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.

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.