Sometimes life hits hard and though you'd LIKE to continue living at the same level of comfort, you just can't. Well, no, you can, but it will take you into debt! We have just been through a financial storm, and though we were able to weather the storm nicely, we now have to get back onto our feet so we can prepare for the next one. Stuff happens, financial storms come and go. In the time between, it's up to you to get back up, brush the dirt off your back, and figure out how to strengthen yourself better for the next one.
Living with financial peace is one of those things that takes a lot of sacrifice. Creating a budget is great, but only if you are willing to adjust it and pull it way back if the need arises.
My husband and I sat down together last week and decided that if we were going to get back to the place where we could weather another terrible storm, there would have to be some serious cuts. Adding to the equation was lost income due to the fact that I've recently resigned from my job. With the lost income and the financial struggles in the last month, some serious re-ordering was necessary.
I couldn't bear to to back to square one and create a semi-permanent budget of very low spending. I just couldn't do it. So we decided to budget for the next 4 months only, and then re-evaluate in January. It seemed much easier to just focus on the next 4 months rather than feeling like we are back in a never-ending prison of sacrifice. Yes... I am a dramatic person, and that drama certainly pops up when I think about sacrificing to save money.
How do you cut back a budget? The only way to cut back a budget is to sacrifice the things you don't actually need. Here's the funny thing. In the last year, we put about $500 a month into savings and lived comfortably on the rest of our income. As we now work with newly lost income, we have cut the budget and INCREASED our savings to be closer to $1000 a month. How can we do that? Simple. Sacrifice.
We've totally nixed our eating out and recreation budgets. We no longer have anything towards entertainment, nothing towards our special savings for random events. We've cut our grocery budget by about 1/3, and we'll be back to the ground beef, eggs, rice, and bread diet! I didn't take anything out of the fruits and veggies budget because those are necessary for a healthy lifestyle.
Some of you may be thinking, "Well you can't possibly live like that... with absolutely no spending money, no entertainment money, and no recreation money!"
Wanna bet? This is where my dramatic side switches over to my competitive side. We've done it before, what's to stop us from doing it again?? You think we can't? You just watch and see and we'll prove you wrong!
Even Gail Vaz-Oxlade, a money coach and financial guru, claims that no one can get by without at least $50 a month set out for entertainment. She's very wise in a lot of things, and I lover her advice 90% of the time. However, in this one thing, I think she's wrong. I know she's wrong.
I can get by without cable TV! I can get by without eating out! I can get by without spending money on entertainment! I can get by without spending a single cent on clothing for myself, and only a couple bucks of clothing for my kids in the next few months! I can get by on a small grocery budget of just the basics! I can get by without costly recreation! I can and I will!
I did it for more than a year as we started to build a financial foundation, and I can do it again! I can do it again because I know that under all this sacrifice is peace. Under all the frustration of trying to feed a family of 5 on a budget for 2, there comes a satisfaction as we watch our savings account rise back to the place where we know that we can last another 6 months on our emergency fund if the need arises.
Financial peace isn't very peaceful at first. But, you know what Dave Ramsey says. "Live like no one else so later, you can live like no one else!" Right now, we are back to the first half of that statement, and though we are not really loving it, we are fiercely loyal to our plan so that we can reach the second half of the statement.
Thursday, August 30, 2012
Tuesday, August 7, 2012
Lots of emergencies!
In the last couple of months, we have come through some crazy financial emergencies. We've managed to take out 50% of our emergency fund on things that we totally didn't plan for and weren't too thrilled about!
Part of me wants to think of it in a very depressing and frustrated way. All that hard earned money just went down the drain! We worked so hard to save almost $20,000 as a good solid financial foundation for ourselves, and we just lost half of it due to stuff that came up. Black mold in carpets couldn't just stay there, we had to replace the carpet. A cracked bathroom sink and rotten out vanity cabinet can't be ignored, we had to replace it. Our van (our only vehicle and our means of earning money!) had some troubles and we had no choice but to fix it.
We also ended up starting our own business in February and didn't foresee some huge costs for various insurance items that are mandatory for a business like ours. Ugh. We had a slow work month in June and ended up not being able to take a paycheck in July. It's been rough!
Instead of dwelling on those thoughts, I can tell you that I have been extremely thankful. I'm thankful that we took Dave Ramsey's Financial Peace University course. I'm thankful that we worked so hard to save all that money. I'm thankful that when we walked through the last couple of months, we had the emergency fund to rely on! Most of all, I'm thankful that we sit here today with a small emergency fund instead of a huge credit card debt.
There are more things that are coming and need to be dealt with one at a time before winter, but hopefully we can handle them without touching any more of our emergency fund. We'll need new tires, new windows (the leaky windows caused the mold in the carpets), new front door and door frame (the snow blows in under the door), and we really need a new screen door for our patio door. Our current screen door is getting more and more taped up every day to cover the new holes.
Here's the thing though. Did we and do we still have financial peace? I can tell you honestly that we've had some doubts, but yes, we are still at peace. It's funny... a few years ago, we felt that we were doing reasonably well as we lived from paycheck to paycheck, constantly battling a few hundred dollars of credit card debt. At least we could find a lot of people that were in deeper debt or seemed less well off than we were.
Now though, we've changed our mindset about money. We sit here feeling empty and broke because we've had to knock $10,000 out of our emergency fund and only have about a 3 month buffer in there now. We feel like we have virtually nothing and are doing everything we can to save our pennies to get us back on track! I can tell you, if we had $9,000 a few years ago, we would have been dancing our way to the store to quickly find something to splurge on! What a change!
When I look at our entire financial picture, even the last few months have been peaceful. Crazy, and frustrating, and expensive yes, but there is an element of stress that has been replaced by the peace that we were ready for all of this. We didn't buy the bigger house (even though that would have eliminated the carpet costs and other house costs,) and have a bigger mortgage and new problems to deal with. I'm thrilled with our new carpet, it makes our house look bigger and more beautiful. I'm happy with the way things are, because I know that we were prepared. I also know that even if we lost everything, we could rebuild it faster than ever because we've done it once already before. We learned so much in the process that if we had to do it again, which we sort of do, we know how.
Part of me wants to think of it in a very depressing and frustrated way. All that hard earned money just went down the drain! We worked so hard to save almost $20,000 as a good solid financial foundation for ourselves, and we just lost half of it due to stuff that came up. Black mold in carpets couldn't just stay there, we had to replace the carpet. A cracked bathroom sink and rotten out vanity cabinet can't be ignored, we had to replace it. Our van (our only vehicle and our means of earning money!) had some troubles and we had no choice but to fix it.
We also ended up starting our own business in February and didn't foresee some huge costs for various insurance items that are mandatory for a business like ours. Ugh. We had a slow work month in June and ended up not being able to take a paycheck in July. It's been rough!
Instead of dwelling on those thoughts, I can tell you that I have been extremely thankful. I'm thankful that we took Dave Ramsey's Financial Peace University course. I'm thankful that we worked so hard to save all that money. I'm thankful that when we walked through the last couple of months, we had the emergency fund to rely on! Most of all, I'm thankful that we sit here today with a small emergency fund instead of a huge credit card debt.
There are more things that are coming and need to be dealt with one at a time before winter, but hopefully we can handle them without touching any more of our emergency fund. We'll need new tires, new windows (the leaky windows caused the mold in the carpets), new front door and door frame (the snow blows in under the door), and we really need a new screen door for our patio door. Our current screen door is getting more and more taped up every day to cover the new holes.
Here's the thing though. Did we and do we still have financial peace? I can tell you honestly that we've had some doubts, but yes, we are still at peace. It's funny... a few years ago, we felt that we were doing reasonably well as we lived from paycheck to paycheck, constantly battling a few hundred dollars of credit card debt. At least we could find a lot of people that were in deeper debt or seemed less well off than we were.
Now though, we've changed our mindset about money. We sit here feeling empty and broke because we've had to knock $10,000 out of our emergency fund and only have about a 3 month buffer in there now. We feel like we have virtually nothing and are doing everything we can to save our pennies to get us back on track! I can tell you, if we had $9,000 a few years ago, we would have been dancing our way to the store to quickly find something to splurge on! What a change!
When I look at our entire financial picture, even the last few months have been peaceful. Crazy, and frustrating, and expensive yes, but there is an element of stress that has been replaced by the peace that we were ready for all of this. We didn't buy the bigger house (even though that would have eliminated the carpet costs and other house costs,) and have a bigger mortgage and new problems to deal with. I'm thrilled with our new carpet, it makes our house look bigger and more beautiful. I'm happy with the way things are, because I know that we were prepared. I also know that even if we lost everything, we could rebuild it faster than ever because we've done it once already before. We learned so much in the process that if we had to do it again, which we sort of do, we know how.
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