You Need A Budget

YNAB. Pretty amazing stuff. If you have read my Month Ahead post, you already know that we save up the income from one month to pay the entire bills for the next month - IE, all the paychecks we receive in May go for our bills and spending during the month of June.

I've heard about YNAB on the TMMO boards for quite some time, but I thought I was doing everything just fine myself. Well, after reading about it, yet again, on the TMMO board, I decided to see what all the fuss was about. They have a 30 day free trial that you can sign up for. After that if you choose to purchase the software, it's $60. I've only had it 3 days and I'm already planning to budget that $60 to pay for it, because it's pretty fabulous.

What I like: you can download you bank transactions from your bank website and upload into YNAB. You can edit or delete transactions as necessary, and categorize those transactions so that you have a crystal clear picture of where your money is going each month. When you receive a deposit, paycheck, or whatever, you can indicate that it is money available to use this month, or next month. If you indicate next month, then that money is not calculated into your this month's budget - it's "babysat" to be used next month. Any money from your budget that you don't use this month will roll over to be available for the next month.

They also offer online teaching webinars that you can sign up for to learn more about how their service works. It's pretty fabulous. I cannot say enough good things about this - and I'm only 3 days in.

Please check it out. 30 day free trial. You do NOT have to enter payment info in to try it - you simply download and start using. At the end of your trial, your software quits working unless you finally pay for it. So you run no risk of them automatically taking your money if you forget to cancel at the end of your trial. If you're like me though, you won't want to cancel. 

Twenty Years? That's Just Not Good Enough

So as the things settle in with Jonny's new job, and we clean up the things we've had to let slide (car repairs, house essentials, etc) we've started looking at the UGLY reality of our student loan payoff. What we've discovered is this: by paying only the minimum due of just over $800 a month for all of our student loans, it would take us until February 2032 to pay the darn things off. TWENTY YEARS!!! I'll be 51! That's ridiculous. I've said this a million times in this blog: If you are a high school or college student who is reading this DON'T TAKE OUT STUDENT LOANS. Please! You can (and must) find a way to pay for school without them. Don't let the darn things follow you for the rest of your life. Please read my previous post which has some suggestions on things you can do to avoid taking out student loans while still attending college.

Luckily, we don't intend to only pay the minimum. In a few months when we get things cleaned up we will be able to pay $1200 a month towards the student loans, versus the $800. That extra 50% drops my timeline almost in half: The new payoff date would be July 2022.

But...that's still just not good enough. I really REALLY want to throw at least $2000 a month at this monster. Why? Because I want it GONE. It's not fun watching my money come in and money go out, and as Dave says, only the names are changed to protect the innocent. With a $2000 a month payment, our new payoff date would be... wait for it... September 2017. That's just over 5 years from now, and that's shortly before what will be our 10 year wedding anniversary. Debt freedom for a 10 year anniversary gift? Yes please.

So the question now is... what can we do to get another $800 a month? Well, realistically, we probably need another $1000 a month to account for taxes and tithing. I really need to get serious about applying to be an online professor...I'm just intimidated by the process and I haven't quite found all the tools I need in order to make sure I have the proper credentials to do so.

So anyway... I'm not sure what we're going to do to bring in that extra $1000 per month...but we know this is what is necessary if we want to meet out goal of having everything paid off in 5 years. I really wish I could deliver pizzas again, but it would be detrimental to my healthy eating lifestyle I'm trying to follow. Ugh. Hopefully I'll have an answer to this problem before too long.

Let me call the WAHHHH-mbulance.

http://www.usatoday.com/news/education/story/2012-05-13/student-debt-loan-rate/54921852/1


College education is not a right. It's a privilege. And guess what folks? With a little sacrifice, you too can have that privilege. It's called researching and applying for scholarships, or, gosh, being a great student/athlete, etc and being awarded scholarships or a free ride. What - you mean you aren't a genius? Well, even if you aren't a great student, you may qualify for voc-rehab (someone very close to me got his entire college paid for like this). Or your can serve your country and get your education paid for via the military or via teaching in low income areas.


From the article: "I look at the loans my daughter is taking out, and I've got to wonder what it's going to be like when my son, who is in eighth grade, gets there," said Tony Pollack, 55, of Detroit, .... "We can't help them out — they've got to shoulder all that cost and get so many debts."

This is a pitiful excuse. This guy has time to figure out a game plan to prevent his son from needing student loans. Again, great grades, scholarships, and military are some fabulous options. But if parents stick their head in the sand and ignore the situation, then sure, that kid may be up a creek without a paddle when it comes time for college. Such a negative attitude, assuming that the son will be forced to take on debt.


I have a crap ton of student loan debt because I was stupid. I was in the military. I could have used my education money wisely and not taken out ANY loans... but I was dumb. Ask me about it sometime, and I'll tell ya how. I'm not blaming anyone but myself... but guess what? I have a plan to get it paid off, and I have a plan to provide for my future kids. I think increasing student loan interest rates is a FABULOUS idea because I think it's a great way to reduce the national debt. No, not everyone "deserves" a college education. If you want it - you need to get off your butt and do what it takes to get it. Shut up about the sacrifice you have to make - whether it's serving in the military, teaching in a low income area, or paying high interest loans because you weren't  able to (for whatever pitiful reason) get scholarships or work your way through school to pay for it. Living in America doesn't mean everything should be handed to you on a silver platter. Such a shame that so many people thinks that's exactly what it means though.

Peace...

It's finally happened. After 3 1/2 long years, Jonny has been offered a full time, salaried, with benefits job. A REAL job - not like that title pawn crap place that treated him wrong back in January when he wouldn't compromise his integrity to do something they asked that was wrong. He's going to be working as an accountant for a law firm. YEAH! This is perfect. Thank you, Jesus. He starts the new job on Monday, May 7th. Funny thing, when I graduated 5 years ago, I started my new job at the Credit Union on Monday May 7th. Crazy coincidence :)

I am THANKFUL that we have been forced to cut our lifestyle down to bare basics. We've cut it down just about as far as we could go. We cut cable. We cut cell phone costs. We are mindful of our electricity and water usage. We've cut our food budget by stretching our meat and frozen veggies, and we buy organic milk, which even though it's more expensive, it lasts longer and doesn't sour as quickly as traditional milk. Therefore, we're not buying as much, so the money we spend is actually lasting us a longer period of time. Not only that, I don't seem to be lactose intolerant with it, which I thought I was with regular milk. We joined a local food-co-op. Paid approximately $15 a week to get a weeks worth of fresh, locally grown vegetables. It was an upfront expense, so that's $15 a week that we don't have to pay in the mean time. There are several other things on our budget that if things had gotten much worse, we probably could have cut them too. One example is the $17 per month trash service... we could have started taking the garbage to the dump ourselves, but that $17 convenience fee sure is worth it.

At any rate, we cut and cut and cut our budget some more, so that now that he has this new job, it's a HUGE blessing to make progress on things that we've "needed" to do, but have had to let slide recently. I posted on FB recently that I was going to be coming after the student loans with a vengeance as soon as I cleaned some stuff up. I'm not quite sure when that is actually going to happen, though. In the short term, we've got to rebuild our emergency fund, and sinking fund accounts, which takes care of our yearly or semi annual bills, such as car tags, life insurance and stuff like that. We also have some trees that need to be cut down in our back yard. We haven't been able to do that yet. The quote is only $750.... but that's $750 we haven't had. Hopefully we'll be able to get those monsters taken down by the end of May now :D I also have some medical bills to take care of too. We also want to save up some money for some things we want to do this summer.... go to a Nascar race, maybe a concert, etc. Our 5 year anniversary is this October, and we'll be going to the beach with our church family as we do every year. It just happens to fall on that weekend. I think we're planning on going down a couple of days early to make a vacation out of it.

So yeah, now that this has happened, we can dream again. Not go crazy, but we can actually budget a little more entertainment money than we had been so that we don't go absolutely stir crazy. I'm actually excited that we're going to be giving a larger tithe to the church! Tithing is something that's been especially important to me.

I worked on a generic budget with our new income, and I'm at a point now where we have a surplus amount that I'm not quite sure what to do with it yet. Part of me thinks "Throw it at the student loans!" since that's the ultimate goal anyway - get those suckers knocked out. But another part of me thinks I need to set a little more aside in our emergency fund and sinking funds account, to create a little bigger of a cushion. Technically, per Dave Ramsey's baby steps, we are still on Baby Step 2 - Pay off all debt. Baby Step 3 is a fully funded emergency fund. However, in his teachings, he does also give you the wiggle room to bump up your emergency a little bit if you are going to be in Baby Step 2 for a long time... which we are. It's been 3 years, and we still have a mountain of student loans. Even with his income, I anticipate we're going to be here at least for 4-5 more years, if not longer. I'm hoping we can do it in 5 years, with anticipated increases in salaries, yard sales, and maybe even a part time income on the side for me. I'm currently trying to find an online teaching position that I can use my MBA for.

Well... and the truth of the matter is, while writing this, I just remembered that we desperately need to start a "Car Replacement" sinking fund... badly. My car is 9 years old. It has 150K miles on it. It's still running well, though it needs a little more TLC these days. It's due for a major service, which we were not able to afford when I had the oil changed yesterday. I need Jonny to bring in a few paychecks before we can do that service. It's got a few quirks about it, and hopefully we'll be pregnant before too much longer. When that happens, I'm going to be in the market for an SUV. I will NOT be able to fit into my car once I get pregnant. Those of you who don't know, I have a 2003 Toyota Celica. It's a small little sports car, and it sits so low to the ground that my mom jokes about dragging her butt on the ground whenever she rides in the car with me. So yeah.... when I get pregnant, it's not going to be easy to get in and out of. Worst case scenario, Jonny and I will be able to switch cars (he has a Corolla, which is a 4 door, and sits higher off the ground than mine does) until we're able to afford another car. But the fact still remains, it's time to get another car, and we REFUSE to make payments. NEVER EVER AGAIN will I pay payments just to have a metal box with wheels. No thank you. So yeah... I think I just answered my own question. Those surplus funds will become the car replacement fund. When we're able to save up about 3-4K, we'll be able to trade my car for probably only 2-3K, and get a decent running early 2000 model SUV. We'll continue to save and upgrade again within a year, just like Dave's Free Cars for Life video illustrates.

Man.... it's good to be able to dream again!!! We cut our expenses so much, that this blessing gives us wiggle room to take care of things, without increasing our lifestyle. Our goal is not to go out an party, and eat out, and buy expensive new phones, or go on vacations every month with the extra money we're going to have. Our goal is to be responsible.... save up to replace the cars so we don't have to get a loan on a new one, throw a little extra money at the student loans when we get the emergency fund where we need it to keep Murphy away, clean up some medical bills, gets some trees removed, do some inexpensive work to the house that we've had to put off.... etc etc.

Thank you Jesus, for these blessings. THANK YOU for allowing us how to struggle, so that with this blessing we can be responsible with it.

2 years, 5 months and 7 days later....

We paid the car off on Friday, 7/29/11. I don't think it's quite sunk in yet. This was a HUGE milestone for us, as it's now one less thing for us to have to worry about. We've had a couple of Negative Nellys who were trying to discourage us, but as Dave says, if we're being made fun of, then we're doing something right.

However, with this accomplishment, we reach a "hurry up and wait" point. Jonny's school plans for his CPA test prep have changed once more...hopefully for the final time this time. The latest plan is that he's going to take his final 4 classes this Fall to meet the 150 credit hours he needed to get his CPA license. Originally he was going to wait until Spring to take those classes, due to a particular elective being offered. He was able to get into another class in its place for the Fall. So now the new plan is that in the Spring he'll begin taking the 4 parts of the CPA exam.

He's taking classes at night, so he'll have the availability to take on a full time regular working hours job, IF he can find one. He still hasn't been able to find anything more permanent. We are fairly certain though, that his current employer will keep him through December, but once he's done with Fall classes, if he hasn't gotten something else lined up, then he's not going to have an income anymore. This is a worst case scenario that I really REALLY hope doesn't happen. Since is is a possibility, though, this means we HAVE to temporarily halt the baby steps and build up as much cash as possible. We are entering Storm Clouds mode. Why? Because my income alone is not enough to cover our regular expenses plus student loan payments. If we didn't have the student loans, my income would cover our basic living expenses. But because off the student loans, we don't have the luxury of being a 1 income only family.

So....for the next 5 months, we're going to follow our written budget, pay the minimums on the student loans, and anything extra at the end that would "normally" be applied as a snowball payment to the student loan, is going to be put into our emergency fund. This will cover us so that if we have a few months of him being unemployed, we'll still have a way to pay the bills. I pray though, that he'll find a full time job soon, and we can resume working the baby steps.

Until next time....

Washington makes me sick.

"Republicans are insisting they will note vote to raise the debt limit without major spending cuts; Democrats are refusing to sign off on cuts of such magnitude without at least some tax increases as well. Republicans say they won't sign off on any tax hikes at all, including those Obama wants targeting the wealthiest Americans or closing loopholes to corporations."

http://www.msnbc.msn.com/id/43645224/ns/politics-capitol_hill/t/obama-warns-against-short-term-debt-deal/

Washington really needs to go through FPU. If you don't have the money, you cannot spend it! Raising taxes on Americans should not be the equivalent of asking for a credit limit increase. Washington needs to make a prioritized budget, and if the program falls below the line of where the money runs out, then that program doesn't get funded. If you need more money to fund more programs, you need to find the individual equivalent of finding a part time job! Hiking taxes on Americans is not the part time job income generator.

Good job, Democrats, you refuse to grow up and realize that you cannot stretch the dollar any further than it will actually go. If you cannot afford it, you cannot buy it. Quit throwing a temper-tantrum and demanding a "raise" (read: increased debt ceiling) just so you can continue to give deadbeats a frikkin handout.

Republicans, you aren't much better. Have you no backbone? "Oh, well, if cuts are agreed upon by the dems, then we'll vote to increase the debt limit." Um, no....no increased debt limit is needed. If cuts are made, then no increase will be necessary. SIMPLE CUTS are needed to balance the budget. Period. No tax increase, no increased debt.


Dumb politicians.

Only 4 Digits....EXCITING!

$9,984.46. That's the amount that is left to pay on Jonny's car. The consolidation loan at $320 a month has been paid in FULL!

If we continued to pay only the minimum payment on the car, it would be December 2013 before it got paid off. This is completely unacceptable, and we are going to snowball this amount by as much as we can. Christmas doesn't look like it's going to happen....so our modified new goal is February 22,2011 - our 2 year FPU-aversary.

I'm not going to lie - that is going to be HARD to do...because of the house situation, our sinking funds account got raided, and some of those bills are going to be due before too much longer. I actually need to reconfigure our sinking funds accounts, but I just haven't been able to do that just yet.

I'm still not quite certain on our new monthly budget with the new house, and utility expenses, but here's a best guess so far:


--------Charity--------
Church                             330
AXiD                               10
--------Housing--------
Mortgage/Tax/Ins                   613.76
--------Utilities--------
ADT Security                       28.99
AT&T Land Phone                    35
Water                              50
Trash Collection                   16.95
Cooks Pest Control                 37
Alabama Power                      175
Cable TV/Internet                  85
Sprint Cell Phone                  143
--------Food--------
Food & Household                   400
--------Transportation--------
Gas & Oil                          350
--------Personal--------
A Blow                             200
J Blow                             200
--------Debts--------
Car                                276.11

Disclaimer: The totals do not list our entire monthly income, and this budget is not $0 based....I still have extra to spend, but if I don't find somewhere else that I need it, it will be snowballed to the car. I've also left out paycheck allotments to our savings account and sinking fund accounts which fund our life insurance, car insurance and tags, and home repair expenses.

We're more than 3/4 done!!!! Only 4 digits left in our non student loan/mortgage debt. Jonny's working hard to find a full time, or a better part time job/internship with a CPA firm this fall. Please keep him in your prayers. His military benefits income will go away once he graduates, and so we'll need to be able to replace that income with a job in order to start paying on the student loans at that time.... I'm slightly stressed about repaying the student loans, but not as bad as I would be if I still had all this other consumer debt...so for that, I'm grateful.

When it rains....

...it pours.

 In one swift kick, $2000 I had saved up for the trip to New York next Spring, and AXiD Convention next Summer has been wiped out.

Columbus State didn't disburse Jonny's financial aid this year as he requested them to, and he had no way of knowing that it had been over disbursed for Fall and Spring. Instead of splitting it in 3 installments for Fall, Spring and Summer, they disbursed it in 2 installments for Fall and Spring....So guess who had to come up with $2000 fast, to pay for summer tuition?

The good news is, we had it, and we didn't have to pull out a credit card to go do it, or apply for a personal loan to cover it. It didn't kill us...but that was by far, the biggest chunk of our actual savings that we had at this point, due to the fact that in Baby Step 2, you aren't really "supposed" to save. I guess it's a darn good thing I had been saving that money though, because without it, our alternatives for paying for his summer session didn't look too good.

I'm not worried, I'll build it back up in no time.

Of course, Buster is being a pain in the ass again. Jonny's gotta take him to the vet tomorrow. He's licking at his right back paw - you know, the only back paw he still has. In one week, ONE WEEK, he's licked up a dime size spot on it. Last time, we ignored it because we thought it was like the one he had on his front paw a few months after we got him that ended up being nothing, but after the snowball problem with the cancer that it ended up being, we're taking him in ASAP this time. Hopefully, they can stick with with cortisone to make it stop itching, or they can remove the spot before it progresses any further. I'm so tired and frustrated. I love my Buster, but good grief this is alot to deal with.

Which just goes to prove that I am nowhere near ready to have a baby, even though ever since Baby Kallie was born (yes, Anna, I blame you, for letting me hold her when she wasn't even 2 full days old yet), my clock has been screeching at me like a wild banshee. Financially, emotionally, and physically, I cannot do a thing about it right now. So I'll just continue to wait. And wait, and wait.

Jonny and I are reconsidering looking at houses. I'm not sure if it fails under the "we're getting impatient" mentality, or if we just feel like it's finally the right time. I think the market is proving that there are alot of potential homes out there for us that I could easily afford on my income alone, and Jonny's full time status not be an issue. Even still, we don't want to jump the gun. If you know a good real estate agent in the area, please let me know. I don't want some random person who is going to rake us over the coals, or someone who is going to force us to buy right away. I want someone who will let us do this at the pace we set, and show us good deals in the price range we provide, with as many of our wish list items as possible.

Good news for the week: I made a 100% on my first marketing assignment. Woo Hoo! Hopefully I can keep my grades up this term. This two class thing is already stressing me out.

The Month-Ahead Plan

I am sick of my cash flow problem. The money is budgetted appropriately each month, but the fact of the matter is that with only 1 steady income, the money is not there as quickly as we need it to get through the month. As a result of this, during the first half of the month, I am ashamed to say that we have "borrowed" from the emergency fund, to have cash for expenses such as food and gas, and then paid back that which we borrowed when the paycheck for the second half of the month comes in.

This is dangerous, and I'm sick of having to do it. What is going to happen if we do have a Major Murphy visit after rent has been paid, but before Paycheck #2 comes in for the month? DISASTER!

I've been reading on the MTMMO forums that many people operate under the "Month-Ahead Plan." Basically the idea is that you build up one month's worth of income and you have that money sitting in your account, and then, on the first of the month, you already have every bit of money you need to pay your entire expenses for the upcoming month. You could essentially pay your entire month bills on the first, and pull out the cash you need for the month on the first. By doing this method, it wont matter when your paychecks for the current month come in, because you'll be paying THIS month's bills with LAST month's income.

So for example, if my usual monthly income is $4000, then I need to build up a reserve of $4000 in my account before the first paycheck of the month even comes in. Then on the 1st of the month, I can pay all my bills for the upcoming month, and withdraw cash for my cash envelopes - gas, food, and blow money. For safety's sake, I would probably actually only pull out enough cash for each envelope to get me through 1 week at a time, so that I wouldnt accidentally spend my entire month's grocery budget in the first week, etc.

It's going to be very very hard to look at my checking account and see a large available balance of $4000 or so from month to month, and not throw it to my debt snowball, but I think that this is the best way to take control over the cash flow issue. I need to start paying THIS month's bills with last month's income, rather than struggling to make this month's income work for this month's bills.

The plan to put this into place is to back off the debt snowball for a month or two and resort to paying only the minimum balance due on my consolidation loan, and car loan. I have some money, approximately $2000, coming in from the Post 9/11 GIBill within the next several weeks, and Jonny is still bringing in some money from his job at the tax office. If I have calculated everything correctly, I should be able to be on the month ahead plan starting June 1st, which is only 11 weeks away.

There are many more plus sides to getting a month ahead. I can stop relying on each bi-weekly paycheck and I can set up more allotments through work, to where certain funds go into particular savings accounts already, rather than into my checking account and manually transferring the money when it's time to put it in. My $300 a month Sinking Funds could become a $150 per paycheck allotment that would automatically go into my sinking funds account. Instead of having to wait until the second half of the month to pay the church my monthly tithe, I could pay the entire tithe at the beginning of the month. I could even FINALLY set all my regular bills up on AUTOPAY, rather than insisting that I pay them on a specific day of each month, because I know it's a day that the money is available. <--I'm a little iffy on that one, I'm afraid I would become sloppy, and not double check the bills to make sure they are right and that I'm not being overcharged.

At any rate....I've been digging my heels in about this one, but as I tried to come up wth my cash flow plan for April and May, I was thoroughly depressed to learn that, once again, I would be forced to borrow from the emergency fund in order to have the basics covered: food and gas. Bummer. I guess it's time to put my big girl panties on and just DO IT.

What are Sinking Funds?

Sinking Funds are defined by Frugal Dad as follows:  "In the personal finance world we can use sinking funds to help prepare for large, infrequent expenses that come along throughout the year. A prime example of such an expense is car insurance. Many insurers allow customers to pay monthly premiums for a convenience fee (my company charges $4.00 per monthly payment). I can easily save $24 by rejecting the monthly payment arrangement and agreeing to pay once every six month, when the auto insurance policy renews. But this means I have to come up with a hefty sum of money twice a year to cover the premium. This is where sinking funds can help."

Dave has a great form for such Lump Sum Payment Planning that works beautifully. The idea behind it is that you list your pricier infrequent expenses (you know, those things that you only have to buy every so often - usually only once or twice a year) and rather than having to come up with a large chunk of change when it's due, or paying a convenience fee to give the company the honor of setting you up on an installment plan, you save the money in your own savings account in the months leading up to when that bill is due, and pay it in full, with cash.

Our current sinking funds are $300 a month, for a total of $3600 over the course of the year. This includes auto insurance, renters insurance, car tag/taxes and fees, car maintenance (tires, oil changes, other services), and life insurance. Here are our yearly expenses on these items:
Car Insurance: $1300
Amanda Life Insurance: $350
Jonny Life Insurance: $450
Car Tax/Tags: $300
Renters Insurance: $350
Car Service/Repairs: $850
Total: $3600.

We actually had our car service and repairs a little less (only $700) when we initially started working on this, but when we divided the total amount out by 12 and our monthly savings were to be $287.50, we decided to round it up to $300. This way, if something happens and it's a little more expensive, we've got a little more wiggle room in there.

If you're first starting out, and trying to get your sinking funds caught up so that you can go forward with the correct monthly amount, you'll need to figure out how many months you have until that expense is due, and how many months portion you are behind on that item. Lets look at our example again, from a monthly standpoint, and taking into consideration when our due dates are:

Car Insurance: $1300/12 = 108.33 per month, Due in May and November ($650 every 6 months)

Amanda Life Insurance: $350/12 = 29.17 per month, Due in January

Jonny Life Insurance: $450/12 = 37.50 per month, Due in November

Car Tax/Tags: $300/12 = 25.00 per month, Due in December

Renters Insurance: $350/12 = 29.17 per month, Due in October

Car Service/Repairs: $850/12 = 70.83 per month, Varies.

Total: $3600.

To clarify, I have a separate savings account that I dump the entire $300 per month into, and I keep track on an excel spreadsheet how much belongs in what category.

For illustration purposes, let's pretend that I just got my tax return back, and rather than putting that amount towards our debt snowball, I wanted to get current on my sinking funds before putting any remaining amount towards debt. This way, starting next month, I'll just need to add the budgeted $300 to the sinking funds savings account. How much money would I need to put into the SF account to bring me up to speed?

Car Insurance is due in May. There is only 1 more month between right now and May, so to get caught up, I need 5 installments of the car insurance. $108.33 * 5 = $541.65

Amanda Life Insurance is due in January. I have 9 months between now and January, therefore, I need to pay 3 installments: $29.17 * 3 = $87.51

Jonny Life Insurance is due in November. I have 7 months between now and November, therefore, I need 5 installments: $37.50 * 5 = $187.50

Car Tax/Tags are due in December. I need 4 installments: $25.00 * 4 = $100.00

Renters Insurance is due in October. I need 6 installments: $29.17 * 6 = $175.02

Car Service/Repairs due dates vary. You can start with the current month and only add $70.83, or keep in on a calendar year basis. I'm going to assume this is a calendar year  thing, and save up from January through December. Therefore, I will save 3 installments now, which will catch up January, February and March, for a total of $70.83 * 3 = $212.49

Now, I'll add all these installments up: $541.65 + $87.51 + $187.50 + $100.00 + $175.02 + $212.49 = $1304.17 needed in my savings account for the month of March. In April, I will add $300 to it. In May, I will add another $300 to it, but I will also pull $650 from it, to pay my semi annual Car Insurance. In May, I'll add another $300, etc etc etc. Car service money will be pulled from it as needed, but make sure you don't spend more than you've currently built up for the year for car repairs. If you need more than you've built up, you'll need to budget to pay it back in future monthly installments.

Here's a list of other Sinking Fund expenses you may need to consider budgeting for:

Real Estate Taxes
Homeowners Insurance
Home Repairs
Replace Furniture
Medical Bills
Health Insurance
Life Insurance
Disability Insurance
Car Insurance
Car Repair/Tags
Replace Car (You should watch this video! As for the skeptic comments by users - just remember that the stock market AVERAGE is 12%. No, it's not 12% right now, but over a period of time, thats the average. Don't over-think the concept because of technicalities, or you'll end up just being another boring NORMAL person. Be WEIRD!)
Clothing
Tuition
Bank Note
IRS (Self-Employed)
Vacation
Gifts (inc. Christmas)
Other 

*If you're reading this on Facebook, please go to http://proverbs227.blogspot.com/ to read the original post for links to videos and other websites.

1 year later....a reflection,

February 22, 2009 we took the first step to taking control of our finances. We started off with 6 credit cards, 2 Car loans, and a consolidation loan, over $42,000 in debt, and a whole messload of bad habits. Here is a reflection of things we've changed as a result:

• In the past year, we paid off 6 credit cards, and a car. All we have left is the consolidation loan, and the second car. Total debt paid: $22,290.06
• We no longer use credit cards.
• We have a written budget... and we actually stick to it. If it's not budgetted, we dont buy it, unless it's an emergency....
• ...which brings me to my next point. We have an emergency fund. Luckily, we haven't had to use it except for a couple of vet related expenses. Once we use it, we halt the debt snowball until the emergency fund has been replenished, and we continue with the snowball.
• I don't go shopping out of boredom or "I Wants" anymore. If I find something I want, I save up blow money if I can justify having it. Many times, I do without. Sometimes Jonny has to tell me that my want is actually a NEED...such as clothing....when you go 6 months without buying clothes, it becomes a need to add a few new pieces to the wardrobe. However, I used to buy clothes ALL the time, and I knew this was a weakness for me. Therefore, I still try to avoid clothing stores while I'm still in this pursuit to get out of debt.
• Because of our written budget, we do not eat out to the tune of over $800 a month in FOOD. Good grief I was depressed when I first realized how much money we were wasting by eating out. Our eating out and grocery budget is now less than half that (due in part to coupons).
• I've become a better cook, and I brownbag more lunches for work, rather than swinging by the drive through.
• We saved up, and paid for a trip to California right after Christmas (to see family) entirely in cash. Flight, rental car, hotel, food, and activities while we were there, etc. The trip did not follow us home in the form of a credit card bill. Woo!
• We pay for things like auto, life and renters insurance in cash now. Rather than swiping a credit card when the bill comes due, I save up an appropriate amount every month in a savings account deemed as sinking funds for these expenses, and then when the bill comes in, I transfer the money and pay it off, rather than charging it.
• As far as entertainment goes - we've gotten creative. Date nights at home with a good movie and dinner, or movies nights at the dollar theater. Camping at the local state park is CHEAP for a weekend. As soon as tax season is over and I have my husband back, we'll be going camping this spring. Yay!

Goals for the upcoming year:

• To better manage our budget by using cash envelopes for our non-bill related expenses. Now that all the credit cards are paid off, our monthly cash flow with regards to the paychecks are going to be easier to manage because. 
• Find more snowflakes (unexpected income, or "found" money) that can be applied to the debt snowball.
• Pay off Consolidation and Car Loans by Christmas.

Hope you all have a great week!

Big News, More Couponing, and updated budget

Fabulous news! As most of you already know, we paid off the last 2 credit cards, and for the first time in over 10 years, we have NO credit card debt whatsoever! All that we have left is a consoliddation loan, and to pay off Jonny's car. We feel very confident that we will be able to do this by Christmas, and will be able to spend Spring building up our fully funded emergency fund, as well as a down payment on a house. Our goal is to be house hunting by Summer 2011! WEEE!

We've also cut our food and household budget because of the use of coupons and looking for savings. I looked back at my post from about a month ago, when I said I had spent $89, and just shook my head. These days, my shopping trips are more in the $40 range, and I have become successful at "flipping" my bill. I dont go shopping for what I need that week anymore. I go shopping for things that we use, but are also on sale. I stock up on non-perishable items. For example: Hamburger Helper. Normally $2.00 a box, today, they were 10 for $10 ($1 each) and I had three $0.75 off 3 coupons. So I bought 9 boxes for $9.00 - $2.25 = $6.75. 9 boxes at normal price of $2.00 each would have been $18.

I don't buy things just because I have coupons or just because they are on sale though. I buy things that we use, but the key to couponing is definitely to not be brand loyal. I have stocked up on laundry detergent, toilet paper, paper towels, and personal toiletries in the last month and have spent just a little bit of money doing so. They are all different brands, depending on what was on sale when. I have a good 6 months of toletries and laundry supplies stocked up right now.

I also buy more "treats" now, because I can. Jonny and I LOVE brownies....we dont make them all the time, but I'd rather buy them when they are cheap, rather than when I'm having a hankering for some, and end up paying $3 or $4 a box for the "good stuff." Today, the Betty Crocker Hersey Brownies were B1G1, and I had a $0.75 coupon off 2. Price came out to $1.02 per box. So, in short, todays trip to Winn Dixie prior to them swiping my loyalty card was $83.33. After swiping the loyalty card, and applying coupons, it dropped all the way to $37.80.

I look at grocery shopping completely differently now. If it's not on sale, if I don't have a coupon, and it's not something I can't live without for the next week, the I don't buy it. Such a different approach to grocery shopping than I used to have...

I'm still trying to find a cheaper way to buy Gillette Fusion Blades, which is one thing we ARE brand loyal to. Jonny and I both use these, and currently, we buy a pack of 16 at Sams club for $42, which comes out to $2.63 a blade. I've been looking at target, walmart, cvs, publix, winn dixie, etc, for a better price, but even with a $3 off coupon (cant use coupons at Sams), the cheapest I have found at those places are $3.00 a blade. So...until I find a better price, I guess Sam's Club will win for this particular product. If you have any suggestions for me, please let me know!

Here's the new budget. Since the last time I posted, we have lowered the cable bill, lowered the food and grocery bill, upped the medical bill. The snowball has changed as a result of no more credit card debt, and anything left over at the end of the month will also be tacked on to the NFCU Loan until that one is knocked out as well.

--------Incomes--------
A Disability 123
J Disability 123
GIBill 1518
Paycheck 1051 (after tax)
Paycheck 1051
Svgs Allotment 100
Svgs Allotment 100

--------Charity--------
AXiD 10
Church 300

--------Saving--------
Savings 443
Sinking Funds/NFCU 300

--------Housing--------
Rent/Water 794

--------Utilities--------
Electricity 150
Mobile Phone 142
Cable 85
Storage 40


--------Food--------
Food & Household 300

--------Transportation--------
Gas & Oil 125


--------Medical/Health--------
Medical 75


--------Personal--------
A Blow 100
J Blow 100


--------Debts--------
Student Loan 126
Corolla Loan 276
NFCU Loan 700

February is going to be a fabulous month.....

Oh thank goodness January is over!!!! January is our busiest month at work, and even though I still have quite alot to do in the upcoming weeks prior to my counterpart's maternity leave, I feel like a huge weight has been lifted and things will hopefully be easier this week and going forward.

I'm really looking forward to February for several reasons. Next weekend is the annual women's retreat for church at Callaway Gardens. This is my first time going. I didnt go last year because Jonny and I hadnt been going to the church for a full month yet and I was not comfortable going with a bunch of ladies I didn't know at that point, but I've been looking forward to it this year ever since they started talking about it last summer.

Tax season is in full swing and Jonny finally got his first few customers at the office last week, so that's GREAT for our financial situation. We actually filed our own taxes on Friday and when it comes in, we are going to be able to pay off the last of 2 credit cards. After that, all we'll have left is a previous signature loan, and a car loan. Depending on how tax season goes with Jonny will determine how quickly we can get those two debts paid off too. The quicker they are gone, the quicker we can work on our FFEF (fully funded emergency fund) and then work on a down payment for a house. I think that things are going to fall into place at just the right time for us. The economy hs nowhere to go but up, and by the time we have a down payment saved up, I'm certain that we will be able to get a GREAT deal. I hope we'll get a fab deal on a foreclosure that we can invest a little bit of elbow grease into to call it home. Fingers crossed that it'll be next summer....

Whoops, sorry. Got off on a tangent there. Well, like I said above - we're going to be paying off our last two credit cards this month. We're also going to 'Bama next weekend to see the in-laws for a superbowl party. NASCAR season is almost here! Daytona 500 on the 14th, only 2 more years until we're planning on being there LIVE!

I've also got to get started on the whole Crossroads Career thing at St. Mark. Aimee, Shannon, Hannah and I were all talking about it back before the holidays, but the holidays just drains you, and with January as busy as it was, I just knew I couldn't put any effort in it during January. So it's time to get the ball rolling for this. I pray that it works out and we can get the funding we need to be able to start this ministry.

Finally, as I mentioned in a previous post, I recently joined the YMCA. I am sad to say that I've only been twice so far, but in my defense, it was closed for a few days last week because they were moving to a new location. That location is open now, and I am planning on getting my butt up in the morning to go, and finally get this habit formed of going. I need to figure out what group classes I want to attend, but I'm afraid to just show up and have them kick my butt and me not be able to keep up with the rest of the class. I've heard alot of people talk about Zumba...I may have to try that for starters. Besides - I'm afraid of Karen and Hannah (from work, who both teach RPM and Body Pump) *grin*

How and Why?

$42,000 in debt. How did we ever end up in this kind of mess, you may ask. It's from a combination of several things. For starters - it's "The American Way" to have debt. It's the American way to have credit cards. It's easier to spend what you don't have than it is to have discipline to save up for what you truly need and or can justify spending the money on, and pay the credit card when it comes in the mail later.

This mentality will overwhelm you. I know EXACTLY where my problem started. It began with the military. I was working a full time job, making good money, and the only bill I had was my cell phone bill. While I was in the navy, I got department store credit cards - target, jcpenny, old navy, etc. I had "some" sense and realized I was getting in a little over my head, so when we went on deployment, I paid those cards off, and cancelled them.

However, I still had no idea about Dave Ramsey, or the common sense approach to money. I really had NO IDEA what in the hell I was doing. I had a paycheck, and a cell phone bill. I had no savings in place, I lived paycheck to paycheck. I went to the mall, I bought clothes, I went out to eat with friends, and I went to the movies. I bought DVDs, cds, and a laptop. When I was overseas on deployment, I paid for the experience. I told myself I may never get a chance to visit those countries ever again, and justified blowing my money on "stuff." Rather than having a budget, I spent until it was gone, and then when it was gone, I used the credit cards.

When I got out of the navy, my habits didn't change, but my financial responsibility did. I no longer had free housing and 3 hot meals a day that I could revert back to if I ran out of money. I now had rent, and utilities to pay. I had to pay money at a laundromat to do my laundry (something I also had for free in the military). It got to the point where I couldn’t afford everything I "needed" so I applied for more credit. I was also in a long distance relationship with Jonny at the time, and had plane tickets to buy to go see him. It didn't make sense to spend 18 hours round trip in the car when I could fly and it only is a 4 hour round trip travel. I needed those extra 14 hours.

Before I knew it, I had more credit cards than I honestly can even remember. Jonny went on deployment and was getting paid tax free, and we used some of the money to pay down the debts we had built up. However, when he returned, we built the debt right back up. Swipe Swipe Swipe went the credit cards. We didn’t learn our lesson.

Jonny got out of the navy in August 2007, and we were married in October. He started school, and found a job, but he wasn’t making near the income he had made before getting out of the service. School was important to him, and finding a banking job that was flexible with his school schedule was impossible. In December, after many nights of tears, and the realization that the 1 step forward 2 steps back approach was not working to get our debt down, we applied for a consolidation loan. At the time, we had $18,000 in credit card debt, plus the 2 cars, which was an additional $17,000 or so, so approximately $35,000 in debt, December 2007. We got rid of the department store cards, and kept only the Visa and Mastercards. However, it wasn't enough. Within the next year, we had reverted back to our old ways. The credit cards that we had consolidated were racked back up, only this time, we still had the consolidation loan to pay as well. WHAT was it going to take to make us learn?

Fortunately, I got out of the job situation I was in and found my calling. In October 2008, we moved 2 hours south to Columbus GA and started rebuilding our lives. Jonny left his job in Atlanta to be with me, and started school at Columbus State. January 11, 2009 we were church shopping and were visiting St. Mark UMC. In the bulletin, Financial Peace University was being advertised. By this time, I had heard of Dave Ramsey, but had not attended FPU. I figured God was trying to tell me something. We enjoyed the church, and became regulars (we joined the church in July). In February we started attending FPU, which changed our lives forever. It's a good thing too; due to the economy, Jonny was having a hell of a time finding a job...and that was when we hit rock bottom. FPU saved us. With it, we learned how to live better on 1 income, than we had been on 2.

TBC...

Current Financial Situation

In February, we started FPU with 6 credit cards, 2 car payments, and 1 consolidation loan (previous credit card debt). We also have student loan debt, that I will honestly admit that I'm being an ostrich with my head in the sand about right now. I'm paying the interest on my undergrad loans right now, but that's it. I'm focusing on all debt other than student loans while I'm still in school working on my MBA. Once we have the 9 debts above paid off, then we will worry about the student loans. Those 9 debts totalled just over $42,000 in February. Today, they total $28,513.17. In 10 1/2 months, we've paid off $13,486.83, and are down to only 2 credit cards, 1 car payment, and the consolidation loan.

Did I mention that this has been on 1 income? Yes, my husband has been unemployed, but it's not because he hasn't been trying. He had a temporary job during the month of July working at Fort Benning, but that's about it. In September, he started taking a tax class, and became certified as a Professional Tax Consultant in all 50 states. Last year, we used Turbo Tax to do our taxes. Had it not been for this class, we would have missed out on some exemptions and deductions we were eligible for. We filed an amended return right before Thanksgiving and got back an additional $1500 this week. If you're looking for someone to do your taxes this year - I have someone I can recommend for you!

He is hoping that he'll be successful this tax season. We're planning on using every bit of his paychecks toward debt. According to our Debt Snowball calculator, if nothing changes, and we continue to pay our debts as they are right now, November 2012 is our debt free date. I want to speed that up. I want a goal on 16 months from today, er, yesterday. May 1, 2011. I want to have all of this debt paid off by the time Jonny and I are both out of school, so that we can start looking for a house, and start working on the student loan debt.

We'll see how it goes....I'll discuss our monthly budget, and ways we can trim the fat and put more money towards our debt in a future post...

Until next time...

Woulda, Coulda, Shoulda...

With the beginning of 2010, I vow to keep the journal I should have started in 2009. February 22, 2009, to be exact. That was the day that Jonny and I began our Journey to Debt Freedom via Dave Ramsey's Financial Peace University.

My intent for this blog is to hopefully summarize the last 10 1/2 months, and go forward with the rest of our journey to getting debt free. I'll also post resources I come across for knocking out debt. I want a record of our good days, and our bad, and what we did great, and what we need to improve on.

There may be a little about getting in shape thrown in here as well, as spending money on food is also a key part of our journey. I need to be honest with myself when I eat fast food, as I am CONFIDENT if I could cut fast food completely out of my life, I'd probably drop 20 pounds instantly.

At any rate, I hope you will enjoy my story, or offer insight as you see fit. I've got lots of resources that I've come across to share, but it may take me some time to get everything listed.