Italy, Here I Come!!!

  I just paid for my Italian tour in April!!! I am so excited you guys!  I am also nervous but that isn't what this blog is about so I won't go into it!

  I have enough money for this trip because I was saving up for a really nice camera.  Then, my friend and I began discussing trips to Italy and I decided that it was better for me to upgrade to a cheaper camera and turn my "camera fund" into an "italian trip fund". 

  The begining of last year, that's what I did.  I saved over 2 grand in probably two to three years. 

  If you want something, save for it.  Never think that what you want to do is out of reach.  There is always a way.

Sara

It Made Me Want to Dance and Sing

  Since I don't have my notes with me from my Tuesday night Financial Peace class, I will just give you a nugget that REALLY stuck out to me and made my night as my friend was going thru the lesson with me.

  She said that at some point I would be putting at minimum 15% of my pay (before tax) into my 401K.  To which I responded, "But what about my bills?"  Her reply?  "Your bills will be paid off then and all the money you make is YOURS to DO WITH WHAT YOU WANT!!"  Of course, that moment was me having a blonde second but her response floored me and TOTALLY made me that much more excited to be completing the Financial Peace course. 

  Guys, after I get my $1,000 emergency fund and after I get 6 months worth of bill money saved up (for emergencies) I get to KEEP all the money I make. 

  But not only will I keep it, I can give it, donate it, buy people nice things, etc etc etc.  What I've always wanted to do but have been constrained because I didn't have the money!!!

  Isn't that exciting?! 

  If you haven't heard of Dave Ramsey's Financial Peace Plan, check it out.  If you don't have the funds to spend on it, try to find a friend or family member who has the information and who is willing to share.  It is well worth your search or your investment!!!!

 Sara

It's Like Rationing

  I got paid last week and that pay started my new budget without using credit cards! 

  It is more freeing, I will say. 

  On Saturday, for the first time in I don't know when, I went inside (GASP) a gas station and paid cash!  It is an inconvenience especially if it's rainy but I know it's what I have to do.  And a little inconvenience never hurt anyone. 

  I was also able to purchase some really cute pink nail polish without going into my weekly "blow money" since I made sure to budget a few dollars a month for cute cosmetics that I couldn't resist.

  I will say, however that I am nervous about gas.  This weekend, I will be traveling to Raleigh and Wake Forest and the gas does get eaten up quickly when going that far.  And I only have a certain amount left for gas til my next paycheck.  But we shall see how it goes.  I will let you know!

  Just a little update on how my life without using credit is going.  =)

Sara

It's Decided, I'm Cutting!!

  Last night, after watching Dave Ramsey's Dumping Debt DVD, I made my decision to cut up three of the four credit cards that I have.  I am very excited.  Once I get this last one paid off I will be cutting it up as well.  I don't EVER want to go back to debt again.

  I jotted down a few myths about money that Dave debunked in the DVD and I'd like to share them with you.  There were several that I didn't know were myths!!

First Myth
If I loan money to a friend or relative, I will be helping them.
TRUTH
The relationship will be destroyed.  You are now their master and they are your servant (until the debt is repaid).  See Proverbs 22:7

Second Myth
By co-signing a loan, I am helping a friend or a relative.
TRUTH
The bank requires a co-signer because the person isn't likely to pay.  So, be ready to pay the loan and have your credit damaged because you are on the loan.

Third Myth
Car payments are a way of life and you'll always have one (I think I've always kinda thought this way).
TRUTH
Staying away from car payments by driving reliable used cars is what the typical millionaire does.  That is how they become millionaires.

Fourth Myth
I'll take out a 30 year mortgage and pay extra, I promise.
TRUTH
Life happens.  Something else will always seem more important so almost no one pays extra every month.

Fifth Myth
You need a credit card to rent a car or to make purchases online or by phone. (I thought this too)
TRUTH
A debit card will do all of that, except for a few major rental companies.

Sixth Myth
I pay my credit card off every month with no APR.  I get brownie points, air miles and a free hat!! (I bought this one too)
TRUTH
Dun and Bradstreet found that when using plastic, you spend 12-18% more because spending cash HURTS.

  There you have it, several credit myths debunked!!  Let me know if you've bought into any of these. 

Sara

Credit Cards and Impulse Buys

  I've been thinking about credit cards and impulse buying these last few days.  Not exactly imagining what the cards look like but the why behind their popularity as well as they why behind impulse spending. 

  Why I believe that credit cards are so very popular is that Americans have lost the art of waiting for the things we want.  If we want a new blouse, we go buy it.  If we see that new phone that just came out, we rush to the store and get it.  If there's a preview for a movie that we want to watch, we won't wait to see it on DVD, we rush to the theatre to see it.

  Credit cards allow us the opportunity to get things we don't necessarily need now at this very moment.  And what does that do for us?  it gives us a high.  But it's temporary.  When our credit card bill comes calling, the high goes away and is replaced by guilt.  Or anger at ourselves.  Or maybe apathy. 

  Back in the olden (don't you just love that word?!) days, if you wanted something badly enough, you saved for it.  You held back your desire of now for the pleasure you knew would await when you were able to afford that item you so badly craved. 

  Do you know what that waiting did for those back then?  It created pride in the item they would soon purchase and it grew patience in their souls knowing that they would get what they wanted but not RIGHT NOW.

  Credit cards have destroyed that for us.  That is why I would love to go credit cardless.  (It is in the works....)

   This also ties in to why impulse spending is so very prevalent (for me too!). 

  Nike told us "just do it" and Burger King told us "have it your way and we listened to both.  We just did it and bought things as therapy when we were sad, mad, or happy and then, we had it our way as we racked up debt, filled our houses and our sheds with items we really didn't like and felt guilty for throwing money away on things that didn't fill the emptiness in our hearts.

  Impulse spending goes hand in hand with credit cards.  Credit cards enable us to spend impulsively and without accountability (until the bills come).

  One of the things that I am trying to challenge myself to do is not spend impulsively. I do it because of my emotions.  Maybe I had a horrible day at work so I go shopping to get rid of the stress.  Or maybe I'm depressed about something so I go out and find the perfect outfit or buy some more makeup (that I don't really need).

  These are just some thoughts about credit cards and impulse buys.  Please know that I am not judging or critisizing anyone because I have found myself in both the places I've mentioned here many times.  But I'm trying to break the cycle because I know that it will be better for me in the future.

Sara

To Cut or Not to Cut

  In my “Dave Ramseying my finances” session this week, my friend said something I found very interesting (and thought provoking).  She pointed out that if you begin using cash for everything (which is what this program is all about) then at some point you wont have a credit score.  When she said this I was very skeptical, I mean you always hear that you must have good credit so if you don’t have a credit score, isn’t that bad?!  Then, she pointed out that you don’t NEED a score if you’re paying cash for everything.  Good point!  However, the thought of not having a credit score (or a credit card for emergencies – at LEAST) kinda makes me nervous.  There again, my friend pointed out that you should already be prepared for emergencies since your emergency fund will be built up. 

  It seems that there is a plan for most eventualities in this program but I don’t know if I’m ready to get rid of the comfort and backup having a credit card affords me. 

  Does anyone have any advice?  I am really considering doing away with my credit cards but haven’t gotten up the gumption to do it yet  As with anything, its all in how you use it whether it turns out for good or bad!

sara

Self-Control

  Last night, I had some time to kill before going to church so I decided to go into one of my favorite stores, Ross. 

  Not many times do I go into Ross without carrying something back out.  It could be a piece of clothing, a pair of shoes, a pocket book, or something for the home but I usually come out with one (or two) items.

  Last night I didn't.

  It was hard. 

  I looked in every section.  In the clothing section I saw a cute lace shrug that would be perfect for summer ($10.99).  And in the housewares section, I saw this adorable little box with tiny drawers (big enough to hold jewelry) that I LOVED.  I almost picked it up.  But then I rememered:  I didn't have money!

  Well, I had $1 but really, that's not considered "money" if you know what I mean.

  I had spent my week's allowance and would not have next week's money til Friday.  So, with regret, I stepped away and moved on.

  I know that if I would have had my credit card with me, I would have rationalized with myself to purchase one (or both) of the items mentioned above.  And knowing me, a few months down the line, I would be wanting to get rid of one of them. 

  Last night's experience was actually freeing.  True, I didn't really have the option to buy or not to buy since I didn't have the cash (or a credit card) on hand but being able to look at something, really want it and then turn and walk away was NICE.  It let me know I can do it.  It also reminded me that some things (the things that aren't really that important to me and that I can live without) will fade from my mind and in a day or a week, I won't remember what they were.  The things that I truely desire (those items that call to me and speak to me) will be more important to me because I will have saved for them.

  That's my first experience with 'window shopping' in a while.  We'll see how the next episode goes!!

Sara

 

Dave Ramseying My Finances - Session One

  I mentioned in the post before this that a friend is helping me with my finances by going thru Dave Ramsey's plan.  Well, I decided to share with you the bits and pieces I jot down from those sessions.  I took a trusty notebook and pencil over with me to write down things that I deem important.

  Please note that I will not put things up here that are not available already for free on Dave Ramsey's website.

  Session # 1

Baby Steps (These 7 baby steps - if consistently practiced- will leave you debt free)

1 - Have $1,000 emergency fund in a Money Market Account

2- Pay off all debt that you have except for your home

3 - Have 3-6 months expenses in savings (you will add this money into your emergency fund after you get your emergency fund up to $1,000)

4 - Invest 15% of your total income into Roth IRA's and Pre-Tax retirement

5- Begin a college fund for your children

6 - Pay off your home early

7- Build wealth and give (this is when your investments bring in more money for you than your job does).

  Completing all these steps should take between 15-20 years.  When I heard this I was like, "Oh No!!"  But that really isn't that long a time.

  Next came the list of things that you should be saving for:

  1- Emergencies

  2 - Purchases (should pay all purchases in cash)

  3 - Wealth Building (investment)

  One thing that really stood out to me as my friend was going thru the lesson with me was that all this requires DISCIPLINE!!!!!  This is something we all need more of and is the key to making this plan work.

  Something else that we went over was that if you have a 401K, you should STOP adding money to it until you get all of your bills paid off.  At first this suggestion was foreign to me and I was very nervous but the more I thought about it, the more it made since.  401K's continue to grow (since they're based on stocks) or lose so whether I stop adding money for a few years or not, it's still going to go up or down.

  Towards the end of the session, my friend printed out this Quickie Budget which I filled out.  Then she pointed me to the very very advanced budget that she wanted me to have completed by our next session.  Both budget forms are at the link. 

  So, that's what I learned in my first session.  I hope this has given you some ideas and resources to begin your own finance plan.

  Let me know your ideas, comments, concerns,etc.!!

Sara

 

Dave Ramseying My Money

  A very sweet friend from my church asked me if she could help me overhaul my finances (since she saw the posts I've been making regarding money).  Her family uses the Financial Peace Plan put out by Dave Ramsey. 

  As you are probably aware if you have read any of my posts, I am trying to get my finances in order so in short I don't have to worry about money!  As I've mentioned, I'm a girl, and I love to spend money on cute things as well as necessities.  That's ok as long as I'm not overspending which I have tended to do these past two years.

  I suppose that I can trace my unwise handling of money to my second credit card which I got the end of 2010. 

  Since I was a late teen, I have had one credit card.  And I really think that all young adults should start out with one to build up credit (disclaimer: Once I am done going thru the Dave Ramsey Financial Peace Plan, I may say that I don't think it's a good idea). 

  I had always used the card for emergencies, or for certain specefic purchases that were a little more than my cash allowance.  The one thing I did that saved me from debt for many years was that right after I made a purchase on my card, I would write a check in my checkbook for that amount and deduct it so that when the credit card bill came, I would have the funds to pay for that purchase.

 I continued on like this until 2010 when I got a new credit card. 

  For some reason, my spend mode kicked in big time and I began charging, charging, charging and while I might write out a check here and there for some of the purchases, for the majority I didn't have the funds to cover the purchases.  I feel bad saying this but there were many bills that I had to dip into my savings to pay off (because I didn't want to have interest or late fees).  The only good thing that I can say about that time was that I wasn't accruing interest (which is NOT a good feeling) or late fees.

  Then, my savings became depleted because of using it to pay off large credit card bills filled with (mostly) unessary items.  I had a decision to make.  I continued using my cards, not realizing the consequence.  About September of 2011, I began to have a bill accruing interest =(.  I'd NEVER had that before in my life so it wasn't a good feeling. 

  Ever since then, I have been trying to handle my money better but it never really clicked until I saw how quickly debt could pile up (especially when using credit cards).

  That's the back-story to me learning from Dave Ramsey's Financial Peace.

  Even though I've only had one session with the friend from church, my thinking is already beginning to change and I look forward to the next lesson.

  It's hard for me to share most of the things above but I really do want to help other young people out.  If I can spare you from debt by my mistakes, that would be lovely. 

  If you have any questions or comments, I'd love to hear from you.

Sara