Tuesday, May 1, 2012

The Post about Money

When the Chef and I took our FOCUS test in our pre-cana class at the University of Dallas, we failed.

Well, we only failed one section, Finances.  We both laughed it off because the questions were like, "Which of you will balance the checkbook?"  "Where will you invest your savings?" and "Who will be responsible for paying the bills?"

We were still students with no jobs on the horizon, but lots of student loans on the horizon, and plenty of baggage in the form of credit cards.

Yup.  Credit Cards.  In college.  How else we were going to buy beer and cigarettes and ramen?  How else would I have funded my annual trip to the Gap outlet?

So, we failed finances and we kept failing them for approximately thirteen to fifteen years.  We did everything wrong.  We never budgeted.  We never talked about money or debts or bills.  I have no idea how we ever bought our house, but it had something to do with a new job, a substantial pay raise, and something called FHA financing.  We've refinanced this home a few times too.  We had to, to pay our ever-growing debt, largely made up of credit cards, student loans, and car payments. We zeroed out our credit card balances and then ran them right back up. 

We spent and justified and spent and felt guilty and made resolutions and spent and so the cycle continued.

Over the years, even though our income grew by leaps and bounds, our spending always kept up. 

Until, one day, I had a friend and her brood over to visit.  We sat outside on a beautiful, sunny day.  I think there were hot dogs and popsicles and water balloons, but what I remember most is that she told me about the money problems in her marriage, which were quite similar to mine.

She told me that they were climbing out of their giant pit of debt because she bought a book in a bookstore.  She was in a bookstore worrying about finances. She prayed for guidance, and she bought Dave Ramsey's Total Money Makeover.  She explained to me the principles in the book, how she and her spouse had applied them, and how things were really turning around for them financially.

Being a better steward, (ha-ha) I did not buy the book.  I requested it from the library.  I read it, was inspired and went and bought it so the Chef could read it too.  If you're already familiar with Dave's plan, skip the bullet points.

  • Dave Ramsey teaches the "debt snowball," which is paying everything you can to your smallest debt, and when that's paid off, you pay everything you can to the next smallest and so on...  Eventually, you've paid off some stuff that had minimum monthly payments so you add the money you would have spent on the payments to your debt snowball.  So you start hitting your debts one at a time with bigger and bigger amounts of money.  Then one magical day, you will be debt free, except for your house.  This is the day you can call The Dave Ramsey show and scream into the phone, "We're Debt Freeeee!"  
  • Dave also wants everyone to have an emergency fund.  One thousand dollars to start, as in, before you pay any debts.  
  • He's also a stickler for budgets.  Know where every cent is going before the month begins.

No, we did not immediately put into practice everything Dave Ramsey says.  We were still failing.

But, slowly, we began to see that we needed to change our lifestyle or our kids would never get braces, among other things.  We stopped our most expensive extra-curriculars.   We stopped using credit cards completely.  But we didn't budget, or start a snowball, or talk about the giant pile of debt sitting in the corner and collecting interest, yet.

That didn't really happen until we had what my friend calls, "the Come to Jesus moment."

That's the moment where we looked at all the numbers written down, debts from selfishness and laziness and greed, and realized that there was no way we could make this go away without each other and without Him.

It was an ugly moment, filled with fear and tears and mountains and mountains of guilt. But, it was a moment free of blame.  We stopped pointing fingers at each other, and we vowed never to do so again. We were left with the knowledge that it could only get better and it would never be that bad again.

 We owned the problem in that moment, and began to attack it together.  And we never looked back.  We stopped wagging our heads and lamenting the fact that we blew thousands and thousands of dollars on worthless crap.  We know we did that.  We don't need to remind ourselves of that ever, ever again.

It takes at least a year to wrestle out a working budget.  And it takes LOTS of COMMUNICATION.  Did I want to ask my spouse if I could get the $100 highlights? No.  But I love him and I wanted open lines of communication.  I needed to know how much was in the bank, and he needed to know if and when the money was being spent.  Now, we budget for the highlights. 

After a year, you can see where you screwed up last year and prepare in advance for the annual vet appointment, the baseball and camp registrations, pool passes, mandatory raffle ticket purchases, school uniforms and supplies, and have a realistic idea of how much you actually spend on Christmas.  

We use cash.  I use cash.  I, who never ever carried cash, carry cash.  We stick to the budget.  For the most part.  And we fight so much less.  There is so much less to fight about!

Now, after years of effort and back-sliding and renewed effort, we are finally getting somewhere.  Two kids have braces, and I was thrilled to pay in full on the first day of treatment.  We went to Walt Disney World with airline miles and Marriott points and did not put one dollar of the trip on a credit card.


The debts are disappearing.  We are not failing anymore.

Our kids know something of this journey.  They have heard enough Dave Ramsey podcasts to know that credit card debt is really stupid and that buying used cars is always a better deal.  They know why we quit Irish dance, and how we saved to get them braces.  And there is definitely going to be a big ole "credit cards are stupid" talk when they go to college.

And hopefully, if they find the right person and take the FOCUS test, they will pass all the sections with flying colors.





3 comments:

  1. I love that book. My brother told me about it and he's a Dave Ramsey disciple. Just a basic shift in perspective make a difference. We still have not figured out a working budget. It is so HARD to do but its a process. You reminded me that we need to sit down and review things...new year, new budget.

    I have my book and have thought of sharing with other people but I was taught you don't talk about money, politics or religion in general conversation. Who am I to suggest someone read his book? I have no idea what their money situation is! But in reality, probably everyone can do better with what they have.

    ReplyDelete
  2. We scored 98-100 on everything on our PMI, except for the 48 on finance. (Tho my parents tried desperately to teach me how to handle money. God Bless Them!) It took us 26 years to rectify the situation. My dh gave me a Dave Ramsey class for Christmas 3 years ago and our lives have never been the same. We still sit down weekly to go over our budget; things happen fast in a family of 10. Those first few weeks we fought every time. SOOOOO much guilt. We're still clawing our way out, slowly but surely. I recommend the class or the books to anyone who will listen.

    Sharon

    ReplyDelete
  3. Hey girl. Love this post. We have one credit card bill (still in zero interest period), an auto loan and our mortgage. Debt is so o so not fun but we are plugging away. Good to know other Catholic families holding it down with cash!

    ReplyDelete

Tuesday, May 1, 2012

The Post about Money

When the Chef and I took our FOCUS test in our pre-cana class at the University of Dallas, we failed.

Well, we only failed one section, Finances.  We both laughed it off because the questions were like, "Which of you will balance the checkbook?"  "Where will you invest your savings?" and "Who will be responsible for paying the bills?"

We were still students with no jobs on the horizon, but lots of student loans on the horizon, and plenty of baggage in the form of credit cards.

Yup.  Credit Cards.  In college.  How else we were going to buy beer and cigarettes and ramen?  How else would I have funded my annual trip to the Gap outlet?

So, we failed finances and we kept failing them for approximately thirteen to fifteen years.  We did everything wrong.  We never budgeted.  We never talked about money or debts or bills.  I have no idea how we ever bought our house, but it had something to do with a new job, a substantial pay raise, and something called FHA financing.  We've refinanced this home a few times too.  We had to, to pay our ever-growing debt, largely made up of credit cards, student loans, and car payments. We zeroed out our credit card balances and then ran them right back up. 

We spent and justified and spent and felt guilty and made resolutions and spent and so the cycle continued.

Over the years, even though our income grew by leaps and bounds, our spending always kept up. 

Until, one day, I had a friend and her brood over to visit.  We sat outside on a beautiful, sunny day.  I think there were hot dogs and popsicles and water balloons, but what I remember most is that she told me about the money problems in her marriage, which were quite similar to mine.

She told me that they were climbing out of their giant pit of debt because she bought a book in a bookstore.  She was in a bookstore worrying about finances. She prayed for guidance, and she bought Dave Ramsey's Total Money Makeover.  She explained to me the principles in the book, how she and her spouse had applied them, and how things were really turning around for them financially.

Being a better steward, (ha-ha) I did not buy the book.  I requested it from the library.  I read it, was inspired and went and bought it so the Chef could read it too.  If you're already familiar with Dave's plan, skip the bullet points.

  • Dave Ramsey teaches the "debt snowball," which is paying everything you can to your smallest debt, and when that's paid off, you pay everything you can to the next smallest and so on...  Eventually, you've paid off some stuff that had minimum monthly payments so you add the money you would have spent on the payments to your debt snowball.  So you start hitting your debts one at a time with bigger and bigger amounts of money.  Then one magical day, you will be debt free, except for your house.  This is the day you can call The Dave Ramsey show and scream into the phone, "We're Debt Freeeee!"  
  • Dave also wants everyone to have an emergency fund.  One thousand dollars to start, as in, before you pay any debts.  
  • He's also a stickler for budgets.  Know where every cent is going before the month begins.

No, we did not immediately put into practice everything Dave Ramsey says.  We were still failing.

But, slowly, we began to see that we needed to change our lifestyle or our kids would never get braces, among other things.  We stopped our most expensive extra-curriculars.   We stopped using credit cards completely.  But we didn't budget, or start a snowball, or talk about the giant pile of debt sitting in the corner and collecting interest, yet.

That didn't really happen until we had what my friend calls, "the Come to Jesus moment."

That's the moment where we looked at all the numbers written down, debts from selfishness and laziness and greed, and realized that there was no way we could make this go away without each other and without Him.

It was an ugly moment, filled with fear and tears and mountains and mountains of guilt. But, it was a moment free of blame.  We stopped pointing fingers at each other, and we vowed never to do so again. We were left with the knowledge that it could only get better and it would never be that bad again.

 We owned the problem in that moment, and began to attack it together.  And we never looked back.  We stopped wagging our heads and lamenting the fact that we blew thousands and thousands of dollars on worthless crap.  We know we did that.  We don't need to remind ourselves of that ever, ever again.

It takes at least a year to wrestle out a working budget.  And it takes LOTS of COMMUNICATION.  Did I want to ask my spouse if I could get the $100 highlights? No.  But I love him and I wanted open lines of communication.  I needed to know how much was in the bank, and he needed to know if and when the money was being spent.  Now, we budget for the highlights. 

After a year, you can see where you screwed up last year and prepare in advance for the annual vet appointment, the baseball and camp registrations, pool passes, mandatory raffle ticket purchases, school uniforms and supplies, and have a realistic idea of how much you actually spend on Christmas.  

We use cash.  I use cash.  I, who never ever carried cash, carry cash.  We stick to the budget.  For the most part.  And we fight so much less.  There is so much less to fight about!

Now, after years of effort and back-sliding and renewed effort, we are finally getting somewhere.  Two kids have braces, and I was thrilled to pay in full on the first day of treatment.  We went to Walt Disney World with airline miles and Marriott points and did not put one dollar of the trip on a credit card.


The debts are disappearing.  We are not failing anymore.

Our kids know something of this journey.  They have heard enough Dave Ramsey podcasts to know that credit card debt is really stupid and that buying used cars is always a better deal.  They know why we quit Irish dance, and how we saved to get them braces.  And there is definitely going to be a big ole "credit cards are stupid" talk when they go to college.

And hopefully, if they find the right person and take the FOCUS test, they will pass all the sections with flying colors.





3 comments:

  1. I love that book. My brother told me about it and he's a Dave Ramsey disciple. Just a basic shift in perspective make a difference. We still have not figured out a working budget. It is so HARD to do but its a process. You reminded me that we need to sit down and review things...new year, new budget.

    I have my book and have thought of sharing with other people but I was taught you don't talk about money, politics or religion in general conversation. Who am I to suggest someone read his book? I have no idea what their money situation is! But in reality, probably everyone can do better with what they have.

    ReplyDelete
  2. We scored 98-100 on everything on our PMI, except for the 48 on finance. (Tho my parents tried desperately to teach me how to handle money. God Bless Them!) It took us 26 years to rectify the situation. My dh gave me a Dave Ramsey class for Christmas 3 years ago and our lives have never been the same. We still sit down weekly to go over our budget; things happen fast in a family of 10. Those first few weeks we fought every time. SOOOOO much guilt. We're still clawing our way out, slowly but surely. I recommend the class or the books to anyone who will listen.

    Sharon

    ReplyDelete
  3. Hey girl. Love this post. We have one credit card bill (still in zero interest period), an auto loan and our mortgage. Debt is so o so not fun but we are plugging away. Good to know other Catholic families holding it down with cash!

    ReplyDelete