Flipping, Flopping, Renting and Selling

Archive for the ‘budget’ Category

Back at Again

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It has been months and months since I last posted anything on this page.  Over the last several days, I have thought about how I have neglected this blog and what I am really trying to accomplish from sharing my thoughts.  Thinking about all of this took me back to the why:

The WHY is at the age of 49, I started my life anew.  I divorced after 29 years and 11 months of marriage.  This was hard, very hard.  However, it was something I needed to do.  I have often said, people under the age of 20 really have no clue what they want with their lives and it is far too young to make a commitment to someone for the rest of your life.  Now I know some of you are going to say I know so and so and they got married when they were in their teens and they are very happy.  For those rare gems, I say congratulations.

I made this very hard decision just a month shy of my 49th birthday.  The day before my 49th birthday, I started my new single life.  Over the next year, the realities of what was occurring set in.  The first is for the first year or so after I left, I paid the expenses for both homes.  I did this not only because I was able, but because I felt an obligation.  During this year, my youngest son got married and there were of course expenses.  Also, during this time I racked up credit card and other stupid debt.

When the divorce was finalized, it was necessary to split what assets were accumulated during this marriage.  Because I did have a better job situation, he ended up with 60% of the assets.  This does not make me unhappy, nor do I bear any grudges.  The reality was though, when I took inventory after all of the dust had settled, I somehow had gotten myself in almost $40,000 debt — without a house payment.  I really was starting from scratch — and I needed to do something about it NOW!!

The good news though is from all of this, I realized I needed to make some changes in my spending and savings habits.  I had to learn how to be disciplined with my money and get back on track. After all, by this time I had turned the BIG 50 and I didn’t have so many working years ahead of me any more to right this ship.  Luckily, someone very dear to me recommended I read Dave Ramsey’s book “Total Money Makeover”.

I knew to pay off this small mountain of debt I needed to make some drastic changes. The first thing I did was take a true inventory of my income and expenses.  I wrote everything down. I also tracked everything I spent for several weeks to truly see where my money was going. I then did the first honest budget I had done in years. Some of my previous posts talk about the zero-based budget. I plan over the next several weeks to do a new series of posts about budgeting and discuss how I was able to pay off this debt and the successes in my life since.

Budgeting – Getting Organized

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Recently, speaking with some of my co-workers about budgeting and getting debt-free, the statement was made to me “we aren’t even ready to start a budget.” My question is if you are in financial straights, how can you not budget??? Believe me it is hard — very hard to get started, but to get on the right financial path it is absolutely necessary.  The very first thing you have to do to be successful is do a reality check with yourself about what you really owe.  Remember — no debt is good debt, no matter what you may have heard.

Three years ago, when I sat down and looked at my world — I was shocked.  I didn’t think I was doing too bad in life. I had just gone through a divorce and had a little more credit card than normal. I also had a surgery a few months before and had some doctor bills. But they were on a payment plan and I was not having any trouble making the payments.  I had a car loan (for a brand new car), but everyone has car loans — right???  When I sat down and put all of the outstanding balances together, along with the monthly payments — I was dumbfounded.  I was $40,000 in debt (with no house debt).  How in the world did it happen.  All my life I felt I was living within my means, making payments on time, had good credit — where did I get astray.

Let me say, it was easy to say it was because of the divorce.  It is because of all the extra expenses I have had recently.  Everyone has debt. I’m doing fine.  But it wasn’t — I was $40,000 in debt and 50 years old.  I decided now – not later, was the time to fix this problem.

The first thing I did was get organized and look at what I really “needed” to spend in a month.  I then split this into two parts.  I get paid two times a month, so at the top of the page I wrote what my income was and then subtracted everything due in the first of the month pay period.  I then took what was left over on paper and added it to my income for the end of the month and subtracted everything I needed to pay the second half of the month.  The first thing I noticed was the amount of money I had left over.  Part of this is likely because I forgot a bill here or there.

The bigger part is because I was not controlling my money and it was dribbling out of my hands without even noticing.  What I did to really help myself get on track is write down everything I spent — no matter how small the amount.  I also switched to cash for my “allowance” which includes eating lunch out, personal care, stuff I just want — those type of things.  Before this exercise I rarely had cash — it was easy to just pull out the debit or credit card.  I also switched to paying cash for groceries. I was very disciplined — if I ran out of cash — I couldn’t spend any more money.

It was amazing to see where all of my cash was going, looking back over the years I was really not very good with money (even when I thought I was great).  By controlling exactly how much I was giving myself to spend, I was really able to get a handle on all of those little drips in my cash.  Even though I am now debt-free, I still manage my cash the same way.

After doing this for a month, I was ready to really budget — and really start the journey to debt-free.

Meal Planning — Spending Less

menu planAs part of my concentrated effort to pay off my car, my dear husband and I are going back to basics of saving at the grocery store.  The first thing we did was go through the freezer and make sure our freezer inventory was up to date.  There a several ways to keep track of your inventory.  The easiest is probably to just keep it in a handwritten notebook and update as you use up the contents.  This gives us a starting place.

With the inventory in place, I now begin the week’s plan.  Normally on Sunday, we will have a larger piece of meat.  We will then take the leftovers of this and reuse in a different meal later in the week.  In this way, we don’t waste the leftovers and it doesn’t feel like we are eating leftovers every other day.

For instance, this week I am going to make roasted chicken and vegetables for Sunday’s dinner.  On Tuesday, we will take the leftovers of the chicken and make a chicken vegetable soup.  Roasted chicken is one of my favorite leftovers as there are so many ways to reuse.   This week we are making chicken vegetable soup, but we could have also used the leftovers to make enchiladas, grilled chicken for salad, chicken tacos.  The chicken I choose is a six pounder, so we will likely have enough to freeze even after we make the soup.  Any leftovers of the soup will also be frozen and I will take them in my lunch in the next 6 to 8 weeks.  Because it is still cold, we will also have chili this week.  When we make chili we make a huge pot.  My dear husband shares with friends and relatives, we will eat leftovers and we will freeze some for later.

At our home, we plan the menu together and make our grocery list based on the plan.  We also keep a list on the fridge of staples we are low on so we don’t forget, or worse get to the grocery and say “do we need _____” and end up overspending buying stuff we don’t need.  If there is a really good deal on a staple we love, we will stock up a bit.  However, we try not to have too much more than we will use in a month’s time.  We like to shop together, as this makes us more accountable.  We never ever go hungry — we always overspend when we are hungry.

During the week my dear husband does all of the cooking, following the plan. Using a dry/erase marker, I put the menu on the fridge for him.

I made a magnetic border for the fridge using duct tape and magnetic strips.  I don’t think it is Pinterest quality, but it does the job.

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The Power of Cash

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Three years ago, I started a journey to get debt-free.  All of my adult life, I have had some sort of debt.  It was the “normal” debt (credit cards, auto, mortgage).  When I began my journey as a newly single lady, I knew I had to get more control.  What I have found on this journey is that many of us seem to live just a little above our income.  This puts us in a vicious circle of paying one thing, creating new debt, paying it down and on and on.  When I met my dear husband, I found there is a better way to live.  So for the past three years, not only have I been living below my income level — I have been dumping debt.  I am now to the point I will be debt free in three months.

When I started the journey, the first thing I did was sit down and see exactly how much debt I had.  I was shocked when I saw the real numbers.  Although I had always knew about what my bills were, I really wasn’t doing much to get out of debt.  Debt is normal and everyone has it, right???  The number scared me — I didn’t even have any mortgage debt and I was almost $40,000 in debt.  A large part of this was my car which I had just purchased — brand new.  I also had multiple credit cards I had used throughout my divorce.  This turned out to be about $10,000.  It was time to get serious.

The first big change I made is I started using cash for most purchases. What I found is I didn’t spend nearly as much money when I really saw what things cost.  The other thing we do each month is put our budget in writing.  As a part of this budget process, I notate the cash line items.  I get paid twice a month, so I break our budget into two parts.

Before beginning my debt-free journey, I used to eat out every day.  Most days, this was at a “sit-down” restaurant.  I was averaging $15 a day for lunch.  This is more than $300 a month — just for eating out at lunch.  Once I realized this, I stopped doing this immediately.  I still occasionally eat out, but it comes out of my “personal” budget.  This is the same budget I use for hair care and any other pampering.  I on purpose made this dollar amount as small as possible to make me think before I do.  This extra money went directly to paying down the debt.

Groceries were another weak area for me and frankly my dear husband, who is more frugal by nature than I am.  We both felt we were a little out of control on grocery spending, so we came up with a monthly dollar amount comfortable for both of us, but less than we were spending.  I divided this number two and it is the amount of cash I withdraw each month for this category.  For both of us, our grocery spending went way down because we had a finite amount of cash.  Again this “extra” money goes toward debt.

As you all know, not every month is the same and there are some months where you know you are going to spend more.  How we managed this is any cash leftover at the end of the month stays in the envelope.  We then use the extra cash on months we have bigger grocery expenditures.  In our case, we had a nice little amount built up as we went into the holidays.  We also budgeted a little bit extra in December for all of the holiday gatherings and parties.

We do still use a card for gas purchases.  There are a couple of reasons for this.  First, when you go to get gas, it is so much easier to pay at the pump.  The other reason is we really track our gas purchases and adjust our budget on a monthly basis.  I have a very long commute to my full time job and it is important to stay on track.

Just by realizing what I was really spending and changing it to a cash mentality, I was able to add this “extra” money to my debt.  As the months turn into Spring, I will talk more about how I dumped all my debt and got to where I am today.  I hope you enjoy my journey.

Don’t Be Suprised in 2015

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As we are all putting our houses back in order from the 2014 Holiday, this is a good time to begin thinking about 2015.  There is one thing for certain in life — birthdays, Christmas and other celebrations comes at the same time every year.  As we were doing our goal setting for 2015, we set aside a budget category for gifts and vacations.  We started with birthdays.  We wrote down everyone we give a gift to on their birthday and wrote down the amounts.  We then looked at Christmas.  We set the amount we were going to spend on each person on our list and then added it up, this became our gift budget.

Next we looked at vacation.  We know how many vacations we plan on taking in 2015 and set out budget amount for each of these vacations.  After this was completed.  We took the total amount and divided it by 12.  This is the amount we need to set aside each month.  By doing it this way, we always have money available for birthdays or other celebrations.  This makes the holidays and vacations much more stress free.

The reason we combine these categories is two-fold.  First, we try to not make our budget too complicated.  We feel by having more general categories it gives us more flexibility.  The reason it make sense to combine these two categories is this is the first area we would cut if we needed to tighten our budget in any way.

The New Year — Setting Goals

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I have heard goals not acted upon are really just wishes. On New Year’s Day, we sat down and set our goals for 2015. When we set goals, we use the S.M.A.R.T. approach. The first part of this is setting a specific goal. An example of a specific goal would be “I want to pay off $1,000 in debt in six months.” A vague goal (dream) would be “I want to pay down debt.”

By setting a specific goal, you now have a measurable goal. For instance, if you are trying to pay off debt and you set the goal of paying off $1,000 in six months, you now know how much you need to pay over the next six months to reach your goal. So your goal of paying off $1,000 in six months is really paying $167 a month. By breaking it down in smaller increments, it now becomes achievable.

If a goal is not realistically achievable, it is also really just a dream.  I have found in all areas of my life if I break something down into smaller increments, it is easier to achieve.  If you make smaller goals out of your larger goals, you will reach your destination.  In addition to being achievable, your goal needs to be results-focused.  By breaking down your goal of paying down $1,000 to a monthly amount, you can see each month the $1,000 becoming a more attainable number.  In our example, your $1,000 is $833 after one month, $666 after two months, $499 after three months, $332 after four months, $165 after five months and $0 after six months.  Each month, you see the results of your hard work and this helps you keep your focus on your final goal.  There are many tips to help you visualize your steps along the way.

The final step in SMART goal setting is putting a set time on achieving your goal.  In our example, our time is six months.

For us, a real life example of this is paying off my car (our last debt) by the end of March.  This goal is a stretch for us, but because we know the dollar amount (specific), the amount needed each month (measurable), we know with a stretch we can do this (achievable).  We know we will see results each month and by setting a date of March 15, it is time bound.

Happy Goal Setting!!!

What Earth Day Means to Me

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Everyone has different views about Earth Day.  Growing up in the 60’s and 70’s, Earth day used to mean “hippies”.  Now that I am older and wiser, I know it means having a great respect for Mother nature.  I am very fortunate, as I grew up in a farming community very close to a big city.  So I really have had the best of both worlds.  Growing up with farmers taught me not to take food for granted — it does not just magically appear on your store shelf.  Growing up with lots of opportunity to go to the City taught me there are a lot of other people in the world with different food tastes other than just meat and potatoes.

When I was growing up, my grandparents lived in the City so there wasn’t much of a garden.  However, I do remember we did only get fruits and vegetables that were local to our area and they were always very fresh.  When I was in my early 20’s I had the opportunity to learn from a wonderful woman how to preserve fresh fruits and vegetables.  I learned how to can tomatoes and green beans.  I learned how to preserve strawberries (which grow very nicely in our area and are delicious fresh off the plant).  I learned how to make homemade jelly (you can’t buy anything at the store like homemade). From my grandmother, I also can make a killer pie — nothing is better than a cherry pie made with the tart cherries grown around here.  By the way, the Midwest grows pretty good apples too.

Now that I am in the second chapter of my life with my new husband, I plan to get back to my early adulthood a bit.  This year, my dear husband and I plan to expand our garden a bit more and can all those wonderful vegetables we are growing (some from seed).  We are also planting more heirloom vegetables than we have in the past.  We are going to expand our herb garden and I am going to really try to dry more of those wonderful herbs this year.  We are also going to create a real compost pile this year.  It won’t be anything fancy, it will not be expensive — but it will get the job done.

We are going to expand the beautiful flowers in our yard.  This I am doing all by seed.  Yesterday, we dug all his old bird feeders out and filled them to treat our feather friends.

Our plans for the summer and fall include canning tomatoes, salsa and pasta sauce with vegetables grown from our garden.  This year I AM going to figure out how to keep cilantro and basil through the winter….

We also love to take Saturday morning and visit our local farmers market.  If we are really ambitious, we will drive up towards Michigan and stop at the great local places along the way (particularly during blueberry season).  Both of us have done many of these things in the past, but with the two of us working towards the same goal we will be so much more successful.

So to bring this all back to my original topic — Earth Day probably means something different to everyone.  For me it is to respect the land, respect our food.

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