Saturday, June 28, 2014

Week 4 - Financial Freedom

Needs vs. Wants

1. How do you treat your money?
  • Ignore it (which is a form of laziness or fear)
  • Actively manage it

 Proverbs 6:6-11

Go to the ant, you sluggard;
    consider its ways and be wise!
 It has no commander,
    no overseer or ruler,
 yet it stores its provisions in summer
    and gathers its food at harvest.

How long will you lie there, you sluggard?
    When will you get up from your sleep?
 A little sleep, a little slumber,
    a little folding of the hands to rest
 and poverty will come on you like a thief
    and scarcity like an armed man

2. Good stewardship requires attention

3. Debt is a natural consequence to in attention.

4. How do  you live with your money?
             a. paycheck to paycheck
             b. feast or famine

5. How can this pattern be broken?   BUDGETING!

Having a budget helps you prioritize.

You tell your money where it should go!

6. You have to take a LONG look at needs vs. wants.

            a. What is a need?
            b. What is a want? A want is not bad but you have to have perspective.
            c. How can you tell the difference?
            d. Are you and your spouse on the same page when it comes to what is what?

Having a budget gives you a reason to say NO to certain things. For example, I am sorry but I cannot participate in such and such because it just isn't in the budget this month.


           a. Calculate how much money you earn in a month after taxes (net pay). Include tips, supplementary income, side jobs, investments and any other thing that brings income in to the home.

          b.  Calculate expenses (save receipts, check on-line banking and your expense log)

          c.  Divide your budget into basic categories.

          d.  Make three columns next to your list of categories.
         e.  Fill in the blanks with your numbers.

         f.   Once everything is budgeted, subtract your expenses from your income. This gives you the
              unbudgeted money that you can use to pay extra on debt, save, give or spend how you see

8.  Some things to take into account when budgeting

          a. Remember to account for and save accordingly for expenses that may not come every month.
               (For me that would be water, Irish Dance, soccer).

         b. Sometimes your income could change and so you budget should reflect that also.
  • Don't look at your good months as an excuse to splurge (Guilty!) 
  • You need to be even more vigilant when tracking/spending money.
  • Being debt free is even more important and harder to do.
  • Your budget may change more often.
  • Keep your budget tight in order to avoid overages.

9.  Budget Maintenance (Once a month)
           a. Work often with your spouse.
           b. Re-evaluate your budget at least every six months.
           c. Don't neglect maintenance.

  • Track expenses
  • Write out your monthly expenses - including bills you will pay throughout the year.
  • Set up a basic budget with your spouse. Think of this as a rough draft and we can work on refining it next week.
  • Check to see if your budget is bigger than your incoming money.
  • If you run into issues setting up a budget, ask for help.

So I worked on this a little bit this week. When I hear the work BUDGET, I feel sick. When I sat down to write out the three columns, I felt a panic feeling because now I have to do math. But the youth Pastor's wife called me and talked me off the ledge for about 15 minutes. This is what it should look like:

Bill Name                        Ideal                              Actual                       Difference

PECO                             $100                                $84.11                      +15.89
Verizon                          $350                                 $331                         +9.00
Gasoline                         $300                                $386                          - 86.00
Oil                                  $224                                $224                           0.00
Auto Insurance             $195                                $195                           0.00
Boat Insurance             $21.66                              $21.66                        0.00
Groceries                                                               $671.00
Meat                                                                       $422
Pork                                                                        $131
Fast Food                                                               $68.56

Ah look here. We are eating all of our money away. We don't typically eat at fast food places. Panara is considered fast food. I bought a lot of gift cards in the month of June for the teachers. Our meat and pork come from my friend's farm (Rohrbach Farm). These are not monthly charges. The meat is a quartly charge. The pork was a bonus!  The $671 that is listed as "groceries" could also be house hold items such as laundry soap, toilet paper, cat food, etc (things that are not consumable).  Some of my classmates suggested that I try shopping at a cheaper store like Aldi or Bottom Dollar.

Hopefully I will save money when I buy less boxed items.

The BLUE above is our goal, I believe.

I struggled through making the budget but I don't feel good about it. I need another class on Tuesday to feel more confident about what I am doing.

But it's a beginning. How are you doing?

The one thing that was said that has been going through my brain, sort of a wake up call is this:

Treat this like a business. If I was the bookkeeper and mismanaged the money, I would be fired. So why is this different? Why is my personal finances not being treated with respect? Could it be laziness or fear?

Well I am tired of my money controlling me. A budget does not mean less freedom. It's just the opposite. A budget will allow us to stay within boundaries and free us from credit cards debt.

I didn't mention credit cards. I have one. It's a Disney Visa that earns points. It is at $597.63.  I also have a Lowes card that I have been using in preparation for Amanda's party. I don't use the others often or on a regular basis. Those are JCP & Macy's.

Again, how are you doing? Are your finances in charge of you or are you in charge of your finances?



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