Accountability

Dear Readers,
Instant gratification. That is what we all seek. We look at the trouble we are in financial and we want the magic pill. Being a Christian, sometimes (okay most of the time) I think God will have a large check waiting in the mailbox for me. I constantly remind myself that the only way out is to spend less, not more money. What will I do with more money? Spend it on Christmas gifts. Sometimes (okay all the time) God knows what is best for us. I have tried working a second job-didn't work because of community service activities I felt responsible for. I have tried blogging, but the money doesn't come in quick enough. Again I was seeking more money, not how to spend less money. So, not exactly back to square one, but truly realizing what needs to take place in the family's life.
Blogging needs to be my accountability partner so if you are reading just leave a comment or send an email. Otherwise we just continue writing into oblivion. Everything else will work its way through with blogging.
Good night and good luck.

Cheapskate Principle #5: No Compulsive Buying

I usually do not have a problem with compulsive buying. However, it is the holiday season and I know I will want to buy more for my family and friends than what I can really afford. The first goal I am making for this season is a list. Actually, I'm making two lists. One of those I want to get gifts for and one of the items I want to buy. Making lists is one way to cut down on compulsive buying. Trent at The Simple Dollar has created a list of ten ways to cut down on compulsive buying.

1. Keep Reminders of Your Dreams Next to Your Cash and Credit Cards
You may want to keep pictures of your kids or dream house in your wallet. If you do a lot of spending online, keep pictures or post its near your screen. The important thing is keeping the "main thing" the main thing and not losing sight of it.

2. Use Ten Second Rule
Whenever you go to purchase something, count to ten and consider how it fits in the bigger scheme of things. Don't just do this with major things. Our lattes and candy bars add up quickly. If you can save $10.00 a day, that adds up to $300.00 in a month. If you can save 10.00 a month, that becomes 120.00 a year. The key is to consider all purchases if they work towards your goals.

3. Keep Clean and Confident
Many times we stop striving for a goal because we loose confidence in ourselves. If we maintain our health and hygiene, then we will maintain our confidence. As parents, the first thing we take from the budget is our haircuts, dental appointments, and routine check ups. If we do not exhibit confidence in ourselves, who will?

4. Don't Take Your Credit Cards or Cash With You
This is great advice went you hit the malls. If you take more cash than you plan to spend, then you will probably spend. It may be as simple as stopping in at the food court to get a soda or a cheap jewelery store to get matching earrings, but you are still spending more than you budget for the trip. Don't take the extra cash nor the credit cards and you will build in the extra waiting period.

5. Avoid Situations Where It's Easy To Spend.
For me, it's an electronic store. Right now, Best Buy and Gamestop are offlimits to my son and me. We just want everything in the store and everything is "on sale". I know I can rationalize any purchase in my head, just not in the budget. So, I stay away from the electronic stores. For you it can be a drug store or an antique shop. Just stay away from where you are vulnerable.

We will continue the next five later today.

Cheapskate Principle #4 Save at Least 10% of Income

According to an article on cnnmoney.com, more Americans have started saving more and paying their debt down. Towards the end of the article however, many said that it was only temporary response to the economy. A true cheapskate would save 10% of the income anyway. There are so many things to save the money for if you have children. We have retirement, college funds, larger homes, emergency funds, etc. and etc. I believe the key is to come up with a plan and stick to it in thick and thin. In the same article it mentions that those that are not despondent over the current economic situation are those with an economic plan, ie budget.

Teaching Children Entrepreneurship

While raking leaves today, my 12 year old son starts talking to me about the his personal business he wants to open. He wants to rake other people's yards in the fall and cut their grass in the spring and summer. Great ideas. Now we rake our yard by hand and don't have a leaf blower. So I ask him how much he is going to pay me to rent the rakes? He looks at me and says half. I said son that I only paid $10 for the rake. He goes "Whoa!" We settle on $1.00 an hour. I then ask him how much he much is he going to pay me for taking him to the job sites. He said $2.00 an hour. Now we live in a very small town and one of us would end up losing. "Micah you pay by", I started. "The mile," he finished. He started thinking about more costs of doing a raking business. I asked him what do most people use in raking leaves. He quickly replied, "A leaf blower." "How much do those cost?" I ask him. "200?" Something else for him to research. Now, if you are a customer, do you hire the guy with the leaf blower or the guy raking? He realized that if he charges by time, then he wouldn't be hired because it would take him too long, and it wouldn't be cost effective to charge by the size of the job. "What can I do?" he asks. How can you raise some capital?

Christmas Spending

What are your family plans for Christmas spending? Usually we take a trip to family in Ohio and Iowa, but with the economy, medical bills, and tell-tale signs that the minivan may be giving us problems in the near future, we are sitting the "travel" season out. So how much are we going to spend on gifts? I don't think we will spend over 500.00 if that much. The kids realize this and haven't really bombard us with a list of wants. I'm very fortunate that my kids don't try to compete other kids and recognize how they really do have in life. Our goal is to give to others. We may try to do some online shopping and ship for free to our love ones in far off states. That is one way to cut costs as online retailers offer special deals with free shipping. The other things for our local relatives would be an exchange of services. Now, the thing I'm trying to concentrate on is making this Christmas a one shot deal and get my budget under control. The plan is start saving through out the year and not to cram at the end of the year. So, again how do plan your Christmas spending?

Cheapskate Principle #3

Cheapskate Principle Number #3: Living Ethically and Honestly No Matter The Cost.

Many of you say that this is not a problem. I don't rob, I don't steal, I don't cheat, I go to worship services. No problems. I have one question for you: What about debt collector phone calls? If you have caller id and see the phone number for a debt collector calling, do you answer it? Many times in the past I haven't picked up the phone. What can I tell them? "This isn't your month to be paid because I don't know how to budget properly." That will go over really well. You must know your budget so that you don't drive yourself nuts trying to avoid the calls. Someone may be asking, "I have rights don't I?" You're right, but if you don't discuss with your creditors your situation, they can't work with you and find a solution. If you are not making an effort to work with them, why should they try to work with you? They didn't overspend on that credit card. Call your creditor and work out a solution. Most will cooperate if you are truthful- be honest with them. You will be amaze how well it work for you. I was.

Good Morning

Good Morning,
I ended up taking a few days off due to sickness and life. Trent over at The Simple Dollar suggests typing a few entries in advance, but I haven't quite made it there yet. In the past 24 hours a couple major things have happened that will greatly affect my budget. One is the second job. I am working for a major retailier during the holiday season. I will be working in the back with merchandise. I didn't want to see the floor due to being a high school teacher, my students would continually hound me. This is just a seasonal position, but the online tutorial position I applied for is progressing well with their background checks and should meet their 3 month timeline of allowing me to start working :-/. Fingerprints and criminal checks need to be completed in New York while I live in North Carolina. The online tutorial is the job I'm wanting but the food needs to be placed on the table and bills paid so I will do the seasonal job for now.

The other major event is my daughter is going on her first college tour. Her preparations for college has really rung my bell, late as it be in life. What are some thoughts about who to pay for college, the child or the parent? I have read both sides so I'm still looking for perspectives. Thanks.

One of those days. People have always...

One of those days. People have always wondered why one of those days come along. It is one of those days you feel is wasted. You don't really accomplish anything. You wonder what can you learn from that day. I had one of those days Monday. Day at work was ho-hum. Took my sixteen year old around the community to apply for jobs. No one is hiring. Finished reading Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and Middle Class Do Not!'>Rich Dad, Poor Dad. (By the way a must read if you are serious about getting out of debt.) I hadn't listened to Crown Financial's Broadcast today. It's 1:30 in the morning, the alarm is set for 6:00 and I realized I hadn't blogged today or listened to the broadcast. I start the broadcast and begin to blog. John Nardini with Denali Ice Cream is the guest talking about earning extra money. He mentions a site I barely catch called MissingMoney.com. I figure what the heck, lets see if I have any missing money. I get on the site and lo and behold Allstate is trying to get me over $100.00 to me. (An old insurance policy that I let the premium lapse on.)Yes! God is Good! Lesson learn: Even in the deepest despair concentrate on God and surround yourself with information that help you achieve your goals!!

Cheapskate Principle#2: Spirit of Giving

Cheapskate Principle #2 A Spirit of Generosity: This one may be the hardest to understand on a budget. The premise behind the principle is the belief that its not ours. What is "it"? It can be time, money, gifts, or talents. The thing to realize its not ours to control. Remember the whole principle behind budgeting is preparing for emergencies. We can't predict what is to come our way, so why should we hoard things. (There is a difference between hoarding and saving.) I may not have money to give someone else, but I may have some time to give them. Think about the amount of time we waste watching TV or other frivilous things in our life. What a difference we can make in kid's life if we coach a little league baseball team and spend time with them? How would a widower take a person doing some extra chores around their house? All of these things do not involve money.

Another benefit of this spirit of generosity keeps our eyes from focusing on our problems and being concerned about others. Sometime when we wallow in our own grief, we may spend more to make ourselves feel better. If we are trying to stay on a budget, that is not a good situation to be in. Remember, we can't change yesterday, we can't control tomorrow, but we can help today.

Cheapskate Principle #1 Spend Less Th...

Cheapskate Principle #1 Spend Less Than You Make. This principle is the heart of financial life. We see many people breaking this principle everyday. Believe it or not, it is the principle I'm having a hard time with right now. If an emergency came up, I would just whip out the credit cards and take care of the problem. I will just pay for it later. I was the federal government and my family was the banks and insurance companies. They were in trouble and I was bailing them out of it without regard of the costs. My kids want a dog- no problem. I will pay for the vet bills if they happen. 

Many times we violate this principle when we have two in the family spending the money. An example will be when the husband pays the bills on the computer and the wife needs to buy groceries. She just uses the debit card and brings home the bacon. She gives her husband the receipt to enter into the computer software. She has spent more than the husband has available after paying the bills. Technology is great, but communication is better. My suggestion to solve this problem is go back to cash for groceries. If the cash is out of the bank account, then the one who does the online bill pay won't spend the money that is not there and groceries are still taken care of and the family can eat.

The greatest way to make this principle work is get on a budget. Dave Ramsey and Crown Financial have great stuff online to help. They also have percentages for typical family sizes. Remember though, it is for typical families and I haven't met one of those yet in my life. Use the percentages for ballpark figures and not absolutes.  

In a recent article on CNNMoney.com

In a recent article on CNNMoney.com, banks are beginning to discuss the idea of a credit card bailout. The article mention a bailout that would forgive up to 60% of the debt that consumers have racked up on plastic. My immediate reaction is yes- get me out of the hole I dug myself. Surely others would say the same thing.

Now my concern is "How we put up the shovel?" Have we truly learned to control our spending habits? Have we trained ourselves to spend less than we make? I would dare to answer no. Dealing with teen age students on a daily basis, I know that the greatest learning takes place when the kids apply the lesson I have taught them. I am learning my lesson about spending less than I make, give me an opportunity to apply it.

I want to be a Complete Cheapskate.

I want to be a Complete Cheapskate. A complete cheapskate, as defined by Mary Hunt in her book by the same name, has six characteristics. During the next week I will be intertwining this series in more detail. For now I just want to list the characteristics:

    1. Does not spend more money than he/she earns, no matter how desperate the situation.

    2. Has a spirit of generosity, regularly sharing money, time, and  other resources with people in need.

    3. Lives honestly and ethically, regardless of the temptation to do otherwise in order to get a better deal.

    4. Saves at least 10% of all income.

    5. Does not buy compulsively but makes intelligent and well-thought out choices.

    6. Lives within a financial plan that includes a margin to allow fun and spontaneity.

 

Some of these seem to contradict and others seem pretty simple on the surface. As we begin to examine each step, I hope that we see where we are doing things well, and where we need a little help. If you want to add some ideas please feel free to do so in the comments. 

Finally Some Good News

Finally some good news. First, my sixteen year old daughter was inducted into Honor Society last night! Only 3 percent are inducted in at my daughter's school. Second, automobile invoice came in for the new term. Bill went down $25 a month. In addition to gas prices going down $1 a gallon since I evaluated the budget last month, my monthly budget has been cut $145.00. I'm going to follow the Dave Ramsey and Crown Financial adage and build up 1000.00 emergency fund quicker. Any other ideas?

Shining Moment

Today was one of those moments that make all of my struggles worth it. My sixteen year old daughter wants a dog. She wants a dog so bad that she has given up a trip to Germany and her own car. After she gave up those items, I realized how bad our debt situation was and I realized that I couldn't afford Germany, car, or a dog. She received enough money for her sixteenth birthday last week to go to the local humane society and adopt an adorable pup. However, I made her sit down and research how much the dog would cost per month. She did her diligent research and came up with her totals including vet bills and local license requirements. Very impressive for a sixteen year old. Glad she takes after her mother. But back to main point, I sat down with her and showed her that she would have to put money in savings little each month to pay for the annual or quarterly costs. What has taken her father 37 years to learn, my daughter has learned at the 16 years old. She is now planning to get the job and pay for dog. She also is planning to pay the difference in insurance to place her on the auto policy. Now to work on the thirteen year old and the text messaging.

A New Perpective

What are the benefits of a day off? Sometimes a day off allows the hours to slow down so you can gather your thoughts. Sometimes they can allow you to just sit and listen to your daughter sing along with her iPod. Sometimes they allow you to just and listen to a train go rambling by. A day is needed to just sit and listen to world percolate around you. You know something is brewing, but you don't know what. I sit and listen to the news media bombard us with negativity about our economy and politics. Then I take a day off and watch as my neighbors teach their children how to carve pumpkins or work in the yard. These are the things we work hard for in life-- to spend time with our love ones and not worry how we will provide for them. Right now I need to sacrifice the small amounts of time with them and work more hours to get my house in order. I want to be able to spend a weekend with a daughter on campus and not worry how I will pay for her meals, loneless her multi-thousand dollar education. I should have been concerned about those things earlier in life, but I didn't. I wanted to see several toys under the tree and smiles on their faces as they played their video games and touched the button make sounds on the latest Rescue Heroes Command Center.

Sometimes a day off just gives you a new perspective on the life you have around you. Today I will go teach a young battling cancer at a hospice house. The lessons are just a distraction from the pain and illness from the radiation and chemotherapy. My struggles with my finances are small compared her battle for her life. A new perspective. My dated furniture looks nice compared the family that lost everything they own in a fire. A new perspective. As I downsize to make my budget work, I truly just need a A NEW PERSPECTIVE.

Sunday Devotion- Norman Vincent Peale Tithing

A large part of my life is my religious faith. One of the reasons I want to get out debt is so I can give more. In The Complete Cheapskate by Mary Hunt, giving is her first major principle in getting out of debt. (The other two in order are saving and paying off debt.) A basic belief that she has and I share is that we are stewards of what God has given us and we are to give back. It is not the give-to-get-rich philosophy touted by several others. She had a great story by Norman Vincent Peale included in her book about tithing.

Back in 1930, I was a young married minister in Syracuse, New York. My salary, which had been a handsome (in those days)$6,000 a year, was cut twice-first to $5,000, then to $4,000. We had no manse or home supplied by the church. Everyone was frightened and depressed. Businesses were failing. Nobody could borrow money; there was no money to be had. Men used to greet one another grimly by saying, "Have you had your pay cut yet?" Everyone had to take several cuts before that depression ended, and many people lost their jobs altogether.

With a salary of $4,000 a year, I just didn't see how we could get by. My salary was the only income we had. I was helping my younger brother with college expenses, and I knew he had to count on that. The pressure got worse and worse. I hated to burden Ruth (my wife) with my fears. One night I went out alone and walked through Walnut Park near our little apartment, and for the first time in my life I felt icy terror clutching at my mind and heart. I was terrified. When I finally went home, I said to Ruth, "We're in a desperate situation. We can't pay the bills. What are we going to do?"

And her answer really startled me. She said, "We're going to start tithing."

"Tithing?" I echoed. "We can't! It's impossible!"

"Not impossible," Ruth said. "Essential. You know what the Old Testament promises to those who give 10 percent of everything to the Lord." I can see her yet, standing in the kitchen and quoting, "Bring ye all the tithes into the storehouse... and prove Me now herewith said the Lord of hosts, if I will not open you the windows of heaven and pour you out a blessing that there shall not be room enough to receive it" (Malachai 3:10).

"We're going to do that," she said stoutly, "because tithing is an act of faith and the Bible says that if we have faith even as small as a grain of mustard seed, nothing will be impossible for us. We have to start imagining God's prosperity."

So we did it. And Ruth was right. Money didn't pour in, but there always was enough. Furthermore, the act of tithing calmed my fears and stimulated my mind so that I began thinking. I started imagining. I knew I had one small talent: public speaking. And so I offered myself as a public speaker wherever one was needed. I spoke at civic clubs and garden clubs and graduations and community gatherings Sometimes I was paid 5 or 10 dollars, sometimes nothing at all. But it helped. What a thrill I felt when I received the first $25 fee. Then someone who heard me speak offered me a chance to go on radio. Again, I received no money for this, but the number of speaking invitations increased. So one thing led to another and gradually we began to get our heads above water.

I am convinced that tithing did it. Ruth and I have been tithers ever since. Through the years in sermons and talks I have recommended tithing to thousands of people and hundreds have been persuaded to try it. Of those hundreds, not one has ever told me that the experiment failed, that he regretted it, or that it was a mistake. Not a single person.

It's almost as if there is an invisible reservoir of abundance in the universe that can be tapped if you will just obey certain spiritual laws. The word abundance, I'm told, come from a Latin phrase meaning to "rise up in waves." When you tithe, it does seem as if little waves of abundance start rising up all around you.

So if you have financial difficulties, face up to them not just with courage and intelligence, but also with warm-hearted generosity and concern for others.

Why have that long story? I told you I live by faith. I obviously have made my mistakes so why not realize my weaknesses and failures and turn to my faith? Another thing that happened to Peale was that he didn't focus on what he didn't have (money), and focused on his gifts (public speaking) and what he had (wife).

Taking on Water

If you are like me, you probably don't really realize where your money is going until you write it down. I was using Microsoft Money for years, only tracking my checking account. I knew I was making payments on my credit cards and other loans, but I really didn't grasp where my money was going. I begin to use other money management software and actually linked by credit card accounts to the software. In one month alone, interest and fees accumulated over $1000.00. On a monthly income of $5000.00, you could easily see that I was bailing water out of a boat with more leaks popping up daily. Most of the credit cards I have charge 39 dollar late fee in addition to the ungodly monthly interest rates at 18%. Multiply that by seven, add in the normal bank fees, you can quickly see how my little row boat was being hit by full blown tsunami. Of course, if I had planned and saved better in earlier years, I wouldn't be where I'm at now. One thing to improve your situation is negotiate your fees with your bank. The bucket I have chosen to bail water with is a debt management plan (DMP). There are pros and cons to this measure, but my thoughts are credit is going to be very stingy to come by for the next couple of years and if I didn't do something quick, my kids could be kissing college good bye. I know it will reflect on my credit report until I come out of it, but again my boat was almost under anyway and credit will be extremely tight. The other benefit of going this route is I have accountability built into the system. Most people can start on the new budget process, but it is so hard to continue following it without having their feet held to the fire. The DMP will do that for me, plus cut the time of eliminating debt paying only the minimum from 26 years to just under 5 years. Of course, I'm in severe trouble and more than one person has recommended bankruptcy. I totally discounted the idea of bankruptcy as lasted longer on the credit report and did not fit with my religious beliefs. Again, the way I'm bailing water out of my ship may not work for you (may not work for me), but that is the beauty of going on this journey together.

Another thing by writing down how you spend your money or itemizing it, is you find out you spend your cash. So many times our financial boat takes on water because we allow ourselves to spend money in small amounts. "It will be okay if I get a drink out of the machine or stop and get a biscuit on the way to work." If you stop and write down every dime you spend, not just cash withdrawals from the ATM, you would be amazed at the amount of money you spend. You truly find out where your money is going.

As Robin Williams' students in Dead Poet Society called out "Captain, my captain", be bold, be brave, and keep the boat afloat!

Hello World!

I’m a 37 year old father of three children ages 16, 13, and 12. In September when the markets decided to go belly up, one of my worst nightmares became true. How can I raise three teenagers in a recession? My wife and I are both teachers, she teaches Elementary Spanish and myself High School English, so funds were not, should we say, unlimited. On top of that we have humongous credit card debt when my wife stayed home to home school our children for 10 years. We constantly relied on more credit during this time than being frugal and making tough decisions when problems arose in the course of life. This blog is going to be about my struggles raising three teenagers and going into credit detox.

My goals are:
1) How do I reduce my debt?
2) How do I build up my emergency savings account?
3) How do I fund three kids’ college education?
4) How do I save for retirement?
5) How do I help pay for the kids to drive/text/etc.?

You may notice that my goals are listed as questions. I don't know how I'm to accomplish the goals, but I must give it a shot in order to be able to live with myself. You will find links to sites I find helpful and quotes from books. Along the way you will meet my family because that is the reason I have these goals. I hope that each of you will join me on this journey to find the wizard and keep everyone happy. I know it will be near impossible, but we will give it a shot.