Wednesday, October 1, 2014

Some Thoughts on Finances…

I am by no means a financial expert. I’ve made some unwise financial choices in the past (some out of pure ignorance, like trying to pay extra on a car payment and it going straight to the interest instead of principle because I did not specify on the payment! uhhhh!! still not an excuse). Fortunately it wasn’t anything too detrimental. I have always worked hard (learned that honest from my Mama & Daddy- hardest working people I know!) and been faithful in giving (m m parents are incredibly generous & always encouraged me to be the same way) because that’s what God expects from us. He has blessed our family with an incredible opportunity that has created a lot of freedom, and I am so thankful for that blessing. I absolutely give GOD all the glory for that & pray we continue to be good stewards of the gifts we’ve been given. One of those “gifts” is access to some really wise individuals regarding finances. They have taught us a lot in this area, and as always, my goal is to pay that forward and share what I have learned. It may or may not work for you, but I have seen some of these thoughts in action (in our own life and the lives of others) and I can tell you, it works.

Finances can be such a touchy subject, and unfortunately formal education doesn’t always cover necessary LIFE skills like creating a budget and balancing a checkbook. I taught a few lessons on this to my middle schoolers during our career exploration units , and although some thought it was interesting, the majority could care less because it was so far in the future.   I know some classes vaguely cover financial education, but overall, it’s pretty safe to say most of us  are not really educated in this area. Whose to blame? That doesn’t really matter. That’s the wrong question. It would serve us a lot better to focus on a SOLUTION moving forward. We love a common sense approach to finances. (If you haven’t already, you should check out Herman Cain. He’s got some great insight on “common sense” solutions to problems we are facing in America.)

We have learned a lot from picking the brains of people who have the type of lifestyle we want. (And by lifestyle I mean debt-freedom, smart spending, budgeting, saving, planning for the future, investing, etc.) They have also encouraged us to start reading books from financial experts. It is one of mine & Jonathan’s parenting goals to teach our children how to manage money well, and we know the best way to teach anything is to model through example.

I am no genius, but here’s what I am observing across the nation. And it’s not good.

More debt. Less giving. More month than money. No plan for retirement. Little to no savings. Living beyond means. More hours at work. Less quality time with the family. Finances putting a strain on marriages. More stress leading to health issues. More medical bills. More debt.

And THIS, my friends, is a recipe for disaster. It’s a vicious cycle.

Some people are never taught HOW to make choices regarding finances and simply do what they have seen their parents do. That may or may not be a good thing, but it’s fairly obvious that the majority of people continue with the same cycle. Most parents want ‘better for their children’ and send them to college to get degrees expecting that will pay out and land them some high paying job. In reality, we are setting LOTS of young adults up for failure. I am not an anti-college person. I LOVED school, had a rewarding career in education for 5 years, and continued on to get a Master’s and Specialist’s degree. But I want to tell you that if I had known then what I know now, I would have absolutely made some different choices regarding all of the advanced degrees.

As a teacher, I saw so many kids who I know will not thrive in a traditional college environment (my hubby is one of them) but choose that path because they see it as their only option. We are doing them such an injustice by making them believe post-secondary education is a one size fits all option & they have to funnel into that. Jonathan is extremely intelligent, hard working, and motivated, but he HATES writing papers and has a strong entrepreneurial mindset. Needless to say, a four year college was not his cup of tea. He ended up attending technical school to get a drafting degree and eventually opened his own successful business that had nothing to do with ANYTHING he went to school for (before walking away to do AdvoCare full-time). This is just ONE example. I cannot tell you how many young ladies I talk to on a weekly basis that have changed their major multiple times TRYING to figure out what they want to do with their life. In the process, they are either driving themselves or their parents into further debt- a black whole with no way out. Don’t get me wrong…learning is important, and I 100% support being a life-long learner. That’s not what I’m talking about here. In fact, here is the post sharing what I am trying to get across.

Really, I think we need to spend time investing into our young people to teach them their options and educate them on how to manage money. Our government is a poor example, and our government runs our schools, so what can we conclude that our children are being taught about money? I’ll let you draw you own conclusions. PARENTS have to be responsible for teaching their children. However, even if your parents did not teach you, that is not a valid excuse. Like Andy Andrews says in The Traveler’s Gift, “The buck stops here.” There is no reason we cannot take initiative and personal responsibility right now to start creating new patterns in our own family. We are all making choices daily that are either getting us closer to our goals or further from them. Why not create a new trend in your family?

SO, I said all of that to share a few insights that that have helped us. Obviously we aren’t anywhere near where we want to be yet, but we are heading in the right direction thanks to some mentors & authors who have helped along the way.  (Here is an older post about our journey to debt freedom.)

1. Set goals. Set different types of goals. Write them down & be specific. Keep them in front of you. Set short-term goals because accomplishing them will motivate you to keep going. Set long-term goals for where you would like to see your family in 1 year, 2 years, 5 years, 10 years, 15 years, & 30 years. Set retirement & investment goals. Failing to plan is planning to fail, so take time to talk about this with your spouse. Just as it says in Proverbs, “Where there is no vision, the people will perish.” (I cannot think of a BETTER real life example of this than Target. If I walk into Target without a plan, I walk out with $98 worth of stuff I didn’t need. I pretty much avoid that place now…)

2. Live beneath your means. Ouch!! I know very few people who actually do this. Debt does not HAVE to be “normal.” Debt freedom leads to all other types of freedom, and there is no way to achieve debt freedom if you’re not living beneath your means.

3. Create a budget. There’s no way to live beneath your means if you don’t know what you’re bringing home or spending. If we are real, most people do not TRULY know where there money is going. (We are guilty of this sometimes, too.) There are so many great tools for budgeting, but here’s what we did. We pulled up EVERY single dime we made and spent for 4 months straight (so we could calculate averages). We added up out total income for those 4 months, and then we listed out our spending in different categories. Now we know what to expect for the “constants” & we plan ahead for “variables” (holidays, birthday, trips, etc.) Here are the categories for our monthly expenses:

  • tithes
  • mortgage
  • health insurance
  • car insurances
  • water bill
  • gas bill
  • electric bill
  • internet
  • gasoline
  • internet (no phone or cable)
  • cell phone (we pay our parents because it’s cheaper to stay on family plan)
  • groceries
  • gym membership
  • books
  • toiletries
  • AdvoCare products
  • savings

Again, we set aside a certain amount to cover expenses like accounting services, gifts, car repairs, travel, clothes, needs for Jase, etc.) We do plan for these ahead of time though as often as possible.

If you have no way to track your spending from previous months, you can start now. Write down every single penny that you spend for one whole month straight! Every penny!! (Don’t worry, it’ll quickly become a habit.) If you’re tech-savvy, I’m sure there are great apps too. Chances are, you will be blown AWAY at how the small purchases here and there add up. A $5 latte, $4 at the gas station on a bottled water and gum, a $3 magazine at the check-out line, grocery shopping without a list, a new outfit for a special occasion, lottery tickets & soft drinks (don’t get me started). It just ADDS up, and before you know it, you have spent a LOT more money than you realize. We are guilty of this, and tracking our spending for the last 4 months really helped us realize some pitfalls. Once you get REAL about your spending, you can develop an appropriate budget for your family that considers your family’s goals, priorities, income, & expenses.

5.  Learn to ask great questions. If I keep doing things like I am right now, will I be any closer to my goals in 5 years? 10 years? 30 years? How can I create residual income? How can I pay off debt faster? Where can I make cuts in my spending? Am I being a good steward of my time, talents, and resources? How can I give more? What books can I read to help improve my financial education? What resources are available to help? How can I plan ahead so I can pay in cash? How much can I afford to save/invest/put into retirement each month? Do I have an emergency fund with 6 months of monthly expenses saved up? Am I buying things I don’t actually need? How can I earn a plan B income on a part-time basis? (This is the "Fix the roof while it's not raining" mentality. AdvoCare has been an incredible plan B for a lot of people we know, and we would love to talk to you about it if you’re interested.)

6. Educate yourself. When Jonathan & I realized it was OUR responsibility to make the best possible choices for our family’s future, we dove in full force. We started with Dave Ramsey to teach us some basics. We quit blaming, comparing, or making excuses. None of that was getting us any closer to our family’s goals. Justifying poor spending habits and a lack of discipline in our finances were not honoring to God, so we just stopped. We also STOPPED spending if we didn’t have it. Sounds simple, right? I can assure you it takes a lot of discipline and & is easier said than done, especially when we live in a generation of instant gratification & entitlement (I deserve…). We seek wise counsel, we pray over our financial decisions, and we read a lot (Jonathan prefers audio books, but he still reads too).

7. Give God the first fruits. This one is a non-negotiable for us. The first thing we do when receive a paycheck is write a tithe check. We know God blesses a cheerful giver, and it’s all HIS anyway. Every dollar we make is because HE has given us the opportunity & the ability. If we can’t be faithful in little, why would he bless us with an abundance & trust that if we start making more, we’ll start giving more? Give now, and give with a cheerful heart. We know none of us are promised tomorrow, and although we want to plan smart for the future to be a good steward, it’s also important to invest in eternal matters NOW.

8. Think differently. Chances are if everyone else is doing it, you probably shouldn’t be. We really had to put blinders on and FOCUS on our own family’s financial goals. And I don’t mean any disrespect by this, but we do not take advice from someone who is in a financial situation we would not like to be in ourselves. That has meant we have had to drown out a good bit of unsolicited advice. We smile and nod, but let it go in one ear and out the other. We have to prioritize and figure out what is most important to OUR family. For us, this has meant putting all of our hobbies on hold. I like to run races & compete in competitions, play team sports, craft, paint, go to the movies, & teach fitness classes. Jonathan likes to hunt, fish, play the guitar, shoot guns, watch GA football, and golf. And I’m not trying to sound extreme, but we know that those things take time and money, and we know that if we can choose to spend our money and time a little more wisely right now, we will have a LOT more time & money to do those things in the future as our kids are growing up. We also plan to homeschool, so that will give us some great options for traveling with the kids. (That might sound boring, but I assure you, we have a LOT of fun over here in the Butler house!! In fact, we had a pretty awesome dance party today in our living room. I’m not sure if that was more entertaining or the freestyle battle. Bet you didn’t know we have some mad rap skills. Free fun, folks!)

I don’t know if that was helpful or not, but my hope is that it can at least help one person start to change their thinking about finances. One person can snowball & change the pattern for an entire family for generations to come. We want to raise hard workers & good stewards, and we know it is OUR responsibility to live that out and teach it to others.


Emily said...

Spot on! Been doing some writing about this too because I see so many people overspending. We cut our budget significantly so I could stay home and have learned to say NO to a lot. The biggest thing I see when helping others with their finances is that they are not willing to change or sacrifice!

Unknown said...

i am really bad at sticking to my budget but i do try to follow it

Anonymous said...

I need this today! Love your writing style. Thanks

Unknown said...

Do you have a list of books that you have read and would recommend on this subject?

Allison said...

Thank you for sharing this! While I'm normally good at resisting the urge to purchase things I don't have the money for, it is tempting to still do it. I needed the reminder today that it's ok to not have everything that America tells me I have to have!

Anonymous said...

We have a "non regular bills" category in our budget. We add up our once or twice a year expenses like Sam's club, AAA, CSA, etc and divide that amount by 12. The first year I forgot to add personal property taxes and renewal fees for our vehicle but as time has gone on, I've gotten better at budgeting for those "surprise" expenses.

Anonymous said...

Danielle, you are right on the money (no pun intended). I recently had a heart to heart with myself on needs v. wants. Things that I thought were needs (cable TV, Sirius satellite radio) were really wants. We just bought a $30 HD antennae and cut our cable TV saving us over $110/month!! And I cut out my satellite radio, saving me $180/year. It's funny though because I started making these decisions after beginning Advocare. I suddenly had more energy and didn't WANT to sit in front of the TV all evening... It's amazing the domino effect of simply being healthier. It bleeds into every other part of your life! - Jo

Lindsey @ SimplyLindsey said...

Amen! I learned a lot of these lessons on my own when I finished graduate school and had to figure out my own budget. It's so sad, but not surprising, that we don't learn much about finances in school. When I began budgeting, I definitely felt like I couldn't do as much as my peers (e.g., trips, dinners out), but one day I had the realization that a lot of these people can't afford it either! I've had the opportunity to sit down with some family friends who are just starting out after college and share my budget with them and give them some of the same pointers you've shared in this post.

So thankful for the Godly wisdom you share! :)