Monday, April 13, 2020

Our Budget Journey

Budgeting. It stinks.  It brings you down from the clouds and into reality.  It gives you a realistic picture of some of your worst and least controlled habits and makes you stare your money behaviors in the face.  It’s not fun and most people hate it.  I, however, am a rare bird and really enjoy making a budget.  This post is about finding yourself, whether by choice or otherwise, in a position of financial uncertainty and discusses a starting point. 

Almost 4 years ago, I made the decision to leave my corporate America job and my corporate America salary and our household income was reduced by 60% in a matter of two weeks.  I did not have another job lined up and we had two months’ worth of savings in the bank.  Granted, this was our decision.  We knew it was time for a change in our home although we didn’t know what was ahead.  In hindsight, I can sit here and tell you that what was ahead was three years of intense financial stewardship, some financial hardship, and lots of provision from God (major understatement), and major personal and spiritual pruning.  And while our financial journey was by choice, I realize some of you are not choosing this season and I am sorry for what you are experiencing.  I hope that sharing parts of our journey proves helpful. 

At the very beginning, we had nearly $35,000 worth of debt to our name, which meant 3 or 4 monthly payments that we could no longer afford ranging from car payments to credit cards to medical bills.  We seemed like the average American household.  At the time we needed to get these bills paid and we needed to do it as soon as possible.  So, in full disclosure, we refinanced our house.  How we came up with the idea, I won’t ever know outside of seeing it as a means to an end at the time and as a result of intense prayer asking for wisdom.  In doing so, we essentially rolled multiple debt payments into one affordable monthly mortgage payment.  When we did so, we paid off our credit card, paid off our vehicle and paid off my hospital bill from delivering our second son.  While I realize some people may see this as cheating, we did what we had to at the time to get our living expenses to a place where we could afford them on a monthly basis.  Please note, I am not telling you to refinance your home, but it was a step in the process for us that I don’t want to leave out because it helped us, and I want to be honest.  I also imagine that any avid FPU follower would probably tell me this was the wrong move.  To each their own and for us, it proved to be the very right move at the time. I should also note, this wasn't the end of our debt over this 3 year time period.  It was just the largest portion at the time.

What if you’re not going to refinance your home and use the equity to consolidate debt?  That’s ok, and probably an excellent decision.  Let’s start with the rest of the basics. 

Your first step is learning that NO has now suddenly become your best friend.  No, you can’t buy name brand food.  No, you can’t go out to eat.  No, you can’t run to the grocery store just to pick up a few ingredients you’re missing for that recipe you want to try.  No, you can’t continue that convenient subscription to Honest brand diapers and cleaning supplies (guilty!), or any other product subscription service you are receiving.  No, you can’t keep your cable subscription.  No, you can’t afford that vacation.  No, you don’t need the Netflix subscription even though you’re spending more time at home, still no.   No, you can’t buy your kid another cute holiday outfit or spend tons of money on a themed birthday party.  Just, no. 

Next, look at your monthly spending.  Literally write down every single thing that you spent money on last month, including but not limited to utilities, mortgage, groceries, clothing, restaurants, etc.  Categorize it and then total it.  How much of that was spent from your hard-earned money and how much was bankrolled by a company named Visa, Mastercard, AMEX or Discover?  How much was spent on wants vs needs?  Trust me, you know the definition, but you will fight it with everything inside of you.  Sit with it for a bit.  Highlight all of the money spent on wants and total it. 

Now that you’ve looked at what you spent money on last month, total up the amount of money you actually brought in through income last month.  Are they equal?  Ideally, the money going out ends up being less than the money being brought in, but is that how it worked out?  If you are suddenly without one income you need to base this off of what you are actually currently bringing in or will be bringing in once that job change takes effect (i.e. unemployment, one income, etc.)

For anything that you spent money on in the want category, whether it is one-time shopping or a recurring subscription, can it be stopped or cancelled?  Good, then cancel it.  One day, when you are not up to your eyeballs in debt or your money brought in category is larger than your money going out category you can decide whether you still want to spend money on that item. 

Ok, so how much do you owe other people?  Other people includes banks, credit card companies, friends, family, hospitals…anyone or any entity that you owe money.  This is where it gets real.  This is what you have to focus on stopping.  You can’t keep spending out of someone else’s pocketbook. 

This is where the rubber met the road for us.  We realized what bills we had to pay off on time, all the time and who would send us to collections if we didn’t.  This was car payments, credit cards, and other things like that.  Over the last three years we had some family loans and we had to ask, or we were given permission, to stop payment on those loans until we were caught up with the credit card companies or needed to make ends meet that month, which brings me to my next point.

Humbly accept the help.  In the beginning of this post I wrote about all of the provision from God and I am not kidding.  We were open about where we were, and our friends and family knew how hard we were working to live within our means, and everyone was incredibly supportive.  I can’t even tell you how many gift cards we were sent in the mail or how many times a check or bonus would come through when we were least expecting it.  If those extra funds didn’t go to absolute essential needs, they went straight to paying a bill.  That was it for us, there was not much in between. 

Additionally, we were gifted a lot as a result of the generosity of others.  Two years ago, when it was my birthday, we decided to splurge and go out to eat with a big group of friends.  We knew it was going to be a stretch on our budget, but we went anyways.  After dinner was finished, our friends let us know that they all split the bill for Jake and me.  To this day it was one of the kindest and most meaningful birthday gifts I’ve ever received and brings tears to my eyes.  That isn’t even the only time something like happened but was just one to highlight.  The same goes for family vacations.  Many of our trips were either completely paid for or highly subsidized by family members that cared more about us being there than our ability to afford the trip and as a result we have precious family memories.  And hear me when I say, it took us a long time to be ok with accepting their generosity for the gift that it was and is to this day.

Get creative with gift giving.  This was very hard.  In order to live within our means and save money we had to tailor our spending on gifts for friends, family and even our own children.  I was not able to buy that item that would be perfect for my friend, or sister, or mom, on a whim.  For our nieces and nephews, we did coupon books.  For my sister and brother-in-law, we offered childcare.  Things that provided quality time but did not cost us money.  For others we simply agreed that both of us would not spend the money because we couldn’t and shouldn’t.  For our own kids, Jake and I saved our own personal gift cards and used them on our kids when the holidays came around.  If you are a gift giver – this is a challenge.  This is also hard when you are on the receiving end of a lot of generosity.  Trust me, it is refining and gives you a good glimpse into personal pride. 

Humbly ask for help. The first year that we were in this we learned we would have to sign up for health insurance on the public marketplace, so I went ahead and filled out the application and then realized we needed to pay the $600 monthly payment up front.  It crushed me.  There was no way we could afford it but there was no way we could go without having insurance.  We were already in the red, so I had to ask someone for help.  In tears, I dialed my sister (since we already owed my parents money) and asked her if she and her husband would be able to loan us the money.  I promised time after time on the phone call that I would pay her back in a reasonable amount of time and I even created a payment spreadsheet for them to see so we could be held accountable. (Note: if you absolutely must borrow money – please hold yourself accountable.  It is not worth losing a relationship over money.) She was willing and we eventually paid them back, but it was at a rate of $20/month until we had a windfall and could pay it off entirely.  I can’t tell you the amount of times both sets of our parents helped us and carried us by grace and generosity.  Paying off our personal loans to them at the end of all of this was the most incredible feeling. 

Take the side jobs.  Both Jake and I worked multiple jobs in the last three years.  While I can say that Jake is one of the most talented workers I’ve ever known, and lots of people are seeking his skillset, somehow there was a need for my skills as well.  Be open to opportunities when they present themselves.  This doesn’t mean you have to sign up for something you don’t want to do but trust that when the right things comes along, you will be able to make it work.  With both of us working two jobs, life proved chaotic, but we had more joy and time together in ways that only God could have planned.  If the job costed us more money or peace than it brought in – we chose not to do it.   God really helped us keep our priorities in the right order during this time.   

Ok Dana, fine, what about emergencies?  I tried my very hardest to maintain a $1000 emergency fund throughout this time.  There were many months we had to dip into it and there were a few months where we didn’t have one at all.  We experienced a miscarriage during this time period and ended up having $15,000 in medical bills that we didn’t anticipate, and it is now all paid off.  It was a major setback, spiritually, financially and emotionally.  So, life does happen, and you have to trust your pace. 

Bills and tithes first. Always. Each year we did this we had nearly $15,000 of various debt that came up and we had to pay off.  To this day it boggles my mind to think about it.  The only thing I can say is that EVERY SINGLE time we had any extra income come into our bank accounts it went to tithes, monthly bills, current expenses, or debt.  This included money from tax refunds.  We didn’t splurge on this item or that item.  We paid bills, always. 

Cut down the grocery trips.  We didn’t go grocery shopping more than once or twice a month and “ate the cabinets” when the grocery budget was down to $0.  My kids love bananas and when the budget was tight, I had to personally forgo the bananas so there would be more for them.  We bought the less expensive canned good instead of fresh produce when the price was right.  We price checked every single item we bought.  I chose not to eat bread rather than spend $5 on a loaf of gluten free bread to save money.  You see what I mean?  Make the sacrifice and eat the cabinets or forgo the favorite food item.  Some people are doing well at this right now just because they want to avoid the grocery store – that’s essentially what you do.  You avoid the grocery store and eat out of your cabinets until your grocery budget is replenished.  Also, make your coffee at home – don’t buy the latte!

Downsize.  We sold cars and bought less expensive cars.  We bought cars that were easier to work on than others.  Jake learned how to do everything himself via YouTube and proved to me that I am married to the most resourceful and skilled man on the planet (I admit, I am biased ;))

Savings is on hold.  For three years Jake and I have not been able to put anything into savings other than maintain our emergency fund.  So when one month was tight - it was tight.  We didn't have fall back.  We are just going to be able to start saving money for our kids but honestly, when it came down to it - it was more important to have food on our table and keep our lights on than it was to have money set away in savings for their college funds and you can't tell me otherwise.

Ask for the extension.  For the first time in my life, this last July, I had to ask Ameren for a bill payment extension.  I knew we weren't going to make it so I used their one time per year extension option and paid my bill as soon as our next paycheck came in.  Did I ever anticipate being "that person"?  Absolutely not.  But did I learn that anyone can be "that person"?  You bet I did.   Let go of your assumptions and stereotypes friends, its time.   

Pray first, pray during, pray after.  We sought God’s will every step of the way.  We prayed about every decision, from jobs, to cars, to giving, to starting to finishing.  We prayed always.  We prayed when we were within the budget that month, we prayed when we weren’t going to make it that month.  We prayed in plenty, we prayed in little.  The point is that God was with us every step of the way.  Please don’t take this as a pass to just pray and be irresponsible but be sure to do what you can and be responsible in being a good steward of what you do have in this season. 

Be a team. Be accountable. For those of you that are married, you and your spouse need to be on the same page and be willing to be held accountable to the budget.  This is teamwork at its finest.  For anyone doing this on your own, hold yourself accountable to your budget.  Check your numbers and be honest. 

After all of this work and effort, God has restored our finances in a way that I can’t even put down on paper.  He has given us back time on our mortgage that I thought was lost forever (which proves that praying through each step is KEY) and has positioned us to live within our means and cover all of our essential expenses.  We are more aware than ever what it takes to cover our family’s needs and we don’t exchange peace of mind for lifestyle changes that the world tries to tell us we should have.  The hard work is worth it.  We have money in savings and were able to pay cash for our "new to us" vehicle last week.  We will continue to work to stay out of the debt cycle as best as we can.  

Even when it seems impossible there can be a way if you are committed to doing the work to get through it.   If anyone wants someone to walk them through creating a budget, I’m a total nerd and would love to help you.  I also have an excel spreadsheet that I use for our household and I would be willing to share the template with anyone who wants to get started on this road.