is only the tip of the iceberg, not the iceberg itself. You can be generous with your time, energy and talents more easily than you can with your money. You can be generous with your faith or your spiritual gifts. You can volunteer towards causes you have a passion for.

Do me a favor and look closely at the picture at the top of this post. I chose that picture for this post because the donation box didn’t say what to donate… so the people who did give something gave freely. To me it serves as a metaphor for the many ways you can show your generosity while staying true to your mission of becoming debt free.

3. Generous people excel at assessing genuine ‘needs’.

(Brace yourself this is gonna be my ‘soapbox’ part of the post lol)

Many people in our society have formed the nasty habit of describing their ‘wants’ as desperate ‘needs’. It’s gotten to the point where the line between the two has completely faded in the minds of many people. This blurred line between wants and needs is one of the general contributors to the cycle of debt and overspending we see today.

Because of this, generous people need to be selective in who, what, when, how, and why they give of their resources. Being carelessly generous can sometimes do just as much harm as being selfish or scrooge-ish.

Years ago I was downtown for lunch and came across a homeless man begging for change. Naturally he asked me for some money so that he could get some food. I told him that I didn’t have any change but since I was on my way to lunch I would buy him anything he wanted to eat. Amazingly he turned ME down. At first I was offended, but soon realized that he didn’t ‘need’ to eat. In fact I later learned that he didn’t need the money at all. Get this – he wasn’t even homeless, he was simply too lazy to find an honest, stable job! He spent his days staking out prime pan-handling real estate — The White House, The Capitol building, Georgetown, and local tourist attractions etc.– and making about $100/day doing it!

The moral of this story — all of it true — is that people don’t always need what they say they need. The other moral is that if anything, we NEED to be careful of giving to every seemingly good cause. Again this goes back to being frugal vs. being stingy vs. being an aloof giver.

4. Generous people have a firm grasp on the concept of ‘Blessings of Increase’.

This past Sunday, I took my bike out for a ride. I didn’t want to carry much in my pockets, so I only took my driver’s license and a $20 bill. Somewhere along the way, either coming or going I dropped that $20 bill. (Which was a large chunk of my food money for the next week) Upon realizing that I dropped it, I was initially disappointed — in part because I was now in line to order some food lol — but I quickly got over it and hoped that my ‘lost’ bill would ‘find’ someone else when they needed it most.

Though I lost $20, so what! It will be replaced in the first hour of my next working day. Instead I realized that I gained a blessing (multiple actually) in the fact that the next person who finds it will be pretty hyped over it. Another blessing for me was that I was ok over losing it. It was another timely reminder of the Financial Peace that I continue to gain as we eliminate our debt. I could’ve obsessed over what a nice snowflake $20 dollars would’ve been, yada yada, blah blah. But as I said before, so what! I could’ve lost my driver’s license instead of the $20…. and then I’d really be getting some use out of my bike!

5. After you get out of debt, there’s no limit to how generous you can be!

The title of this post is “How To Remain Generous In Your Giving While Getting Out Of Debt”. Yes, you already knew this, but i just wanted to point it out again because it’s meant to be a transitional concept. You are not always going to be ‘getting’ out of debt, one day you’ll just be ‘out’! (Can I get an AMEN?)

Baby Step #7 of Dave Ramsey’s Total Money Makeover is simply this: “Build Wealth & Give!”

Once you’re out of debt for good, it’s my hope that you will carry on the obligation of helping others to get out as well. It will truly be one of the most generous things you do with your new found financial freedom!

6. Generosity is a core responsibility for the Christian.

A compelling promise is given in the bible to those who chose to be generous in their giving. It is found in Luke 6:38*:

*Taken from the NIV translation:
Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you.

This is the basic formula for the blessings of increase that I mentioned in point #4. But just like bread cant be made without yeast, this recipe is useless without a loving spirit. There is no such thing as malicious giving. And although there is such a thing as indifferent giving, it’s just as pointless as not giving at all.

The recipe given in Luke 6:38 simply cant be followed by just anyone. It’s the hallmark of a seasoned chef, one who has come to understand and know the six points laid out here.

So with that I ask you, what’s cookin‘?

@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.

May Madness

Photo courtesy of kerindaj

Hi guys,

Unlike my last post, I haven’t been hiding so much as I’ve been buried with tasks and functions to attend. The month of May is notoriously busy for me each year because of the many birthdays, graduations, weddings and holidays that happen in this lovely mid-spring month!

And of course with this blog being about our personal finance fiascoes, naturally I’m looking at these various events with an emphasis on the cash needed to pull them all off.

So here is what my month of May has looked like so far from a dollars and cents point of view:

May 8th I had to pay $100 out of pocket for a farewell party for my departing manager at work. (The money will be reimbursed, but it will be s-l-o-w in returning to it’s rightful place in my pockets!)

May 9th I had to get fitted for a tux for my cousin’s wedding. (more on that below) I’m a groomsman, and although $150+ isn’t a bad price for a tux rental, timing is everything, and right now timing is TIGHT!! lol

May 11th my wife and I hosted a Birthday/Mother’s Day Dinner at our house for my mother, mother-in-law, godmother, my wife and myself. Though we kept the menu pretty basic, thus keeping costs down, a lot of time, energy and fuel went into researching and gathering the materials used for the event. Let’s say $50 total was put towards the event when accounting for gas.

Ah, yes let’s discuss fuel for a moment… we recently increased the amount of money we budget for gas to $75 a week. That’s up $10 a week from what our traditional consumption has been in the past. ($65) The frustrating part is that we have had to come to grips this on the fly, which is not easy. We kept coming up short in the recent weeks and found ourselves using Blow money on gas. So instead we decided to lower our entertainment fund a bit each month and put the rest towards gas. UGGHHH!!!! An extra $40 a month is now going towards just gas, and that is only so that we can continue to do the minimum amount of traveling possible. From home to work, work to home, and church once a week is our normal routine and now even that is pushing us to our limit. “Gas” is quickly becoming a cuss word in our household. But I digress…

Next up was May 12th, my wife’s birthday… This year my best friend and I joined forces to celebrate our wives’ birthdays together. We did this on the 13th because it was the day between both of their birthdays. I wont get into the details, but basically we cooked and served them a very unique and interesting dinner experience lol. Again here, just as with the Mother’s Day dinner, even though we didn’t go overboard with spending (I must be careful here, she’s my number one reader for this blog lol.) a lot was spent in gas rounding up the items for the menu, etc. oh, and text messaging. (Sorry, you just had to be there to get that.)

So that’s been the month to this point, but even more daunting is the rest of the month to come! My cousin is graduating from medical school on the 19th in Richmond (again gas is the issue), My mother has a birthday on the 23rd, I’m in a wedding in New Jersey on the 25th for the same cousin, and on the 29th my niece is graduating from high school in South Carolina… our mode of transportation will be by car… gas is approaching $4.00/gallon… not to mention that before we can even GET on the road we need to replace the 2 front tires and get an alignment and oil change as well (We’re looking at maybe $250 for those to be done)!! This is why I love and hate May at the same time!!

Whew — calm down Adrian… count it all joy man! (James 1:2)

Ok, sorry about that, i flew off the handle a bit there, I know…

But before I go I’ll leave you with a few stats I’ve compiled for our trip and the estimated costs we’ll be racking up for the sake of family!

Total estimated miles from DC to New Jersey to South Carolina and back to DC: 1650
Total estimated hours of drive time from point to point (not including intra-city driving): 25
Estimated Avg cost of mid-grade fuel per gallon: $3.85 (it will be more expensive in the north and less in the south)
Estimated cost per fill up: $63.14 ($3.85 multiplied by 16.4 gallon tank capacity)
Estimated Avg MPG: 20 (according to fueleconomy.gov, a VERY useful site these days!)
Estimated number of fill ups: 5 (MPG multiplied by Gallons per tank divided by total miles)
Estimated cost of fuel for trip: $315.70 (cost per fill up multiplied by number of fill ups)

Your prayers will be appreciated! @men! lol

The bright side to all of this is that by sticking with the TMM, we started the process of properly budgeting to help defray some of the costs associated with all of these various events and the costs that come with them! And this was all done MONTHS ago, because it’s built into our budget! There is a category for vacations/trips that we set aside money for, and also there is a category for gifts as well. Now I’ll be honest we haven’t done it exactly as Dave Ramsey suggests, but we’ve made a pretty good run at it considering we are still VERY much in the thick weeds phase of defeating our debt!

I for one am proud though, because 12 months ago, I would’ve just as quickly suggested skipping a mortgage payment so that we could make this trip and all the rest of May Madness happen as planned. The Total Money Makeover, really shows us how we are growing in our financial maturity…. and it will give us plenty to talk reminisce on when we finally take our first “paid in full” trip once the debt is gone!

@men to that too!!

@W