Wednesday, June 8, 2011

Dave Ramsey Project. Volume 4: We've Made It A Game

     In this, the second week of our trip to financial freedom, I have taken a closer look at our spending habits and I'll share them with you here because I don't think what we do is too much different than what you do with your money.  This is going to blow you away.

     We tend to buy things in our every day lives without thinking of the cost.  A Starbucks here, a pack of cigarettes there for example.  These are the things I have been focusing on for the past few days.  I buy a Monster Energy Drink on my way to the train station every morning.  It's only $2.70 and it helps me get going.  $2.70 is nothing right?  On that same morning, "The Boss" stops at that same gas station and drops $1.50 on her cup of coffee.  I'll buy a hot dog and a soda at work because it's quick, cheap and easy, only $1.63.  Again $1.63 is no big deal right?  I have more than $1.63 under my couch cushions.  Those three meaningless items tally up a grand total of $1800 per year.  Crazy huh?  Now I know that $1800 a year isn't going to make or break anyone.  But that's just two drinks and a hot dog.  That doesn't count the cheap $7 bottle of wine that we drink 6 days a week.  That only amounts to a little over $2000 a year.  Our little family of four eats out at a fast food joint at least once a week.  On the average we spend about $25.  Not bad for a family of four to eat for $25 huh?   That's only $1200 per year.  Now we're getting somewhere.  That's $5000 baby, and I'm just getting started.  Every two weeks, I buy a case of beer for around $25.  Now let's not get crazy, I'm not giving up my sweet nectar, but that's $600 a year.  In my last post, I told you that we had the cable company knock us down to local channels.  That saves us $1200 a year too.  I have two train stations equal distance to my house.  One of them is one stop closer to work but is in a less desirable part of town.  By getting on at that station, I save $2 a day.  Not a big deal until you do the math.  $384 per year in my pocket.  Add it all up and we spend roughly $7200 per year on worthless crap.  Add credit cards to the mix which I wont get into here, and what you have is a recipe for disaster.  This is how we've been living our lives for years.  Scary huh?

     As a household we make approximately $30,000 more per year than the average family, (I Googled it).  We do live in Southern California where the cost of living is higher than in many parts of the country but how long can I use that as my excuse?  No more!  We have made the decision to manage our money instead of continuing to let it manage us.  We've made it a sort of game to see how much money we can not spend instead of how much we can spend.  There will be time for playing with our loot down the road.  But for now we are focused on fixing our mistakes.

     In Dave Ramsey's book, he writes about a man who was known in his community as "The Secret Santa."  Every year, this guy would walk through the streets of his town handing out $100 bills to random people and wishing them Happy Holidays.  It is my Christmas wish to one day be able to do the same thing.  This guy didn't reveal his identity until he was diagnosed with cancer.  He then held a press conference and stated that his only wish was that once he was gone, that those who he had helped would one day pay it forward.  The people were grateful for the gifts that he had given them.  But what a gift it must have been for him to be able to help those less fortunate.  That to me is what it's all about.  How about you?  

Saturday, June 4, 2011

Dave Ramsey Project. Volume 3: Death Of A Couch Potato

     It's been a week since we started our Total Money Makeover, and I have had several friends and readers approach me about it.  Let me make one thing clear about what we are doing.  We are not desperate, there is no financial crisis, the kids are fed, the bills are paid, and everything is just fine.  We as a family have simply decided that we no longer want to live with debt.  We are taught from day one that credit is good, debt is necessary and that's just the way it is.  Like everyone else, we bought into it.  We lived like everyone else.  We did everything we had to do to keep up with the Joneses.  Turns out the Joneses are in debt too.  We're taking an alternative approach and changing our old spending habits.  We have never been fiscally responsible and so now is the time, nothing more, nothing less.  So don't worry about us, dear friends.  Everything is going to be ok.  We're living like no one else now, so that later we can live like no one else. 

     Three days ago, I did what I consider to be the hardest part of our Total Money Makeover.  I called our cable company and told them to knock us down to just the local channels.  No HBO, no CNN, no NFL Network, not even Nick At Nite (we sleep with Nick At Nite on all night.)  The physical reaction my body had to this decision was real..  I thought for a moment I might vomit.  I paced around the house for what seemed like forever trying to figure out why the heck I would deliberately do this to myself and my loved ones.  Then I realized that the physical feeling that I had experienced was the couch potato within me dying a slow and painful death.  I don't like regular network programming  and local news for the most part is not news.  I don't care that Jane Smith passed away in her Pacoima residence this afternoon.  Surprise!  Jane Smith was 108 years old.  Of course she died in her Pacoima residence this afternoon.

      Why get rid of cable?  For a number of reasons.  For one, it saves us almost $100 a month.  That money for the time being is going toward building our emergency fund.  We are saving up six months worth of expenses so that when a rainy day comes, and it will come, we wont have to use credit cards because we will have the cash on hand.  2. we spend a lot more time hanging out together instead of burying our brains in some worthless TV show.  3. we have Netflix($9 a month) so it's not like we're totally in the Dark Ages.

     This program is not for the squeemish.  I was squeemish at first.  Sacrifices, and I mean big sacrifices are necessary to make it work.  We have a long way to go but  after a week, our world hasn't crumbled, we are on the same page, and we're excited to finally be in control of our finances.  We have a plan and we're going to see it through.  For years, "The Boss" has been in control of the money.  She has told me what we have or what we don't have and I just went along.  Now, we are in this together which is how it should have been all along.  I am more involved than ever before which takes some of the burden away from her.  Sorry I'm so late to the party.  Thanks, Babe.


Wednesday, June 1, 2011

The Dave Ramsey Project. Volume 2: The Dirty Old Shoes

     My first true test on our quest to kill our debt came three days ago when I ventured out to find a new pair of shoes.  My dirty old shoes were still comfy, but as age does to the body, it also does to the sole. It was time to move on.

     As far back as I can remember, I have always been a bit of a shoe snob.  I'll wear a $5 Tee shirt but you can rest assured that  I'd paid a pretty penny for some good quality shoes.  So as you can imagine, having just read 3/4 of The Total Money Makeover by Dave Ramsey, this trip to buy some new shoes was going to be unlike any I had ever taken before.  I went out with a $30 budget, 1/3 to 1/2 of what I would normally expect to pay for a pair of shoes.  I knew this was going to take a lot of self control and a lot of telling myself no.  At the bottom of every page of Dave's book is a quote that I am struggling to learn how to live by.  "If you will live like no one else, later you can live like no one else." I kept repeating that to myself as I walked by the shoes that I really wanted to buy.   If I make sacrifices now, later it will be well worth it.  MAN THIS IS TOUGH!

     5 stores, 1 emotional breakdown, and 4 disgruntled texts to "The Boss,"  later, I found a pair of shoes that I actually kind of like. $30!  I didn't think it was possible, and you know what?  It actually felt pretty good.

     This program to get us out of debt and living on cash and not credit is going to take us about two years to get through.  This was just one small hurdle that I had to jump on my own.  Volume 3 is going to reveal a much tougher sacrifice that we have decided to make.  One that will take a toll on the whole family for a short while.

     In my last post, I called Dave Ramsey a Hellraiser.  This is not to say that I think he is demonic in any way or that he is a bad man.  I called him a Hellraiser because after reading two chapters of  his book, my life was turned completely upside down.   I don't like having my life turned completely upside down.  I don't like to admit that I have made horrible decisions with my loot.  I hate to admit that I bought a house that I had no business buying in the first place.  Whatever.  I can't change that now.  What I can do is make much wiser decisions from this point forward.  And so that is what we are going to do.  $30 shoes and all.