Your Family Budget is part of the Saving 201 series that looks at financial life after coupons – because it can’t all be about coupons.
Budget.
Cringe.
If you are like me, words like budget and diet (and when I was younger, curfew) made me think – restrictive, going without, and basically no-fun.
And so I bucked the budget.
I was just fine, thank you very much. I was living a respectable financial life. I wasn’t overspending. I didn’t have any credit card debt and I had a modest savings account. I was good. Or so I thought, in theory.
But the problem with theories is that you can’t put them in a savings accounts.
For some reason, once I turned 35 the magical “theory” machine seemed to go dry. I still wasn’t overspending, but I also wasn’t putting money away for my kids college, maxing out IRA accounts, or paying down the mortgage on my house. They were things I wanted to do – I just didn’t know how to do them with my current budget.
I’ve often said that coupons changed my financial life forever. Well, if coupons changed my financial life, then Dave Ramsey’s The Total Money Makeover
I got it at the library on a whim, and once I started reading, I was hooked. I devoured Dave’s book the same way I would have devoured a new Harry Potter book. I couldn’t stop reading. Everything he wrote made sense and I wanted to learn more.
After reading his book, I was determined to turn my previous “theories” into systematic goals – I realized that I wasn’t getting any younger and there were things I wanted out of my financial life.
But first, I had to get Hubs on board. Because if you don’t have EVERYONE on board, you will fail – GUARANTEED.
So I made him read The Total Money Makeover
And he was midly interested, so I worked on him, and we made some Snyder Long-Term Financial Goals.
Snyder Long-Term Financial Goals
1. Have a $1K cash emergency fund.
2. Pay off any debt outside of our home.
3. Have a six-month emergency fund in a savings/money market account. (Some have three – we have six.)
4. Fully fund our IRAs.
5. Fully fund out kiddos ESAs. (Sorry kids, you are going to state school.)
6. Pay off the mortgage.
What I loved about Dave’s Plan is that it is a rolling plan – you complete Goal #1 before you move on to Goal #2.
The list isn’t huge – but it is pretty audicious by today’s standards. And it is just honest – there is no trickery or beating the system – it’s just our goals.
But for once we had goals. And they were on paper. And we had agreed on them. And we were going to work on them together. And that felt really good.
So do you have long-term goals?
That’s your homework assignment for the week. (You didn’t know you had homework, did you?)
Determine your long-term goals. Do they look like mine? Are they vastly different? Are they on paper?
Set some time aside this week to talk to your significant other about your family’s goals and write them down. Because if you don’t have long-term goals that have been agreed upon together – you will fail.
And also, you’ll need your long-term goals for Week Three.
And if you complete all four-weeks worth of homework – there will be a surprise at the end that your won’t want to miss.
(Join me next Tuesday as we talk about finding out what we spend and making it add up. Also remember to check out these fellow bloggers posts on ways you can Renew for You in 2011.)
Coupon Organization – from My Coupon Teacher
Self Esteem – What’s Your Style – from Maven of Savin
Frugal Weight Loss – Stockpiling Moms: A Guide to Frugal Living
Care for Yourself: Lessons Learned from Postpartum Depression/Anxiety – From Give Me Neither
I have been putting this off for way too long! It is on my short term plan to make a plan – do you like that one – LOL! But you are dead on that EVERYONE needs to be on board. I am working on that piece!
What you said about getting everyone on board is important. Honestly that is a struggle at my house! Wonderful advice!
LOVE THIS POST, Kelly. I love reading everything you write, but the stuff that shares a little piece of your life… awesome!
We are definitely on the DR Plan. Thank G-d we are now on step 4 (that retirement fund stuff), and I have to say – it’s the hardest step of all. After living with such austerity to get out of debt and build up our 6 months of expenses into an emergency fund, we were ready to BREATHE a little bit. Not go crazy, but put our kids in after-school activities, send them to swimming lessons, buy a new pair of jeans every once in a blue moon… maybe even — dare I dream — take some family vacations.
So we did that for a year. We were still really frugal by society’s standards, but we loosened the belt. And guess what happened? We fell far short of our retirement goal. Time to reconfigure some things! There has to be a balance between living today and living FOR tomorrow. I know Dave says, “Live like no one else…” but that can’t be forever. So, now our goal is really to figure out that balance.
(Hmmm… writing this out has given me a good idea for another post!)
We’re sort of easing our way into a budget. I started by obsessively reading about couponing early last fall, and then offered to take over the grocery shopping. (My dh is a SAHD, working on our house, which we’ve had to rebuild from top to bottom. We’re running credit card debt for the first time ever, due to the house combined with the mortgage crisis’ timing.) Then, for the last couple of months — as the stockpile grew — I’ve been telling him we’re going cash only in January, and live off our stockpile. Of course, we’re just on Day 5 (because he decided to start on New Year’s Eve — after we withdrew the cash for this month), but he said this morning that this is kind of fun. So, we’ll see. I have some inchoate goals, but maybe DH and I can firm them up this week.
I have found the first month of cash only is the hardest. And after month three, you wonder why you didn’t do it earlier. Stay strong this month. You can do it.
We live by a very detailed budget and I can say that because of that it is what enables me to stay at home with my son. Thanks for the great post!
I have always lived and loved budgets. I was happily reading down the list checking things off and stopped dead at IRAs. *gulp* Our “IRA” is a measly work retirement plan…and that’s about it. I really don’t even know if we are even close to giving much into it. We sat down and put together goals for this year and right now we are marching towards home ownership. Which for someone who dearly likes to save money, seems like a most daunting endeavor. Thanks for the tips!
Megan – Congratulations on saving for a house. That is awesome. And you are right, it is a daunting task. Especially when you are also trying to save for retirement and emergencies. Good for you for saving on a down payment – you will thank yourself for that down the road in a few years.
We have followed the Ramsey plan for several years. I find using his quickie budget (rather than the more involved cash flow planning) is more convenient and workable for us. I just have to be sure to plan for some of those cash flow things like haircuts, co-pays, clothing, etc. Good luck everyone!
Thanks for the post! I found that preparing a budget made me face how selfishly I spent money. I considered myself a giving person, but I didn’t shop that way! What an eye opener. I love that Dave’s system and KansasCityMamas encourage and help us maximize our giving.
Budget.. cringe.. restrictive.
I can relate to those words. I’m excited to learn from you. We’re coming off a few years where we just didn’t buy anything extra. Now we need to start putting that extra money to start saving for a car and sewage system (oh, joy). Can’t wait to read your future posts.
We are also Dave followers- he has changed our lives, we’re finishing up BS2 this year!
2011 goals:
1. Pay-off final student loan (July).
2. Have 6 months of expenses in savings (December).
After this year our goals are to:
– Up retirement contributions.
-Save 20% for a DP on our next house
– Contribute to our son’s 529 (he’s only 1, but family has been generous to get it started))
Great goals, Valerie. Thanks for sharing.
Hi,
I’m a Dave Ramsey fan too. Maybe I’m not reading through the book carefully enough, but I’d like to know how in the world I can save 3-6 months emergency fund? I figured if I put aside 10% a month it would take approx 4 years, 8 years if I put aside 5%. Thanks.
Hi Cathy. For us, we had to eliminate some other things in our lives. That included home phone, eating out, etc. I’ll talk about this more in week four – so of the ways we were able to cut expenses so we could get to that six month number.