Late last fall, after many months of living in a very financially vulnerable position we enrolled in Dave Ramsey's Financial Peace University Online. (It would have been great to be part of a small group doing the course, but with childcare and limited time, the online version was our best bet.) We were living very close to the $0 mark and although sometimes we were paying our mortgage off faster than required, we had almost no emergency savings. We had some bigger expenses last summer to improve our front and back yards and repair our van which brought us to this point.
As a background, we have been married now 9 years and have never carried any credit card debt and only had a car loan for a short amount of time, though we did seem to be living some months about one month ahead of our means, meaning payday would come and we would have enough to pay off the visa charges for the month and not much left over after the mortgage. While we have been financially okay and have always been very aware of our bank account balances, we have not had a real "on paper, on purpose" budget until we started FPU Online. Now 7 months later we are loving the budget (most of the time) and telling our money where it is going, getting out of the discouraging Visa cycle (i.e. we rarely use it except for travel bookings and online purchases) and feel like we have a plan of action for the months and years ahead. Looking back now and seeing the current state of the economy, I am so glad we started budgeting when we did!
By God's grace and provision, we have been able to:
- Achieve Dave's "baby step #1" - save $1000 in the bank.
- Skip step #2 since we did not have any debt beyond the mortgage to contend with.
- Complete our will, finally! It was in the works a very long time and not because it is a complicated situation, just because we didn't take the time to finish off the process.
- Move on to "baby step #3" - save the equivalent of 6 months of expenses. For us, this fully funded emergency fund was also doubling as a van replacement savings fund. Living on one non-profit income did not allow us to save quickly for both the van and the emergency fund simultaneously, so we needed to accept that after the van purchase we would be starting over to fund the full emergency fund. Even so, thanks to my hard-working husband taking any available extra project at work, me trying to shrink our household expenses as much as possible and our tax return, we were able to buy a van with cash at the end of April, just 5 months after beginning our "gazelle intensity". We were able to get a good deal on a 2002 Honda Odyssey with higher miles, but we like Hondas and plan to keep it for a long time. Buying this nice of a vehicle outright was a true victory for us and something we could not have imagined just 6 months earlier.
- Continue on with funding my husband's work-sponsored and matched retirement fund which he has had for the last 7+ years. Continue on with our kids' educational investment accounts. Though the education accounts are small per month/per child amounts, something is better than nothing and halting those would not make sense with the fees and penalties involved at this point. (So, yes, we are deviating from Dave's program at this point, but feel this is the right decision for our family.)
- Continue with charitable giving to our church and other individuals and organizations.
- Begin again on funding the full emergency fund. This is slower going now. Although our consumption of goods and services in not being upgraded or increasing, the same amount is costing a lot more (gasoline, food, etc.). We have also been able to purchase tickets for our Christmas travel to visit family. With five tickets now to buy and the need to get our own rental car, this is not an inexpensive affair, but this is the joy of financial planning, namely to do what matters. We are often speaking with our children about the two most important things in life: God and people. These visits are very important to our immediate and extended family and are worth every penny to spend time with the people we love.
As a result of living on a budget these past several months we are realizing how our housing cost is really disproportional to our earnings and we are looking for ways to reduce that cost. Which brought us to the decision to put our home on the market in the middle of May after lots of effort in staging and decluttering. The goal would be to move to a lower cost property that would be nearer to my husband's work, thus saving on commuting costs as well as the mortgage. This would/will likely mean a substantial downsizing or downgrading in the size or quality of home we are able to purchase. But, after nearly 60 days on the market, one price decrease and only a handful of showings, we are looking for ways to make staying put a good option, too. Since we are not in a desperate situation to sell, we are not resorting to desperation pricing, either. So although it feels like we are moving forward with our financial stability, there is some uncertainly about life in general in our home right now. We are really feeling the effects of the rising costs of essentials, or at least the things that are the essential expectations of life in North America.
So in the meantime, we continue on with working faithfully on our budget, being very careful about how we spend our money and trusting the Lord for His provision and timing for our family.
P.S. - Over the past several months I have greatly benefited from the Money Saving Mom blog with tons of frugal tips, articles on personal finance and coupon links which have helped me stretch our household dollars. Check out how others are working on their financial situations here.