Sharp as a Marble - Not a penny left

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Not a penny left

TMI

As of right now, every last cent that I will earn in March has been spent. Every. Last. Cent. That means my total available free cash on March 31st will be $0.

And I couldn’t be happier.

I’ve recently started the Dave Ramsey’s Financial Peace University, you see and instead of earning money, putting stuff on credit cards, and hoping I had enough to cover it when the bills came due, I’ve decided to make a budget. I know how much money is coming in, and I assigned ever last penny to a specific use. The goal was to say “I’m spending $X on this, and $Y on that so that X+Y = exactly what money will come in”. Some of that ‘spending’ is putting the money into money markets, retirement, and various other items like savings, so it’s not like I’m broke. I simply have a plan on where my money will go rather than wondering where it went.

My wife and I are most definitely not Dave Ramsey’s normal target audience. We’re not ‘drowning in debt’, more like ‘splashing in little puddles’ of it. We’re taking the course so that we can get ahead of our finances. I’m nearing 40, and while I do have some retirement funds, it sure isn’t enough, and looking backwards every month at the bills and going “where did all the extra money go?” is something my wife and I are done with.

There’s nothing revolutionary about Dave’s perspectives and ideas. He’s simply entertaining and describes the concepts in a way that is easy to comprehend. For me, the most exciting part of all this isn’t simply getting ahead, but also the knowledge that I will be involving my children in the budgeting process when they get older so that they too are aware of how to do this from the day they leave the house. I will arm my girls with information that will allow them to dominate the world instead of being taken in by it.

It’s an interesting concept – figure out what you have, assign every dollar to something before you spend it, and if you do not have enough money to buy something, you do not buy it.

I suggest we all start pushing for legislation that will require all politicians to take this course.

posted @ 2/13/2011 9:38:59 AM

Comments

Standard Mischief says:

on 2/13/2011 10:31:54 AM

I used to have some nagware for the palm with this idea. The palm would display something like 13 virtual envelopes that you would name "eating out", "groceries", "gas"...

The idea was that you could pay by credit card, debit card, or cash, but you would record each purchase by taking "money" out of one of the "envelopes". If you were in a jam, you could move cash between say "eating out" and "gas".

Pretty neat program. I was at the time trying to find it again so I could pay for the app and shut off the nag. I can't find the name or it's been withdrawn.

It's not exactly "shot group analyzer", but...

Jake says:

on 2/13/2011 10:42:13 AM

I've got an app for my Android phone that does the same thing (Easy Envelope Budget Aid). It works pretty well, I just have to figure out what I need to budget where, and then make myself actually stick to it.

Lokidude says:

on 2/13/2011 10:44:29 AM

The program is sound, based on common sense. Dave seems like alright people. Bex and I have been on it for about 6 months now. I don't know how it was for you, but our first budget disgusted us when we saw how much we were blowing on stupid "lifestyle" crap.

Robb Allen says:

on 2/13/2011 10:46:35 AM

Loki,

When the Mrs and I saw how much we spent last year on eating out, we almost fainted.

Could have bought a decent used car for it.

Paul B says:

on 2/13/2011 1:08:19 PM

I took the class as well. I did notice that Dave was always selling. He does a good job of explaining how and why.

Good course and I agree that most congress critters should take it every year, since they have shorter memories than the rest of us.

ZerCool says:

on 2/13/2011 1:25:53 PM

"Lifestyle crap" is absolutely right. Over the past few months MrsZ and I have made a fairly concerted effort to eat foods we prepare at home, stretch leisure money a bit further, and pinch where we can. (Food example: dinner for two at Applebee's or Chili's, with one drink each and a shared dessert, plus tip, will run us right around $40. Our favorite greasy spoon for dinner, water, and tip will run us $12-15. OR we can go to a gorgeous seven-course restaurant with a prix fixe menu and have a fantastic meal for two for about $100 (instead of two trips to Applebee's and two to the diner). Kind of a no-brainer, IMHO.

Even with all that, the numbers have been ... tight of late. Heating oil (which we are approaching "desperately need") has increased nearly 30% since our last fill. Propane has gone up 40%. Gasoline is currently $3.36/gal for regular. The loaves of bread we buy (store-brand whole grain of various flavors) have gone from $1.99 to $2.19 to $2.39.

MrsZ got a 2% raise this year after 0% the year before, I got 2% in January of 2009 and nothing since - meantime my health insurance premiums have increased by about 15%.

Instead of buying movies when they're on sale at $MART for $5 or $8, we have Netflix ($9/mo) and get six or eight movies a month. Occasionally we rent a movie from Redbox for $1.50. MrsZ frequents the library; I can't quite bring my self to take books back so I just re-read the hundreds of novels we already own and limit myself to one or two new books a month.

Part of the reason I've been making an effort to move a few guns is to not to have extra play money, or even make it easier to fill our oil tank - at least not directly. Instead, I want my truck paid off. Zero. Zip. Nada. Having a four-year-old truck with no payment would be wonderful, and free that payment up to pay down MrsZ's car, or our mortgage, or back into walnut and steel investments.

I don't quite understand the people who don't flinch at announcing that they have credit card balances far into the five-figure range. I look at our revolving credit balance (just shy of $5k) and think, "Dear me, we need to get rid of that ASAP!"

*Nothing* consumable goes on the plastic, as a general rule. No food, no ammo, no gas, etc. Staples need to be part of the basic budget.

Newbius says:

on 2/13/2011 3:39:01 PM

Robb,

I teach this course through my church. It is good stuff, and not just for those in debt. IF you need anything, give me a shout.

DJ says:

on 2/13/2011 4:02:31 PM

Well done!

Been there, done that, and it worked.

But, a fair warning is in order. Make sure your budget includes a "reserve fund" (or whatever you care to call it). The reason is that you cannot predict every expense that will arise. The purpose of the reserve fund is to allow the elasticity that can save your backside when the unexpected happens. This allows you to thumb your nose at Murphy when he shows his.

Robb Allen says:

on 2/13/2011 4:09:00 PM

DJ, part of Ramsey's plan is to have 3 to 6 months of expenses in an emergency fund. This is money NOT to be touched. It isn't money you put in a high-interest fund as you may need to get to it RFN.

By having an emergency fund, very little can become a crisis. Transmission breaks down? You *have* the cash for it.

We're working on ours as we speak.

Don Gwinn says:

on 2/13/2011 5:04:34 PM

We're at the same step.

We lived frugally and within our means for years by most standards; I drive only paid-for cars, but we'd borrow for my wife's (used) cars, and we both had college debt. We had no fixed plan, though; seemed too restrictive. We'd get the checking account statement every month, and if we'd taken out more than we'd put in that month, we'd look at each other and declare that we really had to cut back. We usually did, but not in a planned way.

The result of all this was that this year, after having lost a job, spent a year as a substitute and then getting a good job that pays more than my old one did, we only had about $3000 of debt (other than the mortgage) that wasn't matched by money in our checking account (no savings account!) We were treating that large checking balance as if it were savings . . . but of course, we owed it all to other people, so it wasn't actually our savings.

We paid all that off and are now debt-free but the house, saving up a 6-month emergency fund. Should be done with that by early summer and then I really think we can have the house paid off in 3 more years (we really did overpay our mortgage most months, but never systematically--and with no other debts to service, we can overpay massively.)

We knew we had done something big by the way the kids freaked out when we paid off my wife's car. Kane thought we'd better be extra careful driving home from the credit union, because now if we had an accident, we'd have to pay the fix the car ourselves. He also wondered aloud who would get the car if it got repossessed now, since the bank had lost their claim. . . .

DJ says:

on 2/13/2011 7:40:30 PM

"By having an emergency fund, ..."

I confess to not knowing the details of Ramsey's plan, as I used my own.

It appears you're way ahead of the game. My hat's off to you.

Jake says:

on 2/14/2011 10:08:39 AM

By having an emergency fund, very little can become a crisis.

Unfortunately, it seems like every time I get money set aside for an emergency fund, I have an emergency that means I have to spend it all. Usually, it's the car, but last time it was the sublease on my apartment falling through and ending up having to pay six months rent on an apartment I wasn't living in.

It was worth it in the long run, but it really sucked at the time.

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