Archive | June, 2014

It’s All About Our Choices

27 Jun

As I neared the end of my budgeting exercise, I began to panic. It was clear that I hadn’t been putting enough thought into the practical matters of life (like saving for the day when my ancient truck finally gives up the ghost). But it was also clear that saving for those eventualities left me with far less to spend on the things in life that I enjoyed. How exactly was I supposed to make the most of my free time if I didn’t have a couple hundred dollars to spend on books each month? And what would life be like without Starbucks? It was clear that more than just my budget was going to require a “makeover”.

While I acknowledged my relative wealth with my mouth (and with regular charitable giving), it was clear that the message had yet to reach my heart. I had enough, but I felt like I was impoverished. I had failed to recognize that the wise handling of money (just like everything else in life) is about our choices. Dave may have recommended that I dedicate a certain percentage of my income to retirement… but doing so was a choice that I would have to make. Dave suggested that I consider spending less on food, but the decision was mine. With each dollar I allocated, I was making a choice between living with a sense that money controls me or that I control the money. The former brings a sense of slavery. The latter, an undeniable freedom.

Drawing a deep breath, I looked through my budget again – this time with an eye towards practicality and an intense focus upon the two categories to which my impulse spending was most frequently directed. Truthfully, there was nothing that prevented me from making coffee at home. Doing so would reduce my food expenditures by 50% and I could reduce that spending even more if I really tried. Likewise, I rarely had the time to read all of the books that I purchased. With the skill of a surgeon, I cut my budget to reflect the purchase of a mere two volumes a month. (If I needed more reading material, it was rumored that there was a nifty place in town called a “library” where I could go pick out books and take them home… absolutely free!)

I took Dave’s advice and put together envelopes for both of these impulse categories. With cash in each, I would be able to regulate my spending in ways that were nearly impossible when I used my “charge-it-to-the-credit-card-and-pay-it-off-at-the-end-of-the-month” method. Then, I gave the new method a try at the brand new health food store.

List in hand, budget in mine, I cruised the aisles admiring all of the delightful product offerings. I carefully examined my options for each item on my “needs” list and selected the most financially responsible products. Then, each time I picked up something that wasn’t on my list I asked myself, “Do I want to remove cash from my miscellaneous food envelope to pay for this?” One item after another went back onto the shelf, ear-marked for another day. I left the store having spent a mere pittance compared to the previous month… and each “treat” I purchased tasted twice as sweet!

More importantly, I’d finally gotten around to taking responsibility for the money God had entrusted me with. I was no longer a victim held captive by a low salary, government policies, or societal expectations. Instead, I was a steward who could account for each dollar entrusted to them. I was free.

Paychecks and Planning Part II

20 Jun

My first encounter with the type of planning that goes into an effective budget was through Dave Ramsey. I came across his Financial Peace University in search of some help for a friend who didn’t handle money as well as I did. I was soon to learn that there is a distinct difference between handling money “better” than your friends and handling it “well”.

While Dave is well-known for his emphasis on getting people out of debt, it turns out that he also had quite a bit to say to “victims” like myself – trapped in a cycle of living paycheck to paycheck. His message began with a lesson on the importance of “cash flow planning”. This was, essentially, the same budgeting technique that my mother had attempted (unsuccessfully) to teach me years before. The difference was that I wasn’t to figure out an entire year’s budget all at once.

Instead, Dave’s budget involved monthly planning in which I was to write my income at the top of a page, then progressively deduct my expenses. Once I’d finished listing everything I had to buy like insurance, fuel, food, and clothes, I began allocating the remainder of my paycheck to other categories until the total amount deducted equaled the amount of my paycheck. (Dave calls this a “zero-based budget” and he offers a great budgeting tool online at: if you’d like to try this for yourself.)

Each category received its own, separate envelope into which I placed cash. In a sense, each envelope was a tiny savings account designed to ensure that I didn’t have any more unplanned “emergencies”. (I will forever recall the blissful feeling I got the first time I was sick and opened my wallet to discover that the “medical” envelope was stuffed with more than enough bills to cover the cost of my medicine. It was as though I’d discovered that people do get sick… and that it was something that could be planned for!)

This sense of satisfaction, however, lay months into my future. As I looked over the figures for my previous three months spending, I began to panic. After allocating most of my paycheck to necessities either immediate or anticipated, I had very little left. Moreover, my records made it clear that my belief that I wasn’t an impulse buyer was not supported by the facts. No, I didn’t grab candy bars at check registers or make instantaneous decisions to purchase “discount” goods at the local retailers, but I did have two particularly weak categories: food and books. And these two categories consumed such large quantities of my income that it was no wonder I found myself scrambling for cash each time I had to make an automotive repair. I had a problem and something needed to be done… immediately. (To be continued…)

Paychecks and Planning Part I

13 Jun

I wasn’t very old when my mother began teaching me the art of budgeting and, thanks to her training, it wasn’t long before I was allocating dollars like I knew what I was doing. (“Like” being the operative word.) Each year, I sat down with a list of the previous year’s expenses and made a curiously inaccurate guess as to what I might spend in the coming year. I divided that figure by twelve and voila, I had a budget! (In retrospect, I think I may have taken away very little of what my mother was attempting to teach… but then numbers never really were my thing.)

I quickly grew quite skilled at this practice which I rather dubiously labeled: “financial planning.” I was great at categorizing expenditures and moderately efficient when it came to recording receipts. In theory, each pay check was parceled out with portions allocated to gas and groceries, medical expenses and movie tickets. There were pigeon holes for nearly everything and I was quite adept at creating new ones whenever the need arose.

Reality, however, was a little different. I lived within my means, but I had a bad habit of “fudging” on my budget. I was paid hourly and that meant that the amount of my paycheck was inconsistent from one pay period to the next. My spending mirrored that inconsistency.

To be honest, aside from a few monthly bills for necessities like insurance, I couldn’t tell anyone where the rest of my money was going. I kept a running tally of how much I made vs. how much I’d spent and made purchasing decisions based upon that figure. If there wasn’t enough money, I didn’t spend. If there was, I spent without discretion. The result was that, despite my not-so-carefully planned budget, I usually felt a bit tense when it came to my finances. There was always one more unexpected automotive repair to be made or another doctor’s visit to cover. I was staying out of debt, but I also seemed to be teetering precariously close to the edge of a personal fiscal cliff.

The solution to my problem seemed like a no-brainer: I simply needed to find better employment. A more demanding job at higher pay would resolve the ongoing “crisis” of paycheck to paycheck living. So I began my search.

It wasn’t long before I’d found what I was looking for and not much longer than that before I discovered that I still wasn’t making “enough”. Clearly, the obvious solution to my problem had not been the correct one. It was time to pull out the big guns and place the blame where it belonged: on the government, on society, on the fact that I was a woman, on the price of gasoline… on just about anyone or anything except myself. I had become a victim.

The truth is that I’ve always been more of a visionary than a planner. I think in broad swaths of color, not in the intimate details of individual threads. Yet it’s those details that make the difference between financial chaos and effective money management. My income was sufficient to meet my needs at each of my places of employment. I just wasn’t handling it efficiently. In order to do so, I had to acquaint myself with an ancient art with which I claimed only marginal familiarity: planning. And learning the art would prove to be a challenge. (To be continued…)

Debt and the Bible

6 Jun

Last week in “The Dangers of Debt”, I shared a bit about my first and last experience with owing money. While the gut-wrenching feeling I experienced during this time played a big role in my decision to can credit (even when it was extended to me by loving parents), it was the Bible that ultimately pointed me in the direction of debt-free living.

While the Bible doesn’t say that owing money is a sin, it does clearly indicate that the wise man does his best to avoid it. Proverbs 22:7 declares that, “The rich rules over the poor, and the borrower becomes the lender’s slave.” Proverbs 26:6 warns, “Do not be among those who give pledges, among those who become guarantors for debts.” And in Romans 13:7-8, the Apostle Paul admonishes believers to, “Render to all what is due them: tax to whom tax is due; custom to whom custom; fear to whom fear; honor to whom honor. Owe nothing to anyone except to love one another; for he who loves his neighbor has fulfilled the law.” Clearly, debt isn’t something to be entered into lightly or, if it can be avoided, at all.

Of course, keeping my promise to remain debt-free hasn’t always been easy. (Following God’s Word rarely is.) Over the years, I watched as my friends moved into nice homes, bought brand new cars, and started families of their own. While they weren’t necessarily living “high on the hog”, their lifestyles left plenty of room for new clothes, new toys, and new adventures. Meanwhile, I was living with my parents, driving a twenty-year old vehicle, and stashing every penny of my meager pay into savings in an attempt to form an emergency fund.

I won’t pretend that I wasn’t teased for my failure to “grow up” or that I wasn’t just a touch jealous that my life hadn’t “taken off” the same way that my friends’ had. I was working hard to obey God’s Word and give debt a wide berth, yet it seemed like it was my friends who were on top. At least, that was how it appeared until the recession hit.

It didn’t take long to realize that my “grown up” friends had been living beyond their means. Their “adult” lifestyle had been a façade financed by mortgages, credit cards, and government loans. I watched as they fought to keep their homes, their vehicles, and their dignity. Some of them even slipped into poverty, unable to support their own children. And for the first time, I was truly grateful for the commitment I’d made.

I’ll be the first to admit that living debt-free isn’t easy. It requires commitment – a willingness to stick to your guns when others tell you you’re foolish. It requires sacrifice – a readiness to put off the childish attitude that we want what we want when we want it. And it requires planning – a subject we’ll address in greater depth next week. Debt-free living isn’t for the weak, it’s for the strong, the diligent, and the self-controlled. And the freedom it gives is worth every ounce of effort it takes.

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