Tag Archives: Dave Ramsey

Financial Peace – One Year Later (Part 1)

Red beans and rice, prepared with smoked spani...

Red beans and rice, prepared with smoked spanish paprika. Sometimes ours looked this good. (Photo credit: Wikipedia)

It started a little over a year ago.  If you’re a regular reader to this blog or if you’ve gone through the posts filed under “Journey Toward Financial Peace,” then you know what our last year has been like.

Early last January, my family was $900.00 in the hole.  That looks like -$900.00 or ($900.00) or $900.00.  However that appears on a ledger sheet, the bottom line is, there was a whoppin’ $900.00 missing from our usual income.  We knew where it was, but that didn’t help matters much.  It didn’t help us enjoy better food, nor did it help us pay all the bills.  It also didn’t help me sleep better at night, because I was so worried and so anxious about our financial situation.  Our home life was tense.  Talking to my husband didn’t help, because he felt defensive, like he wasn’t doing enough (absolutely NOT the case), so I was left feeling alone in my anxiety.  We needed to bring some peace into our home life.

We’d both received money for Christmas, and I was thinking that a nice pair of clogs would make a great gift for myself.  They were going on clearance, I’d shopped around online at my favorite online shoe store (since we don’t have one of their brick-and-mortar stores near where we live), and I was going to be able to score an $80.00 pair of shoes for $49.95.  Woot!  Then I saw in the hand-out for last year’s Life U classes at church that there was going to be a course called Financial Peace University.  Registration required.

We didn’t register; we just showed up.  The course materials were normally $100.00, but our church fronts half of that, making the course…  Yep.  $50.00.  I thought about it for all of 30 seconds (I REALLY love shoes!) and decided that I could give up a pair of new shoes for some financial peace.  (Can I get an Amen?)

I’d never heard of Dave Ramsey.  I’d never heard of Financial Peace University.  We were willing to try it, though.  And after spending $50.00 on the course, we were willing to commit to sticking with it.  The first thing we had to do was create a basic budget, just to see what we spent on our “four walls” (mortgage, utilities, groceries and transportation).  That was easy enough.  And then Dave started talking about the baby steps.

Baby Step 1 is to set aside a basic emergency fund of $1000.00.  *Gasp!*  What???  How much!?!?!  We were eating lots of beans and rice.  And when we got tired of beans and rice, we’d change it up to rice and beans.  We didn’t have an extra $20.00, let alone $1000.00!  Damnit, though!  We still weren’t going to give up!  Some way, some how, we were going to get that $1000.00!

There are two things I remember from this time.  One, for the first time in ages, I had hope that things were going to get better, because I felt like we were in charge of our money.  Once we took charge of our money, we could control where it went (instead of wondering where it’d gone).  Two, I felt grateful.  You may be wondering, “How could you feel grateful when you were beyond broke and eating beans and rice?”  I felt grateful, because there was food on our table and my family was around it.  We had food on our table in the dinette in our home, and we ate it together as a family.  When so many people have lost homes and families and are starving, we were practically living like royalty by comparison.

There’s much more to this story to share, but I’m breaking it into parts to make for easier reading.  Stay tuned!  You may also want to follow this blog and/or subscribe to the RSS feed to receive emails as soon as new posts go up.

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A New Attitude

Christmas in the post-War United States

Christmas in the post-War United States (Photo credit: Wikipedia)

“If you will live like no one else, then later you can LiVe like no one else.” ~ Dave Ramsey.

It hit me today – a variation on that idea – and that is this:  “If you are living like no one else, then you can start giving like no one else.”

It’s Black Friday.  Millions of shoppers crowded stores like Target, Walmart, Best Buy to be one of the first customers to get that $400 TV for $150 – or some other “Made in China” crap – while canned Christmas music fills the air amidst disgruntled shoppers and cashiers telling customers how much they owe.  And owe and owe and owe, plus interest.

I wasn’t one of them.  My family and I headed to the North Carolina Farmer’s Market today, a treat we seldom get to enjoy since we moved out of that area.  Before going, though, my husband and I had discussed our plans for Christmas gifts this year.  Some people are so easy to shop for, and others are so incredibly challenging.  But this year, we’ve decided we’re going to give gifts that we can afford, not what we want people to think we can afford.

Homemade gifts are nothing new for us.  We’ve given pillows, tins of cookies and confections, soaps, dipping oils, extracts and other treats, all made by us (me, mostly).  I was raised, though, that homemade gifts aren’t that special, that it’s better to buy gifts from a store so the recipient can take them back.  Then I became an artisan crafter and people loved getting products from me that they didn’t have to buy.

There’s still that part of me, though, that wonders what people think when I give them something.  Do they feel stuck with the gift I carefully chose for them, that another artisan made with love and care?  Today, my thinking shifted in a huge way.  This morning, I thought, “I don’t care.”  Really, truly don’t care.

We give gifts carefully, and there’s nothing so exciting to me as finding that great gift and it practically shouting, “This is for ______!”  The package comes (if it’s something I’ve ordered), and I get to open it, then I get to wrap it – maybe in a box, maybe in a handmade cloth gift bag – and watch with excitement as my friend or relative opens it.

But to elaborate on the “I don’t care” part…  Pretty much everyone in our families knows we’ve been on a path toward financial peace this year.  Some of them have shared with us in the huge victories (clearing all our credit card debts), huge frustrations (wiping out 70% of our brand-spankin’-new emergency fund when my car needed repairs) and a few know the huge heartbreak that came over the Summer.  In short, they know we’re trying to do something new and great in our lives.

I won’t go into the specifics of what we’re giving so as not to spoil any surprises, but as the discussion unfolded this morning, I became excited.  Sure, I’d like to give more than what we’re giving, but I’m excited about what we’re giving for a few reasons:

  1. We’re giving what we’ve made with our own hands, so each gift comes with a heapin’ dollop of love.
  2. We’re giving as we are to protect out own reality, not someone else’s perception of our reality or what that reality “should” be.
  3. Our giving in this way allows us to be more generous to those who have far less than we do.
  4. By giving like this, we experience freedom:  Freedom from “must buy” syndrome and freedom to spend more time at home.  Or out looking at lights.  Or Christmas caroling.  Or at parties.  Pretty much anything but shopping.

Baby Step 7 is “Build wealth and give.”  We’re not even through Baby Step 1 for the second time, but I’m ready to give now.  That’s what my immature (??) red-faced kid is screaming for.  Maturity says I can’t give away wealth I don’t have, but I can give what I do have.

What creative ways have you discovered for saving money, time and stress during the holidays?

Gazelle Intensity or Lion’s Determination?

Deutsch: Grant-Gazelle (Gazella granti) beim F...

Image via Wikipedia

Have you ever watched a nature show on National Geographic or Discovery Channel?  Or maybe, like me, you grew up watching Mutual of Omaha’s Wild Kingdom.  You’ve seen big cats chasing tasty morsels, like gnus, wildebeests and gazelles.  The prey runs like hell.  Their whole focus is getting away from this animal – lion, tiger, cheetah – that wants to eat them.  They are intense on escaping.

Dave Ramsey says to approach your debt snowball with that same intensity.  Look at it.  Those creditors are following you, ready to devour you with those high interest rates and the incessant calls when you get just a month behind on your payments.  Go wildly crazy, doing whatever it takes to get out of debt.  We had that gazelle intensity, and we quickly knocked out over $4,000 of our $11,500 in debt.

The frustrating part for me is, now I feel like I’m losing my gazelle intensity and have moved to a lion’s determination.  An African proverb I saw on a forum one time goes something like this:

Every morning in Africa, a gazelle wakes up and knows it must be faster than the slowest moving member of the herd, or it’s going to get eaten.  Every morning in Africa, a lion wakes up knowing it must be faster than the slowest moving gazelle in the herd, or it’s going to starve.  Either way, when the sun comes up, you’d better hit the ground running.

The gazelle spends its days hypervigilant.  If I know something is going to sneak up and try to eat me, then I’m going to be constantly alert, constantly ready to run or defend myself.  After a while, I’d imagine that gets exhausting.  But what about the lion?  The lion runs after the gazelle, catches it, either eats it or drags it back to the pride, and then takes a nap.  The lion must be determined to hunt and catch prey lest it starve, but it also has opportunities to relax and rest.

We’ve lost our intensity, but not our determination.  We’re letting ourselves have some fun.  Instead of tossing all of our money into our debt snowball, we’re giving ourselves permission to use some of Peter‘s commissions to enjoy date nights.  Dave says to put all gifted money into the debt snowball, but I treated myself to a new dress and shoes (took advantage of some amazing deals in the process).  This is OK; it’s likely the only money I’ll spend on new clothes for myself all year.  And, yes, I’m probably justifying, but Peter and I haven’t had regular date nights in ages, so the idea of being able to go out, just the two of us, is pretty attractive.

We found some debts about which we had forgotten (but they’re genuine debts). And there were some other debts I thought we had that we didn’t, and yet others which were forgiven.  I’m grateful for those last two, and I’m grateful for the plan we have in place to address the first.  We should be able to be debt-free by this time next year, alongside having the first part of Baby Step 3 completed.

POWER gets things done!

Mardi Gras in Mobile

Image via Wikipedia

My husband and I attended a Mardi Gras party Friday night, and one of the instructions for the party was to wear a Mardi Gras color, and the hostess had listed what the colors mean:

Purple = Justice

Green = Faith

Gold = Power

Given that I wear purple and green sometimes for school and I’ve been feeling powerful over our money lately, I opted for a gold top.  Upon arriving at the party, I quickly noticed two things.  One, almost everyone there was wearing purple, and certainly almost all the ladies were, and two, only one other person besides me was wearing gold.

I was thinking back on the party yesterday, and it was fairly remarkable that most people were aligning themselves with justice, very few chose faith and even fewer were going with power.  But why not?  Right now, I’m feeling very powerful – powerful over our finances, which makes me feel powerful over our future.  It’s this feeling of power which makes me get things done.  It makes me budget, research, find stuff for our yard sale and so forth.

Think about it.  Without power, things don’t go.  If your car battery has died, then your car has no power and it’s not going to go anywhere.  If your electricity is turned off, then your home won’t have power, and you won’t get anything done, like cooking or washing the dishes.  Even if your own battery is low due to illness or lack of sleep, then you’re not getting much done, either.

We have power over those things which we can control.  It’s as simple as operating a TV remote.  The holder of the remote can control the TV; she has power over which channels to watch and the volume.  When we discovered how our money was controlling us – through debts, living paycheck-to-paycheck, etc. – then we felt powerless to change things.  For my control freak self, that was really frustrating!  Dave Ramsey (you knew I had to bring his name into this eventually) says that women have a place in their gut that gets irritated when they’re feeling insecure about money, and that was flaring for me for a couple of years.  That spot hasn’t been bugging me lately at all, and it feels good.

In what areas of your life do you feel most powerful?  In what areas do you feel least powerful?  What will you do to become powerful where you feel most powerless?

Making Cents

We’ve knocked out a few weeks of Financial Peace University and are still going strong.  We’ve completed our zero-balance cash flow plan and are looking forward to start putting it into action come Wednesday (1 February).  For those of you unfamiliar with Dave Ramsey‘s program, it’s a pretty aggressive plan to create savings and eliminate debt.  It emphasizes controlling your money instead of your money controlling you, and when you have debts, then your money is in control.

This plan has seven baby steps, and the first is to save $1000 for an emergency fund – and quickly, followed by beginning the “debt snowball.”  Our “quick thousand” (and the beginning of paying off our debt snowball) is going to come from selling my older car.  However, before she’ll be ready to change hands, there are a few fixes she’ll need – new tire, for one.  Yet, we’re still so new in this process that we don’t have any money in our budget for this, so my older daughter and I started rockin’ and rollin’ – and rollin’ and rollin’ and rollin’.

Neat little rows of pennies

We’ve got change strewed all over the house, and we decided to make it work for us.  That change can’t do a thing for us when it’s sitting in jars.  My older daughter and I made it a math lesson – rolling all these pennies.

 

Awesome little piles of copper

 

 

 

 

 

Finally, after 2 1/2 hours of pretty much non-stop rolling, we had to call a stop for lunch and my toddler being awake.  We weren’t finished with the jar, but we had a dandy little pile to show for our work.

3,600 pennies - Whew!

That’s 3,600 pennies – $36.00.  I was quite proud of the work we’d done, and this money will go toward taking care of Little Blue.  The payoffs for all this work will be tremendous.  One, get Little Blue ready to sell.  That money will, as I’ve said, create our emergency fund and start us on our way to paying off our debts (with eyes on baby step 6 – paying off our mortgage faster).  And what comes next?  No more paying the taxes, tags and maintenance fees on that car.  Getting it off the insurance.  Am I the only one seeing dollar signs here – more than the value of the car itself?

Right now, my favorite part of FPU is seeing how the little things I do now will affect our plans and dreams down the road.  It’s exciting to feel in control of our money (and I am quite a control freak) and know we’re going to make it work for us.  I really recommend this program.  I recommend it for everyone, but honestly, there’s a new level of romance to my husband and me working together in tangible, concrete ways to achieve our goals.  Even what seem like set-backs look different when we look at them with optimism.

Here we are at the end of January.  We started the month on a major, panic-inducing deficit of the equivalent of 1 1/2 weeks of my husband’s pay.  I’m talking one of those situations where meal variation looks like this:

Monday – Black beans and rice

Tuesday – Kidney beans and rice

Wednesday – Garbanzo beans and rice

Thursday – Black beans and rice

Friday – Payday!!!  Hopefully NOT beans and rice!

and all you can do is pray.  We started FPU after the first of the month, so it was too late to put our cash flow plan into place for January, but we started with the mindset.  One day last week, I had $8.00 with which to buy groceries to make dinner; I was planning on beef stroganoff.  I ran out of money before I got to the beef broth (with no idea we actually had some in the fridge), so I boiled my meat for the stock before sauteing it with the onions.   That one crock pot dish fed us for two meals and there’s a lunch serving left over.  Anyway, we’re here at the end of January.  There’s food in the freezer and pantry, all our housing bills are paid and we actually have money left over.  To me, that’s a reason to celebrate!

 

A Life of Sacrifice

Budgeting

Image by 401K via Flickr

It’s January, and this is the time of year when people decide to make sacrifices – they resolve to lose weight, stop smoking, stop drinking or whatever.  I don’t make resolutions, but I do make goals for my business, my home and my personal self.  There’s a subtle pressure, though, to make sacrifices.  In our Sunday morning small group, we started a study of fasting as Daniel fasted (restricted himself to a vegetarian diet) with the understanding that each member would undertake a fast of some sort.  My husband and I talked and batted ideas around.  We thought at first about giving up meat for a week, but we easily go vegetarian some days, anyway, so this wouldn’t be much of a challenge for us.  He also suggested coffee, but didn’t want to subject our girls to me without my morning cuppa (besides, I’d just drink green tea, and I only drink one mug of coffee a day).  I was intentional about giving up sweet snacks – cookies, chocolate, candy, everything.  I started this this past Monday and said I’d go a full seven days which will end tomorrow night.  Thursday morning in the shower, I thought, I could do this another week.  Thursday at lunchtime, when I cleared the halfway mark, but Thursday afternoon was tough!  I’d stashed all the chocolate and candy on the top shelf of the pantry where I couldn’t see them easily, but Thursday afternoon, my mind kept drifting to the container of Trader Joe’s chocolate cat cookies.  I’m proud to say I resisted, but it was close!

At the same time this was going on, Peter and I started attending a Financial Peace University class.  Talk about sacrifices!  First, I sacrificed the $50 I was going to spend on a new pair of clogs for our course materials.  Today we spent a couple of hours creating our cash flow plan (aka, budget).  The goal was to create  a zero-based budget, one with no money left over and no overspending.  We did it – sort of.  It doesn’t allow for any saving this month, though.

The course instructors told us – pretty much promised us – that we would fight during the budget making process.  I’m glad to say we didn’t.  Shoot!  I was psychologically ready for it, because we seem to fight about money most of the time, anyway.  Seriously, when Dave Ramsey says that couples fight over money more than anything, absolutely believe him.  Men, when he says your wife’s feelings of security are tied to money, believe him – and when finances are tight, give her lots of hugs and spoon her as you sleep.  Women, when your husband is feeling like he’s less of a man because he’s not making enough to keep your security anxieties from flaring up, tell him all the ways he’s doing great and insist you create a budget together – and STICK TO IT!

Anyway, I figured fighting with Peter in the course of making a budget (something we so rarely do) wouldn’t be that bad.  After all, we might be fighting, but fighting is still a form of communication, and we’d be fighting in the midst of doing something positive.  See what I’m saying?  To me, it’s better to fight as we’re doing something to change our current situation.  I’m proud to say, we did not fight.  We did not raise our voices.  We prayed together before we started, we gave it over to God and we listened to each other.  I see where we are as we go into February, but I also see where we are going to be.  The first cut is Peter’s AFLAC policy.  Why pay that money to AFLAC when we can put it into our emergency fund and draw interest on it?  The second cut will be cable (after the Super Bowl).  Some expenses that have to be lump payments now will be 1/12 payments hereafter.  Sure, we’re sacrificing some things, but I get excited thinking about where these sacrifices will take us.  I’m excited, too, that Peter and I are finally on the same page with this!

Since we’re a family, we are approaching this as a family.  One of our line items is to pay our older daughter commission for doing chores.  She will get $1.00 per chore per week, paid in $1.00 bills.  She’ll have three envelopes – “Save,” “Spend” and “Give.”  One dollar will go into “give” and she can divide the other four dollars however she likes.  She’s ready to do chores and she’s totally excited about depositing her money into her accounts and earning “Rainbow Bucks” from the bank that she’ll be able to redeem for gift cards.  Talk about motivation!  She’ll be able to watch her money grow through the month, then watch her savings grow.

Follow along as I tell you about our saving journey.  I’m trying not to read ahead, but apparently we’ll learn how we can also pay our mortgage off quicker, so I’m greatly anticipating being 100% debt-free.