It has now been three months since we began living according to a budget, and we are astounded with God’s kindness and graciousness to us. In that time, thanks to God’s faithful provision to us, we have been able to retire almost half of our debt (not counting the mortgage on our home). What seemed (just three months ago) to be an insurmountable and crippling debt, now appears to be a manageable amount we could potentially pay off in less than a year. I am reminded of Paul’s prayer benediction in Ephesians 3:20-21:

We’re down to 51%!

Now to him who is able to do immeasurably more than all we ask or imagine, according to his power that is at work within us, to him be glory in the church and in Christ Jesus throughout all generations, for ever and ever! Amen.

We have never been grossly foolish with our money, as far as I can remember. We conceal no illicit gambling habit, have bought no big-ticket luxury items, and have not squandered our wealth in foolhardy, get-rich-quick investments. But the steady attrition of self indulgence and inattention has landed us in the unenviable position of owing a sizeable amount of money. Frankly, we were scared when we finally added it up and took stock of how much we owed.

These Boys of Summer aren’t scared …

Thanks to some of Kathy’s recent Dave Ramsey reading, and to the encouragement of many of our friends and relatives, we decided to make a few simple changes in our lives:

1. We figured out how much our monthly bills would be (on average) and set aside money to pay them each month. These include our mortgage, utility bills (there seem to be an unending barrage of these), auto insurance and similar, predictable expenses.
2. Kathy and I designed a budget to cover the remaining, more discretionary categories of spending, and (this is the important part) determined not to overspend in these areas. Such categories include groceries, household maintenance (light bulbs, shampoo, etc.), fuel, clothing (adult and child), homeschooling expenses, and (most precious of all) Tim and Kathy’s Individual Unaccountable Funds (money that we can spend individually without having to get our spouse’s buy-off). I spend a high proportion of my monthly allotment on gardening supplies and Slurpees (™), while Kathy prefers lattes and home decorating items. If, through inattention, we overspend in any area, Kathy and I contribute money from our personal funds to cover the overage.
3. After hours of study and intensive economic research, we came up with a wild plan: we stopped using credit to cover our overspending. Oh, we still use a credit card for online purchases, but when we do, I fire off a check from our online banking that same day to cover the full amount of the credit card purchase. Then when the billing cycle is complete, we read those magical words: No Payment Due. Sometimes I get a little carried away paying off Chase or Bank of America, and actually end up with a small credit on my credit card statement, which stands the whole system on its ear. Imagine, actually having credit on a credit card. What’s more, if you leave a balance on the card long enough, they have to send you a check. While I don’t advocate this as a crafty investment plan, it is sort of fun to get a check from a company whose mail you used to dread.
4. We’ve trimmed and squeezed our monthly budget so that we could make steady payments against our debt. When we get extra money (which seems to happen a lot, lately), we often do something crazy: we use it to reduce our debt. We know it is un-American, but we just can’t seem to help ourselves. As of this writing, we’ve reduced our debt to 51% of what it was, only three months ago. We owe our humble thanks for this to our Lord, Jesus Christ, who has helped us to pay this down so quickly.

As victorious as we feel, it hasn’t all been a bowl of cherries. It hurts not to be able to spend in a carefree fashion, and it takes time (mostly on Kathy’s part) to record each and every transaction, and to monitor the dwindling monthly funds in each category. Both of us have had to swallow some of our pride as we learn to live within our means.

We’re also conscious of how pathetic we must seem, to some of our friends and relatives who have faithfully stuck to a budget for decades. It is interesting to watch our children learn from our mistakes and rapidly adapt our new-found budgeting skills. I was talking with Joshua the other day about the principle of setting aside an emergency fund before saving for a discretionary purchase.

Not Joshua’s actual savings.

“How’d you decide how much you would establish as your emergency fund,” I asked him, wondering what he would consider an emergency.

“I decided to set aside the $160 I would need if there was a sudden youth group retreat that I wanted to attend,” he informed me. “That way I still could go, even if I hadn’t known in advance to save for it, or if all my other sources of income suddenly dried up.”

Rachel has been hinting about getting a cell phone for some time. I told her she could have one as soon as she could (a) buy the phone, and (b) pay me, up-front, two month’s reserve to cover the cost of her plan. Dave Ramsey talks about a ‘gazelle-like intensity’ in paying down debt – Rachel left all the gazelles milling around the starting gate in her rush to save enough money to get a phone.

“Hey,” says one gazelle to another. “What was that pink flash?”

Fortunately for Rachel, my employer (just this month!) increased the value of my cell phone perquisite so that the monthly fees for another cell line are quite reasonable.

“Here’s the money, Dad,” she informed me (rather smugly) a couple of days after I had set out the requirements. “I’ve saved up my babysitting money and I’m ready to buy a phone.” So much for that strategy to slow her down.

Rachel spent at least 10 hours playing with her phone before the account was even activated.

One interesting development is that our spending categories have begun to acquire personalities. Fuel, for example, is a burly, simple man who lives in the moment and doesn’t have to worry about the future. “Next month is Vehicle Maintenance’s problem,” he chuckles, confidently. Since I’ve started van-pooling to work, the end of the month holds no terror for him.

Groceries, on the other hand, is a thin, melancholy woman with low self-esteem, who wishes every month were February, (not on a leap year). “How can I possibly make it to the end of June when I’ve already spent two-thirds of my budget by the eighth day of the month?” she wails.

We talk about them as though they were people. “I don’t think Households wants to pay for that,” Kathy warns.

“How ’bout Kid’s Clothing then, he’s got lots of dough,” I fire back, while Kathy laughs maniacally. (Kid’s Clothing is a chronically under-funded waif with a starvation-swollen belly, who philosophically and somewhat apathetically takes whatever life throws his way.)

As much as it pinches to restrict my discretionary spending, it is fun to be able to spend without guilt. The other day I bought some gardening supplies out of Tim’s Unaccountable Fund, and I didn’t have to worry about justifying the expense to Kathy, or feeling bad about borrowing the money to pay for my hobby. Kathy and I also look forward to the day when we no longer must allocate 10% - 20% of our income to paying down our debt – I’m sure we can find something to do with that extra money every month — maybe we could buy some Teriyaki take-out for Kid’s Clothing.

Tim
Project 366, Day 183

Grab your toy and sit with me.

The children have been working hard saving their money, following in the footsteps of their New and Improved Financially Savvy parents. Rachel bought a cell phone (plus two months of service fees) with her savings. David decided he wanted a Tamagotchi. He saved and gathered his money and then set off for Target with Rachel as his buying assistant. He was so excited to join Daniel and Rachel in the Tamagotchi world.

A Tamagotchi today, tomorrow a car. He’s on his way.

Kathy

Here are a few websites/blogs I’ve discovered in my pursuit of frugal living. Okay, I wasn’t exactly pursuing frugal living when I found these. I was really avoiding working on June’s budget spread sheets and having to enter in the frightening amount of money we have managed to spend on groceries in only four days.

It sounds much better to say “pursuing frugal living” than “avoiding financial responsibility.” It’s all about the PR.

Carnival of Personal Finance #154

I never even knew there was one Carnival of Personal Finance, let along a hundred fifty-four of them. Silly me. If you have time, this site is definitely worth perusing. Many, many articles on topics ranging from credit card usage, online banking, financial simplicity, saving and investing.

Money Saving Methods

This mom of three shares ways she has found to save and/or make money that are simple and straightforward. Since she mentions a Starbucks offer on today’s post, I couldn’t resist including her. Carrie is compelling in her comments on using credit cards for the reward programs and she links to several cash back banking offers.

Frugal Hacks

Be careful with this site! You will get lost in all the amazing bloggy links. I finally had to close down the page because there were more fantastic frugal blogs than I had time to research. The host of Frugal Hacks is Kim, mom of 8 (soon to be 9) and writer of In a Shoe blog. Kim and four other bloggers manage the Frugal Hacks site.

I recommend grabbing a cup of coffee, your keyboard and a timer (because you’ll easily lose track of time if you’re not careful) and set out exploring. Share your favorite finance/frugal blog or website. These are just a very few that I’ve stumbled across.

Happy reading!
Kathy

Who SOLD $9 worth of homeschool materials at a used curriculum sale today and SPENT $15. Hmmm. Obviously still a “frugal living” work in progress.

We were enjoying Dave Ramsey’s Financial Peace University video series again this evening — he’s very watchable and informative. Dave was joking about the ’spreadsheet nerds’ versus the ‘free spirit’ types, and about how they each perceive the dreaded budget meeting time. Kathy seems to enjoy putting the spreadsheet together and nailing it all down, while I tend to be rather impatient with the constraint of actually recording what we spend and earn.

Rachel walked by when the Ramsey DVD was playing. “So, he’s sort of like a Money Comedian?” Actually, that’s a pretty good summary of Dave Ramsey’s lesson style — Rachel always has had a way with words.

Kathy saves us money by cutting our hair … this is the ‘before’ picture for her customers (Sarah just snuck in for a photo op).

We sat down to tally up and close out the budgetary expenses for the month of May, and I reminded her of Dave’s words: “Remember, Dave says we ‘free spirit’ types can only handle up to 17 minutes of this budget talk!”

Two hours later, we were ready to report:

• God is still faithful (I know some of you out there were worried).
• We managed to pay all our bills without resorting to credit cards.
• We were able to continue to put money aside for Christmas and a new roof.
• We were able to pay down our debt by another good chunk, thanks to several generous gifts from God.

It sure is nice to see that percentage drop!

There were some tense moments. We accidentally went over budget in a couple of areas (not paying close enough attention) and so Kathy and I steeled our hearts and paid for the over-budget amount from our own ‘unaccountable’ money (we each get $50/month for lattes and gardening supplies — you figure out whose is whose).

It is crazy, but this whole budgeting thing might just work. We’re down to 68% of the debt we owed at the beginning of April. Not bad for two months … thanks to God’s generous provision for us!

Tim

Life changes when you go On A Budget. There is both freedom and boundaries. I find it an interesting exercise. It’s difficult to say “no” but I’m extremely grateful that many times all I am saying no to is a shopping whim. We have money for necessities (and some splurges) and God is providing the means to continue paying off our debt.

These thoughts crossed my mind this week:

1. There’s no money left in the grocery budget so I’m NOT going to stop at the produce market on the way home, even though I’m all alone and could shop there without any kid distractions.
2. I’m almost out of toilet paper but I can’t afford a Costco run (there’s no money left in the households OR grocery budget). The smaller pack from the grocery store (on sale) will do fine.
3. Who’s paying for THAT unexpected little purchase?
4. I wonder if we could ride our bikes to the grocery store or walk and pull a wagon. Save money AND sneak in a workout - perfect!

Is Miriam offering to pay?

None of these are Momentous Thoughts that will save us hundreds of dollars in our budget. They are, however, little baby steps that reveal a gradual shift in my thinking. A move, I hope, away from “I want = I put on credit.” It’s difficult and I can definitely see why Dave Ramsey insists a truly effective Money Makeover must begin in the heart.

What Works for Me this month is using some of our tax stimulus refund to take advantage of our grocery store’s free money giveaway. Gift cards purchased at Albertsons are granted an additional 10%. A $300 gift card to Albertsons was credited to us as $330. A free $30 to a store we shop weekly. What a fantastic deal!

Here is a list of some other retailers participating in similar offers.

Anyone else using some of their tax money in this way?

Kathy - visit Shannon in Rocks in My Dryer for other Works for Me Wednesday posts.