Wednesday, January 28, 2009

Introduction & Basic Information - Part 1

I would first like to thank those who were in attendance for the first meeting of the All Things Financial group. I am very glad to teach something I'm so passionate about. If you're reading this and you were there, then it means you're working on your homework, and I wasn't just talking into the wind!

If you were unable to attend the meeting, I'm glad that you're joining us now, and you're also doing your homework, so that's a good thing. The weather wasn't the best for our meeting, but I am certainly hoping that we will see you out next month (on February 24), and I'll definitely be praying for some better weather conditions!

In either case - here is what went on in the meeting:

Welcome to All Things Financial.
I am Clarisse Warren, and my husband and I are huge Dave Ramsey fans. We've been through his 13 week class Financial Peace University, and have read his books. About 3 1/2 years ago we had $70,125 in debt - not including a house. By changing our lives, and following Dave's system, we have been able to pay off nearly $45,000 of that debt. When we started 3 1/2 years ago, our income was about $25,000/year, and I wish I could say it has increased exponentially, but it has not. We still have a fairly meager income, but with a lot of creativity and managing our money, we have had some amazing success. We've chosen to sell a lot of things to help us on our way. So much so, that I wonder if the kids think they are next. In any case, I have learned a lot about dealing with finances through this process, and that is what I hope to share with you all. I will be using a lot of information from Dave Ramsey's FPU class, his books, and his talk radio show, as well as citing other financial gurus like Suze Orman and Larry Burkett. This class would not be complete, of course, without a lot of fantastic council from the Prophets, Apostles and other General Authroties of the Church of Jesus Christ of Latter-Day Saints. So, let's get started.

Confidentiality:

I hope that this will be a group that we can discuss a wide variety of issues. Some of them may be very personal, and since we will be discussing PERSONAL finance, there may be discussion about things we normally wouldn’t talk about. I would certainly hope that we can keep a high level of confidentiality in here. I will not divulge any personal information regarding another person in this room, and I expect that you all will do the same.

Please do feel free to share the information we’re discussing with your spouse – just leave the personal details of others out of the discussion.

I do want you all to understand that we are here for support and love. At times I may have to dole out a bit of tough love. Some topics may be uncomfortable, but they are important to the success of your financial situation. Please keep an open mind and an open heart during these classes.

What This Class Offers:
Real Help
Real Solutions
Real Support
Real Change
Real HOPE

If nothing else, I want you all to experience the hope and the joy that is financial peace. It is not just a fool’s dream – it is very real and very obtainable. However, it cannot be reached without first obtaining the information, coming up with the solutions, getting support, and changing the way you look at and deal with money. If you do these things, I know that you will begin to feel so much peace, and above all HOPE.

Monthly Opportunities:

We are going to have a couple fun things I’d like to do for a few minutes before class each month. The first is The Scissors. This lovely pair of scissors is here for you to cut up your credit cards. I am not saying that you HAVE to cut them up, but as we are going through these lessons, you will find that you will no longer need to use credit cards. So, if you ever feel the urge, you can come on up, cut up your credit cards, and inspire us all. I guarantee you will not feel so much freedom as when you hear the snip snip of plastic.

Accountability Reports: a few minutes where you can share your victories, accomplishments, good deals, or even your setbacks – that is it in a nutshell. We all need support & encouragement, and when we have to report back to someone (or a group) then we are more likely to do it. We are here to love & support each other, and this is a great way we can share our progress – our failures and our accomplishments, or victories and defeats. It’s all part of the process, so I want to make sure we recognize them for what they are – stepping stones.

Now Let's Get Real...
Fact: 75-89% of marital problems that end in divorce stem from money fights and money problems.
Fact: 70% of American consumers are living paycheck to paycheck. That means, they have more month than money.
Fact: 52% of people say that they are not adequately saving money. Of those, 47% say they do not have any money in savings or an emergency fund.
Fact: 68.1% of High School Seniors could not pass a basic personal finance test. Only 10% scored a C or better.Fact: Less than 68% of households have an actual written budget.
Fact: Despite economic hardships, consumer spending was up 18% over the 2008 Holiday season!
Fact: Unemployment rates are at a 26 year high.

Those are some pretty heavy statistics. We hear about this stuff on the nightly news, but I don’t know how many of us stop and think what devastating effects this has on those people. What effect it would have on us?

Q: How many of us have an emergency fund or a savings account?
Q: How many feel comfortable with the amount of money in there?

Since not every hand was raised, we have a lot to think about. Many of us are probably living paycheck to paycheck. Many of us are probably being crushed by our debt. Some may be working towards becoming debt free, while others may be struggling to make ends meet. Some may not even be able to get the ends to come remotely close together. With all of the economic troubles of today – what can we do?

There Is a Way Out:

Honesty! Honesty with yourself, with your spouse, and with your children.

Like Dr. Phil says “You can’t change what you don’t acknowledge.” The truth can be scary sometimes, and honesty is not always something we look forward to. 3 ½ years ago, it wasn’t very fun when my husband and I sat down and came face to face with our debt. $70,125 and that did NOT include a house. That is the kind of honesty that jumps up and slaps you in the face, and punches you in the gut while it’s at it. It wasn't fun, but we had to be honest with ourselves.

Suze Orman said, "If you are ready to face up to what you can honestly afford, if you are willing to live within your means, not within your dreams, you can turn this around. By controlling your spending and your money, you can change your entire financial future." How do we change our financial futures? By looking at money for what it really is and by controlling it through a budget.

Money & Budgeting - part 2

Let's Talk About Money:

Zig Ziglar said "Money isn't the most important thing in life, but it's reasonably close to oxygen on the 'gotta have it' scale." We need money to live and survive in today's world. We cannot walk into Kroger with some homegrown tomatoes and expect to trade it for some eggs, bread, cereal and icecream. It's just not going to happen.

Q: How many times have you heard people say "money is the root of all evil" or have referred to "those evil rich people?"

People who say that do not know what they’re talking about. Money is not evil, nor can it make people bad. Money is amoral, meaning that it is incapable of possessing morals. A brick, for example, if given to someone who has a low moral character, could be thrown through a window so that the burglar could enter the home and rob it. This same brick, if given to someone with high moral character, could be used to build a hospital, a church, a school. Same brick – different uses. The brick itself didn’t change – only the people controlling it. That is how money is. It is the same – only the people who control it differ.

Money is active. It moves, thus the reason it is called currency. It flows in and out like the current. The Lord, in his infinite wisdom, will give us only what we can handle. That is true for all things – including money. How can we expect the Lord to bless us with abundance when we cannot manage what we have been given? You are going to be blessed when you become a blessing. When you become a good steward with the money you are blessed with, He will give you more money to manage. It will be like a high tide. When we manage money, it flows to us. Likewise, when do do not handle our money well, it flows away from us.

Q: How do we keep the money from flowing away from us?
A: We tell it what to do by creating a budget.

Dave Ramsey has said, "When you see that a budget is just spending your money with intention, you'll actually experience more freedom than before. Many people say they've found even more money when they created a realistic budget and stuck with it. When you are spending your money on purpose, you will be on your way to a Total Money Makeover. You will be changing your family tree forever!"

Another pearl of wisdom from Zig Ziglar is "If you aim at nothing, you'll hit it every time." Without a budget, you are simply aiming for nothing with your money. You are certainly going to hit nothing when you’re aiming for nothing.

Q: By show of hands, how many of you have had a V8 moment at tax time, when you look at your W2’s and say “We made $43,000 this year. Where did it all go?” I know I have.
Q: By show of hands, how many times did you know a bonus, windfall, or inheritance was coming and you spent the thing 100 times over before you even got the check?” I know I have.

Those are just a couple examples of times when we aim at nothing and hit nothing.

John Maxwell said "A budget is simply people telling there money what to do, instead of them wondering where it went." This is very profound. I can’t even count how many times we’ve had money in our bank account just sitting there, and before we knew it, the termites carried it away or something because it just wasn’t there anymore. When we reviewed our bank statements we saw that we nickel and dimed our way through that money without even realizing it. If I could go back in time, I’d probably be rich if I had just given that money a purpose instead of letting it get frittered away into nothing.

In the book The Seven Habits of Highly Effective People, Stephen Covey says the #1 habit is to be PROACTIVE. Being proactive is one thing I learned about in Public Relations. It was the first and most basic principle of PR – act before you are acted upon. People who are proactive happen to things, things do not happen to them. They choose to be in attack mode, instead of being in victim mode. When you are proactive, you control the situation. You have the reigns, so to speak. If we are proactive and make a budget then we will know exactly where our money goes, and we will be in control of it.

You wouldn't build a house without having a blueprint, right? Before that first shovel of dirt was turned over, you would know exactly where every single wall was going to go. You'd know where the electricity, plumbing, and central heat & air would run. And for us ladies, we'd even know what color the walls were going to be, what kind of carpet we'd have, and how we were going to decorate it. We'd do all that before even thinking of starting the project. Why should dealing with our finances be any different? The only way to make sure we don't screw it up somewhere, is to have a budget.

Let's imagine if you will, that you work for a company called U Incorporated, and you are in charge of the finances. If you did the finances for U Incorporated like you did for your own money, how long would it take you to be fired? Everyone in business knows that a business' success or failure depends on a budget. If they screw up on the budget, it can mean the end of the business. Well, you are the CFO of U Incorporated. You are the one who controls what you do with the money you are given. In order to not get "fired", you need to do a budget and control that money so that you can have profits!

Yes, I mentioned the B word - Budget

What is a budget?
A budget is where you spend every penny on paper on purpose before the month begins. Yep, every penny, on paper, on purpose, before the month begins. What you spend your money on is up to you. If you want to have a $100 a month budget for spandex, then that’s your call – as long as you can afford it and as long as you’re spending your money on purpose.

Budget is not a 4 letter word. A budget is not a straight jacket, it is not constricting. A budget is what you make it. You are in control of your finances, so you control what your budget looks like. Some of you may not believe me because budgets have gotten a bum rap, but you really do experience more freedom living on a budget. Sometimes it’s not fun to face the music – to own up to the stupid choices we’ve made, but we all have to do it at some point, so why not start now.

Some of you may never have done a budget, and if that’s the case, you’re normal. You’re just like millions of Americans wandering around like Gomer Pyle on valium going “gaaawlie, I sure am broke” and you’re perfectly normal – like the rest of America. That’s why you’re going to snap out of it and decide that you’re going to start caring about where your money goes, what your money does, and what it doesn’t do. You can’t afford NOT to do a budget. Millionaires are millionaires because they budget their money and give it a name and a job.

Now keep in mind, that this is a process. You aren’t going to go from Gomer Pyle to Dave Ramsey in one day. You will make mistakes, but you just have to keep going on. I make mistakes, Dave Ramsey makes mistakes – we all make mistakes. The key is to do it and keep doing it until you get it right

One great way to keep yourself on check is to keep your checkbook balanced. Yes, the checkbook. I realize with debit cards, the checkbook is a bit outdated; however, the principles still remain the same. You MUST wake up and pay attention to what you’re doing with your money.

I bet almost everyone in this room has gotten an NSF (insufficient funds) charge on their bank account at least once in their life. It’s not pretty, and it costs you money ($30). It’s easy to keep that from happening. Never write a check until you have the money in your account to cover it. That sounds basic, but almost no adults follow that basic tenet. Millions of people mail that check on Tuesday knowing that payday is Friday, never thinking that they go in on Friday only to find out that their company has filed chapter 7 bankruptcy and they’re not issuing payroll today. Or what happens if there’s a problem with direct deposit? You’re going to hear a lovely little sound “Bounce” – that’s the sound of your rubber check from Ricochet Savings & Loan. Check before you write a check. Dave Ramsey said, "Bounced checks are a sign of crisis living; sloppy, lazy money habits." So check before you write a check.

I have come across a lot of women who say that they don't need to handle the finances or even balance the checkbook because "my husband does it." My husband does it is not good enough! If you say your husband does it, then it’s time for you to learn how to do it. If something were to happen to him, then you’d be like a golf ball in tall weeds – LOST! You need to learn how to manage the finances, learn where the accounts are, have access to the accounts, and know where all of the important papers are. Divorce, death, and hospitalization – these things happen and many times the wife is left floundering and trying to figure out how to manage money for the first time in her adult life. If you do it, make sure your husband knows how to handle the finances. Husbands if your wife handles the finances, learn how to do it! You do not want to have this stuff come smacking you in the face if something were to happen to her! You both need to know how to do this stuff!

How Do You Make a Budget?

Track Your Spending: Every month is unique. There will never be a perfect month from Heaven. So, make sure that each month’s specific needs are taken care of in your budget. I like to use a calendar. This calendar charts everything going on in our lives. Dr. appointments, birthdays, anniversaries, holidays, oil changes, vacations, etc. When it comes time to do the budget for that month, I can easily see what is coming up, and I can work those expenses into the budget. Another great way to track your spending is look at your bank statement. Take different colored highlighters and go to town. One color for bills, one color for necessary spending (groceries, gas), one color for entertainment, and one color for the junk you just blew money on. It will give you a good idea of what things you need to work on.

Begin with your Income: When doing a budget, we work with take-home pay. The other pay is just theoretical. As far as we’re concerned it doesn’t exist. If you get paid every 2 weeks, then divide your budget up into 2 parts – one for each paycheck. If you and your husband both work and get paid on the same days, then you would combine both incomes for one large starting point. If you get paid on different days, then you would have 4 columns (or however many you need).

Subtraction: Always take care of tithing, shelter, food, utilities, and transportation first. Do not starve to pay Visa. Do not risk losing your home to be current with Master Card.

What Happens If... part 3

What happens if I have money left over in my budget after everything is paid?

Then you need to give that money a name and a job! Remember how we talked about the termites coming in and taking away that extra money in our bank accounts? Well, don't let that happen to you! Give that money a name and a job. It is up to you what you do with that money. You can put it in savings, pay off debt, or use it to buy some tube socks. It's your money, do what you want with it. I only care that you are spending your money on paper, on purpose before the month begins, and that you're not spending more than you make!

Your ultimate goal is to have $0 left at the end of your budget. This is called a zero based budget and it is the best way to control your money because you give every dollar a name and a job. That way, your money is working for you and you're telling it where to go.

What happens if I do not have enough money to pay all my bills?

Take care of the priorities first: Tithing, Shelter, food, utilities, and reasonable transportation. Now if you can’t pay your bills but you’re driving a $40,000 car around – you need to sell it and pay your bills.

Beyond the necessities, you begin listing your other expenses in order of priority. Once you run out of money, draw a line. Anything below that line doesn’t get paid. A funny story that Dave told in FPU is that one day a bill collector called his house and was tearing him up – giving him a good one. Dave calmly said, “I’d like to pay you but you’re below the line” The guy said “what?” “You’re below the line, so I can’t pay you.” What line? “Well, on our budget, when we run out of money, we draw a line and anyone below that line doesn’t get paid.” “Are you kidding me? “No sir – when we’re out of money, we can’t pay you.” “Well, how do I get above the line?” “Be nicer to me next time you call and it might happen.”

You can only pay what you can pay. It’s a gut wrenching process, but you have to keep the basics going first and deal with the rest when you're able.

Why is tithing one of our necessities? A former Bishop of mine once told our ward that if a member experiences financial hardships and cannot afford food, a food order can be placed for that person. If that person cannot pay a bill, then the church can help. The church can pay any bill that you have. The only thing that cannot be paid for you is your tithing. That is your debt to pay, and your debt alone. No one can pay that for you. It is an extremely personal thing between you and the Lord, and you will be blessed for doing so.

If you cannot pay your bills you do have some options:

1. Second jobs are a fantastic idea. They aren't for forever - they are just to get you to where you want to go.
2. Sell stuff! Yard sales are my forte, and we’ll have more info about those later. By selling things on ebay and in yard sales, we’ve made thousands of dollars on our unwanted (or un-needed) stuff. What a great way to get some extra cash to get caught up on bills, pay bills, build an emergency fund, or pay off debt.
3. Do Odd Jobs. Think about babysitting, making cakes, cleaning offices at night, cleaning homes, etc.)
4. Call creditors. If you cannot pay your bills, call your creditors and let them know. Explain the situation. They are more likely to work with you if you don’t avoid them or run. If you run and hide, they will get mad and then they won't want to work with you.
5. Cut out non-essentials. If you can’t pay your bills, then you shouldn’t have cable TV and a cell phone. If you can’t pay a debt you owe, then don’t go out to eat.
6. You can reduce expenses on things like groceries by clipping coupons, buying things on sale, buying generic, or sticking to basics like beans, rice, pasta, and other inexpensive staples.

What happens if we have irregular income?

If you are like many people and either own your own business, work on commission or tips, or get overtime, then you probably aren't sure how much money you'll be bringing home ahead of time. Even if you do know what your paychecks are, you will occasionally find use for this information - think tax returns, windfalls, inheritances, and bonuses.

Many people say “well, I can’t budget if I don’t know how much I make.” And that is a big old excuse. You CAN budget if you have an irregular income. Many people on an irregular income have a base salary. It is what they get paid regardless of what their commission might be. That’s a great place to start. Again, we start with the basics – tithing, shelter, food, utilities, and reasonable transportation. Then you begin listing the other stuff you need to take care of. When your base salary is gone, then you need to do a separate little area of your budget (or use the Irregular Income Planning form) and list what's left in order of importance.

If you have absolutely no clue what you’re going to be paid, then you begin listing things in order of importance (on Irregular Income Planning form) – tithing, shelter, food, utilities, and reasonable transportation will always be at the top of the list. Again, we’re not going to starve but have Visa current. It’s not a smart thing to do. Then list the remaining things in order of importance.

So, you are essentially allocating your money with an “if/then” approach. “If I make $500, then we are going to pay the rent.” If I make $1,000 then we are going to pay the rent, the utilities, food, and have money for gas. If I make $1500, then we are going to be able to pay everything and have a little money left over for going to a movie. So, you at least have some sort of plan for your money.

Now when payday rolls around, you’re going to sit down and have an Emergency Budget Committee Meeting to actually sit down and start plugging some numbers in. You will begin subtracting your bills that you listed (in order) on the form. If you run out of money – draw a line and refer to the "What happens if I don't have enough money" section. If you have money left over - give it a name and a purpose!

The Budget Committee - part 4

The Budget Committee is an integral part of any working budget. In the corporate world, if you were working for U Incorporated, there would not be just one person to work on, approve, and carry out the budget. It takes a team to keep it working correctly. It takes a system of checks and balances, of sorts, to keep the budget running smoothly. The CFO reports to the CEO. The same is true with our household finances. If only one person is working on the budget, then it is going to fail. The spouse not actively participating in the family finances is creating an unnecessary burden on the other spouse. When working in conjunction with each other, the budget no longer becomes a burden. In the booklet, One for the Money, Elder Marvin J. Ashton said, "Control of the money by one spouse as a source of power and authority creates inequality in the marriage and is inappropriate. Conversely, if a marriage partner voluntarily removes himself or herself from family financial management, that is an abdication of necessary responsibility." Both husband and wife must work on the budget together, if it is going to work.

Children do not need the burden of being part of the budget making process, especially since they do not contribute to the income of the household; however, use it as a learning tool. If they have a job, be their accountability partner and help them learn how to budget and use their money wisely.

When does the Budget Committee Meet? The Budget Committee cannot accomplish the task of reviewing the budget when the TV is on, the kids are screaming, or even if the husband is hungry. I have found that the best time is after the kids are in bed, and while my husband eats a sandwich. It sounds stupid, but a full man is a happy man, right? Any time you and your husband choose to sit down and open the lines of communication is a wonderful time. As long as you two can communicate and agree on a budget, you will be working toward a common goal.


Like any committee, there are certain rules, regulations, and guidelines to go by:

1. You both have a say. When we get married, we become one. There is no hers or his in marriage – it is only “ours.” When you are co-equals, no one person has more of a say than the other.
2. Compromise is the key to a successful give-and-take relationship; it is also the key to a successful budget. You may think your husband’s need to go golfing twice a month is stupid. He may think your need to get your hair or nails done is stupid, but you need to reach a compromise. There will be things you do not understand or agree with, but there is a time to fight them on it, and there is a time to let it slide. If your husbands bowling night prevents you from paying the mortgage, then by all means – hash it out. If it just means you have less money left at the end of the month, then give the guy a break.
3. Saying "it's not in the budget" is a tool of control. If you say or hear that, then there is a control issue, not a money issue. I think too many times when we begin living on a budget we sound like a broken record “It’s not in the budget, it's not in the budget, it's NOT in the budget!" When you use the budget as a whipping tool to beat someone into submission, there is no longer a problem with the budget. It is a control issue – not a money issue. All too often (both husbands and wives) use the budget as a way to feel like they have the upper hand. They use the budget as a scapegoat, of sorts. If it really isn’t in the budget, maybe suggest putting it in there next time, or if it’s something that you can work with, then go over your budget and see if you can fit it in. Definitely discuss if it's a need or a want and decide accordingly.
4. Budgeting is NOT a method to make other people behave, it is a method to make money behave. You cannot use the budget to tell your husband that he can no longer have any fund, spend any money, or even THINK about spending money.
5. Mutual respect & understanding is a must! It should be a given, but for some reason the lack of it really comes out in the first few budget committee meetings. I have found time and time again (both in my own life and in the lives of the women I work with) that the moment both spouses take emotion out of their finances, they are able to work together and respect each other’s decisions more. Personal finance is extremely personal and there are a lot of emotions attached to our money. We need to remember that money is amoral – WE control what it does. You don’t get upset if you’re working on the company finances for U Incorporated. You don’t scream, cry, and yell at the CEO when things aren’t going right…so don’t do it at home. Your finances are now your business – treat them as such and leave emotion out of it.
6. Your budget is your contract with each other. Every month, we sit down and agree on the budget. We sign it. It is our contract with each other. If we break the contract, it is as good as a lie, and we have a trust issue to deal with – not just a financial issue.

Things To Remember:

Your first budget is NOT going to work.

Your second budget is NOT going to work, but maybe a little.

By your third budget, it should start to work.

THE KEY IS TO STICK WITH IT!!!!

This may seem a bit disheartening, but I have to tell you the truth. It is what it is. The first and probably second month’s budgets are not going to work, but as our moms always said, “practice makes perfect.” And practice you must. You are not going to wake up tomorrow, work on the budget and all of a sudden be an expert. You are not going to go from “never having bothered” to a professional in one day. Remember the Gomer Pyle on valium analogy? We all start out a bit like Gomer Pyle, but before we know it, we get in the flow, we figure out what we’re doing, and if we stick with it, we can become like Dave Ramsey. It just takes a little while to get there.

We all make mistakes. I make mistakes, Dave Ramsey makes mistakes, everyone makes mistakes. There will be months when your budget falls flat. There will be months when you have more month than money. There will be times when you are just sick and tired of being sick and tired, and that is all okay. The thing to remember is that you stick with it. When you get tired of it, push through it harder, find a new resolve. Don’t let one set back ruin it for you. You have to be strong and keep clawing your way out. Get mad…get mad at living the way you’ve been living. Get mad that you’ve lost track of so much money through the years just by not paying attention. Just get mad and start telling your money where to go.

Budget Busters, Envelope System - part 5

Budget Busters to Avoid:

1. Being overzealous and budgeting too little to cover the basics. I have fallen in this category too many times. I think (we can eat rice for 3 more meals so I can short change the grocery budget) and while I’m right, we are really unhappy about it. You have to cover the basics.
2. Overcomplicating the budget. I like to tell people that they need to KISS their budget. Keep It Simple, Stupid! There is absolutely no reason for a 17 page spreadsheet. The nerd of the family might think it’s cool, but it’s just going to annoy the freespirit and they are going to give up.
3. Depriving yourself of everything all at once. This is going to backfire big time. Sure, we can eat on $200 a month – NOW, but when we started we had to reduce our spending gradually. It took us 2 years to finally get rid of Netflix. So don’t over do it, ease in gradually.
4. Not planning ahead for monthly expenses. Remember my calendar? This is an excellent way to stay on top of things. Also, how many of you pay your car insurance quarterly or semi-annually? How many times does it feel like it just creeps out of nowhere? Make a plan now to cover those costs when they become due. Divide how much you need by the number of months you have until it’s due. That is the monthly payment. Don’t let these expenses creep up on you. Be ready for them by planning it out.
5. Not being on the same page. This is a very difficult area. I have had hundreds of women ask me this same question “How do I get my husband on board?” There isn’t a once size fits all approach, but I’m going to tell you how I did it. My husband and I had to sit down and begin discussing what we wanted in life. We had a list of things that we wanted, and so we had to discuss how we were going to get those things. We both knew that we wanted to not have to worry about money, but being debt free seemed like an impossible dream. So, I (being the nerd that I am) ran a bunch of numbers. I did a lot of scenarios and figured out that if we really kicked our behinds in gear, that we could be debt free in 5 years and have an emergency fund. After that 5 years, we could use $____ each month to have fun with, or save for big purchases. One thing we would like to have is a boat. We realize it is a distant dream - a very distant dream especially since our priorities have shifted majorly over the last 3 years, but it was something we wanted back then. So, we figured out that if we could be debt free and really cut back on everything, then it would only take us another 5 years to pay cash for a boat while living comfortably. That sounded great. Then we figured out that if we didn't get a boat, we could have a paid for house in like 10 years without all those debt payments. Then without a mortgage, we could do pretty much anything we wanted. Yes, those were high dreams and life doesn't always work out like that, but we got excited about trying for something. We got excited about being cheapskates and saving money - and we are still excited about it to this day. Priorities have shifted, but we still have those goals to be debt free and to enjoy life once we are.
6. Living without an emergency fund. There is no quicker way to bust a budget than to not have some money set aside for emergencies. They are going to happen. ER trips, auto repairs, home repairs, and hospital stays happen. Without an emergency fund to cover the expenses, you have no other option than to bust your budget by either adding a new expense that you financed (BOOO) or that you have to pay cash for.
7. Not sticking to it. We’re going to discuss some simple things you can do to stick to your budget in just a couple of minutes.
8. Overusing the debit card! How many times have you wanted to get $20 of gas, but got distracted and got $21.08? That’s $1.08 that wasn’t in your budget. How many times have you planned on spending $75 at the grocery store, but ended up paying $83 at the check-out counter? That’s $8.00 that wasn’t in your budget. Those dollars and cents here and there are budget busters – big time. What is the solution to that? Use cash! Yes, use cash for all your purchases. If you pay the gas station attendant $20, then you are only going to get $20 of gas. If you ONLY have $75 in your pocket, then you are only going to spend $75 for groceries. I guarantee that you will be under budget every time because you don’t want to look like a moron when you have to put things back at the register because you went over. When the money’s gone, it is gone. We do this and we call it The Envelope System

The Envelope System:

It is what it sounds like - a system of envelopes that you put cash in. Wow, isn't that profound? They do sell envelope systems where you get a bunch of nice, pretty envelopes in a little case thingie for like $20-30. I, am too cheap for that, so I got some dollar store envelopes and just wrote on the outside of them things like "groceries" and "gas." Too creative, huh?

You put money in these envelopes, so that all of your purchases will now be paid by using cash. Of course, you can still use your online bill pay, your debit card and checks to pay bills, but for purchases - things you buy - use cash.

The envelope system takes the fights out of how much money is needed for purchases. If you and your husband agree that you will have a grocery budget of $400, then you put $400 in that grocery envelope. When it’s gone, it’s gone, and you don’t get any more groceries until next month. If you head to the store and you forget the envelope, you’re going to have to turn around and go back and get it. There’s no gray area with envelopes. If it’s there, it’s there – if it’s not, it’s not.

What you do is go to the bank, withdraw how ever much cash you need to fund those envelopes until the next payday – in accordance with your budget, and then you put the money in the envelopes. I wouldn’t suggest keeping a big wad of cash on you at all times, but if you know you’re going to need gas, keep $30 on hand for gas.

No envelope system is the same – you will have different categories than we do, but here are some examples: Groceries, Gas, Clothing, Doctor Co-pays, Auto Maintenance, Entertainment, Christmas, Birthdays, Blow Money. Whatever you normally spend money on would have it's own happy little envelope. When you need to buy something, just pull the money out of that envelope, and you no longer have to worry if you can afford it.

Simple Ways to Stick to Your Budget:

1. Avoid Temptation: It sounds like a no-brainer, but it's the hardest one for people to actually do. We all like to go out. We like to look around at stuff – we’re conditioned to do so. That’s what gets so many people in trouble. Stay home or go somewhere that isn’t selling something. We have been taught to avoid temptations of all kinds, but yet we have no problems going to the mall on a Saturday afternoon and surround ourselves with things we want but can’t afford. Ummm….aren’t we being a bit stupid. We’re strong, but we aren’t invincible and sooner or later we’re going to give in to those “sale” tags.
2. Plan ahead: Create shopping lists, menus, meal plans - these things will help you stay on target with your spending. Plan ahead for birthdays, auto repairs, or other expenses.
3. Leave debit cards at home. Did you know that by using a debit card (or any other form of plastic) you end up spending 28% more on a purchase than you would if you use cash? There is no emotional connection to plastic, but there is to cash. We like cash, we like to have a wad of it, and we don't enjoy giving it to someone else.
4. Put your budget where you can see it. Our budget is hung up in our house. It is next to the calendar we look at daily. We see it. Out of sight, out of mind….and you don’t want the budget to be out of mind.
5. Get creative, find the joy in frugality and simplicity. There are so many ways you can cut corners, cut costs, save money, or even do things for free. When you have a budget, you experience a new found freedom. You are able to get creative, and saving money becomes a game to you, and you find the joy in living a frugal and simple life. When we first gave up cable TV, we thought we'd explode. Over time, we realized that we weren't missing a thing. In fact, we have already decided that we are probably never going to bother with paying for TV again because we've learned to find the joy in what we have.

The Baby Steps & Conclusion

The Baby Steps to Financial Freedom:
The Baby Steps are a proven way to change your life and get you financial peace. These are the basic stepping stones that will be covered in the upcoming months (with a bunch of other fun information too). If you do these things – in order – with a budget, then you will win with money. It may seem like it is impossible, but I am here to tell you that it is not.

I like to tell people that there is actually a baby step 0. That is to get current with your debts. If you are a month behind, then it is time to get current. Sell stuff, get a 2nd job, do something to make some money to get current. Once you’re current, stay current. Then begin the other baby steps. We will discuss each of these steps in depth throughout the year in the class - this is just a preview of sorts to give you something to aim at when doing your budgets.

1. A $1,000 mini emergency fund
2. The Debt Snowball
3. A 3-6 month emergency fund

There is this thing called Gazelle Intensity. Have you ever watched the nature shows where the lion is chasing after the gazelle? The gazelle is going as fast as it can and as hard as it can because it’s life depends on it outrunning the lion. When you do these 3 baby steps, you need to be gazelle intense. You need to focus on one, do whatever it takes to get it knocked out fast – as fast as you can. Then you move on to the next one, and so on. You cannot skip the order, or that lion will nab you and you’ll be his dinner!

4. Retirement Contributions
5. Saving for kids' college education
6. Pay off mortgage early

At about baby step 4, things start to slow down and you do not have to have that gazelle intensity any more. Steps 4-6 will last for many years. You will do them all in conjunction with each other, but only move on to the next when you are ready and able.

7. Build Wealth & Give - that is what it's all about! Being able to build wealth and do positive things with your money and enrich the lives of others.


The Parable of the Talents (Matthew 25:15-30):
Please take the time to read that and relate it to your own situation. I'll just paraphrase what was going on in these scriptures. Essentially the master gave his servants talents (money). To one he gave 5, to another he gave 2, and to the third, he gave 1 talent. The servant with 5 was prudent and wise with that money and managed it well. When the master returned, the servant had 10 talents. The servant with 2 talents returned with 4. However, the servant with the 1 talent has burried it in the ground, and when the master came, he only had that one talent. True, he didn't lose it, but he didn't manage it well and wasn't wise with it. To the servants who had been wise with the talents they were given, the master said, "Well done, thou good and faithful servant: thou has been faithful over a few things, I will make thee ruler over many things."
From this we can understand that the Lord wants to bless us with more. He wants us to thrive and prosper. We are that we may have joy. The Lord wants us to have peace – financial peace. We have all heard the saying “God helps those who help themselves” and it is very clear in this parable. Those who were wise and who managed the money their master gave them, they were rewarded and were made rulers over many things. Likewise, when we show the Lord that we are good stewards with the money we are given and that we manage it well – in accordance to His laws – then He will bless us with more money. He will bless us with more opportunities for growth and financial expansion. We will reap the benefits of our hard work

If we choose not to manage our money, we cannot expect the Lord to bless us. We will only be blessed when we become a blessing. In the parable, the master said to the servant who did nothing with the talent he was given, “Thou wicked and slothful servant” That hurts, but how many times could we be told the same thing about our dealings with our finances? The master then took that one talent and gave it to him who had 10 talents – who managed his money well.

This is a universal law: If you will not manage the money you are given, it will leave you and go to someone else who is managing it. This is apparent every time you’ve had a bounced check. You didn’t manage your money well, so an extra $30 leaves you and goes to the bank – who does manage their money well. When you take on debt, then your money leaves you and goes to the creditor who manages their money well.

In Conclusion:
Dave Ramsey said it best, "You must gain control over your money, or the lack of it will forever control you."

Money goes further when it is managed – just like time. Having a budget will remove many of the money fights you have in your marriage. When you are in agreement, those fights will go away. A budget will remove the guilt, shame and fear you feel when making purchases and paying bills. It removes the worry that the check will clear, if you’re spending the electricity money on groceries. When you have a budget, you will not longer be living scared. The looking over your shoulder will stop. Life is too short to be living like that! If you take a few minutes each month to do a budget, overspending will stop, the fear will stop, the worry will stop, and the fights about money will stop.

Changing ourselves and how we look at and handle money is difficult. It is hard – I know it is. I have been there. I have been broke. I have been stupid with my money. But no more. I didn’t want to live like that, so I changed how I handle money. I didn’t want to be broke. I didn’t want to keep up with the Joneses…because the Joneses are broke, desperate, and stupid. The Joneses are losing their behinds in this economy. I don’t want to be like them. I don’t want to be normal. I want to be weird! The only way I can do that is by having a written budget and living it. The moment you begin to live this principle is the moment you begin to change your family tree. You begin to feel freedom like never before, and you begin to take control of your life and be PROACTIVE! Don't be Gomer Pyle - be weird!!!

Homework Assignments

1. Read One for the Money - A Guide to Family Finances by Marvin J. Ashton with your spouse.

2. Prepare a written budget for February where you spend every penny on paper, on purpose, before the month begins. Hold a Budget Committee Meeting to discuss & approve.

3. Review what things you can cut out or scale back on, and act! It does no good to just talk about doing it - do it! Save yourself some money. (think lowering satellite or cable packages, get rid of text messaging, lower cell phone plans, cut grocery costs, etc.)

4. Review & discuss this lesson with your spouse. If you're reading this, then make sure your spouse does too. Begin talking about finances & a plan of action to control your money and make it work for you. Remember to leave emotion out of it - you work for U Incorporated now.

5. Pray for yourself & your spouse to be able to make the changes you need to with your finances. Ask the Lord for guidance and strength.

See you next month!!!!!!

Monday, January 12, 2009

2009 Group Schedule

January 27: Introduction
How to make & stick to a Budget
Zero based budget planning
Budgeting for irregular incomes
The Baby Steps for Financial Freedom

February 24: Saving Money
The Importance of an Emergency Fund
Relating to our spouses with money
Ways to Save Money on everything

March 31: Dumping Debt
The Debt Snowball
Collection practices
What your rights are
Credit Bureaus & Credit Reports

April 28: Buying Big Bargains
How to haggle for deep discounts
Saving money with coupons
Playing the CVS game
Playing the Walgreens game

May 26: Understanding Insurance
What you need & what you don’t.
How to save money on insurance without sacrificing coverage
Life Insurance
Estate Planning (wills, trusts, etc.)

June 30: Free Family Fun
Information on free upcoming events
Ideas on inexpensive family activities
Ideas for date nights
Involving our kids with our efforts to
be financially responsible

July 28: Dining on a Dime
Meal Planning & Menus
Cheap meal ideas & their recipes
Money saving resources
Building Food Storage on a budget.

August 25: Back To School Basics & Additional Sources of Income
Where the big bargains are
The joy of Freecycle
Additional Sources of income
(some may surprise you!)

September 29: Planning for the Future
Retirement contributions
Saving for kids’ college educations
Mortgages and real estate
Building wealth

October 27: The Joy of Giving & the Blessings of Being a Good Steward
Giving
The principle of reap / sow
Being a good steward
Sharing your knowledge

November 24: Christmas on a Shoestring & Group Party
“Christmas is a craft” ideas
Gift ideas for $5.00 or less
Group Party to discuss
& celebrate our accomplish-
ments this year!

December: *unless otherwise requested, we will skip this month due to the holidays*

Frequently Asked Questions

Q: What is the purpose of this group?
A: This is a Relief Society Enrichment activity group designed to provide accurate and authoratative information about personal finances. Neither the church, ward, nor group leader is rendering legal, accounting, or other professional advice. This is a group to discuss financial matters, learn about money saving tips and tricks, and getting information to help you make a educated decision on how to pay off debt, build an emergency fund, save money, and be financially prepared for the future.

Q: Who can attend this group?
A: Anyone who is interested in attending the meetings is welcome. Both members and non-members alike are encouraged to attend. Husbands may accompany their wives, if they so desire. High School Seniors are also encouraged to attend.

Q: Do we have to be having a financial hardship to attend?
A: No, anyone can attend - regardless of financial situation. A millionaire can benefit from the information provided.

Q: Will what is talked about in the group be kept confidential?
A: It is my deepest hope that anything discussed in the group will be kept within the confines of the group. The material, of course, should be discussed with spouses; however, the details that other people choose to share should be kept in confidence and not spread to others.

Q: When will the group meet?
A: Our meetings will be held on the last Tuesday of every month (except for December due to the holidays). The meetings will start at 6:30 p.m.

Q: Where will the meetings be held?
A: The first meeting (on January 27) will be at the Gallatin Ward building. We will meet in the Young Womens room (near the Mother's Lounge - opposite of the primary room). After this initial meeting, we will most likely alternate months between Portland and Gallatin. The Portland meetings will be held in Clarisse Warren's home, and the Gallatin meetings will either be held at the church or at a home of a member of the group. Locations will be announced, and carpools will be set up.

Q: Who is teaching the group?
A: Clarisse Warren, a member of the Gallatin Ward, will be teaching/leading this group.

Q: What are her qualifications?
A: While I am not a professional financial counselor, I have become well versed with personal finances, and helping others deal with their financial circumstances. I have read many books on personal and family finances. I have attended Financial Peace University - a 13 week comperhensive course offered by Dave Ramsey. I am an administrator of an online network of over 600 women, and have helped over a hundred of these women with various questions about their financial lives. My husband and I have also been able to work our way through our debt. About 3 1/2 years ago we were in about $70,000 of debt. By budgeting, working through our debt, and following Dave Ramsey's plan, we have been able to pay off $44,000 of that debt - while having 3 children in the process. We live on a very humble income, but we've learned to adapt our lives. We have learned a lot throughout the process, and are still learning as we go. It is my hope that we can give others the tools they need to win with money, to find HOPE in their situation, and to change the way they veiw money. It is indeed a liberating feeling to see the light at the end of the tunnel.

Q: What financial professionals will be referenced in this class?
A: This class will mostly be based on Dave Ramsey principles and information; however, Larry Burkett and Suze Orman's information will also be presented in several areas. The purpose of the group is not to promote a specific individual, but to provide information and allow people to decide for themselves if they wish to proceed further with one plan or another. Talks from various Prophets, Apostles and other General Authorities of the Church will be referenced as well. Scriptures pertaining to finances will also be discussed and referenced.

Q: What topics will be covered in class?
A: We will basically cover anything that has to do with personal finance. We will discuss the following topics in depth: Budgeting, Building an Emergency Fund, Paying off Debt, Saving Money on Everything, Finding Great Deals, Insurance (what you need, what you don't), Estate Planning, Retirement Planning, Saving for College Educations, Using Coupons, Mortgages, Building Wealth, Being a Good Steward, The Blessings of Giving, Free Family Fun, Christmas on a Shoestring, and more.

Q: Since a lot of the topics are based on Dave Ramsey teachings, will this be like Financial Peace University (FPU)?
A: Yes and no. There is a lot of valuable information in FPU. It is a 13 week, very concise and compact class; whereas this group will be spread out throughout the year - once a month. While some of the topics covered are also covered in FPU, there are many topics that are not covered - such as shopping with coupons, free family fun, etc. This is essentially a collaboration between FPU, other plans and ideas, and things that I have found that work. I will be adding my own knowledge about local sales, where to find the big bargains, and how to get many things for free using sales ads and coupons. Things that a financial professional cannot cover, since they reach a broad national (and international) audience.

Q: What should we bring to class?
A: First and foremost, bring an open mind and heart. The prophets and apostles have encouraged all of us to get our financial houses in order, and I pray that the Lord will bless us all in this endeavor. Secondly, it would be helpful for you to bring paper and a pen so that you can write down notes and any thoughts you have. Third, there will be "homework" assignments between classes. Nothing too hard, but something to keep the information in the front of your mind, and to help facilitate change.

Q: What other things should we know?
A: 1. This class is meant to be both informative and fun. Looking at your finances does not have to fill you with dread and fear. My goals are to remove those from your lives, give you a plan, and give you hope.

2. There may be moments of tough love. There may be moments where we rejoice together, where we celebrate accomplishments together, where we cry together, or when we can vent about the things in our financial lives that are affecting us.

3. The moment that you (and your spouse) can become real about your financial situations and begin to make changes, is the moment that you will feel an overwhelming sense of hope. When we become good stewards with the money the Lord blesses us with, the windows of heaven will be opened to us. It is my firm belief that this group is the answer to many prayers, and that it will benefit the lives of any who attend and begin making changes.
So come, let's learn together, laugh together,
and make sense of your dollars and cents.