My third big resolution is one that, if I can accomplish it, will bring me a LOT of peace. I want to improve my financial situation!! I stress out about money constantly, but especially when something happens (which a lot did happen in 2009). First, we needed a new roof (due to not one, not two, but THREE leaks in different areas of the house). Of course, we didn't have the money to cover that, and ended up putting it on the credit card. Then came my emergency appendectomy. Even with my insurance, it would have been cheaper to have a funeral. That's really sad. So we spent about four months of the year throwing all of our "extra" money towards that, instead of building up savings and paying off debt. And that took us until November, when we had to put braces on Issy for a down payment of $675 (which we were able to pay in cash, no borrowing), but then turned right around and had over $1000 in unexpected car repairs in December. And while we were also able to cover that without the credit card as well, it made December EXTREMELY tight. Let me just say that I am really glad I tend to buy extras of various food items when they are on sale, because there was really no money for groceries for about two weeks there.
I stayed really stressed out about money most of the year, and I'm thinking God is trying to pound a big old fat message into my head. And, God, just wanted to let you know that I hear you, so no more lessons are needed at this time, thank you very much. I've decided to try out the Dave Ramsey Total Money Makeover. Basically, you save up $1000 as quick as you can (within a month, usually), and then with "gazelle intensity" you throw everything you got into paying off the smallest of your debts, while paying the minimums on your others. Once that is paid off you snowball that money into the next smallest debt, etc. If there is a setback and you have to dip into your $1000 emergency fund, then you stop snowballing the debt temporarily and pay back the emergency fund as quickly as possible. Once all the debts are paid (excluding the mortgage), then you build your emergency fund up until you have 3-6 months of living expenses saved (I'll be shooting for the 6 months!). This is as far as I've gotten in the book, and I won't read on until we've gotten these three steps accomplished. My estimated length of time to have everything but the house paid is 42 months, but that is not taking into account any "found" money (like Shane's quarterly bonuses or my occasional catering gig). Dave says in the book that people who follow the plan usually pay it all off in less than their original projected time due to "found" money and just plain old determination. And I also didn't take into account that beginning in August, we will no longer have to pay daycare (yay!!). We will be paying for afterschool care, but that is about 1/4 of the cost of daycare. So that will free up a bunch to throw towards the debt as well.
Another thing he recommends is monthly budgeting. I know, you're thinking "DUH"! I know how to budget, and I always project out our budget a year in advance. But I think it will be useful to sit down at the beginning of each month, re-examine that month's budget and make any adjustments for "extra" income or expenses, and figure out exactly how much will go toward the debt for that month. I think it will keep us focused.
So, this really, really pains me to do, but here is my business for everyone to see (so everyone else can keep me accountable as well):
Line of Credit $1421
Harley Davidson $4093
Orthodontist $4270
VISA $8951
Student Loans $17,470 (ouch!)
car $20,151 (double ouch!)
current emergency savings $328
At this point, if my fairy godmother would like to enter the picture and pay all or some of this, please do..... Well, no one showed, so I guess it's up to me! I'll be posting monthly updates on this New Year's goal so that anyone reading this can feel free to b*!&h-slap me if they feel I'm doing something stupid. Also, we'll be looking for free or extremely low-cost activities to do with the kids, and looking for ways to save on groceries and household necessities, so if anyone has any ideas please email me or post in comments!!
Wish me luck!!
1 comment:
I wish you the best for 2010! Dave Ramsey's plan is great and there are several churches in town that offer his Financial Peace University class. Scott and I are planning on attending one of them. There are also free online sites to help set up and monitor your budget. I've been looking into those as well. Let me know if you'd like the links to some sites. You can do it!
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