The Strategy

Yesterday I told you the joys and sorrows we faced when we got out of debt, only to get back in it. I told you the hows and whys of all. And then I told you about the turning point.

The moment eventually came but only after many MORE moments pouring over books, listening to the wisdom of biblical advisers and nights laying in bed talking to Matt about what I had been reading. Dave Ramsey was the guy behind all the books and he really made sense! What I especially liked about one of his books entitled The Total Money Makeover, he shared tons of success stories. People who had royally screwed up and not only had rebuilt their lives (albeit the hard way) but were now thriving with money AND happiness. These poor people had such incredible debt I can not EVEN fathom it. Double and triple the amount of money Matt EARNS in a year. Our one measly credit card balance didn't seem all that terrible compared to THEM, and THEY did it! SURELY, we could get out of debt too!

But I realized, I don't just want to get out of debt. Been there, done that.

I wanted more. I want our family to THRIVE. I didn't ever want to NEED to use a credit card again. I want to think less of the here and now, and more of the future. Can something so radical be done? Can something so radical be done with a family who has what most would consider a very modest single-income? Could something so radical happen to a family who would love nothing more than to have a whole passel of children running about? It certainly could, CAN and WILL--but only with the RIGHT tools and the RIGHT plan.

That plan requires a whole new mindset of us. It takes us out of the defense and puts us in the offense. We are no longer reactionary, but PROACTIVE.

Anyone familiar with Dave Ramsey knows his Seven Steps to Financial Freedom, so I am writing nothing new.

The very first step for ME that was necessary was to recognize the part I played and repent. At the time this all transpired, Matt was making more money than he ever has. We came to that job from years of working jobs that barely paid the rent and years of me struggling to make money stretch in ways it just can't. I remember my sister loaning me money for groceries one day, we were that poor.

When he got that new higher-paying job, we let loose! Oh MAN it felt good! We bought pizza, we went out to eat, we spent money. We earned more than we ever had, and despite getting out of debt, there was nothing to show for it. We had no savings, we weren't PLANNING for the future. Well sure enough--the future comes. I say this because, credit card debt was not the only issue that needed to be worked through. Maybe the credit card was in Matt's wallet and I never touched the thing. That didn't negate me from the situation. That was just the apple on the tree. I needed to get to the root of the problem-to cut down the TRUNK of the tree-which was me. I was the trunk of the tree by foolishly allowing hard earned resources to fly like a brittle fall leaf on the wind.

Letting so much money fly out of our fingertips on foolish things without planning for the future made the meeting not so pleasant when those necessary costs met us head on. There was no fall back, no money set aside because we had used it on pizza or REALLY cheap clothes (but they were only $2.00!!!) I remember working it all out and had I budgeted and dealt with our finances responsibly, we could have saved an unsightly amount of money each year~like LOTS (Matt asked me not to write specific numbers but in this case, I wish I could because. oh my goodness). Realizing that number and seeing what we actually had literally made me sick to my stomach. It took a long time, but I knew I had to actually FORGIVE myself too. The numbers haunted my dreams and I saw very clearly my shortcomings and I beat myself up about it to within an inch of my life. Even now at times, I cringe and what could have been. I try to quickly squash those feelings though, because they are not at all productive.

We established our emergency money right away and began our debt payoff.

I had a lot of trepidation about starting a zero-based budget though, and really did drag my feet in that area. It seemed too hard, too foreign to me. I had never ever done a budget before. I had never ever (even in our poorer than dirt days) accounted for every dollar spent and/or allotted money for different areas. This was all new and terrifying to me and I DID NOT WANT TO DO IT.

But I did do it, knowing that change needed to be made.

I sat sweating, fingers computing and recomputing calculator numbers many a night until I finally figured out just where our money was going and where it NEEDED to go. I filed my debit card away and created envelopes instead, labeled 'em, planned what money needed to stay in the account and what needed to be divvied out. I made revision after revision and note after note.

Now, almost four months later, I realize this is the single most important change in our financial gameplan. Here is why.

A zero-based budget means every single dollar spent is accounted for and divvied out and "spent" (in theory). This means I was IMMEDIATELY required to have self-control, I was FORCED to pay attention to how much I was spending and it was absolutely NECESSARY not to spend more than was allowed. Unless of course, I wanted to pay late and over-drawn fees. Trust me, I don't. I have stories about those, too.

In my zero-based budget, I not only accounted for monthly expenses (rent, utilities, debt reduction, car, etc.) but FUTURE expenses. (See?! PROACTIVE!) I created envelopes (LOTS of 'em!) that would ensure that when the need arose (and it inevitably will) I can have it covered, ELIMINATING the need for any plastic credit card buffer!!! Isn't it a BEAUTIFUL thing?!

Some people make categories and work out the details without using envelopes and that is something that would be wonderful for me to do someday (using envelopes can illicit the most horrifying stares!) but right now, for me, I need the TANGIBLE reminder to stay on target and the touchable proof of improvement as the amount of bills add up. I still need to force myself into financial submission. ;-)

The only money that stays in our account is for tithe, rent, utilities, life insurance, Netflix and debt pay off. Everything else is divvied up into envelopes. These are my cash categories.

Saving
Food
CVS
GAS
Clothing
Medical/Health
Personal
Recreational
Preparedness (food supply, grain mill, garden seeds, etc.)
Homestead (animals, animal feed, tractor equiptment)
Entertaining/Gifts

There are several categories I would like to add, but am waiting until the credit card is paid off and that cash is freed up. One is a homeschooling envelope for curriculum and supplies. Any envelope system fans out there? I'd love to know what's in YOUR wallet?! That is, what categories you have created.

What isn't SPENT in a category simply rolls over until the money is needed. Again, self-control is necessary not to raid envelopes simply because the cash is there. (I am practicing!)

What I love about this system is that I don't FEEL limited in my spending (It's like those diets that promise you can eat all the food you normally do while still losing weight. Only this works! hehe) and I don't feel GUILTY when I go to buy needed shoes for the children. Because the money is already there and had been planned for! I also love the recreational envelope...because that is a really fun one! ;-)

My husband has changed jobs twice since the time of the higher paying (for us) job, and with each move he has taken a drastic pay cut. We are now working with almost half the salary that he had been getting before but you know what? I have never been more EXCITED or at EASE about our finances before.

I am writing all this here in as transparent a way that I am allowed and admitting my own mistakes in PUBLIC (man, I AM insane!), in order to encourage us all to be better stewards with our money and to debunk a few myths even I fell for up until recently.

Myth #1) "If only we made more money, we wouldn't be in this mess..." DEBUNKED. It isn't about the amount of money you make-it's about your mindset.

Myth #2) "If you have are debt-free, who cares about a budget?" DEBUNKED. You still need to know where your money is going.

Myth #3) "If only I were debt-free it would be okay". Being debt-free is NOT enough...you also need to be PREPARING for the future!

Myth #4) "It's all the credit cards fault!" DEBUNKED. We need to stand up and give accountability for our own shortcomings. Nothing can change unless we are honest with ourselves.

Myth #5) "It's impossible to live a happy, luxurious life on a modest single-income with lots of children."

You just keep visiting this blog from time to time and I hope you'll see how untrue that is.