Week #3 FPU

Last night was the 3rd week of Financial Peace University (FPU).  GJS and I decided we'd use some of our baby savings to enjoy dinner before class, which is provided at church for a suggested donation of $5 per plate.  This was a small price to pay for a yummy meal that neither of us had to prepare or clean up after.  Not to mention we've been literally subsisting on beans and rice for several days while waiting to go grocery shopping for February.

FPU starts with the leader giving some announcements and then the larger group settles in to watch a video of Dave Ramsey do Dave Ramsey.  This week's lesson was on cash flow planning and using the envelope system. 

GJS is all about using cash for groceries so that we "feel" the money.  We have had a persistent problem of eating like princes at the beginning of the month and paupers by the end (hence the beans and rice diet this week).  I'm really not willing to give up the cash back we get from using our Chase credit card.  Some quarters we get back 5% on groceries.  At $600 per month, that adds up.  So we compromised.  We'll spend around $40 per week on our Door to Door Organics box (fresh produce and other grocery items delivered to your home once per week) and around $88 per week at the grocery store getting everything else.  Right after FPU we went to Meijer with our list in hand and came out with everything we wanted and spent right around $86.  Hopefully having a weekly goal will help us stay even on our eating all month.

The other exercise we focused on was creating a zero balance budget.  Again, GJS and I have been on this band wagon for a while now so we're already zeroing out each month, spending everything on paper before the month begins.  The new part was the form used for this purpose.  It was a list of all possible expenses and a place to put the cost of the item and a place for the new total once you subtract that expense from your total income.  I think it is a great tool for those who need to see how it all works by hand.  Mint.com isn't exactly like this but ultimately gets you to the same information.

Our homework for next week is to create our full budget using this form.  Considering we have so few items we're spending money on, I don't envision this being too tough.  The challenge lies in the columns for each pay period.  We'll have to show where, after each paycheck, the money goes before the next paycheck comes along.  It does make me think about the sinking funds we need to include for car repairs, clothes, hair cuts and the like.  For now we just take those as they come during the month but it would be nice to put a little each months to each one and have those dedicated dollars available when the need arises. 

Me and Dave

So that's me at Financial Peace University with my buddy Dave.  There were some technical difficulties with the DVD player or disc so we missed a chunk of the video - BUMMER, but what we did see was very engaging and seriously funny.  It was nice to have a laugh while hearing about such important stuff.  After the video portion we broke into small groups for discussion, unfortunately, since we missed the first week, we were late to our new table.  Our group is mostly couples, one single lady with two teenage sons and our facilitator, Cindy.  I liked Cindy immediately, but I felt a little out of place with the rest of the folks. 

We completed a little survey that helps determine if you're more of the "nerd" or the "free spirit" in the relationship.  I got 10 out of 10 for nerd while GJS got 9 free spirit and 1 nerd.  I was the only total nerd at the table.  We went over some discussion questions that mainly focused on getting the free spirits to recognize the value of budgeting and to get nerds to recognize the need for entertainment.

I'm hoping we'll get our materials before next week so I can catch up.  One of the nice things about this program is all the videos are available online and I have unlimited access to future Financial Peace University classes, so I can do a refresher anytime.  Our homework is for me to set up a budget.  Now we already have one on mint.com but we've usually given ourselves some wiggle room each month.  Dave requires every dollar to have a purpose on day one of the month.  So I will be putting on my thinking cap to properly allocate the $500 I expect we'll have unaccounted for when I get to work on the written budget.  More than likely I'll add in some budget line items for hair cuts and oil changes and shopping for things that come up.

Overall I'm a little underwhelmed with the small group aspect of Financial Peace but I'm a satisfied customer with the video portion and cannot wait for more!

Certified Financial Planner?

I’ve been really fired up about increasing my financial literacy ever since I finished Dave Ramsey’s The Total Money Makeover.  That was July 2011.  Heading into 2013, I’m slowly realizing that perhaps this is God’s plan for me.  My whole life I’ve been single minded about my career ambitions:  I just want to help people.  And I have in my current job.  But I want to do more, reach more people.  Almost everyone has to deal with money, budgets, debt and financial decisions at some point in their lives.  I think I could come along side some of those folks and lend a hand, share some knowledge and play cheerleader.

Last Saturday I was telling my Mom about this blog.  She encouraged me to try and find a way to pursue this further.  I explained that I would love to do what the host of We Owe What? does for a living.  We Owe What? is a television show on the Live Well Network (something I never heard of before I no longer subscribed to cable).  The host rescues a different family each episode by walking them through their budgets and finding flaws in their circumstance and gives suggestions for helpful changes.

I contacted We Owe What? via their facebook page and I got the following response:

We Owe What?

Hi Gina Mae! Thanks for the note. I think it is excellent that you are interested in financial education as a career. There are a lot of ways to get started. My route- through journalism- also included a Masters Degree in Business and a second Masters looking at women and money and I have also taken financial planning courses which were outside of my degree programs. This is my vocation in life so I intend to be a lifelong learner. That said- you don't need a Masters to get started. But I do recommend enrolling in a financial planning program. It really helps you see how all of the pieces of your financial life come together.
The best teachers I have had have been the people I have met on the job- from the folks struggling to get back on track to the businesses owners who came from nothing and made a fortune because of their hard work.
Let me know if you have other questions! Thanks for writing in!

So now I’m seriously thinking about following this advice.  I’m investigating the idea of becoming a certified financial planner.  It would open up a whole slew of opportunities for the future.  And maybe even provide me with a bump in salary that I could put towards our own financial goals.  Here’s hoping.

Budget 101

Now, if you’ve taken my advice and set up your mint account it will be child’s play to draft your first budget.  I recommend pulling out your last few months of debit card and credit card statements and averaging out how much you spent in each category monthly.  These categories include items like utilities, groceries, car insurance, cell phone, mortgage, car loan etc.  Hopefully once you have listed all your expenses it adds up to less than your income.  The amount left over should immediately go into a money market account to begin your $1000 emergency fund.  

I think a money market account is the best place to house your emergency fund because it grows your savings with a small interest rate and it is easily accessible.  My husband and I have our money market account through Sallie Mae.  We can withdraw funds up to six times per month and earn 1.05% interest on our balance.  It is also easy to transfer funds from our checking account to the money market account.  Why start your journey to debt free living with an emergency fund?

Murphy, the little devil that shows up to wreak havoc on your good intentions.  You’re paying off small debts left and right and then bam, your tire blows or your timing belt breaks or you have an unexpected mini disaster.  If you’re prepared with an emergency fund, you won’t have to rack up more debt on your credit card.  You’ll be able to escape the vicious cycle.  Murphy’s law:  If it can go wrong, it will go wrong.  But a $1000 will usually get you out of the worst of anything murphy brings your way.

 

Summary:  Step one, write out your budget plan somewhere you will see it frequently.  Step two, open a money market account and stock it with $1000 as quick as you can.  Step three, get to that debt snow ball.   

The master plan: Baby Steps

I read Dave Ramsey’s The Total Money Makeover twice during the summer of 2011.  I read it the second time because I loved it and wanted to soak up all the information I could before returning the book to the library.  See, I was already frugal not buying the book.

My artist husband made a visual aid of the seven baby steps that we have posted on our fridge.  We have built in mile stones on our debt snowball.  As we reach a mile stone we are rewarded with little gifts to ourselves.  Our next mile stone won’t be reached for a long long long time BUT I know it will feel great when we get there.

If you look closely, you’ll notice that our mortgage is listed in our debt snowball.  This is not the norm.  We have a ten year mortgage with a balloon payment due in September 2015.  The value of our condo is still way less than we owe so we cannot refinance and we cannot sell it.  So, we’re planning to pay it off before that September 2015 deadline.

It would be much more satisfying to pay off the student loans.  There are four student loans between two loan servicers and we could knock them off one at a time and build our snow ball the way it is meant to be done.  Instead, we tackle the behemoth mortgage.

Before my husband was laid off we were able to put an additional $1500 a month toward the mortgage.  Now, we’re putting our extra money into our emergency fund until we have $10,000.  This is just a precaution.  Hopefully my husband will secure a new job and we’ll go back to the old plan, transferring the emergency fund money to the mortgage in the process.  Until then, I get to pretend we’re on baby step 3.