Short-Term vs. Long-Term

“If you think short term, you work for the weekend and fall prey to the pleasure-based products that in the end steal your pleasure.”

More Than Enough Dave Ramsey

Short term pleasures are what kept us from financial freedom for too many years. We were in WANT WANT WANT mode.

I want a new car. I want to go out to eat. I want a new coat. I want to go on vacation. I want some new shoes. I want a pool. I want some new home décor stuff. I want this and this and that. And it was more than just me - there were 4 of us pretty much buying whatever we wanted. We were able to pay cash for most of it so we felt like it was ok. But there was always that black creature lurking around the corner who kept an eye on our spending. Its name was DEBT. We weren’t living paycheck to paycheck, but we were also not puting any thought into the amount of debt we had accumulated.

Because we were spending so much money on short-term pleasure, we were denying ourselves long-term, life-lasting, family-changing pleasure.

All of those toys, clothes, cars, restaurant meals (aka “wants”) – where are they now? GONE. And so is the money. Was it really worth it? Heck no. All of those things were temporary, short-term pleasures.

It’s funny. We used to think all of those things were so important to us. The other day we were making a list of the things we had given up. We had to think and think and think to come up with a list. We don’t miss those things. We are so excited about where we are headed, we realize the craziness in “living in the moment”. The “moment” will come and go. Our financial freedom will last a lifetime.

Debt Consolidation Stinks

I tend to have a lot of stuff lying around my house. I hate dealing with the paper coming into our house (school papers, meetings, mail, etc.) so I end up grouping it into nice piles and set aside to deal with later.

Debt consolidation is much the same, putting the various debts into one big pile because you don’t want to deal with it. But a pile of debt is much more dangerous than my pile of paper.

I can certainly understand why debt consolidation looks good to people who are drowning in debt.

“My monthly payment on the consolidation loan will be less than what I’m paying in monthly payments now.”
Yes, this is probably true. But do you really think paying less money will lower the amount of debt you have?

“If I could get my bills all put together and into one payment, it will be so much easier to manage.”
It will be easier, because you won’t be doing the managing! You are leaving it up to someone else to pay your debts with the little bit of money you give them.

“I’m sick of the bills. I just want to wipe my hands of them.”
Debt consolidation is the easy way out. By not putting forth your own blood, sweat and tears to beat down the debt, you’ll not go through the suffering that is oftentimes required to get rid of the poor spending habits you have.

“The only way I can make the payments is to consolidate.”
I don’t buy this one. If you are in this position in the first place, I can guarantee that you aren’t in control of your money. You have a rough estimate of how much you make each month, but you don’t have a clue how much you are spending. If you can’t make the payments on your bills, sit down at the kitchen table and get it all figured out. Go through each bill that you have decide how you will pay for it. You also need to cut out all extra expenses you have. You got yourself into the mess. It’s up to you to get out of it.

It's The Little Things

I’m writing this paragraph last. I thought it would be helpful to share what we have cut back on in order to gather up more cash to work off the debt. Yet, when I tried to think of what we cut back on, I found it difficult to come up with a list. That’s great news because what we originally thought we could not do without, now we aren’t even really missing. So here’s the list of things I was able to come up with. I’m sure I’m missing some, and I’m sure you have some ideas where people could cut back even more.

Eating Out = $140
We used to eat out at least once a week.

Using Online Bill Pay = $5, cost of envelopes, stamps and checks.
Not to mention an evening dedicated to writing out checks. I hated those nights. Now I pay each bill as soon as it arrives in our mailbox. Love it.

Taking my lunch to work instead of eating out = $100

Coloring my hair at home instead of salon = $60

Buying pop by the six pack rather than individuals at the gas station = $50
(I know, I know. I shouldn’t buy pop at all, so don’t bother mentioning it.)

Family Entertainment at home = $300
We used to go to Des Moines for the night at least twice per month. We would go to a movie, or just browse through the mall. At the end of the night, we would have spent at least $150 each time.

Cancelled Netflix - $10

Monthly Savings = $665

And that’s only the things I can remember!

I really don’t consider myself a frugal person. I think in order to be REALLY frugal, you need to have time to commit to it. But I work full time, and I don’t have tons of hours to research sales, figure out how to shop at Walgreens for almost free, make our own sandwich bread instead of buying it, and make laundry detergent. But what I am able to do makes a huge difference to the amount of money we have left over at the end of each month. I challenge you to take a look at what you are currently spending unnecessary money on.

Have a suggestion for the rest of us? Please share!

New Challenge

Now that our cars are paid for, it's time to attack the line of credit loan. It's our last item in Baby Step 2. (We already have baby step 3 done because we are rebels and don't always follow the rules.) This line of credit was used to pay for all kinds of things it shouldn't have, which really frustrates me. This balance consists of landscaping projects, an in-ground swimming pool, business expenses, and possibly a credit card balance or two that was transferred over here. The only valid expense, I suppose, is the new roof on our house. I'm really not exactly sure what the debt all entails - all I know is that it's a large amount of debt and I want it gone.

The line of credit balance is just a little less than the remaining balance on our mortgage. (as a side note, most of you would probably kill to swap me mortgage balances.) Last night my Excel program was smoking as I was punching numbers. I was able to come up with a plan that had us debt free except for the house by January 2009 - less than one year away!

Those little payments of extra cash (book sales, refunds, etc.) are now being sent straight to the heloc. So far this month I've sent $121.75 of additional cash to the heloc, and because we've really cut back our expenses, we are looking good to have a hefty balance left over at the end of this month to send to the loan.

Debt free except the house within 11 months. Sounds sweet!

Crazy Lady Calls Dave

Dave had a caller the other day who was mad at her bank and wanted to make sure others knew to be on the lookout for the same problem she had.

She had a bank account with $5.00 in it.

She paid a parking fee with her debit card for $1.00.

A week or so later, she went out to eat and spent $5.00, using her debit card for this account again.

She got a $35 overdraft fee and she was pissed at the bank! Dave was much nicer than I he had to be, because seriously lady – FIVE MINUS ONE MINUS FIVE means you have overdrawn your account! She was mad because she thought the $1.00 charge should have processed immediately and it was not her fault that when she checked her balance there was still $5.00 in there so the bank should not have charged her.

But the real problem I have with this story is…if you only have $5.00 in your bank account, why the heck are you going out to eat?

Crazy people. They are everywhere.

Green Knows Dave Ramsey

“Oh no. Dave is NOT going to be happy with us!” Last night as we were paying for our $100 dinner at Cheesecake Factory. We made our Valentine’s dinner a family event, which cost us a bit more.

“I don’t think Dad’s doing Dave Ramsey.”

“You’re good at Dave Ramsey mom. You don’t let us buy ANYTHING!”

“ **name withheld** really needs Dave Ramsey, doesn’t she mom?”

“You haven’t given me my Dave Ramsey money for TWO WEEKS!” True – I haven’t paid them their commission checks. Dang.

"Why can't we get pizza tonight? Oh, let me guess. DAVE RAMSEY."

She's a Winner

Congrats, Sarah! You are the winner of my extra Larry Burkett book! Wait a sec, how come everyone who wins my contests is named Sara/Sarah? Weird.

The random number chosen was actually 3, which was Chilihead. But because of her wisecrack about Larry Birkhead, she's automatically disqualified. he he...

So send me an email, Sarah, and I'll get the book shipped out. Congrats!



Yeah, I know I ended the contest early. But there were only 7 people who wanted it and I was ready to be done with it. And it's my blog so I can pretty much do whatever I want over here.

Free Finance E-Book!

Oprah's offering Suze Orman's book, Women and Money, as an ebook for FREE until tomorrow late afternoon. Get it here.

JC, and anyone else with dialup - I would not attempt this with your connection. Get up to speed!

Another Free Book Giveaway!

**UPDATED - To answer EC's question and to give you a head's up, this book is used because I don't buy new books - wasn't returnable.

Hey, ladies and gents. I have another book to give away: Victory Over Debt by Larry Burkett. You'll notice (maybe) that I linked that over to Amazon, where there is a not-so-great review of the book. However, I think it was an excellent read and I know you'll get something out of it. And it's free, so even if you don't, who cares.

"So, green3, if you liked it so much, why are you giving it away?" I was not aware of this, but apparently the publisher of Larry Burkett's books is a freakin marketing genius! I bought two Burkett books: Victory Over Debt and Debt Free Living. I read Victory Over Debt and loved it, and could not wait to start reading the next book. So I settled into bed one night with my book light, opened the second book, only to realize it's the EXACT SAME BOOK WITH A DIFFERENT TITLE. Authors should take this tip and run with it. You can write only one book, but call it a bunch of different names and then people like me will just keep on buying them. It worked for Larry, I don't know why it wouldn't work for others too. But I digress...

Leave me a comment below and I'll pick a winner from there - nothing fancy. I'll quit accepting comments Thursday night so that I can hopefully ship it out Friday morning.

Car "Mortgage"

Thanks to all of you who participate in my surveys! It’s very interesting to see where people are at.

I was excited to see how many people owe nothing on their vehicles. I knew I had me some smart readers! And to the couple of people who owe more than $15K on your cars, I sure hope you have some kind of plan which involves either selling a car or two or paying it off within the year.

For all of you who still have a car payment, or *gasp* paymentS with an S, I strongly encourage you to jump over to Dave’s site and read about car payments and watch the video.

I used to be one of those people who said, “I will always have a car payment, so I just deal with it.” What a stupid philosophy. I love being able to now say I don’t have a car payment!

Millionaire Next Door: #5, #6, #7

This is continuing my series on the common denominators of those who successfully build wealth.

5. Their adult children are economically self-sufficient.

This goes along with the previous one. Their parents did not provide financial assistance to them, therefore they are not providing financial assistance to their own kids.


6. They are proficient in targeting market opportunities.

I have often heard the phrase, “They were in the right place at the right time!” However, I believe you have to be the RIGHT PERSON in the right place at the right time. There are plenty of people who were in the right place at the right time, but they weren’t knowledgeable enough to know it or act on it.


7. They chose the right occupation.

This goes without saying…

There, series done! Now I can move on to talk about more interesting things. Any ideas? What do you want me to talk about next? Any suggestions from the audience?

Millionaire Next Door: #3 and #4

This is continuing my series on the common denominators of those who successfully build wealth.

Ummm, ok, I didn't mean for it to be this long before I continued this series. And this, my friends, is why I don't do series like this. Life gets in the way, blogging gets delayed, yadda yadda yadda. So here are next two thrown together, short and sweet.

3. They believe that financial independence is more important than displaying high social status.

As I was walking to my car the other day, I was nearly run over by a Hummer. As it went by, I noticed the driver was probably around my age, which is mid-30s. For REAL. I hate to make assumptions, but I think it’s pretty safe to say that she drove home that day to a highly-mortgaged home in the best neighborhood in town.

There really isn’t any reason to own a Hummer other than to try to impress people and make them think you are wealthy. “Think” is the key word there – most millionaires wouldn’t think of wasting money on such a thing.


4. Their parents did not provide economic outpatient care.

This refers to parents providing for their kids, such as helping them pay their bills. If kids learn that they will always have your parents to fall back on, how will they ever learn to be responsible?

Millionaire Next Door - Time, Energy & Money

This is continuing my series on the common denominators of those who successfully build wealth.

See item 1 - Living Below Your Means

2. They allocate their time, energy and money efficiently, in ways conducive to building wealth.

I used to be a big abuser of wasting my time, energy and money, as shows in the following example. I have a 1 hour lunch period every day. I used to use this hour to run and grab something to eat, then I’d hit Target or the mall. At least 4 out of the 5 days, I went home with a bag from somewhere – and usually more than 1 bag. Especially if I went to Target because I used to not be able to control myself in Target, as many of you can probably attest to. I even got to the point that I was kind of hiding purchases from my husband. As soon as I got home, I’d run my huge Eddie Bauer bag down to the bedroom and take out the items so he wouldn’t notice that I had just purchased them. So in this one example, I’ve wasted all three: time, energy and money.

I now realize how valuable time is and I use it wisely. I no longer eat out or shop over my lunch hour. I make sure I’m doing something productive with that hour, such as reading, walking, doing some of my contract work (which doesn’t relate to my job at all) or blogging. And yes, blogging is productive because not only am I writing articles that are hopefully teaching you a little bit, but I also continually learn things about myself and our situation.

Dave Ramsey once said (paraphrased), “Normal people know all about the current television shows because they sit on their butts every night watching TV. Successful people know very little about the current TV hits because they are doing something more productive with their time. THOSE are the people who will get ahead in life.”

Millionaire Next Door: Living Below Your Means

The Millionaire Next Door is a must read for those of you who are working to make a change to your financial situation. Below are the 7 common denominators among those who successfully build wealth, which I’ll be discussing over the next several posts.

1. They live well below their means.
2. They allocate their time, energy and money efficiently, in ways conducive to building wealth.
3. They believe that financial independence is more important than displaying high social status.
4. Their parents did not provide economic outpatient care.
5. Their adult children are economically self-sufficient.
6. They are proficient in targeting market opportunities.
7. They chose the right occupation.

They live well below their means
This is so basic, yet it eluded me for years. The more money we brought home, the more we spent. At first we lived about equal to our means. Then as our cars got fancier, our closets became fuller, our toys became more expensive, and our vacations more costly, we slowly watched our savings account start to drop and it became apparent that we were living above our means. Not only was our “nest egg” savings account balance dropping, but the amount of debt we had started to get higher.

It’s so simple that it’s laughable that people don’t follow this. But I can’t laugh because I lived that life for years. We always knew there was money in the bank so we never kept track of how much we were spending.

I can’t tell you the day it hit me, because it was kind of gradual. Those checks I wrote every month for the car payments really bothered me. We were paying $455 per month on Pool Boy’s truck and $535 per month on my Yukon. Yes, almost $1000 per month just on cars! Then we installed the swimming pool, so we had that monthly payment. Not to mention the mortgage and heloc we already had. Plus we had several little loans to Best Buy, a carpet company, a furniture store, and on and on. Even though this is considered “normal”, I was no longer comfortable being “normal”.

The “what ifs” of our situation scare the hell out of me. What if I hadn’t stumbled upon Dave Ramsey’s podcast on iTunes that day? What if we kept living as we had been and never realized what our situation truly was? What if our kids went to college fully funded by student loans, and started their lives deeply in debt? What if we had no money saved back for retirement other than my 401K and my husband’s retirement? What if we were still trying to “look” good instead of actually BEING good? What if we never realized how horrible debt is?

Please don’t let my “what ifs” listed above be your reality.

Loose Tooth, round 2

I have a parenting question for all of you, because if there’s one thing about parenting where I’m failing, it’s loose teeth.

Green has “issues” with loose teeth. They scare him, for who knows what reason. When a tooth gets loose, he refuses to eat until it literally FALLS out of his mouth. He won’t pull it, won’t wiggle it, won’t let anyone else even look at it. And the part about not eating? Yeah, he gets weak, can’t stand, all of that business.

So as of this morning, he hasn’t eaten since a late breakfast yesterday. I told him he was absolutely not staying home from school. I even wrestled him to the ground this morning, kicking and screaming, trying to get it out. I went ahead and sent him to school, but I already got a call from the school nurse saying he was very weak. They gave him milk and a pudding cup, but he didn’t eat much of it. Green is well aware that if I have to come get him from school, he’s in big trouble.

What the heck do I do??

Enough Celebrating

We spent the weekend celebrating our car payoff, which means we spent a few days spending money like we used to. But we had a lot of fun (which included adult beverages and dancing on her bar, which resulted in a raging headache) and now we're ready to get back on board tomorrow morning.

On a side note, any of you know anything about pnuemonia? Like, can it seem to come on within just a few hours? And are the symptoms sudden chest congestion to the point where you think you should go to the ER but don't, along with a high fever? And does it cause you to say, "Oh man, my CHEST" throughout the entire Super Bowl? Hmmm. He's fully medicated and in bed now. I've been given instructions to check on him later to make sure he's still alive.

Yip Yips

Let's take a break from talking money and have some fun, shall we?

After the kids went to bed, I wasted way too long looking at vintage Sesame Street clips on You Tube. It amazes me how some stuff just sticks in your brain and you never forget it. I can still sing all the words to The Ladybug Picnic!

And of course, the Yip Yips. This one made me laugh out loud. Please do yourself a favor and head over to YouTube and search on Sesame Street. Ahh...the memories.

If There Were An Awards Show For This, Here's How It Would Go

And the winner is…

Green3! Here is your trophy, a paid off car!

Oh my gosh! Ok, I’d like to thank the Academy of Debt Reduction and all of its members who encouraged us to get our butts out of debt and start living the life we want to live. I’d like to thank all of the people from craigslist, eBay and half.com who bought all of our extra stuff because you contributed to this! I’d especially like to thank Green, Three and Pool Boy for going along with this crazy plan of mine and agreed to quit buying crap we didn’t need. Because of your commitment, whether voluntary or forced, we’ve made incredible progress over the past 8 months - $28,000!! And of course Dave Ramsey, who encourages me every single day.

I hope you use my little celebration here as encouragement for yourself. If someone told me that I could get rid of $28000 in debt in 8 months, I would have laughed. REALLY loud. We’re just a regular family with regular incomes. What we are doing is something that every single one of you can do if you are willing to make the commitment. It’s so worth it – jump on board.

Only two debts to go: home equity loan and mortgage.


Green3, Pool Boy, Green and Three…
Living like no one else so that we can LIVE like no one else

Celebration

Check back after 1:00 CST. There's going to be a celebration here on the green3 blog, and I'll write my post over my lunch hour.

Giving

Yesterday we had the unpleasant task of going to a funeral. While it was a sad event, it was an amazing service and we all learned something about Jan – and hopefully many people in that service learned something from how she lived.

She was a wonderful woman who could be labeled a “giver”. If someone needed something, Jan was there to give it to them. A member of our church shared this story about Jan:

Our youth group likes to go on trips, as a way of bonding with each other and seeing opportunities that are out there where their gifts can be used. These trips are awesome for the kids, but they do cost money. Jan went to the leader of the group and told him, “If you ever have a student who cannot go because they cannot afford it, you come to me.” Each time he went to Jan to ask her to help a student, she never asked who it was or what their situation was. Her response was, “How much do you need?” She simply smiled and handed over the money.

As we drove away from the funeral, Pool Boy said to me, “I want to be able to do what Jan did, helping kids whenever they need it.”

Once we are debt-free, we will do just that. Thanks, Jan, for your inspiration. I did not know you well, but I know you will be missed.

I Heart Online Banking

I’ve mentioned online banking before, but I think it’s worth another post because of how handy it is and how helpful it is in reaching our goals.

Handy Because #1
We have several bank accounts, but we operate out of only one. So every night I log on to our checking account and see what transactions hit our account that day. I transfer every single transaction to a spreadsheet, so I always know exactly how much money we have at the end of every day. Also, if Pool Boy made a stupid purchase at some point throughout that day, I can hassle him about it while the purchase is still fresh, rather than wait until he’s forgotten about it.

Handy Because #2
The people in charge of the online bill pay at my bank hate me, I’m pretty sure. If I come across any extra money, I immediately send a check to my car loan. Here’s an example. I sell a lot of books on half.com. As soon as I sell the book, I immediately log in to my bank account and submit a payment to be sent to my car loan. In a month timeframe, I might send up to 10 checks to the loan! If I was writing manual checks, I would never do this because I never have any envelopes at my house, and I also never have any stamps.

Handy Because #3
This is similar to the one above, but still deserves it’s own number. I always HATED sitting down one night a month to write out all the bills. What a depressing way to spend an evening. Then I’d have to hunt down envelopes and stamps (see above). And I was usually low on checks, because I hate ordering checks. And on top of all that, I very rarely remembered to do this before the due date on all the bills because I can be lazy like that. The whole process stunk. Now I pay a bill as soon as it arrives in the mail so I don’t have one big “doomsday” every month. I get the mail, open it up, walk to my laptop, and pay it. Done.

Handy Because #4
Think of all the money I’m saving! No stamps, fewer checks, fewer envelopes, no late fees. I also don’t have to worry as much about a payment not arriving on time. The bank backs me up if there is ever a problem with that.

Sooooo…this means a new poll! See it up there? In the right corner?

P.S. Tonight is a big night for Three! We are all very excited for him, as he’s been given quite an opportunity. I’ll tell you about it and post pictures afterwards.

A How To Guide

Building wealth is not difficult, if you are willing to save your money instead of spend it. Looky here.

Yes or No?

Debt reduction is not without its troubles. And here is one of my “troubles”.

We love to ski, we love visiting our relatives, we love vacations, and we love Colorado. And we have a free place to stay if we go (my brother lives there). And possibly discounted ski lift tickets. And this is the first year Green has learned how to ski. And on black diamonds. (they are Iowa black diamonds, but still). And we promised Green we’d go to Colorado if he learned how to ski. So he learned. And your kids are little only once. And this will create more memories for their childhood. And we can get there via Amtrak for a mere $550, as opposed to $2000 for airline tix. And we would love an adventure on Amtrak, because it’s a TRAIN! And Three adored trains when he was little. And we could go over Pool Boy’s spring break so he wouldn’t have to take any days without pay.

BUT…we are trying to work down our debt at racing speed. And we already have a trip planned to Florida in June – which we already have the cash set aside for.

This month I could easily set aside cash to pay for the whole Colorado trip. We’ve done an awesome job not spending any money this month. After setting aside that money, I would still have plenty of extra to send to the car.

Should we stay or should we go?

Progress Report

Since last summer, we’ve been hammering away at our pile of debt. In only 6 months, I’m excited to report that we’ve gotten rid of over $20,000 of debt! We started with 8 debts, and now we are down to just THREE: mortgage, line of credit loan, and my car.

We’ve sold a lot of stuff in order to get to where we are today. I know it will get harder to keep up that pace since we have sold most of the big stuff we had available to sell. Now it will come down to plain ole budgeting and not buying crap we don’t need.

I’ve also found various ways to bring in a little more moola. One area that’s been successful for me has been half.com. In the past 30 days, I’ve sold 50.35 worth of books and DVDs! If you have books and DVDs lying around, I highly recommend half.com. They even reimburse you for the shipping amount, which totally rocks. Every cent I receive goes straight to my car payment.

Let us hear about your progress on your debt tackling, plus a tip for how you are finding money to throw at your debt.

Have a great week, everyone!

THIS Is The Reason To Be Debt Free

If you don't read any of my other posts, please read this one. I know I yap and yap about getting out of debt in order to build wealth, but without hard facts to show you, I'm finding that some people just aren't seeing the need to do it. So here's your lesson. Listen up.

Here's what you are probably doing now:

1. Paying minimums toward mortgage and cars


2. Savings, if even there, is hovering at the same amount every month. Sometimes it even goes down.


3. Total retirement plan consists of a 401K plan for each spouse, or maybe even for only one spouse.

You are just plugging along, getting no traction in making a difference to your financial future.

Here's what you can do if you are debt free:

Let’s say your take home pay is $4000 per month. If you could live on just $2000 per month (which you should be easily able to do if you don’t have a mortgage or car payments), that leaves $2000 to invest. So let’s put this extra $2000 into a growth stock mutual fund at an average rate of 12% per year. This money must be deposited every single month. If you are 40 years old now and did this plan, you will have $2 million dollars when you are 60. For those of you who like colors and pictures, here's your chart:

So, if you refuse to live below your means, refuse to get rid of your debt, keep buying crap you don’t need, what will you have when you retire? Your piddly 401K and if you are lucky, maybe a couple thousand in the bank. And no, you should not count on Social Security. This isn't rocket science, people.

Which life are you choosing? $2 million or nothing?

The above chart is from Dave's investment calculator. It's easy to do, so go plug your own numbers in and see how you could end up.

There's No Reason For Your Kids Not To Be Millionaires

There's no reason, because I'm telling you now how it works.

If your 20-year-old child saves only $65 per month at 12% average annual returns (such as a long-term growth mutual fund) until he/she is 65 years old, at retirement they will have approximately $1.34 million. They must put the money in every single month and they can never take money out of the account.

Now that's not hard, is it?

Example taken from Financial Peace.

My Money Saving Tip - Knowledge!

Like, I have just one! Anyway, No Credit Needed wants to know money saving tips from bloggers so here is mine.

I believe 100% percent that you can't build wealth unless you are knowledgeable. By this I mean that you know exactly where each penny is going because you write down each expense on a spreadsheet or something. When you see all of your expenses written down, you are able to spot exactly where the problems are and can cut them out immediately.

Before we started tracking our expenses, I never really thought our eating out expenses mattered all that much. We ate out at least once a week, but we had the "I deserve it" disease. Once we wrote it all down, we saw that over $300 was going to bad restaurant food EACH MONTH! Now that we've cut that down, it's like we got a $300 raise.

Track those expenses!

They Are Following In Your Footsteps

One of the main reasons I’m working so hard to get debt free is because of my kids. I want them to know how money works before they get to be my age, and have a pile of debt they have to beat down. My kids know a lot about money and finances just by watching us. They know we don’t buy something just because we want it, they are well aware of who Dave Ramsey is (and he’s currently taking the blame for us not having a Wii), and they know the best way to get wealthy is to save your money. They also know that it’s important to give away a portion of your money, as they give their weekly donation – out of their commissions – to our church.

What are your kids learning from you? Are they learning that it’s ok to buy whatever you want? That it’s important to buy brand new cars every few years? That bankruptcy is the way to go because it’s the easy way out? Do they often hear you and your spouse arguing about money?

I challenge you to take a long, hard look at how you handle money. Your kids will likely treat their money the exact same way you are. Is that what you want, or do you need to make a change?

Sara. Sara. Storms Are Brewing in Your Eyes...

Ok, “storms” has absolutely nothing to do with being frugal, but that’s all I could think of for a title of this post. I’m creative like that.

Anyhoo, SARA! You are the winner of the Tightwad Gazette! I’d link to you and all, but it appears you don’t have a blog. I’m so excited that this book is going to a one-income family, because if there’s anyone who needs to be frugal, it’s a one-income family.

Thanks so much to everyone who stopped by and commented, and especially to those who wrote about the contest on their own blog for an additional chance at winning. It didn’t help you at all, obviously, but hey – it was fun while it lasted, right?

So, You Want To Be Successful?

I could not have said it better myself. Take it over, Millionaire Mommy.

New Kids On The Block

Hi, green3 here. I’m so excited that my addition to Frugal Hacks has brought me tons of brand new friends. I’m thrilled that you are here so we can teach each other how to make our money work for us instead of us working for our money!

Let me give you a quick overview of what goes on here.

• Dave Ramsey rocks. He knows his stuff, and the world would be a happier place if everyone followed his guidelines.
• I’m not as frugal as a lot of you are, but I’m always looking for was to change.
• I’m all about getting out of debt. And I’d really love for you to be out of debt as well, so I talk about it on my blog. A LAWT.
• Sometimes I spell words wrong just for emphasis. (see above)

So I hope you stick around for the fun. Together we will become financially free!

There's a Giveaway Hidden In This Post

**Sticky Post Alert!** Scroll down for most recent posts.

WINNER HAS BEEN CHOSEN, AND WILL BE ANNOUNCED TONIGHT.

THANKS FOR PARTICIPATING!!

I found it humorous that I was mentioned in this article on MSN Money about extreme frugality. Because although I do cut my dryer sheets in half, I’m really not all that frugal.

Frugality, it seems, takes way more time and space than I have available. I don’t have time to make my own loaves of bread or use powdered milk instead of real milk (also, there’s the gross factor). I also don’t buy my clothes at Goodwill or cut the boys’ hair myself. That is SO not me, regardless of how bad I want to get out of debt.

Here’s a story that just makes me shake my head. This guy built a stand out of wood where he could put his empty motor oil bottles in upside down. The extra oil would drain out and be collected in another container. He said after 15 oil changes or so, he would end up with a free bottle of oil. Seriously. For you people that are really frugal, where the heck do you put all of your contraptions such as this Motor Oil Collector? And where do you find the time?

So, the giveaway. I currently have two copies of The Tightwad Gazette, and I'd love to give you one of them. I did find my dryer sheet tip in there, but that’s about all I got out of it. But maybe you have more time than I do and can get some benefit out of it? It’s used, but in great shape. (I mean, really – that wouldn’t make sense to go BUY a book about frugality, would it?)

So leave me a comment below to get included in the giveaway. And if you post about this giveaway on your own blog, I’ll enter your name into the drawing twice. I’ve got a few readers that are non-US and I’d love to have you participate as well! And for those of you that don’t have a blog, just leave a comment that somehow tells me who you are or how to get ahold of you. I'll announce the winner Monday evening. Good luck!

503B, anyone?

A friend of mine is considering a 503B. She is a SAHM, but substitute teaches at local schools. Her plan would be to deposit her paychecks directly into a 503B. I know nothing about these. Anyone have any advice or information for her?

Larry Winget Says It Like It Is

Did you recently buy a new car with a 5 year loan? Then click here.


So let’s get this straight – you have a bunch of debt, you can’t pay your bills, you don’t have a job that pays well. Click here.


So you think your life sucks because you’re up to your ears in debt? Click here


Larry's awesome.

Millionaire Minds

“For the rich, it’s not about getting more stuff. It’s about having the freedom to make almost any decision you want.”



Check this Reader's Digest article out. It rocks - promise.

How Gazelle Intense Am I?

I’ve read a few blogs lately that have discussed how gazelle intense people are in attacking their debt. While I’m a huge fan of Dave Ramsey and think what he does for people is absolutely amazing, I have to admit I’m not following his steps exactly. Here are a few areas where I’m breaking the “rules”:

Retirement
Dave says that if you are able to clean up your non-mortgage debt within 2 years, to halt all retirement contributions until you are to that point. Pool Boy and I are still funding our retirement plan, as well as an additional amount taken out of PB’s paycheck each month.

$1000 Emergency Fund
We have a substantial cash balance in our savings. I know, I know, I should use that money to pay off my car and then attack the HELOC, but people – PEOPLE – I still have to live with my husband. He’d be a complete mess if we only had $1000 in our bank account. Granted, we’ve never had to touch this savings account since we started focusing on our finances – but still. I’ve even given him the option that we go ahead and use some of the money to pay off my car and put some toward the heloc, and then if he didn’t like it a few months down the road we could go get another loan to put the cash back into our savings. “I’m not getting another loan!” he declared. That’s exactly my point, dear.

Envelopes
Nope, still not using them. I have my “virtual” envelopes but I’m aware that’s not the point of them. I even have Dave’s fancy envelope system.

For Ramsey followers, are you breaking any “rules”?

Another installment of “1001 Things Every Teen Should Know Before They Leave Home”:

966. They should know that instead of going to their parents for money, they should work things out. Or do without.

NoFatBlawgers - I need your totals!

It's True

The list of reasons for not doing very well in your life is actually a very short list. It should contain only your name.

— Larry Winget, You’re Broke Because You Want to Be

My 15 Minutes

My dryer sheets are making me FAMOUS!

Dang, and I was counting on my acting and singing skills...

Basketball Weekend and Such

I won't be around much this weekend. We're going to basketball games tonight, Three plays basketball all morning tomorrow, starting at 8AM. (I'm on concession stand duty for 2 hours tomorrow morning.) Then our county has their basketball duel-thingy tomorrow night, so we'll probably go to that. That's a heck of a lot of basketball for someone like me.



Attn: No Fat Blawgers - send me your totals so I can post it on our site! You can send me the total amount lost so far. I'll keep it all organized on my end.


And look! Poll! ----------------------------------------------------------->

Rate Reduction Rally

I just learned that Watch My Money Maker is having a Credit Rate Reduction Rally this week. I'm not a regular reader of that blog, but will be now!

I cannot participate due to the fact that I don't have any credit cards, but this is your chance to make a difference in your credit card debt! If you currently have credit card debt, call the companies up today and ask them to lower your interest rate.

After doing that, work like crazy to get rid of the debt!

Why I'm Dumping PBS

I used to love Paperbackswap. The books would come and go and it seemed like good fun. But then I got so bogged down with books that I quit ordering them. Yet, I was still spending money to ship them out. I racked up 12 credits, but I could never buy any books that I really wanted. So I scrounged around looking for books tonight, used up my credits and closed my account.

I'm mostly a non-fiction reader, and mostly books about finance and personal development - cause I'm a dork. I think that's where my problem was. If you love fiction, PBS is a goldmine.

(I don't have my book with me and I'm way to lazy to get up off the couch to get it. Hence, no "1000 Things" with this post.)

Wondering How To Start?

Trent offers some great advice on his post.


24. They should know to seek the advice of a mentor. Not the wisdom of their unemployed bar friends.

Which Life Do You Want?

I was listening to a podcast last night by No Credit Needed. I highly recommend it. He was describing how his life is different now that he doesn’t have any debt to deal with. Even though I’m already on board with a debt-free lifestyle, it reassured me that I’m on the right track. It got me thinking about the kind of life our family will be living in just a few years.

A family living a debt free life:

Will not be devastated if one of the parents loses their job. They have enough cash to survive because they were able to save their money instead of sending it to debt. They don’t have any bills to pay other than utilities, food, and other minimal bills. Losing a job when you are debt free is NOT a crisis. What, think you can’t lose your job? Think again. Yes, even you are replaceable.

Will build wealth at amazing speed. Let’s say you get a paycheck of $2000. You spend $1000 on your monthly expenses such as food and utilities. That leaves you with $1000. A family living with debt would have to send that money to their mortgage, student loan debt and car payments. There is very little, if anything, left to save. The debt-free family deposits that $1000 into their ROTH or at the very least, a savings account. Which family do you want to be?

Can have a lot of fun! Most importantly, the family is not stressed out about financial problems. They can have fun with their money instead of working to make it stretch. It’s not a financial burden to take a family vacation because they have enough cash to pay for the trip. Vacations are much more fun if you aren’t worried about how much it’s costing you.

Aren’t devastated by emergencies. If the oven breaks, a family living with debt will probably wonder how they’ll afford a new one. They’ll end up charging a new oven on a credit card, therefore making it cost much more than if they paid cash. A debt-free family can simply buy another one and move on with their lives.

Can give like crazy. I want to help people in a productive way. I want to pay for them to go to Dave’s live events. I want to pay for couples to go through Financial Peace University (I haven’t even done this myself!). I want to help feed kids who are hungry. I want to make sure kids living in poverty are well fed and clothed. And as Green told me this holiday season, “Every kid should get at least one present for Christmas.” Because of discussions we’ve had at our house, my boys are well aware of how fortunate they are.


816. They should know that wealth is a tool to further God’s plans.

Green, In His Usual Pose

I Can See You, But I Can't Hear You (part 2)

I don’t write posts simply for the comments people leave. Ahem. No, I really don’t. I have my regular blog friends who comment but I want to hear from the rest of you as well! I know you are there because I can see the numbers. Can’t you show me just a little love?

Maybe tell me something like what you find interesting about this blog, your experience with personal finance, or leave me a quote that you think is awesome.

Continuing with my sharing of 1001 Things Every Teen Should Know Before They Leave Home book:

301. They should know that if they spend all their money partying and trying to impress people, they’ll quickly have an impressive amount of debt.

A Good Start to the New Year

I was tempted to eat out no less than 4 times this weekend. I ended up eating out zero times.

I sold a book on half.com and netted $6.00, which will be sent to my car debt. That will bring my total January car payment to $2084. It’s not always about the income, friends. It’s about getting rid of your extra stuff, as well.

Two more couples have been influenced by yours truly, and they are getting started on their own Total Money Makeover. I don’t say that in a bragging way. I say it in a, “Looky Here! You can do this too!” way.

I can whip Green in Guitar Hero. But only on Synchronicity II. And only if I’m on the easy level and he’s on the medium level. And only if I have the good chair instead of sitting on the floor. And only if I’ve had my caffiene for the day.

I’m rubbing off on my kids. Green said to me yesterday, “(name withheld) should be a Dave Ramsey fan. Their kids get whatever they want!” Yessiree, that’s my kid. And don’t worry, he wasn’t referring to any of you. These people don’t read my blog, that I’m aware of.

My kids have started the Dave Ramsey plan for kids – and they are loving it. They get their first “commission” payment tonight. The plan also includes reward certificates. Green got one for bagging the groceries at the store the other day, then unloading the cart into the back of my car. Three got one for letting the dog outside, and another one for unloading the groceries from the car and taking them into the house. They did all of these things WITHOUT BEING ASKED! Our rewards are things like, they get to pick a game to play that night, they get to have their favorite meal for supper, or they get to stay up 15 minutes past their bedtime (and their brother!) – so they are things that don’t cost us anything extra.

I’ve been able to stick to my new healthier living plan. Not loving it, but it's going ok.

Have I mentioned yet that I'm going to see Dave's live event this spring. And that I didn't even pay for it? Thanks, Mom and Dad, for one of the best Christmas presents EVAH!

307. They should know that unless they pay twice the minimum monthly payment, credit card balances never really go away.

One Year From Now

I can't remember where I heard this, but it's awesome:


"One year from today you'll be the same person you are today except for the books you read and the people you meet."

815: They should know that lenders are not their friends. They are cold, hard businesspeople who want their money back. With interest.

No New Cars

755. They should know a new car plummets in value the moment it's driven off the lot. This creates that "upside-down" feeling.

Red Boots

A couple years ago, I was on a mission for red boots. I thought they were funky, cool and hip. And maybe, JUST maybe, they would also make me funky, cool, and hip.

My mom bought me a pair, but they weren’t what I was looking for. I returned them and then went out and bought just the right ones.

They sat in my closet the rest of that winter. And the next winter. And the first half of this winter. Oh, they came out a few times for a day at work or a meal at a nice restaurant, but they still just weren’t the right ones.

Yesterday I decided to give up on the red boots. I put them on eBay at 12:35PM. They were sold just a few hours later at 5:25, and they were shipped out over my lunch hour today.

Can you guess where that money will be going? After shipping costs, I only made $13.00 on the boots, but that $13 will be sent directly to my car loan!

201. They should know never to use the words not my job if they're making long-term career plans.

Massive Car Payment

I have something very cool to share with you all...

It's only January 3 and we've already paid $2078 toward my car this month!

We were able to do this because we are living like no one else so that later, we can really live like no one else. You can do this too, if you are willing to make the necessary sacrifices. Jump on board, friends!

Comment With Freedom, Now

Sooo....I made it a tad difficult to post a comment over at the nofatblawg. Sorry 'bout that. It's fixed now.

Jenn and Blonde Chick - you are linked up!

Wealthy and Healthy

Over the past 6 months or so, I’ve been all about fiscal fitness. It’s time to also put some effort toward physical fitness. I need to eat healthier, exercise more, and just take better care of myself in general. I’ve got two boys to keep up with!

Want to join the fun? (Yes, it will be fun!)

http://nofatblawg.blogspot.com/

We’ll keep track of how much weight we’ve lost, starting today through March 31. C’mon, you can do anything for 90 days, not matter how painful it is during the process. And think about how much healthier you will feel on March 31!

To participate, email me or post a comment. You don’t need to have a blog, but if you don’t at least provide us with a nickname to refer to you by.

Let's Go!

607. They should know they won't lose a pound running three miles a day unless they give up the ice cream, beer, Coke and doughnuts.

How I Keep Motivated

Once in a great while I hit a roadblock where I think to myself, “I’m so tired of thinking about budgeting and money!” Granted, those roadblocks don’t last very long, but I can see how some people would grow weary of it. I do several things to keep myself motivated toward our goal.

Dave Ramsey Podcasts
I subscribe to Dave’s site, www.mytotalmoneymakeover.com, so I can download podcasts of Dave’s radio show. I listen to this every day on the way to work, over my lunch hour, and on the way back home. Listening to his callers just reminds me that I never want to be in their shoes.

Online Bank Acccount Access
I log into my bank accounts every day. Having an active interest in our accounts just keeps me excited about it. Excited about bank accounts, you ask? Yes – excited!

Online Loan Access
I have online access to our car loan and HELOC. I’ve been watching the car balance drop quite dramatically over the past few months, and it’s awesome.

Right now our HELOC balance isn’t changing because we are only paying the interest each month. Looking at that stagnant balance really makes me mad, so I know once we get our car loan paid off, we’ll go full steam ahead on the line of credit!

Books
I have all of Dave’s books. I’ve read The TMMO twice. I also have the audio version of it, and I’ve listened to that once, so I’ve gone through it a total of 3 times. That information never gets old to me. If you don’t like to read but are wanting to get started, the audio version rocks. Dave reads it himself.

You!
Comments from fellow people working off their debt, reading blogs about people getting out of debt, remind me that I’m on the right track – no matter what others say. Just a few short years from now I can tell them, “Remember when you were laughing at my plan? Who is laughing now?”

The Future
I want to be one of those people who is able to leave a $100 tip to a waitress on Christmas Eve. I want to be able to help kids who don’t get a Christmas. I want to guide other people through their own Total Money Makeover. I want to retire young. I want to travel with my family. I want to send my kids to college without having them go into debt. I want my kids to live their lives without debt, by learning from us.

And it will happen. I know it will.

May your 2008 be full of blessings and financial peace!


798. They should know that if they start saving in their 20s, they only have to regularly put aside 10% of their income to accumulate all the money they’ll need for retirement.

We Aren't Looking for Sympathy

I’ve been catching a lot of flack about living like no one else. I hear things like:

“You should be enjoying your money”
“You aren’t poor. Why are you doing this?”
“You make money so you can enjoy life.”
“I feel sorry for your family, not being able to spend any money.”

I know a lot of it is just in fun, but I also know some of the comments are serious. People really do feel sorry for us. So let’s think about the comments I would receive a few years down the road, if I continued living as we have in the past, spending money like it grows on trees.

“You don’t have any money to send your kids to college?”
“Too bad your kids don’t know how to handle their money.”
“You really thought Social Security was your ticket to retirement?”
“Will you EVER get to retire?”

I’m only asking my family to suck it up for a couple of years. If we go hard-core at this and don’t buy crap we don’t need and we commit to sacrifice, we will be debt free except for our house by September 2009. We will be totally debt free in only 4.3 years.

Without a plan, we would have been out of debt in around 10 years, at the minimum. But probably not, because we would have kept spending as usual, keeping the debt rolling. We never would have escaped the vicious cycle.

But now, in 4.3 years, we will quit sending our money to banks. We will be free to travel, buy all of the stuff we aren’t able to buy right now, send our kids to college without having to deal with any loans, be able to donate our money and our time to worthy causes, and start building some serious wealth. I bet you won’t feel sorry for us then, will you?

Getting Started

The new year is a good of a time as any to get started being in control of your money, if you aren’t already. To help you get started, here’s how we did it. It’s not exactly Dave’s way, but it’s what got us going.

Last summer, we started tracking our expenses. We operated out of one bank account, and I kept a spreadsheet. Every night I would transfer the expenses that hit the bank account that day to my spreadsheet, keeping a running balance of where we were at.

After those two months, we evaluated where our money was going. We were SHOCKED to see how much of our money was spent on eating out. The first month it was almost $300. We also spent $700 on random stuff like golfing and hotel rooms. We also found we were spending $530 per month on groceries. And those are only examples – we were spending money faster than it was coming in. I sat there in disbelief, and thought to myself, “Holy Crap.”

(If you want a sample of the spreadsheet I use every month, email me.)

I gathered up all of our debts and wrote them down, largest to smallest. We had several little annoying bills. Best Buy had a $400 balance, Nebraska Furniture Mart had $1000, and so on. Over the next 2 months, we got rid of all of those and cancelled all of the accounts.

We then proceeded to cancel our credit cards. The companies didn’t like to hear that we didn’t plan to get taken advantage of anymore. “You’ll need these for emergencies.” No thanks, we’ll use our own money for emergencies, thanks.

We started selling a lot of extra stuff: a mower, saxophone, bunk beds, etc. We netted several thousand on those things. All that money went straight to debt!

So that brings us to today. We are down to three debts: my car, home equity line of credit, and our mortgage. I can’t explain the feeling that I have that I am in control of my money. I really want you to feel the same way!

We are acting our wage.

We are living within our means.

If we can’t pay for it in cash, we don’t buy it.

We don’t by crap we don’t need.

We WILL be debt free.

My Envelopes (aka Spreadsheet Columns) Didn't Like Christmas

So, I’m not so good at budgeting for Christmas. I did pay cash for our entire Christmas but I spent way more than I had saved. Even with all of the deals and sales I utilitized, I spent a large chunk of change.

December was our first attempt at envelopes, but ours were kept in spreadsheet form. (Don’t worry, blog friends, I’m going to try actual envelopes next month). I underestimated our personal expenses by about $300, due to a few unexpected doctor visits, new shoes for both boys since their toes were curled up in their other ones, etc. The good news is that I didn’t do any major grocery trips this month – I used what was already in our fridge, cupboards and freezer. I’ve only spent $164 so far this month for our family of 4! So the remaining balance in that category can be moved to cover negative amounts in other categories.

Thanks for the comments regarding the CD. Hopefully you can guess that I would love to throw that money at debt, but we both need to be on the same page in order for that to happen. Anyhoo, it’s still sitting in our savings account.

I do have some GOOD news! I may have gotten a relative on board with Dave Ramsey’s plan. I’m doing what I can to keep her sucked in! She may stop by this blog today or tomorrow, so if you can leave her a comment to get her motivated.

Merry Christmas!

Wishing you and your family a happy holiday season...

Pool Boy, green3, Three and Green

The CD is Cashed!

We just cashed in CD that we’ve had since 2005. While I’m not a fan of CDs, it worked well for us while we had it. Back in 2005 we were not in control of our finances, so the CD was a great way to keep money “hidden” from ourselves. If we wouldn’t have had the CD, I’m positive we would not have this money today.

So now we have a lump of cash, and Pool Boy and I are disagreeing on what should be done with it. I know what should be done with it, and he doesn’t have any idea what should be done with it – only that he doesn’t want to do what I want to do. So basically we’re doing nothing with it until we agree on it. It’s sitting in a bank account right now patiently waiting for us to decide.

I did take the interest amount on the CD and applied that to our car loan. That makes $2,322.43 sent to our car loan over the past 3 weeks. That rocks!

For Your Sports Fan

I know this is a late Christmas idea, but I have to share with you how much our son loves his basketball court in the basement, thanks to JustInTymeSports. Yes, we converted one large room into a basketball court! Each end of the room has a mini basketball hoop on the wall so we have an actual court. We also have a real scoreboard program from the same company that we use on our laptop. Yes, this is exactly how it looks on your screen!

Oh yeah, we're the real deal down in the basement!

Rich and Poor

I’ve been confronted about our money-saving ways. “Why are you doing this? You are acting like you are poor, and you aren’t poor.”

We aren’t doing this because we were on the verge of bankruptcy, living paycheck to paycheck, or because creditors were calling our house. It wasn’t even close to any of those things. We just decided we want to keep our money instead of send it off to everyone else. What good is your money if you don’t have any of it?

And really, how can you tell if someone is rich or poor? Do you base it on the house they live in, the car the drive, or the clothes they wear?

Take one of Dave’s recent callers as an example. Her husband made $280,000 per year, so people would tend to put them in the “rich” category. They lived in a $700,000 home – again, another reason people would consider them rich. But they also had this:

$650,000 mortgage on that home
$50,000 home equity loan on the home
$68,000 in credit card debt
$35,000 in student loan debt
$22,000 loan against their 401K

They also had a $19,000 property tax bill due every year, paid for their daughter to go to private school and had a nanny come to the house. They had major debt and they were scared. They were current on all their bills but didn’t have anything left over at the end of the month to pay down their debt. As she described it, they were “hemorraging money.” Even though they had a good income, they were extremely poor.

She said she was “trying to put together a budget, but it’s hard.” Dave got all in her face and told her they needed to quit acting like a prince and princess and quit buying stuff. Their take home pay was $11,000 per month for crying out loud! “You need to learn to sacrifice,” he told her bluntly. “You’ve never sacrified in your whole life and now look where you are!”

Frankly, I don’t want to be where they are. I’ll learn to sacrifice on my own, thankyouverymuch.

Our First Attempt at Envelopes

Before I go into details, I need to admit that I’m not using actual envelopes. I know, I know, it’s breaking the rules. But at least I’m trying! I am keeping it in a spreadsheet that is updated every day, so it’s a start. (For those of you now familiar with envelopes, it’s basically a budget for each category.)

Here are the “envelopes” I created for December:

Fixed Expenses = $2525
Groceries = $375
Personal = $400
Entertainment = $200
Spending Cash = $160
Gas = $300
Christmas = $300*
Total Expenses = $4260
Amount left over to send to debt = ya right, not sharing that one!

*The Christmas line item is for additional gifts that our Christmas fund did not cover. Even with the savings I did this Christmas, I still spent way too much. We went way over our original Christmas fund, and way over the additional amount budgeted above. It’s really hard when there are so many people to buy for. But at least I’m paying cash for Christmas!

This is the first winter in several years that we do not have a vacation planned. We’ve been to Colorado on our annual ski trip for three years, then we went to Vegas last year. This winter we’ll just be staying home, but it’s ok. We are going to DisneyWorld in June so Pool Boy is working extra to save up for that. Don’t feel bad for him – he loves refereeing wrestling.

On a side note, my car loan is now under $10,000! In addition to the $336 car payment paid on December 3, I’ve sent them an additional $800 so far this month. This money came from a few different sources (selling stuff, working side jobs, etc.) I can see the end in sight…

Do you use an envelope system? How do you like it?

Things I Wish I Had Known When I Was 21

1. You need to start investing now. I could be almost a millionaire right now if I had started investing right out of college.

2. Just because you can afford the monthly payment doesn’t mean you can afford it. This one is the number 1 reason I’m having to deal with debt at the age of 35. Up until last summer, every big item I bought (house, cars, pool) was based on whether or not I could afford the monthly payment. Stupid, stupid, stupid.

3. Don’t spend every penny you earn.

4. Everything except for your house should be bought with cash. And when you buy your house, only get a 15-year mortgage. If you can’t pay it off in 15 years, you can’t afford it.

5. Don’t buy a home until you have enough cash to put at least 20% down. Paying PMI (mortgage insurance) stinks.

6. You don’t need a credit card for ANY reason.

7. You should never, ever buy a brand new vehicle. They are a horrible waste of money.

8. Borrowing money to buy a car is stupid. If you need to borrow money, you cannot afford the car. I’m working my rear end off to pay for my car now. Each month I’m sending around $1000 to the loan. It’s not fun.

9. Start a budget today. Don’t wait until you are 35 and are used to spending money like it’s water. It’s much harder to start at 35.

10. Don’t buy dumb things. Here’s a short list of dumb things I’ve spent money on:
A collection of Liz Claiborne purses @ $80 each
Eating out every day for lunch – this went on for years
Everything I’ve ever bought on a “no-interest” plan
Not to mention the new cars and the pool…

Reasons Why People Don't Pay Attention

Do these reasons sound familiar?

I’m doing just fine. I make good money so I don’t need to do anything about it.
If you have consumer debt (credit cards, lines of credit, no-interest plans), you don’t have as much money as you think you do. The only reason you think you are fine is because you aren’t willing to deal with the debt. It’s all a charade - you are living on borrowed money. I lived the charade for many years without even realizing I was doing it. I just assumed that’s how everyone lived. Then I realized YES, that IS how everyone lives and it sucks!

I’m not interested in money issues. I think it’s boring.
Once you start digging into it and figuring it out, you will probably find that it’s exciting because you finally feel like you have some control of the situation. You know how much is going in, you know every single penny that is going out. It’s an awesome feeling.

I don’t understand money and investing.
Personal finance is not brain surgery. You need to spend less than you make. If you don’t have the money, don’t buy it. As for investing, you don’t need to spread your investments all over the place. Pick a few that are somewhat reliable (growth stock mutual funds and paid-for real estate) and learn about them.

I don’t want to give up my lifestyle. I like new clothes, toys, entertainment, etc.
You’ll never succeed until your lifestyle matches your wage. If you have consumer debt, you are not acting your wage. This will come back to haunt you, so you need to decide if you’re going to deal with it now or wait until disaster strikes and you are forced to deal with it. Disasters happen all the time – people get sick and can no longer work, lose their jobs unexpectedly, and so on. How long would you be able to pay your bills if the primary wage earner in your family was suddenly without a job?

My employer has a retirement plan. That will be good enough.
It will not be good enough, people. You are the one who needs to be responsible for your retirement – not your employer.

Think You Can't Do It? Think Again.

These people did. So can you.

The Mortgage Myth

Pool Boy and I have about 11 years left on our mortgage. (yeah!!!!) I’ve had more than one person tell me that we are crazy to pay off our mortgage. “Why would you do something so stupid? You’ll lose your tax deduction! Plus, you could use that money to invest instead and come out ahead.”

They apparently don’t have basic math skills.

Let’s run this example (borrowed from Dave Ramsey, of course):

Your mortgage interest rate is 8%.
You can invest and get 12%.

You may think you’re losing out on 4%, but this is where you are wrong, in my humble opinion. First of all, would you really invest that money or would you just spend it like the rest of your money, without a plan? If that’s the case, then it REALLY doesn’t make sense. But let’s say that you do have a financial plan and you wouldn’t just blow the extra money.

The interest part of the mortgage payment is is $830/ month, which equals almost $10,000 per year you are paying in interest. If you’re in the 30% tax bracket, this would give you a tax deduction of $3000. So if you didn’t have this mortgage payment, I would have to pay an additional $3000 in income taxes. So to those people who say I’m stupid, let me say this. You want me to send $10,000 to the bank just so I don’t have to send $3,000 to the IRS?

Now for the investing portion. If you don’t pay extra on your mortgage and spend the extra money on investing, it would appear that you are gaining 4% each year. Keep in mind that the interest you would earn is taxable, so take the taxes out of that extra 4%. Not all that much left now, right? Add risk to that equation. What if you/your spouse were to get called into the manager’s office this afternoon and be fired? What if you/your spouse got sick and could no longer work? Would you still be able to pay your mortgage? If you got fired or sick, where would you rather have your $10,000 be sitting? In the bank’s pocket or in your mutual fund?

Learn how to keep your money, friends. There are very, very few good arguments for having debt.

The Selling of Stuff

So you’ve dug yourself a hole and you are sitting at the bottom of it looking up. You can see the sunlight way up there. You’ve decided that you despise making those stupid payments to your debt every single month. You’re done giving your money to other people. You’d kind of like to keep some of it. But the hole you are in is so deep, is there a way out? The answer is YES, but it will take some sacrifices. One sacrifice is to sell some of your stuff.

You’ve got to have extra stuff (aka “junk”) sitting around that could be thrown at your debt. Don’t say you don’t have anything, because all of us have crap laying around that we don’t need, or even want. Here are some things we’ve sold:

Brand new, shiny red, zero-turn lawn mower = $2,200
2 loft beds = $100
1 couch = $150
1 saxophone = $1,600
Books = $15.00
NASCAR Tickets = $1,300

I only listed 6 things there, but those items alone got rid of $5,365.00 of our debt in just a matter of a few days. It took minimal work, and we really don’t miss those things. If we weren’t on a mission to live a better life, we’d be trying to figure out how we were going to pay those extra thousands. It never would have occurred to us to – *GASP* – sell some of our stuff!

Look around your house. Yes, you may have to physically look because some of your stuff has been sitting there so long you don’t even really see it anymore, as was the case with our couch. Do you have any of these things that are “necessary”?

Extra vehicles
Fancy, expensive toys (big screen tv, zero turn mower, boat, motorcycle)
Exercise equipment that is collecting dust
Unused furniture
Extra appliances
Home décor stuff
Instruments (We just bought a used saxophone from Craigslist for $400. Someone wants your instruments!)

And the list goes on and on and on. The hole you are sitting in doesn’t have to be as deep as it is. Use some of your stuff to get you a little closer to the top so you can ESCAPE!

List

Some days my to-do list seems longer than is doable. Today is one of those days. So was yesterday. And tomorrow will be more of the same.

Link

Awesome post about you and your spouse being on the same page when dealing with finances and life in general. Go here!

It's a Personal Decision, Part 2

I know that the decision to be in control of your finances is a personal decision. Here are some questions I would love to pose to those living with debt and who are not aggresively getting rid of it.

1. Do you know how much debt you have?

2. How does it feel to write out checks each month for your car, your truck, your student loan, your new toy in the garage, and so on?

3. How do you think it would feel to be able to actually KEEP your paycheck rather than make payments with it?

4. Wouldn’t it feel great to retire at age 45 or 50?

5. Look at the “stuff” you have. Is all of your “stuff” worth the stress it causes your family because of the expense involved to have it? Remember, family is way more important than your stuff.

6. Does your family have a history of financial stress, generation after generation? Don’t you think it’s time to change that with your generation?

7. Do you want your kids to have to be where you are today, working and working to make payments on cars, credit cards, and mortgages? They need to learn about money now, while they are young. They need to know debt is not a way of life.

8. If you are still running up balances on credit cards, why? What are you purchasing that is so important that you are willing to go into debt to get it? If you don’t have the cash, you should not be buying it.

9. Do you know exactly how much you are spending each month?

10. Why do you choose not to aggresively pay down your debt?

I don’t ask these questions to be mean. I just want to give everyone the chance that I’ve been given. I am so, so fortunate to have gotten on this track. Each of you has the ability to make a difference in your family’s financial situation. Get started today. It’s not too late!

It's a Personal Decision

Getting out of debt seems obvious to me now, but a year ago I would have laughed at you and said, “Isn’t that what life is about? Working to make money so you can send the minimum amount due toward your debt payment?”

Now that I’m on the other side, I can’t imagine going back to the way were living. We had no financial plan, tons of debt, new cars, weekly trips to the mall, almost daily trips to the grocery store. We were spending and spending and spending. We felt were were ok because we weren’t using credit cards and we had a healthy savings account. But we also weren’t seeing our financial situation progressing forward. We were stagnant. Every penny we made went right back out. And more often than not, more money went out than came in. We could tell our savings account was slowly dropping, but we never knew exactly why. Pool Boy would say, “What happened to our savings account this month?” Truth is, we had no clue. We made deposits and wrote checks. Whatever happened, happened.

I know I talk a lot about Dave Ramsey, and I’m well aware that is annoys the hell out of Pool Boy sometimes. But I really feel it was an amazing blessing that I discovered him at the time I did. We are still young and still have time to turn this situation around. I know I’ll never convince all my family and friends to see how important a financial plan is. I doubt I would have listened to anyone a year ago either. In fact, I remember making a specific comment about someone else’s frugality and laughing. Oh, if I could take that back because they were actually the smart ones. I know people are laughing at us now, but I also know that we will be the ones who will be debt free and retiring MANY years before them. I wasn’t put on this planet to make payments, and I don’t intend to live that way my whole life.

I encourage you to ask yourself these questions:

1. Do I know where every single dollar of my money goes each month?

2. Are there things that I am making payments on that aren’t necessary, such as newer cars, trucks or toys?

3. How much money will I need to retire?

4. Do I have an aggressive plan for paying off my debt?

5. Do I even know exactly how much debt I have?

6. Am I properly insured in case something happens to me?

7. Do I know how I will support myself in retirement?

8. When do I want to retire?

Please don’t wait until it’s too late to get on the right financial track. Every day you wait to get it figured out, every penny you spend, is taking you further and further away from making your family a financial success.

Show The Love, Blog Friends!

A friend of mine needs to feel the blog world love. This week she had a very small fire in her house. Her husband had turned on the stove while a nylon lunch bag was sitting on the burner. They got it out in a matter of minutes, but the house is still unliveable. When the furnace kicked on, it sent smoke and fumes throughout the house. Every single item in their house is contaminated. They had to move to a hotel – with two little girls – for a week or two while a company goes through their house cleaning it inch by inch.

Locally we are collecting money for a Target gift card for them so they can go buy essentials they need on a day-to-day basis.

So go over there and leave her a comment. Show her the love, friends!

May 3, 2008 Cannot Come Soon Enough

If you are wanting me to hang out with you next May 3, I'm sorry. I won't be available. Because I'll be at DAVE RAMSEY'S LIVE SHOW IN KANSAS CITY!

That's right, folks. Dave Ramsey is finally coming somewhere within a 4-hour radius of me! And because I'm a member of mytotalmoneymakeover.com, I even get a discount on the tickets.

Want to come with me? I need to buy my tickets, like THIS WEEK, so if you want to come along you need to tell me now. Can you tell I'm excited???

Quote

It's not about how much money you make. It's about how much money you keep.

Spare Time

Everyone’s busy. We all say we don’t have time to do anything. I catch myself saying that a lot. But in reality, you probably do have some free time every day. Are you using that time wisely?

My spare time occurs during my drive to and from work, which totals an hour each day. I also have a lunch hour. At night, I have an hour or two after the kids go to bed. So really, there are about 4 hours a day that I can officially consider “spare time”.

My drive to and from work is spent listening to podcasts on my iPod – my NEW iPod with cooler features than my old one, thanks to Pool Boy’s early Christmas present to me. My regular podcasts include mostly Dave Ramsey (of course), a little Anderson Cooper 360, Joel Osteen and any other personal development podcasts I come across.

My evenings are spent doing some contract work, learning a new skill such as how to use Flash or researching all the features in Photoshop, or reading personal development or personal finance blogs and books.

I don’t watch much television, and it’s not because I’m against it – I just have better things to be doing with my time. I’d rather know tools to help me be successful than to know the main characters on “House” or “24”.

Anyone who stops learning is old, whether at twenty or eighty. ~Henry Ford

We're Off!

Work, that is. Pool Boy and I both took Monday off to go to Des Moines and get our Christmas shopping done. I have everyone done except for the boys, so it should be a full day of toys and games!