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.

Dreams

I think a lot about the future.  And I am convinced that it is important to have goals.  Have them and also be intimately familiar with the plan that will get you to those goals.  My future includes a life without debt.  No student loan payment, no mortgage payment, paid for cars and plenty in savings.  This future will enable me to travel.  Extensively.  GJS and I want to travel annually and REALLY travel every five years.  Our 5 year anniversary is supposed to come with a 3 week trip to France.  5 years later we'll either go for an extended trip to Greece or New Zealand.  We talk about these dreams frequently.  They give me energy.  They give me hope.  But the dreaming doesn't make these trips a reality. 

As one of my favorite fictional characters put it, "It does not do to dwell on dreams and forget to live." ~Albus Dumbledore

 If I get too caught up in what I'll have when this debt struggle is over, I might not ever make it.  I may become discouraged, or complacent or simply make these goals an idol in my life.  I don't want to take this life for granted.  There is so much to enjoy now.  Things that don't cost a dime.  Hopefully, I can find the right balance between dreaming of the future and living in the present.

The race

A few days ago I shared a picture of our Baby Steps Plan.  I wanted to do one better and give you a quick snapshot of where we are in our plan.  I wish I could also give you our time table but that, alas, has gone out of the window since GJS (the husband) was laid off.  (We were on track to pay off the mortgage by December 2014 and the last student loan payment would have been sent in September 2015.  The emergency fund would have been fully stocked 5 months later.)

·         3-6 months emergency savings goal $10,000.  We are at $3,153.81.

·         We owe $57,342.37 on the mortgage.

·         We owe $4,208.16 on 1st student loan to AES.

·         We owe $13,058.24 on 2nd student loan to AES.

·         We owe $13,250.56 on 1^st student loan to Sallie Mae.

·         We owe $14,553.18 on 2^nd student loan to Sallie Mae.

Now, our focus is the emergency fund.  As soon as we have socked away $10,000 we can get back to debt elimination.  I think we should have about $7,000 or $8,000 to contribute to the emergency fund by the end of the month.  It is a lot to digest.  We were poorer when we got married than we’ll likely ever be again in our entire lives.  We’ve made progress.  This is a marathon, not a sprint.  We’re only around mile 3 or 4 and I predict it will only get harder from here.  But we will get there, one baby step at a time. 

The 1st of the month

I really love the first day of the month.  It is a fresh slate.  Anything that I screwed up in the budget last month is in the past.  Mint.com brings me to a new budget page and I get to input my monthly income, each budget category amount and hope for the best.  Things haven’t gone so smoothly the last few months for several reasons.  We had some unexpected travel expenses, a job loss and veterinary fees for our kitty, Cody.

The 1^st of the month is a great time to readjust the budget items to more properly reflect the reality of your situation.  When I first got married I assumed our budget would double.  I budgeted $200 per month for groceries when I was single.  We got married and I assumed we’d be fine with $400.  This never worked for us.  The budget went up to $500 after a couple of months of running over.  Then I realized that if we were going to eat mainly organic/free range/grass fed/non-GMO food, I would have to budget for that as well.  We’ve been rocking the $600 grocery budget for a few months now and I think we’ve finally found the sweet spot that works for our family.  We prioritize having a clean diet, so we eat out a lot less to pay for it.

This month we’ll be getting an influx of money from my husband’s last free-lance consulting job.  That will enable us to catch up on our savings that went awry in September and October.  I’m not beating myself up for not making my savings goal of $1500 the past 2 months because we didn’t screw up because we were selfish and frivolous with our spending.  We had legitimate unexpected expenses.  And we didn’t go into debt to handle them, we cash flowed our problems.  Our emergency fund is still intact and growing.  That’s a win in my book.

Sacrifice

The road to financial freedom is as challenging and painful as it is rewarding and life transforming.  Wimps need not apply.  If you are not willing to give up your old lifestyle, you will lose.  You cannot expect to keep doing the same things and get out of debt.  It doesn’t work that way.  Sacrifice is not a four letter word.  Don’t be afraid to deny yourself. 

When my husband and I started our hardcore commitment to getting out of debt we cut out a lot of non-necessities.  We ditched our basic cable and internet, we cut my husband’s data package on his phone (I never had one), we car pooled to work, we denied ourselves fun money ($100 each per month) and we said “no” a lot more to eating out, travel and entertainment.  So we eat more ramen noodles.  We see our friends and family less.  We are dependent on the library for movies and books. 

In exchange for the sacrifices we make, we know we’re going to be out of debt by the time we turn 35, mortgage included.  I will be able to stay home with our future children.  We will be able to make our travel dreams come true.  We’ll be able to be generous.  We’ll know our kids will have an adequate college fund and we’ll have fully funded retirement accounts.   With 5 years of sacrifice we’ll be set for the rest of our lives.  Seems like a small price to pay. 

But many cannot stand the thought of not having everything they want when they want it.  So they go into debt to have it and make poor decision to continue their behavior.  I know how this goes because I used to be there.  Start small.  Give up one luxury.  Learn to live with less.  Each step you take away from this old life brings you closer to the new life you are shaping, debt free.

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.