Tuesday, December 30, 2008

The Cookie Jar

Can I just tell you how good it feels to have all of your credit card balances be at zero? If you have no idea what that feels like, may I suggest you join me on my credit card "diet". Having credit cards at your convenient disposal is a lot like living with jars of cookies and chocolate all over your home. It is one thing to want to eat healthy or lose weight, but if your weakness is cookies and you are constantly surrounded by them, then you will have a very hard time reaching your goal. You will snack, and just have one or two, and all of a sudden you have eaten an entire jar of cookies! In the same way, credit cards seem innoculous in just charging dinner, or some clothes, or an ebay purchase, and pretty soon you have eaten the all of the cookies and are in a deep hole of credit card debt.

Matt and I aren't in debt (thank you Lord!), but we also feel like it is foolishness to keep doing the same thing expecting different results. So today I threw out the cookie jars. I took all of the credit cards out of my wallet. I paid off all of the balances. We actually only have one main credit card that we use, but I also have a few store credit cards that give me special deals for using them. They have saved me a lot of money over Christmas and I knew that I would immediately pay them off, but for at least this next month, they are all being packed away.

I also got my finance binder completely in order and bought my new binder today. It was a good day in finance land for me and my house. However, it was a little complicated to figure out just how to deal with some of the returns I still need to make to stores. If I pay off all of my main credit card now and then make the returns I will have a credit on my card and since I am not going to be using it, that does me no good. So what I have done is guestimate my return amounts and then made a payment of almost all of the total. After I have returned the toy Luke got two of, and the shoes that aren't comfortable (although very pretty), and a few other things, I will then make a final payment on my main credit card.

So that is my plan. What is yours? You might need to put yourself on a payment plan for what you have spent on Christmas. And let me just say, a payment plan is not your minimum payment! The only way to effectively work a payment plan on your credit card is to stop using them. First make a payment for as much you can. Then take the remaining amount that you owe and this is your goal for this year (and hopefully sooner).

And this goal is entirely possible with the help of your budget. If you need further help in digging out from credit card debt please read the following two blogs: Managing Your Credit Card Debt and Kill Your Giant. I have several other blogs on credit cards that will help you, but start with these two and go from there.

We all have such a good year ahead of us. God has gone before us and I truly believe that His heart for each of His kids is that we not walk bound with debt. I don't think that necessarily means that God is going to instantly pay off your debt. Just like He doesn't instantly make you skinny when you repent from over-eating. There is a process to going into debt and there is a growing process in getting free from it. But God does give you incredible grace for the journey and His wisdom to manage your money better. As God said to Samuel in 1 Samuel 16:7, "Man looks at the outward appearance, but the Lord looks at the heart." It is not debt that is really at issue, but what is in your heart. I guarantee you that as your heart changes from dependence on credit cards to a dependence on God, you will see God's hand working in your finances in wonderful ways.

I am so excited to see God's faithfulness this year and what He is going to do in my heart, and it hasn't even begun yet :) But for me, today was a good beginning... at least I got rid of the cookie jars.

Monday, December 29, 2008

A Little Less Chocolate

Are you hiding from your bills and finances? I am... just a little bit. Christmas is such a magical season, but it is also magical how quickly money disappears during the Christmas season. Between the presents, stocking stuffers, parties, family and guests visiting, travel costs, the outings and even the utilities bills from having guests... it just adds up so quickly. Facing that final reality in the aftermath of Christmas can seem like a bucket of cold water. So we are all in recovery together.

Let's face it friends, there is no way through but to go through... and I for one do not want to start the new year with financial baggage. I didn't blog very much in December and it was for these reasons: I was sick for a good week before Christmas and then when I was finally better I hit the ground running with a trip to Nashville with my Mom, and then straight back into Christmas and family in town. I honestly feel like today was my first "normal" day in weeks. And I know that I am not alone. Many of you have had the same kind of month and may not even be breathing yet (although if you still have house guests, God bless you!).

But wherever you find yourself, the end of the month is coming and the beginning of a new year approaches. So tomorrow, I am going to file my small pile of December's neglected paperwork into my finance binder. This actually should close out my binder for the year, which is exciting. I am also going to go buy my new binder for the new year and start a fresh. Every thing that I need for my taxes is in my 2008 binder so I will keep that handy until I have done my taxes, but it is going to be lovely to begin again with an empty binder. If you haven't yet started a finance binder, or haven't read about it yet, let me encourage you to go read about it here , here, and here. It really will simplify your financial paperwork. Even when you neglect your paperwork for a month (like I have in December), you will never be that far behind with the binder system.

And to really end the year right and get ready for my "life after credit cards", tomorrow I am going to reconcile my books, pay off my credit card, and remove my credit cards from my wallet. Whew, deep breaths. I am already looking ahead at January at the challenges that I am going to face without credit cards. For my family it is a month packed with birthdays (including Luke's, which means a party :), anniversaries, we had even planned an overnight trip... these are all going to challenge me. I am going to have to think ahead and budget for the details like haven't done in a while.

My printed budget governs all of our bills and spending, but there is still wiggle room in the discretionary spending. Unfortunately, that wiggle has become a full out dancing jive to the music of credit cards, and our discretionary spending keeps spilling into our savings. It is just so difficult to have accountability when you can so easily use a card. So, I am excited to rein in the wiggle this month. Actually that sounds like a diet plan too :) Maybe we all need a little less wiggle in our walk. So... a little less chocolate, and a lot more running. Or in financial terms: a little less credit card, and a lot more budgeting.

God bless.

Sunday, December 28, 2008

New Beginnings

A new year is coming and I just love new beginnings. Many people laugh at new year's resolutions, but every year I see it as an opportunity to begin again. I ask the Lord for fresh vision for the year and for my life. I look at my calendar and write in all of the birthdays for friends and try to think "birthday budget". I clean out my closet and go through my junk drawers. In my house, everything gets a fresh beginning for the new year... and that includes my budget.

So as I have been looking at my budget for the new year, Matt and I have decided to do something a little drastic. Over the last few years, we have started using our credit cards more and more. We pay it off every month and we meticulously track our spending, however we have also started to feel the slide of spending without knowing exactly where the money is coming from. Up until now, we always had a steady salaried paycheck so we knew that at the end of the month we would be able to pay it off. However, with Matt moving towards a commission based income, where it is not always a guarantee that clients will pay you by the end of the month, we no longer feel that our credit card "habit" is safe for us.

Consequently, starting in January we are going to quit using our credit cards. I am going to take them out of my wallet, and outlaw online spending (at least for a month), and I am going to blog about the adventure. I am sort of seeing it as a fast for my budget. I have gotten lazy with my spending and I just think this is going to re-focus us towards "purposeful spending to enable our dreams" which is the very heart of my philosophy on budgeting. You don't budget just to control your spending. You budget to enable your dreams, because just having a goal of deprivation is not enough to empower a life change in your finances. But when you have a purpose for budgeting, it takes on meaning and the dollars you save become significant because they are enabling your dreams. (budgeting in a nutshell :) )

Matt and I have a huge dream this year of going to England for our 10th anniversary in August. We have talked about it since our 2nd anniversary and it is almost here. It seems a little difficult to me with starting a business and all that goes with it, but it is not impossible. But first, we need to get back to purposeful spending.

So, I am going to call this next month "Life After Credit Cards". I know it is possible, but for me it is really going to be a challenge. Anyway, I am going to share the journey with you this month. Of course, I will probably write about other things along the way, but I hope my adventure will inspire you to think outside your box of the familiar in order to reach your dreams.

We get so used to doing things a certain way that it seems so sacrificial when we have to change. Yet, many times the things that we are holding on to are actually just holding us back from our purpose. As we look at this new year, are there things or habits that you are holding onto that are holding you back. For me, the credit card has become a crutch that has enable my faith to get weak (I'll write more about that later). What is your crutch? What habits are you keeping that are actually sabotaging what is God has put in your heart? We still have three more days until the new year. Take these days to ask the Lord what He has for you this year and what He would like you to leave behind in the old year. The new year is a beautiful time for new beginnings. And the new beginning for me is life after credit cards :)

Thursday, December 11, 2008

The Father's Love

Well, I can't seem to get the blog written, but I am working on my book, so I think it's just that I am doing what I am supposed to be doing.

But I just have to share this video with you. Nothing to do with budgeting, but it also puts everything in perspective. Love and fear cannot co-exist. His love drives all fear from your heart. So if you are in fear in your finances... this is such a wonderful reminder of who your heavenly Father is and how much He loves you. What amazing love...

Tuesday, December 9, 2008

Hey friends, I just wanted to give you an update since it has been a week. The Jones family is doing great. We are enjoying the Christmas season immensely. It is so fun to hear the kid's questions and to focus our conversations with them so much on Jesus. I know you should always do that and we do, but Christmas provides such a purposeful opportunity.

And for me personally, I am working on my book again and that is why I haven't been blogging. Honestly it is a little hard going. It is so much more fun to write a fresh story or article than to edit the ones you have already written. However, I have a goal for December so I am pushing towards it. It is just so good to keep forward momentum, and so on I go.

I do have a blog that has been stirring in my heart and I am working on, so maybe I will get that posted a little later today. It is a bit "soap boxy" but with such a powerful point that I hope will challenge you as much as it has me. That is, if I can just find the time to write. But as I keep reminding myself, this is just for a season. It's funny, but nothing will get your creative juices going like having to take a break from doing the thing you love. Maybe it is just that there are so many budgeting issues that surround the Christmas season, especially this year.

So from my home to yours and in the mean time... keep on budgeting and have a wonderful day

Monday, December 1, 2008

Thoughts From Beneath the Tree

I was sitting beneath my beautiful Christmas tree last night, looking at all of the pictures of my kids and little ornaments that represent all kinds of holidays, years, milestones in our lives. And all of a sudden I was struck by the abundance of Christmas and how it flies in the face of the current trend of “frugality”. Everywhere I look and read people are scaling back, cutting back, and trying to figure out how to give less. And though I absolutely applaud being purposeful with your money, there is something so empty in this approach to Christmas. They call it refocusing the season on Jesus, but in the process many have lost the spirit of the giver.

And as I sat there looking at my tree I was struck again by the nature of my wonderful God who extravagantly gave His only Son to us, so that we might know Him. He held nothing back. He didn’t scrimp on His gift. He gave freely, with love and abandoned generosity. We give in celebration of His gift. We give because He gave.

No, it’s not about the price of a gift, or the size of the gift. Rather I am talking about the spirit of the giver. This season is all about Jesus, but that shouldn’t mean that we don’t give gifts to our family and tell them we are focusing on Jesus. It means we embrace who God wants us to be in our family’s lives. Be His hands and His ambassadors to your parents, aunts, and grandparents. Instead of asking, what is the cheapest gift I can give to my brother or niece, ask the Holy Spirit how you can bless your brother. I guarantee you that God knows your budget, but it is something in your heart that changes when you give from His heart rather than your lack. I think the problem is that we are embarrassed when our gifts are small, rather than just celebrating that we get to give. You may be giving coupons to baby-sit for your sister’s children so that she can have a break with her husband, but that may be exactly what will bless her the most even though it doesn’t have a monetary tag.

People get so “religious” at Christmas and want to criticize the consumerism and excess and call for spending less and just “focusing on Jesus”. But while I agree with them on some things, I just think they have missed the whole point. People get into excess when they aren’t giving from their hearts and are instead giving because of expectations, obligation, or fear of offending someone. But you can be just as bound by being miserly. The fear of not having enough for yourself, stinginess, judgments that they have too much already, and religious self-justification all trap your heart inside a prison of fear and hoarding. Remember Scrooge? It’s not really that he had or didn’t have, because though he had lots of money, his heart was impoverished because he didn’t know how to be a giver. It’s not really the giving in excess or the hoarding, it is the spirit of the giver that is at issue

I have actually wanted to write this blog for some time now about the absence of “frugality” in the nature of God. Instead, everywhere you look you see His liberality. Why did He make so many kinds of fish in the sea, and then make completely different fish for the rivers? Why the amazing variety of colors in flowers? Why did we need so many different kinds of ants, or spiders, or butterflies? Have you ever stood on a mountain and watched a sunset, or happened on a field of wild flowers? God said that He is revealed in creation, and everywhere you look you see His glory and His extravagance.

Or look at Jesus. Yes, he lived simply, but He never lacked. In fact, when there was lack He multiplied what He had and fed 5,000 people. Such amazing compassion and generosity. Everywhere He went, He healed, He touched, He gave. His focus wasn’t on what He didn’t have to give, but instead He gave everything.

It just reminds me of how many people read the Christmas story and focus on the scarcity of the manger, instead of the extravagance of the gift inside. The wise men saw it and brought Him everything. The shepherds saw it and worshipped. The truth is that the manger doesn’t matter when your eyes are on your Savior. And in our lives, it isn’t our circumstances that define who we are, it is the gift that has been given to us that defines us. We love because He first loved us. We give because He gave.

This Christmas is one of the tightest financially for us and for so many others, but I have never been so excited to give. Yes, I still want the best deals on what I am giving, but my heart is to be an extension of the heart of God. There are some gifts that I am giving that cost so little, but I know it is what the Lord put in my heart to give. So I’m not adding to it. I’m just giving exactly what He prompts me to give. There are other gifts that cost a little more and Matt and I have prayed through those too. But when you know in your heart that you are giving from His heart, there is so much joy in the giving.

Your budget for Christmas may just be a plate of cookies for everyone on your list, but if that is what the Lord puts in your heart to give, give with joy and with liberality. Rejoice that you get to be a blessing to those in your life. Right a meaningful note of thanks to accompany the cookies and give with joy. If you give with the spirit of frugality and lack you will miss the joy of giving whatever gift you give. You will constantly be apologizing for your gift and your circumstances. Rather, set your budget and then instead of focusing on what you don’t have to give, set your heart on the joy of getting to give.

Generosity does not mean more, or bigger, it means giving with freedom. No matter what your financial situation, you are free to hear the voice of the Holy Spirit and to be led by the prompting of the Spirit of God. And where He leads, He also provides. And that is the amazing thing about giving in the Spirit of our generous God. He loves a cheerful giver and just seems to pour His blessing all over it.

I am reminded of the story of George Muller. He ran an orphanage in England and saw miracles on a daily basis. He literally poured out His life giving to those children and God was continually surprising Him and proving His goodness. He tells the story of having nothing to eat for breakfast and setting the table anyway. They all sat down at the table and He prayed and thanked God for His provision. At that moment, the doorbell rang and a milk truck had broken down outside the orphanage and the milkman asked if they could use his milk because it was going to spoil, then someone stopped by with groceries, and the butcher showed up to give them meat. Literally daily miracles.


There is an old saying that you can’t out-give God… I dare you to try it this Christmas. Don’t give what you don’t have (I am NOT advocating putting Christmas on the credit card!), but give with liberality from what He has given to you (and I am not just talking about money, toys, and presents), and you will be amazed at what will happen in your own heart. Christmas is truly a birthday party celebrating the most extravagant gift that has ever been given. Whether you live in shack or castle, God gave His only Son so that you might be reconciled to God and have relationship with Him. Chew on that. Think about God’s liberality toward you, and ask Him to give you His heart this Christmas season: a heart for the sick and the poor, a heart for the lonely and broken, a heart for your family, a heart of compassion and generosity, a heart of a giver.

Tuesday, November 25, 2008

Thanksgiving prayer

Have a wonderful Thanksgiving! My dear brother and his wife and kids are in town for the holiday, and so I am out for the week. But I pray that you and your families have a wonderful time together and may the Lord remind you in this season of how much you have to be thankful for.

"The Pilgrims made seven times more graves than huts. No Americans have been more impoverished than these who, nevertheless, set aside a day of thanksgiving."
~H.U. Westermayer

"The unthankful heart... discovers no mercies; but let the thankful heart sweep through the day and, as the magnet finds the iron, so it will find, in every hour, some heavenly blessings!"
~Henry Ward Beecher

May your heart be a magnet for blessings today and have a wonderful week.
Tracy

Tuesday, November 18, 2008

The Thumbtack Theory

My Dad has this saying, “Stupidity is continually doing the same thing and expecting different results.”

We all have our moments of stupidity. I had another moment today as I attempted once again to hang my son’s wall decorations back on his wall. Somewhere in my life I became convinced that the best way to hang anything is with thumbtacks…. I know I should get the hammer and put a nail in the wall. It’s just easier to use tacks. And more forgiving if you accidently hang the picture 2 inches too low. However, tacks definitely have their down side like they don’t hold very much weight. Another down side is they can easily bend when going into the wall. The particular picture I was hanging now has about 14 tack holes in a little circle. For some reason, it just doesn’t want to stay :)

You may laugh at my “stupidity” (I definitely do) but many of us do the exact same thing with our finances. We know that we need to find a permanent solution but we just keep “jimmy-rigging” our finances with thumbtacks and expecting different results. So when it comes to making a major life change and adjusting your budget and your finances to fit, don’t try to do it in a makeshift, jimmy-rigged way. There is only one way to really succeed whether you are needing to down size your life, or pay off debt, or just overhaul the way you handle your finances: Throw out the thumbtacks, get out the measuring tape, a hammer and nails, and do it the right way.

And the right way to correct an out of control financial life is to get your budget in order. So if you have been “borrowing” from your 401K to make it through, or you are up to your eyeballs in credit card debt, or if you have resorted to selling plasma to make ends meet (my husband did this in college ~ they do pay $80 for it, but it really is a desperate measure :) … there has got to be a better way!) then may I suggest that your finances may be hanging precariously from thumbtacks. It is time to take a realistic look at your finances and sit down and evaluate your budget once again.

If you are new to Budgeting For a Better Life and have never taken the time to set up a budget, then this is a great day for your financial life. If you have already set up a budget and are just needing to make some adjustments, then pull out the thumbtacks and let’s do it right. Every dollar that you spend has to come from somewhere, so having a plan for the “somewhere” can really impact your financial situation.

Sometimes we get into that “jimmy-rigging” mode with our finances because we just don’t want to face the cost of what we are actually spending. For instance, there are many people who don’t want to know what they are actually spending on dining out. If they actually sat down and did the math of eating out at $30 a meal every night they would realize that they are actually spending over $900 a month on food… and that doesn’t even include other groceries. If you are living on a limited budget, this is one of the fastest slides into debt that you can devise. It seems so much easier to pull out the credit card so you “don’t have to face it,” but the truth is you are killing your financial future (and probably your arteries.)

If you really want to take back your financial life, you are going to need to look at those habits and put yourself on a budget. This is why I am such a firm advocator of using the cash/envelope system. When the money is gone, you are forced to either determine where more money is coming from (is that meal out worth some plasma? :) just kidding) or eat at home. It is hard to set boundaries when you aren’t used to them and so that physical boundary of your cash envelope being empty can be revolutionary in retraining your spending habits.

As for me, I am going to go get a hammer and a nail and hang the picture the right way. I’ve got to do something different if I want a different result. And if you want to see a different result in your finances in 2009, then it’s time for you to do something different as well. So get out the hammer (A Plan to Stop Juggling), bring out the nails (Finding Balance ), and a measuring tape (Directions for the Journey ), and get your budget in order. It takes a little more effort, but take it from the thumbtack master, I would much rather pick a picture off of the ground than have to try to pick my financial world up off of the ground. Even I realize that there are some things that thumbtacks just won’t hold.

Sunday, November 16, 2008

Suprises: Courtesy of India and Beyond

Have you ever been going through your bank statement and realized you forgot to enter a deposit or a debit? It doesn’t happen too often these days with automated downloads into your financial software… that is unless your financial software hates you. Yes, I know it’s a computer program that just does what it told, or at least that is what my mind tells me, but my heart knows the truth. “Quicken” hates me. I have upgraded, I have reinstalled, I have checked and double checked my account information, I have spent hours on the phone with their “support” team which I think are all located in India. There is nothing wrong with being from India, but it is very difficult to have confidence in your technical support when they have only just learned English. Does this man have any idea what I am saying? Nope. I decide to hang up and try again. And once again, fourty-five minutes to get to a human being wasted as I arrive once again in India.

All that being said, my current software will download a few choice selections from my financial world, but not my bank statement and information. It used to do it, but one day it just stopped. No, I did not do anything or change anything (as the man from India insisted over and over again). It just stopped and so now I manually enter all of my bills, checks and deposits…. And sometimes I miss one, or two, or… see, now I’m just getting mad at the man from India again.

But the bright side is, it forces me to stay on my toes with my finances. I check and double check to make sure that I have everything entered. Most of my bills are automatically debited so it is really important that I have the necessary funds in my account when they go through. I love the freedom from not worrying that your bill will be late that you get with automation. I love that I don’t ever need stamps. I love that I am protecting my credit by never being late on a payment. I love that I simply check the bill off on my budget and know that the rest will be automatically taken care of. I do NOT love miscalculating what is left in your bank account because you forgot to enter the check for the doctor’s visit last week.

But that is part of financial life. Sometimes we forget. We are not perfect (gasp!) We sometimes forget that we already spent the $20 in birthday money from our Great Aunt and “re-spend” it on something else. And sometimes we forget to write in a deposit… more rarely, but what a glorious surprise when that happens. And yes, after all of my grumbling about Quicken, I was wonderfully surprised on Friday that I had neglected to write in a deposit and we actually had $206 dollars more than we thought! Hallelujah. It truly seemed like a miracle to me, and I know that every good thing comes from God, so I believe that it was. It definitely was a great reminder that good things can even come from hateful computer programs…. Ok, considering Quicken that feels like a stretch… but I will definitely say that my wonderful God works all things for good on our behalf. He can even use Quicken… now if He could just teach me how to use it :)

Saturday, November 15, 2008

Still Alive :)

Have I fallen off the planet? No, just very full days and evenings lately. I'm still here, and still budgeting (of course), I just have needed a little time to focus on other things.

Matt and I have really been working to get our graphic design business off of the ground. We have called it jones house creative. Matt is still working part time for Liberated Living Ministries but we are actively trying to build our graphic design business. I think it has felt a little like trying to juggle two infants as I have struggled with giving my "free" night hours to either my book and blog, or our business. As you have guessed from my absence, the business is winning right now, and really needs to be a priority during this season.

But in the midst of all of this activity, I keep thinking budgeting and wondering how all of my "blog friends" are doing with their budgets leading into the Christmas season. In fact, as I pulled out my Finance Binder today and realized that I have been neglecting my paperwork, I wondered how many of you are doing the same thing. It is so easy to start letting things drop during this season. Tis the season to shop... or so stores hope, and it's easy to just start procrastinating as you begin the last leg of the year. It is way more fun to buy than to figure out how to pay for what you bought, and it's easy to just start to slide and figure you'll "re-commit" in the New Year.

However, this is actually the perfect time to get a hold of your spending, and look at your Christmas budget again. I did this the other night, and I am so thankful for the time I invested. I sat with my budget and my Christmas budget and figured out exactly where we are financially by reconciling my bank statement and paying my bills. And then I looked at what I had already bought as Christmas presents and how much further I had to go. At the end of the evening, I felt excited about the upcoming season again and felt so good about having a plan for gifts we are planning to give.

I don't know how it is in the rest of the world, but around here, shoppers just get so mean and grouchy during this season. I think part of this is because they are all spending money that they don't have for presents that they know will be returned. What is fun about that? But knowing your budget and sticking to it, as well as shopping early and catching the early sales can save you having to endure the world of the shopping grouches.

Anyway, just thoughts from my corner of the world tonight. Hopefully, this week will be a little less busy and I will get to blog more.... but did I say that last week as well? Oh well, it is what it is :) Have a wonderful Sunday... and if you have some time, catch up on your finances. I promise you will feel better. Even if there is less than you want, you will at least know what you have... and what you have to give. God bless.

Tuesday, November 11, 2008

Down Sizing Part 2 - A Little Pruning

What would you do if all of a sudden your income was cut by more than half? This happened last week to a man named Henry who was completely blindsided by his company’s decision to start layoffs and downsize. He was called into a meeting and given the option to quit or to be demoted. The demotion meant that his salary would be decreased from around $140,000 to $50,000!! He has given so many years to the company and all of a sudden he’s back at the beginning. He chose to take the demotion and stay with the company, but he is going to face a very hard road ahead. Either he is going to need to down size his entire life, or he needs to start looking for a new job. But really, anywhere he goes he is going to be starting over. At this point, his only option is to down size.

So where do you start in the process of cutting back your expenses? It is such a difficult place to be in, and yet if you don’t act immediately, your next month’s expenses might land you under a landslide of debt. But the good news is, you don’t need nearly as much “stuff” as you have come to believe. It may seem radical to change your life, but remember you are saving your family’s future.

The first place you start is your budget. You should have every bill and every expense listed in your budget and this will make it very convenient to see how your numbers are adding up. So take your new salary, which for Henry is $50,000. He will want to take into account taxes and subtract them from his total and then divide that total by 12. His new monthly salary is probably around $3400 a month (I’m guessing because I don’t know his tax situation). So this is the number that he will want to work toward. Every number in his budget needs to be re-calculated to bring his monthly expenses under this number.

However there are some numbers that can’t immediately change like his house payment and related housing costs like gas and electricity and water. Automobile payments may be difficult to immediately change as well. Yet in this time of change, everything needs to be considered. If you can’t afford your car, then buy a second hand car and get out of that payment if you can. Re-evaluate your home. Yes, you may love your home, but at what cost? If you end up in bankruptcy, chances are you will lose your home long before then. It is so much better to be proactive and make the best choice for your family…

Which I have to interject and say that you absolutely need the understanding and support of your family in this endeavor. If you are married, your wife or husband needs to be right there with you to really make this succeed. The best way (in my opinion) to approach it is to be honest and hopeful with them. This is a challenging time, but you want to make the best decisions before the decisions are made for you. These decisions mean cutting back and being purposeful in many areas where you have had no previous limit. But the goal is a debt free life where you are free to be a blessing to your children and to many others while living within your means. The example that you will give your children in doing this will be an inheritance for the rest of their lives. There is honor in paying your bills, and there is honor in living within your means. If the “stuff” in your home is all built on a mountain of debt and pretense, then what is the message that you are giving to your children?

Now if you have little children, they obviously do not need to know too much. What they really need to know is that they are loved and that Mommy and Daddy and their Heavenly Father are taking care of them. You can involve them in praying for a new job or wisdom, but be so careful not to involve them in your fear. They are powerless in this situation and it is an unfair burden for them to carry that can really scar them if you place your fear on them. It is amazing how children adapt and they will be fine as long as they know that you are OK and that their family is OK.

I am going to stop here for now and continue this blog later, but I do just want to remind you that if you are in the process of down sizing your life that you are never alone in this. Ask the Lord for wisdom and don’t resent the process. It is all just stuff and there is a way through this, but it may take some ingenuity and also some tenacity to see it through. But don’t get discouraged. You are fighting against familiarity and sometimes against the culture, but you are still right in the middle of God’s hand and in the very center of His plan. And NO He did not plan evil or pain for you, but He always has a plan for our good and is always fighting to work the difficult things in our lives for good. Rest in the fact that God has a plan, and then yield to the fact that His amazing plan for good might just involve a little pruning.

Thursday, November 6, 2008

Down Sizing Your Life

The other day I had a conversation with a lady who is facing the decision of whether to leave her job and stay home with her children and whether her family can afford to live on just her husband’s salary. It is a very difficult decision to reduce your standard of living and learn to live on less, yet many people are facing this reality and for many it is not by their choice. There are so many companies that are cutting back and laying off people right now. But whether by choice or by necessity, the struggle to reduce the cost of living is the same.

It is actually very difficult to undo the financial tapestry we weave as our salary increases. We take on additional bills and payments, increase the size of our home, hire service people to mow the yard, clean the house, do our taxes. We buy bigger cars and houses with bigger payments and bigger insurance payments. Everything gets larger as our salary increases and it is really a challenge to extricate yourself from all of the things that you have come to deem “necessities”. But many times the challenge isn’t so much financial as it is emotional.

A friend of mine just went through a divorce and one of the biggest challenges that she faced as she has down sized her life was the resentment she felt in having to do it. Her sense of entitlement continually undermined the realities of her situation. She felt like she was being robbed that she couldn’t have the car she was used to. She resented the smaller home because her furniture wouldn’t fit. She HATED having to have a budget when she had been used to just buying whatever she wanted. And every bit of this emotional resistance made the process of down sizing so much more traumatic for her than it had to be.

The big challenge in this emotional minefield is to get a vision for your life on the other side and continually remind yourself of where you are going. For the lady considering quitting her job to stay home with her children, her vision statement might be something like, “My children are worth it. I am investing this effort and my income into their lives so that I can be with them.” So anytime she faces a difficult financial decision when down sizing, she reminds herself, “I can do without this large home because my children are worth it, and I am investing my income into their lives so that I can be with them.

For the woman going through the divorce, her vision statement might be, “This is my chance at a new beginning and I am not going to hold onto anything that might keep me in the despair of my past. I am going to embrace my new life, and move forward. There is a way through this and this is only the beginning.” So when she faces getting rid of her expensive car for a payment she can afford she reminds herself of her vision statement. “This is only the beginning, and I am going to embrace my new life and move forward.”

And for the man who faces layoffs at work and has to take a job at a lower income his statement may be, “Whatever it takes to provide for my family. This isn’t going backwards, it’s just life. I am going to embrace where we are and make the most of what we have. We are healthy, we love each other, and this is just a small part of the journey.”

In each of these statements, there is no indication of self pity, or resentment. It is an acceptance of where you are so that you can build from here and move forward. If you spend all of your energy resenting your present circumstances, you will miss what God has for you today. It is absolutely critical to let go of that resentment, denial, and sense of entitlement that cripples so many when they come to a major life change. God has an amazing plan for your life, and whatever has happened in your life He can work it for good. But one thing that can prevent Him from working in your life today, and that is if you stop living in today and choose to stay in yesterday and what “should” be.

So don’t look at down sizing as going backward. Choose to see it as simplifying your life. In this process of down sizing you will have to question everything that you currently spend money and it is an emotional process. But don’t let your emotions sabotage your financial future. Keep the vision for what you are doing in front of you and remember that this is only for a season. It won’t always be this hard and the decisions that you are making to reduce your cost of living and live within your means are going to ensure that there are only better days ahead.

I am going to be talking about more practical steps to down sizing in the days ahead, but I felt it was critical to start here. You can resent the process, or you can embrace it and go for it. But whether you are choosing the process or are in it out of necessity, it will be a much easier journey if you are not carrying the baggage of “what was” and just accept “what is” today.

Tuesday, November 4, 2008

A Significant Time

It is a very significant time in America. I know tonight that whatever blog I write will be obsolete tomorrow. Tomorrow we will have voted for a new president and all of this nation and the world waits in anticipation tonight.

So, as I wait with the world, I honestly feel no desire to blog on the kingdoms of men, but rather to blog on the Kingdom of God. We live in this world, but we are not of this world. We vote, we raise our voices, we fight for what is good... but in the end, we belong to another kingdom. Our hearts are actually longing for His Kingdom to be established here on earth. And His Kingdom is a kingdom of love.

Our nation is torn in division and dissent on this night and has been for a long time. No matter who is elected, I do not see an end to this division. As men move further and further from any common ground, the darkness can only get darker. But it is in the darkest dark of night that the light will shine most brightly. As part of our constitution, the founding fathers of this nation wrote, "We hold these truths to be self evident..." But in this world today there is no longer any measure of agreement on what truth is.

But as always, I am again comforted that nations will rise and fall, and yet the Kingdom of God and His truth will remain. I am proud to be an American citizen, but my citizenship here is secondary to my citizenship in the Kingdom of God. And as an ambassador of His Kingdom I am called to be a minister of reconciliation.... not neccessarily to reconcile men to each other (although I dearly wish there was a way), but to reconcile men to God. We bear the good news that God is good, and has made a way for all men to come to Him and to know Him. The message of love and reconciliation is the anthem of His kingdom. And the really good news is you never have to vote for new leadership :)

Sunday, November 2, 2008

Christmas in November


We almost, almost watched a Christmas movie this weekend. Matt started to turn it on for the kids. “NOOOOOOO”, I pleaded. “Christmas is still 55 days away. I can’t do it.” Now, I love Christmas so much and I am usually the first one diving in. Our tree is up the day after Thanksgiving (Nov. 25th for my SA friends) and I just love the whole season. However, the season has come a month early this year. The stores are so desperately hoping that the Christmas season is going to save them that they just decided to go ahead and start early. But it just feels like we are skipping ahead and missing the now. I love anticipation and looking forward to things, but if you start the party too early… it starts feeling really long by the time you get there.

However, while I may be boycotting Christmas movies in October or even early November, I have already budgeted for Christmas and have even started buying presents. It may be too early to start celebrating, but it is never too early to make a plan and to save money. If you haven’t yet done it, I would like to encourage you to sit down and make a budget for yourself for Christmas. I do a simple spreadsheet in a program like Excel. I make a list of everyone that I am going to buy presents for in the first column. Then in the second column I set a budget for each person’s present. I note present ideas in the third column and then in the fourth column I track how much I actually spend.

Excel has a great feature that if you highlight the column of your spending and then go to the tool bar at the top and click on the Sigma letter (looks like a funny shaped E) it will add everything together in the column for you. It will put the sum of your numbers in the next box in the column. This lets you know exactly what you are looking at as your total spending for Christmas.

After you have worked out a feasible budget for Christmas presents, it is important to also make a budget for Christmas travel and entertaining. If you are going to be traveling to family over Christmas, you will want to make a detailed budget for your trip which should include food, lodging, gas, air fare, snacks, entertainment while there, etc. However, what many people fail to budget for when planning for Christmas is the cost of having family come to you. While it is much cheaper than traveling, it can actually eat up your budget so quickly when you don’t plan for it. Just in the cost of extra food, you will be spending quite a bit more than usual. There are also family activities and extra gas. It is difficult to gage how much to budget for the cost of hosting your family, but be generous. It is better to have money left over that you can put into savings, or take your wife out to dinner with because she survived her in-laws, or just finally have a year where you leave the holidays with no regrets and no debt.

Planning ahead will help you to not resent your company, and will help you to start the new year on great financial footing. So here are a few more tips for making your holiday a very happy and budget friendly time:
1) Don’t forget about the tree ~ if you buy a real Christmas tree each year, don’t forget to include that cost into your Christmas budget. If you have an artificial tree, try to think ahead to what you might need to purchase this year, like did you break the angel last year?
2) Remember the trimmings ~ When Matt and I first were married we realized that we had no Christmas ornaments. All the memories from our childhood were still at our parent’s house and we were starting a life together. So we decided to buy each other an ornament each year. We decorated the rest of our tree with inexpensive ribbon and balls. It wasn’t glamorous but that was perfect and just made the memory sweeter. When the kids came along we included them in the tradition. Our tree is now so full of precious memories that we only buy one for our family. If you are just starting out, this is a great idea for cutting down the cost. You don’t have to buy everything all at once. Just buy one Christmas decoration this year and one ornament. Let those decorations be meaningful to you and pretty soon you will have a Christmas full of meaningful memories rather than just the clutter of Christmas stuff…. But just remember to include it in the budget. Those ornaments can get pricey, even just for one.

3) Plan your Christmas meal ~ So much of the trimmings for Christmas and Thanksgiving are on sale right now. There are coupons in this week’s Sunday paper for all kinds of baking goods and supplies for Christmas cooking. If you plan ahead and start buying your Christmas meal a little each week, then it will not be such a huge blow at the end. Try to catch sales on items that you will need. You have 8 or so weeks to watch for discounts, and every dollar that you save on Christmas groceries is more that you will have to give to your friends and family.

4) Don’t forget the stocking stuffers ~ For a few years in the beginning of our marriage, I forgot to fill the stockings. In fact, I have only gotten good at it in the past couple of years. But one thing I have learned is that it can be just a stocking full of budget blowing stuff, or it can be meaningful. On years when I would forget, I would sometimes remember on Christmas Eve day and be out shopping just for the stocking! And you always spend more money when you are buying on a time crunch. In recent years I have started budgeting for the stocking fillers and then buying little things as I think of them or see them on sale in the stores. I keep all of the stocking fillers in the their own bag and then I know exactly what I have. I have been able to cut down the cost and make each person’s stocking more meaningful. Also, a great tip if your husband consistently forgets your stocking is to let him off the hook and find a friend whose husband is also “Christmas challenged” and fill each other’s stockings. It is no fun to fill your own stocking and it is also not fun to make your husband feel guilty on Christmas morning. This is a great solution to be a blessing to a friend and to actually be surprised yourself.

So, I hope these little tips helped, or at least were interesting. I know I will be writing more on this topic come December. But in the mean time, make a plan!! Christmas doesn’t have to kill your budget, but it is guaranteed to do just that if you don’t have a plan.
God bless~

Thursday, October 30, 2008

Checking In

Well, I am just checking in. This has been another busy week for my family. We have had something on every evening, which is definitely not my favorite. However, in the midst of all of the craziness I have had so many "budgeting" conversations! For instance, my friend Rachel commented about taking a "break" from budgeting because she has had three weeks of family in town. It is an interesting problem and one that we all face in the holiday season. She just had her company early, but it is such a great issue for all of us to address. How do you afford to feed and house your extended family over the holidays without killing your budget?

I also had another conversation with a friend about how to scale back your budget when either your income level changes through a job transition, or maybe you go from a two income family to a single income family. In this climate of layoffs and economically rocky times, asking this question may save your family from a lot of difficulty.

A question I personally have been thinking about is what is the best way to stretch your groceries till the next payday. I don't know about your family, but for us it felt like October 31st was never going to get here. I am so excited to have my pantry and refrigerator stocked again, but so many have already put groceries on the credit card this month and are now trying to figure out how to pay for them.

All around me there are just so many questions in this very turbulent time. Now, this is great if you happen to be writing about finances, but if you are living in the middle of a financial mess... it's not that much fun. But the great news is that if you are in a financial crisis in your life, there are so many practical steps you can take to change the direction your finances have been going.

So, I will be back soon to talk about some solutions to these questions, but in the mean time have a wonderful weekend. And if you happen to have some more questions, send them on :)

Sunday, October 26, 2008

The Pumkin Patch

What a beautiful fall weekend. It has been such lovely weather here in Tulsa and after several weeks of sickness and a very busy week last week, it was so lovely to just enjoy our weekend and to visit the pumkin patch. I am posting a lot of photos, so I hope you don't mind as I share pictures of my darling kiddos. I know I haven't posted in a few days, but I am just really finding that I need a break from blogging right now. We have had a lot going on in the evenings and as we face this coming week, I just feel like I need to prioritize and follow my heart... and for me that means working on my book during my free time, rather than blogging. I will probably check back in throughout the week, but I am not going to post a "real" post till next week. So have a wonderful week and I hope you enjoy the pictures.
I LOVE this picture! It is everything beatiful that is growing in the friendship between Ava and Luke. It has definitely taken some time and Mommy intervention, but they have become such good friends and have really learned how to play together.

This is sweet Ava and her dear friend Ellie. During this picture they were singing "Happy Birthday" at the top of their lungs :)

Noah and Ava in a very sweet hug... now if I could just get Ava to look at the camera...

This is more like Noah and Ava in real life. Ava is the girliest girl, and Noah is all boy... but he still tries at every opportunity to teach her to wrestle. She never does "get it" but she squeals with laughter, and then sometimes tears... but she just adores her big brother.

Darling Luke and Noah. Some of the pumkins there were as big as Luke.

Now this is the face of trouble :) He is such a sweet boy though, but he is definitely a free spirit... not naughty, just a lot of fun and energy.

Princess Ava on her pumkin throne. She looked like a little pixie amongst the pumkins.

My big Noah. We have been going to this same pumkin patch since Noah was little and it was just amazing to look at him climbing on the pumkins and to see how big he is. How did he get to be Six years old!

Looking up to Daddy. I just love this picture. Such a little guy with his wonderful Daddy. Just off of the picture was a huge tractor and that was all Luke cared about for the rest of the visit. Luke loves tractors, and cars, and especially trains.

Luke and Mommy :) When it comes to Luke, its just sunshine and happy thoughts.
And so from my family to yours, have a really wonderful week.
God bless,
Tracy









Wednesday, October 22, 2008

The Seat of Scorn, and The Tree of Abundance

"Blessed is the man who walks not in the counsel of the ungodly, nor stands in the path of sinners, nor sits in the seat of the scornful..." Psalm 1:1

Now, I have to say, most of my counsel these days is with my children, I don't often have the opportunity to stand in the path of sinners (in other words, to linger in their ways), but I have to confess, I sometimes sit in the seat of the scornful. I was reading the first chapter of Psalms the other day and just felt the Lord convict my heart. It is a very politically charged climate here in America, and I have yet to walk away from any conversation about politics and feel refreshed and uplifted. Instead, I usually find that in some way my heart has gotten into scorn: I question people's motives, I doubt their sincerity, I get frustrated with the media. But the end result is that I find myself feeling dry and yucky.

Just like Psalm 1:4 talks about, my life becomes dry and full of chaff. There is something about the seat of scorn that just sucks all of the life out of your soul and leaves you with nothing but chaff to give. I don't know if you have felt like this lately, but if you have... there is a good chance that you are sitting in the seat of scorn. What are the words coming out of your mouth concerning your boss? the economy? the government? If they have been filled with scorn, then you have been allowing those words to suck all of the abundance and prosperity from your soul.

But the solution is so simple, meditate on the Lord. Speak about Him and His goodness and His truth. Psalm 1:2 says, "But his delight is in the law of the Lord, and in His law he meditates day and night." The law of the Lord to us through the New Covenant that Jesus put in place is the law of the Spirit of life in Christ Jesus. So when we meditate (which means to chew on, to speak about, to think about) on the Spirit and His life and even what He is saying about our lives and finances, then we will be like a well watered place.

Verse 3 promises that we "...shall be like a tree planted by rivers of water that brings forth its fruit in its season, whose leaf also shall not wither, and whatever he does shall prosper." Now that is a promise!!! I want that kind of abundance flowing in my life and it all comes down to what I am doing with my thought life and what I am doing with my mouth.

So, for me, I am repenting of sitting in the seat of scorn, and asking the Lord to wash all of the chaff from my life that that has produced. And today, I want to challenge you to do the same (if you need to) and ask the Lord to flow with His rivers of refreshing again in your heart. Throughout history elections have come and gone, financial crisis has come and gone, nations have risen and fallen, but no matter what happens around you, God's promise to you as His child remains. He never changes. He is always good, and as verse 6 promises, He knows all of our ways. So delight in Him today, and watch as your life becomes an oasis to everyone around you.

Have a wonderful day.

Tuesday, October 21, 2008

Finding the Balance When You Are the Boss

Cynthia emailed me this question a few weeks ago concerning the unique needs of trying to set up a budget when you own your own business or are on a commission based income. I have already written a few blogs on this subject ( Feast or Famine , Finally Breathing , Your Business , The Power of Percentages ) but I felt like this question is so relevant to so many people that is bares revisiting.

Cynthia wrote, “We desperately need a budget and it has been difficult for us to budget because we own our own business. I need to create a budget for the business as well, but it's really the net personal income that I need to manage.

I'm going to use your example of the $50,000 net annual income ($4166.67 monthly)

$4,166.67 income
$3,166.67 hypothetical expenses
$1,000.00 left over to go into a surplus, not an escrow account

Then should we make any additional money over the $4,166.67 goes into the escrow account.
Here is my question:
If I am taking last year's figure of $50,000 and make the same or less amount of money... what do I put in escrow? Isn't the example assuming I will make more than I did the previous year?

My problem is that I know by the end of the year, we make enough to pay our household bills and more. The problem is some months there is enough money to pay the bills, other months there is way more money.
I guess I'm just not seeing the whole picture.”

Cynthia’s question is exactly the reason why you would set up what I call an “escrow account” and why it will work for you. As she states in her question, she is already living successfully on her income and there is enough money to pay the bills. The whole idea of an escrow account is not that you are going to make more money, but rather that it will help you to live on the median of what you actually make rather than have an abundance one month and not enough the next.

The principle of the escrow account (which I explain in detail in Finally Breathing) is that it acts as a storage for when you have months of surplus. The idea is that you have based your budget on a very realistic estimate of what you are going to make this year. Remember, it is better to be conservative in this estimate because overestimating means that you will end up spending more than you make which equals debt. So with a conservative income estimate you will then subtract taxes and divide that number by 12 to give you an estimate of your monthly salary on which you can base your budget.

However, when you own your own business (especially when you are starting out) the income rarely comes in in dependable monthly amounts. In fact, I could say it NEVER
comes in in dependable amounts. The only thing you do have an idea of is how much you are expecting to earn for the year. So our numbers are going to be based on that estimate which basically says that even if you make $1500 this month and $7000 next month, at the end of the year you will make around $50,000 (take home pay). So divide $50,000 by 12 and you get $4166.67. So every time your monthly income is above $4166.67 take the additional money and put it into your escrow account. When your monthly income falls below $4166.67 then you will draw money from your escrow account to make up the difference.

Now if you do own your own business, it may be that you set up your business finances to serve as the escrow account and you simply just draw a salary. This is actually the way it works in most businesses, especially well established businesses. However, if it is a very small business (like you are the owner and there is no one else), you will need to look at the expenses of your business and take them into consideration. Most very small business owners will pay bills for the business and draw everything left as salary and this is exactly when you need a personal escrow account. If you don’t want to leave it in the business, then go ahead and draw it as salary. The point is not to consume everything that you bring in in the really good months, and an escrow account will keep you from doing that.

And if they are all really good months and your income from the business never dips below what you need for your budget, then Praise Jesus!!! And, you probably do not need an escrow account for your income right now. If you are in a position where you continually make more than enough for your budget and then just make even more some months, then the surplus money can just go into savings, or giving, funding your dreams, or whatever the Lord leads you to do with that money. But I would suggest increasing your budget and giving that money purpose like “Retirement Savings” by making it a purposeful part of your budget. Money with no purpose just tends to get consumed and disappears. But the bottom line is, if you don’t need an escrow account, then don’t overcomplicate your life by trying to set one up. However, if your income does fluctuate below what you need for your budget, then an escrow account can actually be the key to simplifying your life.

I hope this has helped Cynthia, and again, if any of you are lost when I talk about escrow accounts then please go back and read my previous blogs on this topic as I went into much more detail on them. And if you are still lost, I would love to hear your questions.

God bless today and I will be back tomorrow.

Monday, October 20, 2008

Preparing for Future Expenses

What a lovely weekend it was here in Oklahoma! It was just perfect fall weather: cool, with clear blue skies, and no wind. It was such a nice weekend for my family because we were able to play outside, and just relax and take the weekend off. Noah got sick again last week and we had to keep him out of school for most of the week. So this weekend I also sterilized everything in my home, and washed all of the linens, and just cleaned everything. Noah is finally better and will be returning to school on Monday and I am just so excited to be done with sickness.

Anyway, over the past few weeks I have received a couple of questions through email that I haven’t had time (or energy with being sick myself) to answer. So this week I am going to try to answer those questions on my blog. They are questions that I am sure many people have and hopefully the answers will be helpful to you as well.

Jessica wrote me with the following question:
“I have been reading your blog for a few months. I love it. I was searching and couldn't find anything on how to save for larger expenses that don't have a definite date for replacing the item. For example, a furnace, we will just use it till it stops working. The heating guy said 1 to 5 years to expect to need a new one. How would one go about saving for something like that?”

I love this question because it means that she is already thinking ahead (and if her furnace looks anything like the one in my picture, she definitely needs to be :) ). It is very difficult to be motivated to put money away now for something that seems so far away, yet it is such a smart financial move to do so. Matt and I have done exactly this on many occasions, most recently for the writer’s conference that he attended. But truly saving for a major purchase such as a new furnace, tires for your vehicle, major auto repairs, co-payments for elective surgery, dental work, home improvement projects, etc is all done the same way.

The first thing to determine is an estimate of when you will need the money. The question for Jessica is, what will she do if she doesn’t have all of the money saved and needs to replace the furnace? If the answer is that she will have to put it on a credit card and pay interest on that money until she gets it paid off, then I would begin an aggressive saving plan to save for the entirety of the furnace as soon as possible. If she can cover whatever balance she hasn’t saved by drawing from a separate savings account or by another means then she might be able to relax her deadline for saving the entirety.

So let’s say Jessica’s furnace is going to cost $2000.00 to replace, and she decides that she would like to have that money within 2 years to cover the cost of a new furnace. Within 1 year she will have half of the money for the furnace and she decides that she will take a loan from her emergency savings account if the furnace should go out before her 2 year savings plan is completed. She can then continue to pay off the furnace by monthly payments to her emergency fund until the furnace is paid for.

So if you are saving for a similar project to Jessica's furncae, the first step is to open a savings account specifically for that project. Or if you would prefer, you can just use your regular savings account but start a separate ledger (where you track your money) to specifically track your savings for this project. But if you use a savings account at a place like INGdirect (which I highly recommend), then you can even rename your account so that you know exactly what it is for.

The next step is to take your estimated cost for your project and divide it by your deadline for saving the money. So for Jessica she would take the cost of $2000.00 and divide it by 24 months which would be $83.33. She would then take her monthly budget and make a space in her budget for that $83.33. Now if you are on a “tight” budget this may take some effort, but remember there is always a way.

Recently, Matt and I needed to “squeeze” something into our budget and this is how we did it. We took a little money from our entertainment budget, and reduced our grocery budget by $10 and re-evaluated some bills to see if we could reduce them. I took advantage of a fantastic deal on diapers and stocked up, and so I was able to contribute part of my “baby money” that had gone to diapers to our project. Ask God for creative ideas to make it work in your budget. He really loves to be a part of your life, and He really does have all the wisdom that you need to make your budget work. Remember, every $5 helps and can contribute to successful debt-free living.

I hope this helps, Jessica. If you have more questions please feel free to ask. I do have another blog on this topic that you can read here. But I really do think it is wonderful that you are already thinking ahead and making a plan in your finances for the future. That really is what budgeting is all about.

God bless, and I’ll see you all tomorrow with a new question.

Wednesday, October 15, 2008

Home Sweet Castle?

I recently heard a comment that 20 years ago doctors bought 3,000 square foot homes and today they are buying 10,000 square foot homes! I know American’s have gotten fatter, but seriously, what are they doing with all of that space? I actually know some people who own a home that approaches 10,000 square feet and the truth is, they just never go upstairs. They live in the living room, kitchen, and their bedroom and the rest of the home is just for show. To me, I can understand that size home if you have a lot of company, but most of these homes are just trophies. It is a totally bizarre concept to me, but it is one that many American’s have bought into, and many of them are in bankruptcy as a result.

But I don’t just see it on the upper end, I see this same symptom in couples just starting out. They want brand new, the biggest they can “afford”, and a lot of them are in trouble as well. Their debt just keeps escalating, and in the current housing market, they are in some deep trouble. They can’t sell their home to get out of the huge payment because nothing is selling, and they are stuck just sinking deeper and deeper into debt. In fact, I recently had a friend comment to me that she couldn’t budget because their expenses were always greater than their income!!! What???? I am so glad I was on the phone, because my facial reaction would not have been discreet. Literally my mouth was hanging open. Fortunately, I managed to pull myself back together and just very kindly reminded her that that is actually exactly what a budget is for. But the shocker is that she lives in a gorgeous home, in a beautiful neighborhood, and from all outward appearances is doing well financially. What in the world is going on?

I honestly think that so much of the current crisis is directly tied to three things: 1)We have bitten off more than we can chew when it comes to our mortgages 2) We are not on a budget 3) We have no idea what we can actually afford to pay for a mortgage or for our lives. As a result, we are maxing out our credit cards, living lives we can’t afford, and praying for a miracle. Well, before you get yourself into the same situation as my friend, I want to talk today about how to figure out what kind of mortgage you can afford.

If you go to visit a bank or mortgage broker, they will typically tell you that “industry standard” is that your mortgage payment should not be more than 28% of your gross income. This is known as your “front end debt-to-income ratio”. Under this “standard” if you are making $3,500.00 a month, they think that you can afford a mortgage payment of or below $980.00 a month. There is also another number that they consider and that is your “back end debt-to-income ratio”. This is your overall debt scenario, in which they will take into account your car payments, credit card payments, other loans, cell phones, etc. Items like insurance and utilities are not included. Most lenders want this number to be below 36% of your gross income. So if you make $3,500.00 a month and you divide it by 36%, you get $1,225.00. So if you add up all of your monthly minimum payments, plus your new house payment, then the lender will want that number to be below $1,225.00. That doesn’t leave a lot of room for debt.

Of course, lenders want to give you the loan, especially if you have good credit and a good job history, so many of them are willing to offer loans that will far exceed this percentage. You may even be able to get a loan as high as 50% of your debt-to-income ratio. However, as I have said before, you should never take a loan based on what they are willing to give you, but rather based on what your budget tells you you can afford.

And here are some things that you need to factor in that your bank and broker will not take into consideration: First of all, are you a giver? No mortgage broker is going to ask you what percentage of your income you give to your local church, charity, or to missions each month, but it has a huge impact on your financial picture. If you are giving 10% of your income away each month then you cannot consider this “livable” income to take into account what size home you can afford. So, right off the top you need to subtract your giving from your monthly salary. If you give 10% (for example :) ) and you earn $3,500.00 a month, then you need to subtract $350 from your gross monthly income. Your income would then be $3,150.00 on which to base your percentages.

Furthermore, if you are committed to saving money then this is a further deduction from your gross monthly income. I have written several blogs on savings that I would love you to read including Small Beginnings , Our European Adventure , Debt vs. Savings , and The Storehouse Blessing , but the bottom line is, if you aren’t saving money, then you are heading for debt. Unexpected expenses happen all the time in life, and if you don’t have a savings plan for those expenses, then they will end up on a credit card and you will end up in a hole. I am passionate about savings, and I just want to plead with you to not cut your savings in order to get into a bigger home. Your savings are such a vital part of enabling your dreams and your dreams for your family. Yes, your savings can help you get into your new home, but you don’t want it to be the last place you ever go because you are so financially strapped into your home.

So if you look realistically at these factors, you can see that this can have a large impact on what size mortgage you can “afford” to carry. Many Christians have really struggled in particular with the aspect of giving because there just never seems to be any money left over after bills. It is so wonderful to be a giver, but you need to be practical about what affect your giving will have on the size home that you can buy. Now, I know that the Lord is so incredibly gracious, and this is the moment when I feel like everyone wants to bust out with “God will make a way where there seems to be no way”, and yes, He loves to bless His children, but God is also really smart with finances… He is the beginning of ALL wisdom after all.

So many times what we want God to do for us is actually to provide for us to get OUR way, rather than His. He loves to bless His kids, but sometimes that means getting into a smaller, more affordable starter home that you can prosper in and eventually outgrow, rather than a large dream home that is going to overwhelm your finances and leave you constantly in need of a “miracle”. Many times it is our desires that lead us rather than the Holy Spirit, and we need to realize that although God wants only good for our lives, His prosperity is so much more than a bigger home. In fact, if living in a smaller home means that you work less and get to spend more time with your family, or that you have more surplus income to take vacations, or to give more, or be a blessing to your kids, then I think that is absolutely God’s blessing on you. Don’t let the size of your house be the only measure of you…. Love big, embrace life, and be grateful for what you have, and for what you can afford. Don’t despise small beginnings, especially in the size of your first home. Life is so much bigger than the size of your house, but as so many have discovered, a house that is too big can actually keep you from getting to live the rest of your life.

But even though the percentages that I have talked about today are the numbers that a lender will present to you, the best measure of what size loan you can afford is always going to be based on your complete budget. The debt-to-income ratios may govern their decisions in giving you the loan, but your budget should always govern what size of loan you are willing to commit to. And let me just add one more thing… if you can’t afford a large house, don’t let your realtor even take you there. They always start out with the best so that you are ruined for anything else. Know your budget and let it be the guide even as you search for your home sweet home. Don’t get seduced into loving a home you can’t afford and sacrifice your peace and your financial future for a bigger bathroom, or an upstairs you never visit :)

God bless.

Tuesday, October 14, 2008

Time to Begin

Wow, there is so much to write on with so much happening in the world! It has really been a financial roller coaster for anyone following the stock market and global markets over the past two weeks. There are dire predictions and forecasts, really a lot of gloom and doom out there right now. I have to be honest however, for me, I have taken more of a “let’s see in a month’s time, or maybe three month’s time.” It is difficult to really give this crisis the weight that all of the financial “prophets of doom” are saying it deserves. I think that is because, even though I do believe that a correction in the market was absolutely necessary, I still believe firmly in the power of individual choices.

Once again, if you have been making wise financial decisions, with no debt, you are living within your means, and you are doing what God has called you to do… what do you have to panic about? I know that many people are fearful of the “trickle down” effect, but once again, since this crisis is mainly affecting the credit markets (at the moment)… if you have great credit because you are making smart decisions and paying your bills on time, then you are not really going to feel the effects. The people that this is going to affect the most are the people who really should not be borrowing money in the first place. And even if that is you, what this turn is telling you is: get your budget in order, live below your means, save aggressively, pay down debt, and when the market turns again you will be in a much better financial place, and have a better idea of what you can afford to borrow (if you still want to). And as history has shown, the market can turn very quickly…

It was just a year ago on October 9th, 2007, that the stock market reached its all time high at 14,279 and now a year later it has come tumbling down to close at 8,451 last Friday. People all over the world are panicking and pulling their money out of the market. In fact, last week investors pulled over $43 Billion out of mutual funds. Two weeks ago that number was “only” $6 Billion dollars. If you look at those numbers, it is easy to see exactly where the “crash” came from. It wasn’t based on value. It was based on panic. Fear has set in and people are taking staggering losses on their money in order to “secure” what they have left. However, if you look at market without the eyes of fear, you will see opportunity instead of pessimism.

In just one year the market has moved almost 6,000 points! Now, I think the 14,279 number was definitely based upon an inflated market, but I also think that the 8,451 number is a severely undervalued number. To me, it is the number of opportunity. Every investment book that you will read will tell you that you don’t sell when the market is low. In fact, it is the time to buy.

So I would like to suggest today, if you don’t have a retirement account… they are currently on a huge discount sale. If you can just control your fear and realize that you are buying a long-term investment, not one to micromanage with each turn of the market, then you can buy with peace right now that you are getting a great deal J This opportunity doesn’t come around often, and I promise you 10 years from now, you will so regret not buying in right now. I am not an investment broker, but I would recommend looking into buying into a mutual fund like the Vanguard Target Retirement Fund. They have a couple of different funds based on your age and when you would like to retire. The older you are and the closer to retirement, the more they limit your risk. It is a fantastic way to invest as a beginner if you have no idea what you are doing.

Of course, you need to follow the peace of the Holy Spirit, but just make sure it’s not your fear that is talking to you. These really are amazing days that we are living in, amazing in a negative way to the rest of the world, but to those who walk in perfect peace, they are also days of opportunity. Even if that opportunity is just a wake up call to get your finances in order, to aggressively pay down debt, to spend less than you make, and to start saving for your future. There has never been a better time to begin.

Sunday, October 12, 2008

A Princess Party


My darling Ava Joy is 4 years old! I can hardly believe it. The party was a wonderful success, thanks in large part to my Mom who stepped in and saved the day. Praise the Lord, my fever was gone by Saturday, but I was still pretty weak. My Mom just brought the whole beautiful party together. Ava had such a lovely time and I was just so glad that she finally had a birthday party without tears. In fact, she totally enjoyed herself.

So, I am still in recovery myself, but I did want to share pictures from the "Princess Tea Party". I know you will wish you were there :) The first picture is a picture of the "cake"... although we actually had cupcakes instead of a cake because to Ava cake is just a means to and end.... which is the icing.

This is my beautiful girl on her special day. She came dressed as "Belle" from "Beauty and the Beast"... afterall, it was a tea party.

Noah was the honorary boy at the tea party, but he did a great job in celebrating his sister. Although at one point I did have to remind him that ladies at tea do not want to swordfight in the yard. He, of course, came dressed as a pirate.

Ava and her dear friend Ellie enjoying some fancy fruit snacks.
Noah was such a good sport, he even drank from the tea cups. I was really proud of him.Ava Joy blowing out her candles. She by then had changed outfits about 3 times as all of the little girls played dressup. She finally ended up in her beautiful new Tinkerbell outfit that her Aunt Marlene gave her. So cute.
And this is the whole beautiful party, her dear friends Ellie, Evie, and Madison, and of course, Noah. It really was a lovely day.

Finally, my darling Ava today getting a "manicure" with Mommy. Ava probably messed her nails up 3 times before the lady was through painting them, but we had a wonderful time together. She is such a delight to my heart and I was so thankful to feel better to be able to enjoy her special day. By the way, the manicure for her only cost $5! She even painted beautiful little flowers on her nails. She sat in my lap the whole time and just kept saying, "Don't my nails look beautiful Mommy?" It really is a gift to be a Mommy, and I feel like I have been given the best gifts in the world with my 3 darling children. However, I am very glad to have a break from birthday parties for a few months. Me, and my budget :)

Thursday, October 9, 2008

A Chilly Morning

For those of you checking in here to check up on me, thank you so much for your thoughts and prayers. Unfortunately, I am still running a fever. It just hovers right above 100 degrees... not enough to really burn this off, just enough for me to ache all over. This morning I bundled my children up in their fleece winter clothes because I couldn't stop shivering and didn't realise that I still had a fever. I was so praying that I would wake up well today. My Mom came to pick up Ava and Luke so that I could rest. "It's not that cold," she observed looking at Luke and Ava's outfits. "They've been sick Mom, I don't want them to get chilled," I replied. She just lovingly smiled and bundled them into their car seats. Well, sure enough, I came back inside and I was absolutely shivering... and then I took my temperature and realized why I was so cold. My poor hot kiddos.

Anyway, thanks for your prayers. I am just praying that tomorrow I am better. The birthday party is getting closer and closer and I am feeling a little desperate. Matt and my Mom both said they would help me clean and run errands tomorrow if I am still sick. I so do NOT want to cancel the party. I just keep thinking that in five years time, I won't remember that I was sick, but I will remember what I did for Ava Joy's fourth birthday... Birthdays live forever :)

So, on to the party... I'll make sure to update you on the other side.
God bless

Wednesday, October 8, 2008

A Different Perspective

And she is down... and out of the game. Unfortunately for my sweet family, and for blog land, the bug that has plagued my boys all weekend has finally caught the girls. Luke started with a croup like cough on Friday night and it has just gotten worse and worse. Noah started running a fever on Saturday night... but Ava and I were still good. Unfortunately, yesterday we both started coughing. I still was hanging in there, but fever has found me tonight and I am out of the game. So... pray for Matt :) because he is still up and running and until Mommy is better, he is completely in charge. Thankfully, Noah is completely better. He burned a high fever and it just seems like that is all it took and he has had no other symptoms (why can't all of our immune systems work that way?). Luke's croup is better but seems to have migrated into a cold. However, at least he isn't waking up all night long fighting for air.

Anyway, a long detailed explanation for why I won't be blogging for the next few days. I think I might just take the rest of the week off to recover. Also, it is Ava's 4th birthday on Saturday and there is a party to plan... even smaller than the pirate party, but nevertheless, there must be cake :) I am going to do a princess tea party for her and she is beside herself with excitement... or she was until she started with fever. But prayerfully we will all be better by Saturday to enjoy her birthday cup o' tea.

In the mean time, as you watch what is happening in the economy right now, just remember that your future is not controlled by this moment. You are in bigger hands and your destiny goes beyond what happens with the financial markets of the world. This panic will pass and although we are looking at some very serious recovery time on the other side, I firmly believe that the market will eventually recover. The economy will come to a balance and will see brighter days again, but even if it doesn't our lives are still in God's hands. The only thing that you have control over is are you doing what you are supposed to be doing. Keep doing that and remember what Jesus said in Matthew: "Don't worry about your life, what you will eat or what you will drink... For your heavenly Father knows that you need all these things."

Times of stretching and difficulty come and go, and it is in these times that it is so good to sit and read your Bible (and don't groan like I just told you to go and take some medicine! It is actually even better for you than the "Nyquil" that I am about to take). As you read you will be reminded of the brutally difficult times that those amazing men of faith went through and yet still sang God's praises in the midst of it. In the good times, it is easy to sing praises. In the face of adversity, it is your lifeline to praise Him. When you praise Him you remember who made the heaven's, who owns the cattle on a thousand hills, who knew you from your mother's womb, who knows the end from the beginning, and who works everything for good. Praise brings a whole different perspective, and it is a perspective that we all need right now.

Our God is bigger, and He says not to worry... so as for me, I'm believing my wonderful Father for healing tonight and receiving what Jesus already did to make provision for that healing for me and for my family. I am praising Him for the way He takes care of me and my family and I am excited to see the good that He is working on our behalf.

God bless and I will see you soon... or maybe after the birthday party :)