Wednesday, May 12, 2010

Living Like No One Else!

So, as I said this would be my next post. Don't worry, I have tons and tons of pics on my camera and I will get them uploaded and post some pics of my girlies next, I promise. I guess lately it's been too easy to get lost in my role as "Mom" and it just feels good to have an outlet where I can talk about the other things going on in my life besides my kiddos (about 2% of my life right now, but still). I just want to share something with you all because it is (hopefully) changing the way Tim and I live and grow financially, and it is already making a difference. I teared up last night looking at our "budget", and they weren't sad tears, what is going on? Well, let me tell you.

Alright, I will admit when my sis-in-law was gushing to me about the financial class they were taking and how excited they were I was like "Well, that sounds really cool and I hope it goes well." But in my mind I'm thinking "Yeah, we've read some books and gotten excited too, but how different can it be. We'll just see how long this lasts for you". What she was talking about is Dave Ramsey's Financial Peace University. Well, that was maybe a year and a half ago, and since then I kept hearing about this Dave Ramsey guy, and in the mean time we bought a house and seemed to loose complete track of our finances. So, when this same sis-in-law told me back at Thanksgiving that it was going well and if they stayed on track they would be out of debt by this summer, I said "Wow, really?" I knew that they, like us, had a good amount of debt to plow through because we are young and stupid. So finally in April I had her send us the CDs to listen to and decided to reign in our budget once more.

The Nerd

One of the first things Dave (yup, I feel comfortable calling him Dave after listening to him for 15 hours) talks about is the "nerd" and the "free spirit" in every relationship/marriage. In a nutshell, the nerd is typically the one to make the budget, and the free spirit is the one to break it = financial fights, which we all know SUCK. So, he talks about this, and makes you laugh out loud (I don't do this much to CD talkers...but he is FUNNY, worth the listen just because he is such a good speaker). I knew immediately that I was the NERD, because my laptop was full of about 5 budgets that I meticulously made, and then there is even one that shows how badly we blew the budget that month. I am still the Nerd, so I listened carefully, took the workbook my sis-in-law lent us (she is the free-spirit by the way and SHE recommends this program) and inputted the worksheets into Excel, and did all the other nerdy financial stuff I do, and then we started to work the program aka:
Dave's motto (at least one of them) is "If you live like no one else, later you can LIVE like no one else". This means a lot of things but I will write out the Baby Steps for you:
1) $1000 in an emergency fund
2) Pay off all debt except the house utilizing the debt snowball
3) 3-6 months expenses in savings
4) Invest 15% of your household income into Roth IRAs and pre-tax retirement plans
5) College funding
6) Pay off your home early
7) Build wealth and give!
And he spends 15 hours teaching you about ALL of this so obviously I'm not going into all of it, but I have decided to be very open with people about what we are doing so you know a) why we are living like we are broke and b) to share something I think is great because I am now very grateful that someone shared it with me.

Broke, not Poor

If you were to call Tim and I tomorrow and ask if we could go out to dinner we would likely say "We can't afford it" and while that is true, it is because we are broke, not poor. I thought this part of the CDs was great, because he says something along the lines of: Poor is a way of life, but Broke is something you pass through, you are there and recognize you don't want to be there forever. So yes, we are broke, but in the long run, it's a good thing. The nice thing about the "Budget" (actually its a Monthly Cash Flow Plan) is that it is COMPLETELY up to the people using it. There are areas for every luxury and IF YOU HAVE THE MONEY, you can spend it as you choose, simple as that. One of the keys is that several areas work on cash envelopes. That's right, I'm back to my childhood of paying cash instead of with the card, and if you listen to the program you'll understand why this works. I can tell you it works well, because it feels different going to the milk store with my milk envelope and paying, seeing what's left and knowing "that's it, that's all we have for the month for milk". The great thing is, so far we've done well with this, yes it takes some months of adjustment to figure out what you actually need each month when you've been doing it different for so long, but we are finding that we can live comfortably with this, it's not a huge sacrifice. We may be able to go out to dinner with you next month, because we have an envelope for that, there's just not a lot of money in it this month :-)

Gazelle Intensity

I will also be very forward and say that Dave is a Christian and his program incorporates this. There are MANY reasons I find this a great thing. First of all, I am a Christian person, and hearing him talk about scripture within this program reminds me that my Father wants me to succeed in life, but for the right reasons, and that the only way I will truly succeed is through Him. Here's a thought for those who may not care about the bible passages: Dave Ramsey is teaching this program much like I feel about teaching HypnoBirthing: Yes it is an income, and that helps me and my family, but I teach because I genuinely feel that people deserve to have this information to have a better birth (in my case, financial life in Dave's). I truly believe that because of his faith, Dave has the best of intentions for the people he teaches. He also doesn't sell financial or investment products, just information about these things, so he doesn't make anything more from you following his system...or not... He wants you to win, and for good reasons.

So WTH is the "Gazelle" about, well, Dave explains a biblical passage about debt, specifically getting out of it, and it's hilarious so you should listen to understand it completely. This is where Tim and I are though, Baby Step 2. (It's amazing how good Baby Step 1 felt BTW just to set that money aside and KNOW that we won't touch it except for an EMERGENCY...and no, a landscape project we want to do doesn't count). This is going to be a BIG baby step for us because tackling our debt was always one of those things we were meaning to do, and although we don't have a ton of credit card debt, or a huge car payment, we've just never gotten around to it, and then we have (and with my degrees and no income, I am the big contributor) and LARGE amount of student loan debt...then we went and had these kids (what were we thinking, lol) and here we are, under the weight of debt. So, with Gazelle intensity we are focusing on this step, snowballing our debt, and doing what we have to do, why? Because, you know what we can do when we don't have any debt? ANYTHING WE WANT!

This means we are putting EVERY extra penny towards the debt. I hear people say "You can't do that if you don't have any extra a month, and we've done the budget, we don't have extra" Well, believe me, when I sat down and made our monthly budget, we don't have magical extra, in fact I had to parcel out his "5 instead of 4" paycheck months and our income tax return money into 12 months worth of money and count it as income just to break even in each month. So, how do you do it? You LIVE LIKE NO ONE ELSE. For us this means I am baking cakes like a maniac this summer and continuing my HypnoBirthing classes (this will be extra money as soon as I pay for that cruise I booked before we started the program....yes it will be a very worthwhile experience, next time though I will plan for it differently.) Also, SELL SO MUCH STUFF THE KIDS THINK THEY ARE NEXT. Now, I know this is hard, I like my stuff too, but a lot of it we don't NEED, and when we are out of debt and can save up again, we can just buy more stuff, and you know what, it could even be nicer than the stuff we have now. So, we are selling bikes, snowboards, video game systems, baby stuff (soon), and whatever else. At first, we only came up with a couple things, but after you get over the idea of selling (for quite a bit less than you bought sometimes) something, it gets easier to look at other stuff that way. If you put that money towards a debt, and get just one paid off, that means now you have a little extra from that monthly payment, and that can go toward another debt along with every extra penny, and so on and so forth.

The Tortoise and the Hare

Dave talks about the story of the tortoise and the hare a few times, meaning "get rich quick doesn't work", but it's the tortoise that ALWAYS WINS. I will have to remember this as time goes on, because it is a slow process. I listened to the CDs and they gave me hope (and I never thought someone could make me feel so good about being broke), then we started the system and it is going fairly well and I have faith it will only get easier, and last night while looking at my spreadsheets I had this feeling well up in me. Before, when I would look at the budget sheets and compare to what was actually happening, I would feel butterflies in my stomach because inevitably we were spending too much. For the FIRST TIME last night I looked at our sheets and what we are doing and I felt warmth in my heart because IT IS WORKING, since just the middle of last month we have found over $400 to put towards debt, and this means we are close to paying off two small debts. Now, in the long run this is still at tortoise speed, but it is a big tortoise step in the right direction and I have hope, because if we are working this part of the system, we can work the rest, and someday we will LIVE LIKE NO ONE ELSE!


Kerry said...

We were able to attend a seminar with Dave Ramsey (an online friend that went to one gave us tickets to the one here last April! That is a great friend!) and we learned a lot...but I was feeling very overwhelmed with implementing. Mike kept after me and kept after me. In January this year we started our budget...started living like no one else...and last night I paid off another one of our little debts!!! It feels so free to know you worked hard (him for the paycheck, me in not overspending it!) to pay off what we owe. One more small debt, a loan, a car loan and our house and we are forever debt free!!!

Natalie said...

I am so glad that things are working. As I said on Sunday, you and I can take comfort in the fact that we are both living similarly. We can be proud of our brokeness! YAY for us! And yay for you paying off your debt and taking a chunk off of Step 2. Maybe it is a little chunk, but it is a chunk nonetheless.

Melis said...

Wow! So awesome! My hubby and I aren't using his program, but it's very clear he's the NERD and we're doing very VERY similar things in our lives right now... we had to take a pretty decent pay CUT to get out of the Navy for 2 years or so until we get back to where we were with Justin's Officer salary. We're cutting out EVERYTHING we can and we've been paying extra to my student loans each month and doing lots and lots of retirement saving and living simply and humbly. The cool thing is, we've even been able to budget for charity giving too. I'll have to check this out!