Get Your Finances in Order

Like many people at the start of the new year, I set my top 5 goals for the year.  Some were personal, others were with the family.  Some were narrow, some were broad.  Most had bullet points that I can use as a checklist.  You can read my entire blog post HERE.  

Goal #1: $$$$  Get your financial house in order  $$$

My first goal for 2014 of getting my financial house in order.  I had organized all the papers and done a 'month in review' budget for years, but decided that I needed a kick in the butt and accountability.  Enter Dave Ramsey.  I had come across his free podcast of his daily radio show that spoke of finances.  Dave has a very 'in your face' personality.  He tells it like it is... even if it's not what you want to hear.  And that's refreshing.  He had spoken about his method of getting out of debt and accumulating wealth.  It was different than the other information I had read about (mostly investing in real estate, that was out of my reach now, and in year's past).  He principals included a checklist - I LOVE CHECKLISTS! - that seemed like an easy road map to the goal I was trying to achieve.  

So, as a birthday gift to myself, I enrolled in his Financial Peace University that was being held at a nearby church.  Though I hadn't been a student in a class in a while, this was a bit of a commitment - 10 Saturday nights, plus homework - but I knew it was an investment in myself and my future!

Each week covers a particular area of this checklist, what Dave calls the 'Baby Steps'.  And the class has facilitators, but is actually a video presentation of Dave and his colleagues (so everyone essentially gets the same class).  It also had an online component, so if you missed class or wanted to recap the highlights, you could review the video at a later date at your convenience.  This worked out great when I missed class due to inclement weather!

The Baby Steps are no secret, Dave talks about them regularly on his radio show.  It's basically 'common sense' or what Grandma would have told you growing up!  They are as follows:

#1 $1000 Emergency Fund (available for EMERGENCIES)
#2 Pay off all debts (except the house)
#3 Fully Funded Emergency Fund (3-6 mo expenses in bank)
#4 15% into Retirement
#5 Kids' College
#6 Pay Off House Early
#7 Build Wealth and Give!

My journey began with Baby Step #1: $1000 Emergency Fund.  I have carried a 'savings account' that is linked to my checking, and always got nervous when it was below $1000, but never thought of it as something separate.  So a bit or reorganization, and that step is checked off the list.  It's there for EMERGENCIES, like the furnace breaks or you get a flat tire, not for a WANT.  That's something you plan for, in the BUDGET.
 So along with Baby Step #1, I also reorganized the budget and moved to an envelope system of money management.  The idea is to CASH FLOW your expenses, with cash, and not live on a Credit Card.  That was, and continues to be HARD!  But it's also changing behavior, and I certainly am a work in progress...

The budget changes month-to-month, and that's very different than how I had previously arranged my budget analysis.  Each month, you take your paycheck, before you get it, and tell you money where to go.  EVERY PENNY!  Of course, as a pseudo-perfectionist, doing this in pencil was a must, because it's a ZERO-BASED BUDGET.  No money is left over.  And I wasn't very good at that.  But once the basics were covered (Home, Utilities, Food, Transportation), and monies set aside for Sinking Funds (like auto insurance, home insurance, the dentist, Christmas/Vacation savings and those other bills that are planned, but not monthly), then the other bills (ie: DEBT, like credit cards) could be addressed.

So cross that one off the list!
#1 $1000 Emergency Fund (available for EMERGENCIES)

So on to the next step.  That's the step I'm on now, Baby Step #2: Pay off all debts (except the house).  It's taking care of all the debts I have (except the home mortgage).  This is daunting.  It was something that I was aware of, but since I used credit A LOT, and didn't pay down my balance, it was always there... never a zero balance.  And I didn't ever see one.  So now that the Envelope System is in place, the cards cut up (still working on this one... but most are and I'm not adding to them), and the budget has told every dollar where to go, what's remaining becomes the DEBT SNOWBALL.

The idea of the debt snowball list all debts and organize them from least to greatest balance.  Then, pay minimum balances on all your debts stack all extra money available (after that well organized budget) towards the lowest balance.  Once that debt is paid off, use that amount and put it towards the next lowest balance.  As the smaller debts are paid, the snowball gathers momentum and you FEEL like you are making progress towards tackling your debt.  And you are.  Slowly at first, but eventually, as the snowball gets bigger and bigger, the debt will literally melt away!  

So here is my debt.  YIPES!  $35,000 to start.  That's daunting.  And, sadly that doesn't include college loans, like most folks.  Those were actually the first that were paid off.  My debt is solely car and credit.  But the plan is in place, and I'm chipping away.  $4,200 paid off since February 1.  YAY!  

But the great thing, that I'm super proud of, is that I did purchase a used Truck and Plow in CASH!  A bit of planning, but that's the first major purchase since I started Financial Peace University.  It was due to savings as well as selling a ton of items with my friend Craig (Craigslist and Ebay are awesome for this).  Also hoping to add to the snowball this April with a Tag Sale.  Another thing is to change my tax witholdings to get more in my paycheck throughout the year, and a much smaller rebate next spring.  That extra cash will go towards the snowball, as well as funding sinking funds for budgeted expenses.


So the journey continues.  I hope to finish Baby Step #2 by the summer of 2016.  It's a big challenge, but with extra jobs, extra cash and lots of motivation (and some accountability here on the blog), I will tackle this!

Happy Budgeting!

 

New Year = New Goals

The new year brings us a chance to reflect and renew for the upcoming calendar year.

Fortunately, in my line of work, I am able to 'regroup' on several cycles (academic calendar at school, seasonal catalogs for my direct sales business, calendar year).  But a disadvantage to that is that I never quite feel like I get my feet under me to get the ball rolling.

 I may not be completely organized (or even partially organized) but with new gusto I will send my TOP 5 goals for the upcoming year.  Putting them here will, I hope, keep me accountable, and will also help me to check in on a regular basis (and reset if necessary, despite the calendar I'm currently on).

#1 Get my financial house in order:  With a monthly budget (and sticking to it! *note, the spreadsheet link has fictional numbers), attending Dave Ramsey's Financial Peace University this January, consolidating the debt with a home equity loan, and sticking to the envelope system, I have a big mountain to climb.  But I am determined and I hope that during the first 9 weeks of the year, I will be able to make great strides on this!  I consider this as a birthday present to myself - and a goal I'd like to make significant progress on in 2014.  The nerd in me is making some graphs and timelines and spreadsheets to wrap my brain around it, but I hope attending the class (with my beau) will also allow me not to complete this in isolation.  It's difficult to complete any task, let alone one that has a lot of emotional value, but I feel that this is my Number One priority this year, for the benefit of my family.  Getting expenses under control will also help focus on what the income needs are - especially on some of those 'fringe' jobs I have - and give me a goal on what those areas should bring in.

#2 Manage my time better: This one will be a tough one to actually benchmark.  It's a lofty goal, that will be able to be worked on in all the facets of my life.  I do have my favorite product (and comparable app for my phone) that I use frequently at school.  Read about it here on a previous blog HERE.  I shared the second one with a colleague at school, who worked with students who needed visual cues and lead time.  I also have found that I have been using my phone app more often - but not sharing it with the kids as often (for cleanup, reading, etc).  For the upcoming year, I'd like to be working more on an internal clock that this one, but also focus on a task at a time and give it my all.  If I am focused on a task, I can actually become quite OCD.  But if I have a long list (like cleaning or organizing my house) I notice that I can work for long periods of time, but it doesn't appear that I get much done, mostly because I flit from room to room and never quite get one section 'completed'.  I think I'll focus specifically on a 15-minute cleanup daily before I leave for work, cleaning off my desk each time I use it (both at home and at school), and working on school work for no more than 60 minutes at home.

#3 Focus on Family: Now that my kids are getting older, they are venturing out in their own interests.  As mom, I feel like it's partially my responsibility to remind them of the importance of family and family time.  Unfortunately, with some technical difficulties, one of our true family time events has been disrupted (watching movies together), but I hope to actually get that rectified today.  I also feel it's important for the kids to set (and strive towards) goals themselves, so we also are sitting down today to write down those goals and post them in their room.  Our goals are thematic:  academic, scouting, health/fitness/athletic, recreational/extra-curricular, and personal.  I'm curious as to what they decide as well as helping them create a timeline and smaller goals to reach the big picture.  Personally, I am setting aside one-on-one time each day with each kid and a 'date night' once a week. 

#4 Clutter Control: This tends to be part of issue with goal #2.  I have intention to clean an area, then it immediately seems overwhelmed by chaos (hence the title of this blog).  My two most recent chaos areas are the kitchen and the dining room/office.  I have been essentially 'banned' from the kitchen (no one likes my cooking, so I have relinquished that duty) but not it's clean up.  Some might say that I am giving up control, which is a HUGE step for me!   But some of the routine is just having a place for everything, and returning it when it's taken out.  So the control and the reminders may still be in place (putting items in the trash instead of leaving them on the counter, dishes in the dishwasher instead of in the sink).  The dining room is my undoing.  I have found that going vertical is helpful, as is stylish storage.  Because we use the same space as an office, a library, and a dining room, the table tends to be overrun with papers, books, and a serious catch-all for mostly MY stuff.  As I stated in Goal #2, a 15-minute clean before work as well as cleaning off the desk and table each night will be my benchmarks.  I should even rate myself weekly.  That would be motivation!  Of course, one thing I do need to remember to do is photograph the 'before' and the 'after' of my projects.  I would like to take one one 'minor project' each week (like a junk drawer, or a linen closet) and one 'major project' each week (like a child's bedroom or the basement family room).  I am reserving the garage for Spring Break.  That will certainly be a proud moment to post that 'after' picture! 

#5 Be Grateful: Though I saved this goal for last, it is certainly the most important.  I don't thank people enough.  I don't tell them how much I appreciate them enough.  I don't live in the moment enough.  And I think 2014, despite all my other goals, should center around an attitude of gratitude.  I will thank more people.  I will tell more people what they mean to me.  I will live in the moment more. 

Our close and extended family had a rocky 2013, from a health perspective, employment perspective, academic perspective, but the outlook is bright for the coming year.  We had many people support us and our endeavors last year, and this year, we are making effective progress towards that end. 

So cheers to you and your family!  Wishing you health, prosperity, and love in 2014!