i'm going to give you a step-by-step guide to follow if you are serious about getting your finances in a better place than they are now. a lot of this i learned from dave ramsey, some from suze orman, and a little bit i can't remember where i learned it. this is how my husband and i do things, and our financial advisor was very proud the first time we met with him*! so without further ado...
1. paint your fingernails. seriously. this is not what you'd call a fun process, and at the end of today you might feel a little discouraged (and you might possibly feel like you'll never be able to afford a mani/pedi again. don't worry - you will). you will just feel better if you feel pretty.
2. cut up your credit cards! RIGHT NOW. do NOT close the accounts. just cut up the cards! this is extremely important.
3. anything that you can pay for with cash, make an envelope for. here are the ones we have (in no particular order): medicine/vitamins and supplements; entertainment; clothing; "blow" (fun money); weightlifting (this is not mine. jake is real big into it so he needs supplies...or whatever); home improvement; gifts; gas; beauty (hair, nails, makeup); eating out; groceries. we put the amount we've budgeted for each category into its envelope. if i don't feel like cooking but we don't have money in the eating out envelope, guess what? i cook. or go to my mother-in-law's house :) this way we never go over our budget in any particular category! (there are "envelope" systems you can do online if you don't want to use physical envelopes. i used to keep a spreadsheet of each category, and i kept everything in my checking account. that was a lot harder for me, and jake and i have just decided physical envelopes with actual cash keeps us much more disciplined.)
4. we follow the 10/10/80 plan. we give our first 10% to tithe (if you do not believe in this, i'm not going to force it on you. if you claim to be a christian, you really need to look into this - we are called to do it. however, any sort of charitable giving is important, regardless of your religion. i think you could teach your children the importance of concern for others. you could pick a cause you believe in, or a local food bank, or change it up every time. i just feel this is very important; and for me and jake, this is our first bill, every month, no matter what). the second 10% goes to savings. we pay our savings like a bill, second only to tithe. we have planned it this way from the very beginning and don't even consider our take-home pay to include this first 20%. it is vitally important to us that we never ever let up on these "bills". everything else comes from the remaining 80%.
5. make a list of your debts. since you now won't be accruing any more (thanks to those handy scissors from step 2!), this is a final list. at the top, put consumer debt - credit cards, store cards, line of credit (i.e. an overdraft credit line from your bank, which you have used). then list student loans. then cars, then home. you can kind of tell the order of importance i'm going with here, so if you have debts i didn't mention, just put them in there. within each category of debt, list the debt with the least amount owed first, then the second least amount owed, and so on. this is most likely a very discouraging thing for you to see. BUT you now have it on paper, and later we can make a plan to attack it!
that's all for today - and it's plenty! just do these five steps, and be open to changing your thinking about money. trust me, our household income is a whole lot lower than most people's, and lower than even what our friends think, i'm sure. but we have fun! and we do not have any needs that are un-met. we want to be debt-free (including the house) before our kids go to college, or preferably sooner, and we are on that track. you can be too! it is a lot easier once you actually get in to living a debt-free lifestyle. just trust me on this.
*you may remember i mentioned our financial advisor earlier. he told us about some clients he has who make $175,000/year. they pay $45,000/year in credit card bills. they pay more than we make. that's sad! it's awful! don't get to that point.
No comments:
Post a Comment