Friday, August 10, 2012

Money Management, our beginning steps

Is it ironic that I'm in some pretty deep debt and yet writing a post about money management? Well maybe, but I've learned a lot from being in debt. Especially, when it seems easier to pull the towel over your eyes.

RULE #1 That heinous B word....No not that one!
Budget.
Unless you know what money is coming in and going out, then you'll never know how much to spend or save. And if you're spending more than you're bringing in, you'll never get out of debt.

For the past 3 months I've been saving every receipt and recording everything we purchase. I just use a simple excel spreadsheet and record how much our rent is, car insurance, average utilities, and any other fixed bills (I pay $100/month to the hospital for Monkey's Delivery). Every paycheck I take out half of those costs and send it to savings so we don't accidentally spend it. When we get Hubs' 2nd paycheck of the month, I add that lump back into the checking account. From there I've follow the 10% rule. I try to send 10% minimum to each medical bill to stay in good standing. But they don't accrue interest and don't report to credit so it seems silly to pay them off fast while paying 16%-17% interest on a credit card. Then I pull out $50/week for Hubs' fuel for work, $65 biweekly for my fuel, $70/week for Monkey's formula and $50/week for groceries.

For us, we don't use paper towels or napkins, we use cloth and rags. We do have paper towels but I haven't bought a pack in almost a year. They're for the occasional cat mess or traveling. We also cloth diaper. We do use some disposables but they've all been gifted to us, or I only buy them once in a while and save some money from something else to pay for them. I buy kids clothes on sale and again, a lot were gifted. Bear doesn't really need many clothes, he hasn't grown very much in the past year. Monkey on the other hand is growing like a weed. He's already in 3-6 month clothing at the 8.5 week mark. We'll have to buy him new clothes as he keeps growing. I try to buy them off season at a deep discount (think $0.99 for a onesie with an adorable appliqued airplane from Gymboree)

RULE #2 Cut back...way back.
Since having Monkey my fuel costs have plummeted. I'm so exhausted and taking the two kids out is impossible, so I don't go anywhere. We now have central air so we're trying to keep it set high in the daytime. We've also closed most of the vents on the first floor and turn it down lower at night. In the winter our heat is set to 64 and we wear warm clothes. We have bundled cell phones and my mom is on our plan too. We just changed our car insurance to Geico and cut our bill by about $40/month. And now that there are 2 kids, going out to dinner is not fun so eating in has saved us so much money (and headaches). And because we don't go anywhere, we don't really buy much outside of food.

 RULE #3 Acceptance.
In our materialistic consumer based society "I want" is always at the forefront of our minds. Newer cars, newer stuff, newer clothes, newer toys and clothes for the kids, the latest restaurant, cute cloth diapers (okay so maybe this only for the fluff obsessed), and the list could go on and on. Learn to look around and be happy with what you have. Our main car is 3 years old. It's small and fuel efficient. Sure it's a pain to squish everybody in, but seeing the 35.8mpg on our trip a few weeks ago was more than enough incentive. Monkey has minimal toys or clothes that are new because Bear's stuff is more than enough.

One thing that helps me is to calculate how long I'd have to save up to buy something. Think of the cost PRIOR to purchase. Sure, you buy the car and pay $200/month for 5 years. Well, this doesn't seem so bad, you're basically paying to use a car. But if you calculate the payment plus interest you pay about 1.5-2times more for it than the purchase price. However, if you had to save $200/month for 5 years to purchase that car you would probably choose a cheaper model or one with a few miles one it to save some money. Sure, I may want an Ipad, but $500 is a half of a thousand. Which is a huge percentage of our debt. And even once we're debt free, $500 is a half of a thousand, which is a huge percentage of a down payment on a new house.

RULE #4 Combine your faith and your finances.

Matthew 6:24 says "No one can serve two masters. Either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve both God and Money." When we're in debt we are serving a master that takes away from our faith in God. We cannot tithe because we're in debt payoff mode, we cannot give to others like we should. We need to commit to God first, family second, ourselves last. Nowhere in there is money.

RULE #5 Create shopping rules.
     Our #1 rule for any shopping is...NEVER go when hungry.
     Create a list and stick to it (but make sure there is always a family treat worked in so you don't    
     feel deprived).
     Choose a meal planning method that works for you.
     Don't impulse buy large purchases.
     Always research and get a few price quotes.
     Ask about price matching.
     And our last steadfast rule is "Before you buy always ask why" Why am I buying this? Why do    
     I feel I need it?

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