On the Right Path

OK, I have just returned from picking my parents up from a trip to the airport, and had the most wonderful conversation about debt and finances. I knew when I wrote Friday's blog that there was something missing. It is all true, but there was something about grace in the process that I wasn't quite grasping and so it came across too hard. If I were writing a book instead of a blog I would scrap the last few pages, but since it is a blog... I am taking down my post from Friday. I am going to rework it and post it again next week, but from my true heart. There is a path that leads to fear and despondency and a path that leads towards freedom and hope for the future. The path towards freedom is always the way of grace. Anyway, hopefully that doesn't sound like jiberish to you, but let me just say that I believe there is a way out of your debt which won't define you as your debt and I want to help you to see that path.
Have a glorious Saturday, and I will see you tomorrow.

Your Story...

Anyone ready for a little breather from debt? Me too! So for today, what I would love is for you to email me at budgetingforabetterlife@gmail.com and tell me your story. I am going to pick my favorite story or testimony and post it on my blog. I would also love to hear any questions that you might have. If you don't want to post it in a public forum, please email me and maybe I can address your question anonymously in my blog... or just answer you back. I would also love to hear any creative ideas that God has given you for your budget, or for overcoming your debt. Although I am presenting a strategy for your finances, there is not just one way to do anything, and your ideas may just help someone else and speak to them.

I have now been blogging everyday for 6 weeks, and it would be wonderful to hear what you have to say and your stories. What I love the most about diving into finances with people, is that when they get a glimpse of light at the end of the tunnel and a taste of that freedom, it changes their entire outlook, and consequently their lives. I am going to keep going on debt on Monday. I have a strategy for facing your debt and I am going to try to keep it very simple and concise, but all of us need encouragement on this journey. Your story may just be the encouragement that someone else needs to finish climbing their mountain, or maybe just to start the climb.

So I'll see you tomorrow... probably with a little "preach". I just have a lot in me and it is Sunday after all. Although, if you have been reading all along, you know that my preaching is not just limited to Sundays. :) It might have something to do with my Mom and my Dad both being preachers, but I think it is just part of what God has for me and my calling. God is such and integral part of my life, and I love finances, and I just get so excited when I get to talk about the two of them together. So then on Monday we will plan a strategy of attack on your debt.

Thank you again for reading, and I so look forward to hearing your story. God bless.

A Guide for the Mountain

“American climber becomes first non-Nepalese to scale Everest 10 times.” I just read this article on MSN.com today and I truly was awed by the thought of scaling Everest that many times. The amount of dedication, and courage, and strength are just amazing to me. Yet because my thoughts tend to continually come back to finances these days, I couldn’t help but think, if debt is a mountain, I wonder how many champion debt climbers there would be? How many people courageously face and climb their mountain of debt, only to circle back around and have to climb the same mountain all over again. Now there are some people out there that may have actually had fun making their mountain and they may even have a plasma TV to show for it. But for most people, there is nothing fun about the mountain of debt. It is devastating, it is hard, and just the thought of the strength it will take to climb that moutain can be completely paralyzing.

For some of you, debt came as a result of sickness, or unemployment, or tragedy, and it may be that that mountain is more than just an obstacle in your finances, it might be that debt has become constant reminder of all of the pain that you have walked through. It certainly does not seem fair that you should suffer great loss, and then have to pay for it as well. It’s like loved ones paying for a funeral. It seems so wrong to not only be grieving the person who has passed on, but then to have to pay the bill… It’s just a nightmare of a situation. There is nothing easy about loss, or emergencies, or unemployment. The comfort that we do have is that “though I walk through the valley of the shadow of death, I will fear no evil.” (Psalm 23) I love that we are walking through. We don’t camp there. We don’t stay there. We keep moving. And with God’s amazing comfort, we move on.

I don’t know the circumstances in you life that may have resulted in your debt. If it’s your spending habits, there will be another blog for you, but if your mountain has come with a lot of devastation in your life, then you need a lot of extra grace to face that mountain and get free from all of the baggage that is tying you to that pain. The first thing that you have to know is that God did not do this to you! So many of us get into difficult places in our lives and we immediately begin to blame God, and question Him like it is His fault. I have to tell you this today, because it is imperative that you get this in your heart… God can only do good. There is NO evil in Him. The devil can only do bad, and if you have faced a horrible tragedy, it was not at the hand of God. Now our heavenly Father has promised to never leave us nor forsake us, so He was right there with you in whatever you have had to face, but I believe He wept with you. He wasn’t doing it to you. His heart is only good for you.

We live in a broken, sin-filled world that constantly grieves His heart at the wounds that people inflict upon one another. It is not God’s heart that you should suffer, anymore than it would be your heart for your children to suffer. You would do everything possible to keep you kids from pain, and yet you cannot control every minute of their day and lives. That isn’t relationship, and it would be a horrific scenario for the child. Imagine if your Mom or Dad were controlling every single thing that you said or did out of fear that you might have pain. You would go crazy and beg for freedom. True relationship means freedom of choice, and that is exactly what God has given us, even if it means that we may sometimes get hurt, or that our choices might lead us down painful paths. He is always with us, always loving us, and always good… but He will not control us. And so because of sin, painful things happen in the world.

I just want to tell you today, that God is for you. He is on your side, and if you are ever going to get over that mountain, you are going to need His help… desperately! So the very first step to facing your mountain of debt, if the mountain has come with pain, is to forgive God, and cancel the debt that you have held against Him. What that means is that you say to Him, “God I have blamed you for my injury and for the resulting debt, and right now I forgive you for my perception that you failed me, and I cancel the debt that I have felt you owed me. I choose to believe that Your heart is only good towards me, and that Your Word is true that you are “working all things for good” even though I don’t yet see it.” Nothing stops the flow of finances, of freedom, and of grace in our lives like un-forgiveness. Let me just tell you, if you are facing a mountain of debt, you cannot afford the luxury of un-forgiveness. God did not do this to you. In fact, He is 100% with you, and behind you, and for you as you climb your mountain of debt. He wants you to be free from that bondage even more than you do!

So as you face your mountain, face the pain and forgive God. Forgive those that may have hurt you or mistreated you, resulting in your debt. And then ask God for His grace to walk forward. It is time to get out of the valley of the shadow of death, even if there is a mountain of debt that seems to be blocking your path. We are going to be taking more steps in the days to come towards conquering your mountain. However, just like no climber on Everest would dream of climbing the mountain without a guide… you desperately need God’s guidance on this adventure. I am going to be giving you strategies, and ideas and even creative solutions to help you in your climb, but the strength to actually climb, the grace to keep on going, and the victory on the other side will all come from God. However, the difference between your mountain of debt and Everest is, your mountain was not made by God. However He knows your needs, He knows you, and the good news is, He’s been over this mountain many times before.

The thing I find so funny about the headlines about Everest is that for every “American” or “French” or “English” man that makes the headlines for climbing Everest, there is a Sherpa who has climbed it ten more times. It’s the Sherpa who should get all the glory for leading some fool up a mountain and bringing them safely down again. I think on the other side of your mountain of debt, you will be very, very glad for your heavenly “Sherpa.” It is a horrible thought to think of climbing the mountain of debt alone, but the good news is, you will never have to.

Debt vs. Savings: A Shopping Cart Dilemma

Imagine trying to grocery shop with ten children. They are all different ages with all different needs. Now these are not the nice orderly children that you sometimes see in large families, these kids are whiny, and wild. They are not there for you, they are there for themselves. And it is just you, trying to get something done… and trying to keep them happy. The little ones start to cry, the older ones are complaining, everyone wants something for themselves (that is not on your list!). At the end of the grocery shopping trip you are exhausted, frustrated, and you look in your cart and though you somehow managed to keep all of your children happy, you have nothing that you needed. In your distracted state, you spent the whole trip catering to the urgent and were never able to focus on the important… the things you actually needed, the reasons you came to the grocery store in the first place.

Spending your life attending to only your debts is a lot like this analogy. Some of you are in tremendous debt, and you may have been thinking to yourself, “How can I afford to save money when I have so much debt?” This is really a very important question, because it is my contention that you cannot afford not to. If all you do is spend the next few years paying off your debts, you will be no better off than the person in my analogy… you will have nothing to show for your efforts except contented creditors, but you will have made no progress towards your true purpose. Now if you are in debt, I am absolutely excited about you coming out of that debt and I am going to be talking a lot about a plan of how to do just that. However, I also believe that no matter what your debt, it is so important to pay yourself first. You are more than just the sum of your debts. God has more for you than just paying off debt. How wonderful would it be in five years (or however long it takes), when all of your debt has been paid off, to also have a very nice savings account and to be in a completely different place financially. If you don’t strategically save while you are in debt (right now, today!) there is a very good chance that you will never start, and your cycle of debt will just continue.

One of the most obvious problems with having nothing in savings is that you are on course to just accumulate more debt. What if you air conditioning goes out? Or your car needs repair? What if you have a sick child and have to make a trip to the emergency room? Or you have a hailstorm and you have to pay a huge deductible for a whole new roof? With nothing in savings, any form of emergency will just be added onto your pile of debt and you will have to pay those horrible interest rates on that debt as well. You may pay a little more in interest by not putting all of your available money towards your debt, but it will actually cost you more in the long run to not have a savings account. At the very least, it is important to have an emergency savings account, because chances are… not having one is how you got into that debt in the first place.

However, my heart for you is that through this blog, you would get more purpose in your heart for your money than just being prepared for the worst. As I pointed out in my blog about “The Storehouse Blessing”, Joseph was prepared for the famine in Egypt and it was the salvation of his entire family, as well as all of Egypt. It is God’s heart to prosper you, not just so that you can have, but so that you can be a blessing to all of the families of the earth. My Dad preaches a wonderful sermon on this, but the heart of what I want to share with you today is… how can you be a blessing to all the families of the earth when you are constantly in desperate need yourself? When we are being constantly affronted with debt, we get so distracted from what our true purpose is and what God has called us to do. That is why it is so important to come out of that debt, but it is also why it is so important to keep our purpose in front of us in spite of that debt. Joseph didn’t only just survive during the famine in Egypt… he actually prospered during the famine. At the end of the famine, Joseph owned all of the land in Egypt (in Pharaoh’s name of course), he had all of the money, and he had given all of the people seed to plant harvests with the promise of a 20% return from any crop that they grew. (Genesis 47:13-26) He didn’t just use the storehouse to survive, he put the storehouse to work for him and thrived.

I don’t just want you to be free from the debt that has plagued you, I want to you to thrive on the other side. So that is why it is important to save even when you are facing a mountain of debt. There is a way over that mountain and we are going to be talking about that very soon, but if all you face on the other side of the mountain is poverty with nothing to show for all of your hard work, then it is time to rethink your approach to the mountain. Just like my shopping trip analogy, there will always be something pulling at your money and your financial attention. Distractions from your purpose are a guaranteed fact of life, but it’s what you do in the face of those distractions that will determine whether your shopping cart ends up full of what you need for your family and for you to be a blessing, or full of junk that you were distracted into buying along the way and empty of anything of substance. Don’t be distracted from your purpose. Start a savings account while you are paying off your debt, because it is possible for you to do more than just survive in the land of famine. It is even possible for you to do what Joseph did and come out from the famine of debt in your life with money in the bank, land that you own, and investments for your future. Now that sounds like a dream worth keeping your shopping cart on course for.

A European Adventure

When my husband and I were newly married, we got a sort of crazy dream into our hearts. We dreamed of going to Europe. We knew that it would not be long before we would want to start a family and we knew that having a baby would push the dream back by a lot of years, so we decided that we would start saving and go. At the time, we were not making very much money. We were going to Bible school together and both only working part time… so not exactly wealthy… actually, far from it. But we had a dream, and we decided to go for it. So we scaled back our budget to a bare minimum, simplified our lives as much as possible, and started to plan our journey. We wanted to go for at least a month. We figured if we were going to pay all of that money just to get there, we needed to make it worth our while. It truly seemed an impossible dream, but so much fun just to dream.

We started saving. For over a year, we squeezed ourselves as tight as possible. We would continually ask ourselves, “Do we want this (t-shirt, meal out, new book, etc.) or do we want to go to Europe?” I won’t lie to you, it was not an easy year. We sacrificed a lot, but at the end of the year we had saved up the money that we needed. Honestly, even we were amazed at what we were able to save. We bought our tickets, reserved our Eurorail passes, made reservations, and had the most amazing month of our lives.

Now in financial terms, this trip to Europe may not have been the wisest decision, and I am sure many financial advisors would have advised against it. Most would have advised us to put that money into our retirement savings and not to waste it on a trip. There are many people who do save all of their money for the end of their lives, and I admit, I am torn on this issue. I am absolutely a believer in saving for retirement, but I also believe that life is so rich and full and precious. To me it is foolish to save all of the best moments for the very end. So I think there is a delicate balance to be fought for between planning for the future, and not delaying living until the future.

Many financial planners put such a heavy emphasis on the future, that it feels like it sucks all the life out of today. I don’t know the exact answer to this except that I don’t think our lives should be ruled by a fear of what will come. So absolutely plan for the future, but you have to make a place for in your life for your dreams today. What do you have in your heart today?

One of the things that we learned in our savings adventure for Europe, is that you can only live in that place of intense deprivation for a limited time and you have to have a very clear goal that is motivating you. It was such a powerful experience for both of us, not just the actual trip, but also the journey up to the trip. We learned what we can accomplish when we come into agreement, and the power of savings. We discovered how much fun it is to realize a dream. There really is nothing that seemed out of our reach after that experience. It truly changed our lives.

Now I am not recommending that you live in that place of intense saving. It does seem to leach the joy out of life right now. However, if you can incorporate the principles of saving into your life, while still giving yourself breathing room to enjoy your life, you will be amazed at what you can accomplish. As you write down your dreams and financial goals, it is a great idea to ask yourself, “Do I want this new DVD player, or do I want to be out of debt? Do we want to eat out tonight, or do we want to be able to buy our own home?” Whatever the little desire is that pops into your head today, compare it to the dream, or the goal. It is so easy to lose sight of what you really want and what is really in your heart for your money, and to waste the resources that God is giving you to get there. This is the heart of purposeful spending and the really beautiful part of budgeting. Budgeting is not just to get you out of debt or to help you live within your means, it is also a way to see your dreams realized. So dream big. We did, and we have the most amazing European pictures to prove it.

Giving Your Money Purpose

When my husband and I have money in limbo, it always disappears. By money in limbo, I mean money without a purpose that we aren’t sure what to do with. Not that it’s just extra money. There will always be something that is grabbing in urgency at our money, like debt, or repairs, or dentist visits, or groceries. Something always wants that money, and unless we have a plan in place for that money, we rarely accomplish something that we really want to accomplish. It feels more like it just disappears.

So in answer to this limbo disappearing act, we came up with the “Plan for Extra Money.” If you look at my sample budget plan, or download my budget plan here, you will see a section entitled “Plan for Extra Money.” It is based on the plan for percentages that I outlined in my blog on Self-employment. While it is an excellent plan for self-employment, it is also very powerful in stopping the disappearing act of extra money.

For many people debt seems to eat up every spare dollar. When they get any extra money, they feel so guilty about spending it because they feel like it should be going towards their debt. However, most people rarely put that money towards their debt, because their debt feels so overwhelming that they feel like why bother. So they don’t actually pay their debt down, or get to enjoy their free money, and in that place of limbo, that money disappears into groceries, or diapers, or eating out, or some “urgent” expense. This is why having a plan in so critical.

So how does it work? Well, the first thing you need to do is sit down and decide on your percentages. Your percentages will be based on your unique financial situation and on what is the priority in your life right now. Sometimes those priorities can shift from year to year, but some of the percentages should remain the same no matter what. You always save some of all of the money that comes through your hands. You keep some of it for “change in your pocket” so that you are motivated to make more. Give some of it, if it is outside money that is new to you. Not because you have to, but because giving is critical in keeping you from hoarding and keeping money moving through your hands. There are so many promises in the scriptures about giving, but mostly give because God loves it. He smiles on it and He gives you more as you give. That is His promise. If the Lord tells you to give the $20 you saved in utility bills this month, then give with joy. There will be a harvest, but otherwise, save with joy, because there is blessing on that too.

So where does "extra" money come from? For my husband and I our entire budget comes out of our salary, and if your income is based on salary or hourly wages (in other words you receive a steady paycheck) and you are following my plan, then yours will too. Therefore, any money that comes in above what we have set our monthly budgetable income at, would be extra money and thus subject to our set percentages. This keeps our money purposeful and working towards our dreams, no matter where it is coming from. An example of those percentages might be 10% to savings, 10% to giving, 5% free money, 5% to Christmas fund, 10% to a Dream fund, and 60% to debt reduction. Now, Matt and I don’t have any debt, so we are able to put a lot more into savings and a lot more into our dreams, but that is the beauty of paying down your debt. Getting out of debt means that you will have more of your money available towards your dreams and your future.

If you are paid on commission or self-employed, then percentages will play a part in your budget already. However “extra money” will be harder to determine, especially from outside sources, since all of your income is already coming irregularly. (Please see my blog on The Power of Percentages) However, it is still so important to have a plan for extra money in place so that you can accomplish your dreams outside of your budget. Extra money for you may come in the form of tax return refunds, your bonus, money that you have budgeted for an expense that turns out being cheaper, or extra money may just be the money you make at your garage sale.

Right now I have my garage sale money sitting on my countertop, waiting to be deposited in my bank. However, if Matt and I hadn’t already worked out a plan for that money, I guarantee you that it would be disappearing already. It is only as you give it purpose, that your money is going to work for you. Without a purpose, it feels like money just works to disappear. So get a plan for “extra money” in place. If you are debt free with your bills covered by your regular income, it might be as simple as 50% savings, 10% free money, 40% dream, but whatever the plan is that you come up with, stick to it, no matter how small the amount. Even if you just save $10 each week by not buying bottled water and drinking tap water instead, then put $5 towards your debt and $5 towards savings… you will be amazed at the impact. That $5 a week is $20 a month and $260 a year. My point is, that is money towards you getting out of debt that you could have just turned around and spent. Without purpose, that is exactly what you would have done, but with a plan in place, that money is going to help to bring you towards your dreams

So that is why I have this section on your budgeting plan. Matt and I refer to our percentages all of the time. It reminds us what we are working for, what we are saving for, and why we are not going to let our garage sale money disappear! Our money has purpose, and that purpose is enabling our dreams. And the dream for my garage sale money? Well, that just happens to be a well-earned vacation. Only you and the Lord know the dreams that are in your heart, but don’t let your money just disappear. Let it have purpose and you will get to do, and see, and finally be in the debt-free place of your dreams.

Small Beginnings

When my Mom first began saving, it was in an envelope beside her bed. She and my Dad had gotten the revelation about God blessing their storehouse, and she just knew that she had to start a storehouse no matter what. At that time, there wasn’t a lot left over each month and it seemed impossible to save. So each time my Dad would give her grocery money, she would take a percentage of that money and put it in her “storehouse” envelope. It was such a small beginning, and many people would have thought, “How is this ever going to amount to anything.” But my Mom persevered. For a couple of years she just grew her bedside savings. If someone gave her $100, she would save $20. Whatever money went through her hands, she saved a portion of it. Eventually she started a savings account, and you can’t believe how it has grown from there. She and my Dad have been able to grow their savings, facilitate business ideas that God has given them, and have investments for the future, all out of that savings account, and it all started in an envelope beside her bed.

Don’t despise small beginnings! Some of you have been saying to yourself, “I don’t have any extra money that I can save. I am barely making it.” I just want to say to you that you will never move from where you are unless you do something different. You can do anything that you really want to do. If you really want a new shirt, you will scheme and plan and find a way to get that new shirt. If you can scheme a way to get a new shirt, you can scheme a way to save. Even if it’s just the $10 left over from grocery money for the month, there is a way to save. Now, I absolutely feel it is so important to have savings as part of your budget and to make it a priority. However, if you have never saved and feel like it is impossible, there is always a way to start, no matter how small.

Let’s just say that you are married, and your husband manages the money and you have no say in your financial direction? How do you find a way to save and to impact your financial situation? You may not have say in your total direction, but you can be wise with whatever money you have to manage. Whatever money does go through your hands, you need a plan for. Even if it’s just $100 a month from some side job, or your left over grocery money. Don’t despise small beginnings.

What if your debt load is so enormous that every free dollar is going to debt? Let’s say it takes you 20 years to pay off that debt. If you never save and only pay off debt, you will have nothing to show for yourself at the end of 20 years of hard work! There will always be an excuse not to save, but if you can just make it a priority, you can change your future. It is amazing how God will bless your storehouse and even bring opportunities to make more money, and so you can reduce your debt even faster. They say that it takes money to make money, but if you spend every dime of what you earn, even if it’s on debt, you are wasting your opportunity to make future money. Even if it’s not a priority to you today, can I just challenge you to start saving anyway. You will never change your financial situation unless you begin.

In closing today, I want to quote from “The Richest Man in Babylon.” I would probably quote the entire book to you, but my husband has informed me that that would be plagiarism :) So you are just going to need to read it for yourself. But here is the quote for today,

“Wealth, like a tree, grows from a tiny seed. The first copper you save is the seed from which your tree of wealth shall grow. The sooner you plant that seed the sooner shall the tree grow. And the more faithfully you nourish and water that tree with consistent savings, the sooner may you bask in contentment beneath its shade.”

Do not despise the day of small beginnings. So maybe skip your Starbucks Latte’s this week, or don’t buy the new shirt, and put that money into savings instead. It might seem so small, but if you think of it as seed, it might just be the beginnings of a tree that will change the rest your life, and shelter your family for generations.

Garage Sale (update)

Just a quick update on the garage sale. It was a huge success, though I am truly amazed at what people will buy! My friend Katie and I had a really good time, and we are so glad we went to all of the trouble.
Thanks for all the thoughts and prayers. I will be back in the morning with an all new (more interesting than my garage sale) blog. See you tomorrow!

Garage Sale

I am doing such a crazy thing tomorrow. I am having a garage sale. Yes, I know that garage sales and roses don't go together, but wouldn't you rather look at a rose, rather than a garage? That's what I was thinking too.

My dear friend Katie and I are doing it together, and I don’t have an ounce of energy left in me for my blog! Considering how much I really love the writing and doing this blog, that is saying a lot. I have been on my feet all day, sorting and pricing and straightening our garage. Anyway, I will be up bright and early in the morning selling all of my darling children’s baby clothes to strangers… I’m quite emotional about it. This is actually my first garage sale ever. I usually just donate all of my things to charity, but I have so much this time because we are getting rid of all the baby, baby stuff.

Anyway, if I am not just exhausted I will try to blog later on Saturday, because I really did have something to say… Otherwise, check back on Sunday and I’ll let you know how I did at the garage sale.

Have a wonderful Saturday and God bless.

The Power of Agreement

So what good is a budget if you are the only one using it? What if you are trying to be budget conscious and your wife keeps handing you piles of receipts from her purse? What if your husband is constantly impulse buying, and even though you would love to be out of debt, you feel like you are powerless to do anything, or you feel like a nag because you try? How do you make a budget work when you have two very different people and personalities trying to come together in their financial life?

Marriage is a lot of hard work. It is absolutely the best adventure, but like any worthwhile adventure, it takes preparation, some kind of plan, and you are going to need some money. Seriously, finances are the number one reason that couples fight, and also a very popular reason for divorce. This topic can be so divisive and full of landmines, largely because everyone in the world comes from different backgrounds when it comes to money. Some people are afraid of spending money; others can’t stop spending. Some people love to save, while others prefer the endorphins of shopping. Some people take any attempt at a conversation about finances as an attack, and others prefer to duck their head into the sand and pretend their finances aren’t there. No matter what your background is when it comes to money, if you are married… God has called you to walk with this man/of woman and so there is a way to unity in your finances.

My husband and I have had to talk through all of these issues. We are unique people, from different financial backgrounds, with differing passions. I love to save money, he loves for there to be breathing room in our budget. I am passionate about finances, and he is passionate about me… but not so much about finances. We have had to learn how to come together, and how to speak the same financial language so that we can agree. I can honestly say, that our finances are such a peaceful issue in our home now. It’s not because we stopped being ourselves or stopped having individual opinions, but because we have discovered that we can accomplish so much in our finances if we are willing to come together.

This coming together is so amazing because in coming together you will find the power of agreement… and man, is it powerful! What an amazing gift that God has blessed you with in your partner in that the two of you can come into agreement and bind things in heaven or on earth and set them free. In fact, I believe one of the most wonderful tools you have in marriage is the power of agreement, because you can even set yourselves free. As you come into agreement about your spending, about your situation, your debt, your dreams, your goals, it can be the most liberating thing in the world for your marriage. Especially if one partner has been carrying all of the financial burden, the power of agreement somehow lifts that load as you realize that you are not alone.

Now, if you are single, you are not alone either. I want to address the very unique challenges of finances and being single, but I think that I am going to write a whole blog on it, because you definitely deserve your own day. But I did just want to say, that God is with you today. So please don’t despair as I talk about marriage and the power of agreement, because He has not left you alone in your finances. He is always with you, and talk about powerful, there is something incredibly powerful when you come into agreement with God over your finances!

So, in marriage, how do you come into financial agreement? Well, the key to that is communication. You have to start to talk about your finances. In too many marriages, one of the partners has enabled their spouse to revert to a sort of parent/child relationship when it comes to finances. “You handle the finances honey, and just tell me what I can spend.” In other words, “you take all the responsibility, and I’ll just be the child.” In other marriages it may be that the spouse has been the one saying, “Don’t worry about the finances, honey, I’ll handle them.” They may mean well, but they are denying themselves the power of agreement and the freedom that comes in financial unity in a marriage. Ignorance is not agreement… It is time to include your spouse in what is happening in your financial life.

Starting this budget is a wonderful way to do it. It is not pages and pages of bills and figures. It is a simple sheet that can open the doors to discussion about your finances and help you to establish goals together and talk about your dreams. So here is how you do it. You take my budget which hopefully you have made your own and filled in all of your bills and expenses, and then you sit down with your spouse and say, “Honey, here is what we make each month. This is what our mortgage/rent is… our water bill… our phone… etc. What can we live on when it comes to groceries? Can we come into agreement on how much to spend on eating out and then hold each other accountable? What are we saving for? What dreams do you have when it comes to finances? Maybe we could each have a separate savings account for our dreams, mine for a new couch, yours for a new laptop? This is what we spent on Christmas last year. Let’s make a plan for what to spend on Christmas this year and then start a savings account towards that and include it in the budget. Does this feel too rigid anywhere, or can we live on this budget? Can we agree on this budget?”

Then after the conversation, print two copies of the budget, one for your spouse and one for you and then keep this conversation going all the time. Every time you sit down with your bills you need to be having conversations about where you are in your finances, your goals, your dreams, with your spouse. This will both encourage them and it will bring you both into that incredibly powerful place of unity. I don’t think it is possible to actually get out of debt as a married couple without agreement. You both spend money. You have both created your debt, whether knowingly or unknowingly. It is going to take both of you being willing to take responsibility and being willing to talk about your finances. But as you come into that place of agreement, I truly believe that anything is possible.

So if you have not had a conversation like this one with your spouse, it is time. You are in a marriage, you are not their parent, and you need the power of agreement in your finances. Your spouse may not want to take responsibility, they may not want to know, but that ignorance is going to kill your finances and sabotage both your marital peace and your budget. Obviously, if your spouse gets overwhelmed easily, then have the conversation in bite size pieces, but you have to still have it. The key is to start a conversation that is ongoing and brings you into unity. This conversation doesn’t all have to happen in one day, it just needs to happen.

This is also not the time to beat your spouse up over their spending habits, or issues. Division has already cost you dearly, and attacks on each other are just going to bring more division. Your heart in this financial conversation is agreement (not coercion!), which means you need to hear each other’s hearts and try to facilitate each other’s dreams. Pray before it, sit together and talk about your fears when it comes to money and then take that to the Lord. This may be the start of not just a turning point in your finances, but a turning point in your marriage. The power of agreement will set you both free… so what are you waiting for?

“Assuredly, I say to you, whatever you bind on earth will be bound in heaven, and whatever you loose on earth will be loosed in heaven.
Again I say to you that if two of you agree on earth concerning anything that they ask, it will be done for them by My Father in heaven.”

Matthew 18:19-20

Directions for the Journey

A few weeks ago, I had the opportunity to speak at a ladies retreat in New York with my Mom. It was such a fun thing to get to do together and we had a lovely time. We flew into Newark airport and were picked up by three very sweet ladies whom we had never met before and the plan was then to drive to Long Island Beach where the retreat would be held. Well, my Mom and I were in the back seat with one of the ladies in between us, and let me just say the conversation from the front seat was just a little disturbing. There were many, many comments like, “I hope we don’t get lost”, and “I’m just not good with directions”, and “Let me just call my husband to find out where we are.”

My Mom and I just kept our mouths shut and started praying… not so much that we would find it, although we were very ready to get out of the back seat, but that we would find it soon, because we were both starving. We had been up since 4am to get to the airport and it was now around 2pm and the muffin at the airport was a long time ago. Well, towards the very end of the journey, my Mom starts talking to the ladies about how she wished that she had her “Nuvi” with her. She and my Dad drive to many of their meetings and the “Nuvi” is a GPS device that tells you exactly where you are and gives you specific directions on how to get to where you are going. Well, the lady in the passenger seat, whose car we were driving says, “I think we have one of those…” and proceeds to pull out a “Nuvi” from the glove compartment. Wrong turn after wrong turn, wandering aimlessly trying to find a place to eat, frantic phone calls to husbands, and we had a “Nuvi” in the car with us the whole time…

Some of you may be wondering why do I need to have this budget, Tracy? I track all my finances on my computer and everything is automated. Well, I’ll tell you. Life has a tendency to throw you a lot of surprises and turns, and even the need for u-turns sometimes. It is all very well to be able to track where you went once you have already gotten to your destination, but how much better is it to have directions in the car with you telling you how to get there. This budget is like your own personal financial “Nuvi” or printed directions. It is your roadmap to when each bill is due. It is your signal when you are reaching the end of your budget for entertainment for the week, saying, “OK, stop here or you will not reach your destination.” And what is your destination? A life without debt. A life with savings, and provision for the unexpected. A life with hope and a plan for moving towards your dreams. That is why I have the sections to the right on your budget. This section doesn’t have to be your plan for what to do with your extra money. It may be your section for tracking your savings and watching your dreams grow. Make it your own, but write down your financial vision. Carry it with you. Look at it often, and remind yourself why you are doing this. If you are going to a place you have never been before, it is wise to have directions, and this budget is your directions for a new life.

Every month I print a new copy of my budget and I fold it and carry it in my wallet. I still input all of my spending into Quicken and I record it in my check register… but this budget is my vision. It is my roadmap to where we are going with my finances. I physically cross off bills as I pay them on bill paying day. On the first and the fifteenth I sit down with my budget and enter all of my bills that are due for that section into Quicken (and my check register, although I don’t necessarily recommend this, it is just a habit for me). I then track my spending on that piece of paper for the rest of the categories, like groceries, and gas. I transfer out all surplus money from my account into my savings, which forces me to stick to my budget and not overspend. If I am continually short in a category, my husband and I will adjust our budget, but we always do so with the vision in mind.

So that is why I feel like this concise, clear, easily accessible budget is so important. You may love your financial software program, but mostly it just tracks where you have been, and can also make something that is very straightforward into something very complicated. Your financial plan needs to be simple, it needs to be easy to follow and even adjust, but I also firmly believe it needs to be written (printed is OK :) ). Habakkuk 2:2 says “Write the vision and make it plain on tablets, that he may run who reads it.” I love this verse because it is basically saying if the vision is plain and written out clearly, you get to run to your destination. In other words, you get to get there a whole lot faster! This is truly the heart of budgeting… purposeful spending in order to reach your dreams… as quickly as possible.

There is a small chance you may still reach your financial destination without directions in the car. We did eventually reach Long Island Beach (well, actually we only got there after we started using the Nuvi). But I guarantee you if you do decide to go through your financial life without a map, it will take you a lot longer to get where you want to go, and like my Mom and I in New York, you will probably be extremely hungry when you eventually get there. So save yourself time, frustration, hunger and a lot of u-turns, and get yourself a financial “Nuvi”. It will not only tell you where you are, like we looked at yesterday, but a budget will also help you to get where you want to be, and to get there a whole lot faster.

Finding Balance

"God has not given you a spirit of fear, but of power, love, and a sound mind." (2 Timothy 1:7) As we face your budget today and try to determine how to bring balance. I just want to remind you of this verse. This is the time that many people want to get into fear when it comes to their budget. Fear that there isn’t enough, fear of deprivation, fear of knowing… None of this fear is from God. He is not in your fear. Neither is He controlled by your fear. Let go of your fear of the unknown and face your budget. God is with you today.

So… balancing day. How exactly do you do it? The idea behind it is that you want to enter all of your expenses and still have surplus, even if it’s only a little bit, left from your income. A new friend named Ashley left a comment yesterday asking a question that I just want to address quickly. He asked, “I get my salary once a month, (end of month), all my bills are debited or paid by the 2nd of the month. I therefore have no expenses (bills) to pay by the middle of the month. Should I still be putting my salary into 2 portions?”

Now, Ashley’s situation is unique in that all of his bills are being automatically debited on the same day each month. I wish all of us could do this because it makes bill paying so simple; however, for most of us, our bills are due at all different dates during the month, with many of them having inflexible due dates. Utility bills, for example are often set with inflexible due dates because they are dependent on when the company comes to check your meter and they often give you only a few days to make your payment once they bill you. However, for Ashley, no I would not complicate your situation by dividing up what is already so simplified for you. I would leave all of your bills coming out of the first of the month as they do, but I would divide up your discretionary funds. So your budget might look something like this.

If your situation is similar to Ashley’s in your income setup, but not in the way that your bills are paid then I would typically still recommend dividing your monthly income in two. This will enable you to divide your bills into two sections (please see my blog “Simplicity”) and not have to be constantly managing your bills all month. It enables you to only have to sit down twice a month and work with the bills that are due. Also, I have discovered that if you take your entertainment money, or grocery money (for example) all at once, it is very rare to have anything left by the end of the month. Typically you spend it all in the beginning, and really struggle at the end.

So for today’s topic of balancing your budget, I am going to continue to address the issue from a position of dividing your income into two sections, since this is going to work best for most people. The very first thing to look at when starting to balance your budget is your mortgage/rent. Your mortgage/rent is typically the biggest bill that you will have in your budget. So when you enter your mortgage amount into the budget it may take the majority of your first of the month budgetable income. So from there you need to choose the bills that are going to best fit with your mortgage and not cause you to go over.

So let’s say that you have inputted all of your bills due on or after the 1st into your beginning of the month section and you are two hundred dollars over the amount of your income. There are several solutions to that. The first is to identify the bills that do not have fixed due dates such as Savings, Giving, Car Insurance, Infrequent bills that you are saving for, Groceries, Gasoline, Entertainment, etc. These expenses can easily be moved between sections and allow you to try to move your expenses around. You can even divide these up and pay them in both sections if that is what works best for you. For instance, I have a section for savings in both my beginning of the month and middle of the month sections. So lets say I save $300 dollars a month. I might have $150 coming out of each section, but if I need an extra $50 as I am balancing my budget, I might reduce my savings amount to $100 in the beginning of the month and then increase my savings to $200 in the middle of the month.

A second solution is to look at the bills that have semi-flexible due dates close to the first and to move them to the middle of the month. These might include bills like your retirement savings, insurance, or credit card payment… anything that you can call and request a different bill due date or automatic payment date. Companies will typically be happy to bill you earlier or to debit your account earlier, so it might just require a simple phone call to move your due date for a bill if you absolutely cannot get your budget to balance without doing that.

So now, what if the issue is not having too little money in the beginning of the month and too much in the middle of the month? What if your issue is not having enough money for your total? What if once you enter all of your bills, both sections are in the negative, meaning that you have too many expenses for you income? Don’t get in a panic. This is just your moment for discovering why you are in debt. If your outflow every month is always more than your income, then the only possible result is going to be debt. So don’t despair, this is just your answer to why you are in debt, and it is a great thing to discover or you can never change it. It is simply time to re-evaluate your “necessary” bills, as well as your discretionary (meaning flexible) expenses. Are you spending too much on impulse purchases for clothing and eating out? Can you reduce your grocery budget? Are you killing your budget through all of the presents that you buy for other people (a topic for another day)? Are you living beyond your income in your new car payment or in the vacations that you take each year?

These are very hard questions for many people, and for some reason seems to stir up all kinds of fear. Fear of deprivation, and having to give something up, fear of being controlled, fear of not getting to do what you want to do. I want to remind you again… “God has not given you a spirit of fear” Ask Him for the wisdom to know what to change and how to live within what He has given you to live on. Surrender your desires and your fears. Your heavenly Father loves you and He knows what you need. Sometimes His answer may even be a job with better pay or a raise, or His answer may be to give you the wisdom to manage what He has already given you. However, it is really amazing when you begin to live within your income and with gratitude, how quickly increase will come in your life. It is just so true in so many circumstances, when you get happy where you are, and learn to be content whether you have a lot or a little, God always brings more. Again, He is after your heart, so let Him have your heart, your fears, and your trust in your finances, and you will be amazed at what He will do.

The picture at the top of this blog is entitled “Perfectly Happy”. It was the first picture that came up when I did a search for the word “balance”, and somehow I think that is significant. As your budget comes into balance, as you weigh the plan to live within your means, as you face what lies before you, I think you come to a place of acceptance and peace. I don’t think you can ever be “perfectly happy” when you are in fear and denial and your entire life is out of balance, but in the truth comes freedom, in the light comes answers, and in the place of balance you will often find happiness… or at least a reprieve from constantly falling off the beam and into debt… and that really is a happy thought. But even if you have just discovered that you have fallen off the beam, God is with you. He is for you, and just like a Daddy helping his little toddler to walk for the first time, God is so excited to help you and so delighted to see you come to the place of balance in your financial walk.

If you have any other questions or if I didn't answer something today, please let me know. Otherwise, happy balancing, and I will see you tomorrow.

Parties, Taxes, and a Plan for the Infrequent

I had a question from my dear friend Kim posted on Sunday’s blog, and I just wanted to take today to answer it. Kim wrote,
“Tracy!!! I love your blog. I have my notebook and I started my spreadsheet today. Where do I put things that are paid every few months?”

I am so glad you asked this Kim. To illustrate my answer I am going to use my car insurance. Matt and I pay our car insurance every six months because we get a discount for paying it in advance rather than paying it monthly. So every month I have a category for car insurance in my budget. I take my car insurance bill and divide it by 6 and every month we pay that amount into an ING savings account. When it comes due we simply transfer the money back into our checking account and pay the bill. I also use this same savings account for saving towards our car registration that is due annually. Again, I take the annual total and divide it by 12 and then every month I have budgeted in that amount.

This is such a good point because so many of us forget the fees and bills that aren’t monthly and then they come as a surprise and usually at the worst moments. My homeowner’s association dues are always due right after Christmas! If I wasn’t planning for that bill all year, it would always be a nasty surprise rather than just an expected bill that I already have the funds set aside for. For that matter, if I wasn't planning all year for the expenses of Christmas then the bill for that would be an even nastier surprise. I think more people go into debt over Christmas than at any other time of the year. If this is you, then planning for your Christmas expenses as part of your monthly budget is absolutely critical. Trying to dig out from the financial hole you dug at Christmas is a miserable way to start each new year. Planning ahead and making Christmas a part of your budget can set you free from that cycle. Other expenses and bills that might only come annually and that you will need to plan for in your budget may include:
Taxes (especially if you are self-employed)
Car Insurance
Car Maintenance fees
Vacation
Christmas
Birthdays (especially if you have little kids because they can get expensive!)
Home Owner’s association dues
Annual Fees on Credit Cards
Magazine Renewal Fees
School Fees and Expenses

Everybody’s situation is unique, and that is why it is so important for you to think through your costs and situation. If you can begin to plan for these expenses by including them in your budget and making them a monthly expense that you pay into a savings account, then you will no longer have your finances sabotaged by these “unexpected” annual or bi-annual bills. Again, this is where INGdirect can be such a great tool for you because there are no fees at all for setting up an account, and you can open as many as you want and don’t have to keep a minimum balance. You can give each savings account a name so that you know what it is for, and earn a great interest rate on your money while you are waiting for the bill to be due. Some of you may be frustrated by the idea of having multiple savings accounts. It is definitely not a law that you have to. You can just have one savings account that you keep a ledger for yourself. In that ledger you can break all of your different categories down so that you can track your savings. However, if you are just going to have one savings account, it is very important to track your savings so that you know exactly what you have to spend on Christmas and don’t spend your money set aside for taxes (for instance). If this plan sounds better to you then go for it. The important thing is to have a savings account and to have a plan for these expenses in your budget.

I just want to add one more thing as a note of explanation today, because tomorrow we are going to deal with how to actually balance your budget – I promise! I have dealt with actual bills (please see my blog “Learning for Life”- April 30th), estimated bills (see “Highs and Lows – Changing Seasons” – May 1st), and now infrequently occurring bills. I just want to quickly address the expenses at the bottom of each section of my budget. If you didn’t get to download the budget spreadsheet from yesterday, you can get it here. At the bottom of the “Beginning of the month” section and the "Middle of the Month" section you will see expenses like Groceries, Baby (may not apply to you), Entertainment, Gifts, Clothing, and Gasoline. These are expenses which you may not easily be able to assign a cost value to.

Many of you may have no idea what you spend on groceries, or entertainment, or gasoline, or especially on gift giving. I am going to do a whole blog on this very soon, but I wanted to just say that if you don’t have any idea, you can go back and look at either your credit card or your bank statement and try to determine what you have spent in these categories in the last month. If you do use a program like Quicken or Microsoft Money, or something like them, then you can just do a report on your spending in these categories for the last couple of months and take an average from that. However you determine it, for now, it is good to just give yourself a number. You can always go back and adjust it if you didn’t budget enough for groceries or you budgeted too much for gasoline. Each month as you go forward using your budget, you will get a better idea of what you need in each category. However, if you are on a very tight budget you may need to set that budget amount and then possibly change the way you live to fit within your budget, rather than change your budget to fit the way you live. For instance, if your dream is to get to go on vacation this year, you may not be able to continue to eat out every night and be able to realize that dream. Working within your budget may mean that you limit your entertainment budget to just eating out once a week, so that you also have room in your budget to save towards your vacation. Again this is not about deprivation, but it is about being purposeful with your money.

So I will see you tomorrow with a plan for balancing your budget. Thank you again Kim for your question, and for all of you I just have it in my heart to bless you with this today,

“Be anxious for nothing, but in everything by prayer and supplication, with thanksgiving, let your requests be made known to God; and the peace of God, which surpasses all understanding, will guard your hearts and minds through Christ Jesus.”
Philippians 4:6-7

A Plan to Stop Juggling... Besides Dropping the Balls

One of the most difficult things about juggling finances is that you feel like you can never stop. Some people are constantly dropping balls, others just put some of the balls down until they can afford to pay them. The juggling act is constant and exhausting. You never know when the next ball is going to be thrown in or how many there will be. What I am going to be giving you today is so incredibly valuable because it is not just a way to manage the juggling act, it is way to end it.

I am so excited about what I am going to be sharing with you today because it is a very simple, very straightforward “Excel” spreadsheet that you can plug all of your information into and will allow you to determine your budget. Many people fail because they can never grasp the big picture of their finances, and this visual budget is going to help to give you that picture. So if you just want to see what I am talking about, you can view my blank budget here. Or, if you want a copy for yourself that you can actually work with (which I highly recommend), you can download it here.

All week long we are going to be looking at this budget and how you can use it to stop the juggling act. The first step is to click in the top peach box (You can change the colors on your budget later :) ), and to enter in your bi-monthly budgetable income. If you only figured out your budgetable income to a monthly figure, simply divide your monthly budgetable income total by 2. When you have entered in your bi-monthly income, you will notice that it will automatically add the two together to give you your monthly total and also put that total in your Surplus category and Savings. Do not worry about those numbers right now. They will automatically adjust as you enter in your bills and expenses.

The second step is to get your list of bills that I recommended that you make in my blogs entitled “Finding the Holes” and “Learning for Life”. This is where knowing the date that every bill is due is going to be extremely important. I want you to begin to plug your bills into the budget according to when they are due. If they are due after the beginning of the month, plug them into the first section entitled (beginning of the month). If they are due on or after the 15th of the month, plug them into the second section. You can change the names of any of the categories that I have put in for an example, although I would recommend leaving the category entitled “savings” found in both sections, because it is linked to the savings tracker in the yellow section of the budget.

Obviously, the categories will need to be changed for your specific situation, but they will give you a general idea. Furthermore, don’t worry if the numbers don’t add up correctly for today (if your bills total more than your income in one of the sections). I am going to be addressing how to balance your budget in detail in tomorrow’s blog. For today, you have started. You may be able to mess with this budget and figure it out for yourself, which is wonderful. If you need to see an example of a completed budget (all the numbers are made up ~they are not mine, because what I pay for my mortgage isn’t the point :) ) I have posted one here. If it is all a little confusing, don’t worry because by the end of the week this budget will be so simple and clear. So hang in there with me. I know some of you may already manage your finances through a program like Quicken, or Microsoft money. I use Quicken, but I also use this budget and I am going to go into why later on this week. So let me just challenge you to trust me and go for it.

This budgeting plan is going to set you free from the juggling act. You will finally have all of your balls in one place and you will know exactly when each ball needs to go out because it is due. You will also be able to see at a glance where your money is going and what your plan is for your money. It is time to get all of the weight, uncertainty, and confusion out of your head and into a plan. It is time to stop tossing your bills up and hoping the money comes in before they land. You can succeed on a budget, but it needs to be clear, it needs to be comprehensive, and it needs to be easily accessible and changeable. If you will walk with me this week, I think you will see that this budgeting plan is all of that and more: it is also your chance to quit juggling, and to finally clear the balls from your head so you can get on with the rest of your life.

Beautiful Sunday

What a georgeous day to be alive! The weather is perfect, their is no wind (rare for OK), and my garden is calling me. My sweet Luke has been sick all week from whatever he caught in the church nursery last Sunday, so we have decided that for this week we are going to skip the next wave of baby yuck and stay home :) Hallelujah for an actual day of rest.

So, today I am taking the day off from blogging. I will be back tomorrow and we are going to start looking at more of the specifics of a budget. So for today, enjoy your family, your friends, and the gift of life. But more than anything, enjoy your Creator. He is with you today, He loves you, and He has given you "all things richly to enjoy" (I Timothy 6:17) So enjoy your day. As for me and my house, we are going outside. We are going to enjoy being a family, enjoy our heavenly Father, and we are going to practice the "Gift of Gratitude" in thanking God for a beautiful day to be alive.

I'll see you tomorrow.

The Gift of Gratitude

It is not a fun thing to take a child shopping when all they do is whine and cry and want everything. I have friends who never shop with their children because of this phenomenon. My son Noah used to do the same thing. He loves toys and getting surprises (as most kids do). Well, we had reached the point where shopping with him had become a complete nightmare, until my husband and I came up with a plan. We call it “A day to buy something.” We started a star chart and let Noah (and now Ava) earn stars through things like cleaning their room and helping Mommy. Then when they reach a certain number of stars they get “A day to buy something.” I can’t even tell you how this has changed my kids and their attitude. They don’t wine and cry in stores. I can even take them to Toys R’Us just to walk around and have fun! I just simply tell them before we enter the store that this is not “A day to buy something,” and, if they see something that they love, to remember it for when they can buy something. We leave the store without tears or fits, and it has enabled me to take my children shopping and actually enjoy the experience.

Now, the other day we had “A day to buy something.” My kids were so excited as they plotted what they were going to buy. I always keep it under a certain amount, but I have also discovered that one purposeful time of shopping every two months or so with your kids is way less expensive than continually “impulse buying” just to keep them happy. Hey, does that sounds familiar from yesterday’s blog? Maybe it works for adults too. :)

Anyway, Noah and Ava both chose their toys, and were so excited. However, about an hour after I got home, I heard Noah crying in his bedroom. I ran into his bedroom thinking that he had been injured, but no... he was crying because he has changed his mind about what he bought. He didn’t want it anymore. Well, you can be assured that didn’t go over well with me at all. I immediately realized I was looking at a child who a) needed a nap and b) needed a lesson on gratitude. So that started me thinking about gratitude.

If gratitude affects my heart so much as a parent, how does it affect my heavenly Father’s heart? The bible tells us that “God loves a cheerful giver”, but I think he loves a cheerful receiver as well. He is very concerned with where our hearts are. I know that there is a flow of grace that is released in gratitude. As you thank God and praise Him for everything that He has given you, your heart changes. The yuckiness of discontentment leaves, and in that place of gratitude, contentment comes. Gratitude can radically change your outlook on your circumstances. If you catch yourself continually complaining about your circumstances and wishing you had something else, I think it might be time to let your heart be changed through gratitude. Begin to thank God for what you have. Thank Him for your body, for your children, for your family, for air to breathe. Thank Him that His grace is sufficient for any situation that you might be facing. Thank Him that He is always working things for your good. Thank God for His strength in your weakness, His abundant provision in the face of any need. Rejoice in your circumstances, right where you are. The Bible says in Ephesians 5:20, “In everything, give thanks.” This is not just a child’s lesson, this is a radically empowering position of your heart.

There is an old saying, “Gratitude equals wealth.” There is definitely a flow that is released as you begin to voice your gratitude. I think part of that equation is that as you remember the faithfulness of God and begin to position your heart in gratitude, you will feel wealthier, no matter what your circumstances. So, if I’ve “caught you” this morning, crying in discontentment over your circumstances, it’s time to remember God’s goodness, and “forget not all His benefits.” Begin to cultivate gratitude in your life, because when my kids are grateful, it makes it so much fun to give to them, and I wouldn’t be surprised if our heavenly Father feels the same way… He is still going to bless you because of what Jesus did, He is still going to take care of you because He loves you and He has promised, but when you have a heart of gratitude, I think He just loves it and it makes it more fun for Him to give to you. Your next “Day to buy something” may just come a little sooner, or you may just find the joy that He always intended for you in what you already have.

“I gotta little change in my pocket going jingalingaling…”

OK, so some of you may have no idea what my title is talking about. It’s the first line of a country music song, but for me it’s from the movie “Sweet Home Alabama”. But the heart of it is exactly what I want to talk about today. Do you remember the feeling of your Mom or Dad giving you pocket money that you could spend on anything you wanted? Even if it was just a dollar, you felt wealthy, like the world was full of possibilities. For me as a child, life was all about candy, so just having the freedom to choose any candy I wanted, and to be able to buy it myself with the change my parents had given me was amazing. For some of you that first taste of freedom might only have come when you earned your first paycheck. Do you remember how fun it was to get to spend the money that you had earned? It made it easier to go back to work the next day, didn’t it?

There is nothing quite so motivational as feeling and seeing the reward of your labor. A few years ago, Matt and I had to have very serious change in our “financial policy” in this area. As I have already mentioned, Matt does a lot of side business from his regular salaried job. Well, every time he would get a call for a contract, or gig, I would already be scheming where the money would go. He would literally just get off the phone and I would already be saying, “Oh yea, we can use that money to pay for repairing the dryer!” I would be so excited, and he would be demoralized. There was no motivation to even do the work. Yes, he was happy to have clean clothes (or whatever the money went to), but he struggled to find the motivation to want to keep doing it. After many discussions and a lot of figuring things out we finally hit on a plan that has worked wonders in our family and I think it may do the same in yours.

Out of every check that Matt earns, he takes a percentage that is just his. He takes it in cash in his wallet and spends it or saves it, just whatever he wants to do. I do the same. Every time I get the opportunity to make a little extra money, I keep a percentage just for me. The rest goes toward our family and the areas that he and I have agreed upon because that truly is the focus of both of our hearts. However, it is amazing how just getting to eat the fruit of your labor a little will motivate you to work harder, or take an extra gig.

You have to give yourself permission to spend money. If every cent of everything you earn just gets eaten and used up, it actually can be quite demoralizing to want to do more work. Wives, you have to let your husbands taste the fruit of their labors, and husbands you have to let your wives have some free money. It sounds simple, but for many families who are barely making it, it has been a very long time since they bought anything for themselves without feeling guilty. That feeling of guilt when it comes to money will tie you to a poverty mentality that will continually steal your joy, and even perpetuate a feeling of hopelessness when it comes to your finances.

Now some of you are probably saying “Spending money? I spend whatever I want!” Well, that is a whole different blog topic and I am not talking to you today. Spending in rebellion of your actual finances, impulse buying, and spending on credit are not healthy and I am not advocating that. I am advocating taking money that you have already earned and just getting to breathe a little… even if its just buying a candy bar, or a new book, or being able to buy your wife flowers or your friend a coffee. It’s amazing how that can break that feeling of poverty, and motivate you to want to keep earning and moving forward.

So as we begin to talk about the nuts and bolts of setting up your budget next week, I just want you to keep this little thought in your mind. Maybe it’s only $5 a month, but their just has to be a little license to spend or else you will:
1)Rebel and spend anyway, and usually a lot more, landing you in more debt
2)End up demoralized in your job, feeling hopeless in the cycle of poverty
3)Burn out on budgeting and say that budgeting is too restrictive and controlling, also resulting in more debt.

Life on a budget is not controlling, it is empowering. It will empower you to take back your life from fear and debt. It will empower you to start moving towards your dreams, and it will empower you to finally know where you are and how to move toward the future. However, you have to be able to live on a budget and not be constantly sabotaging it. “A little change in your pocket” may be just the answer to keep you from feeling that sense of deprivation which sabotages so many people into debt. So you might just need a category in your budget called “play money” or a percentage of your extra money that goes into your wallet. Because as backwards as it sounds, sometimes giving yourself permission to spend a little money, can actually be the key to having the motivation to save a lot more.

The Power of Percentages

“Deride not what I say because of its simplicity. Truth is always simple. I told thee I would tell how I built my fortune. this was my beginning. I, too, carried a lean purse and cursed it because there was naught within to satisfy my desires. But when I began to take out from my purse but nine parts of ten I put in, it began to fatten. So will thine.” ~from "The Richest Man in Babylon" by George S. Clason.

OK, I love this book so much that (although it is not Christian) I’m just going to say… You have to read this book!! It is told as a story and it reads easily and it will change your life. It is a fantastic book about the power of saving money, and managing money. One of the principles that it lays out so clearly is never spend more than 90% of your income. It doesn't bind you to just 10% but lays that out as the absolute minimum. As Christians we are used to hearing this because we are told to give 10%, but as a Non-Christian book, it urges that you have to save at least 10% of anything that comes into your hands to ever move beyond where you are. Now I don't believe that 10% is a magic number. I really believe that God can lead you how much to give and how much to save, but I also believe that He can lead you in advance. Giving and saving are both such amazing principles in your financial life, but if you don't prioritize it, the money for both giving and saving seems to be the first to dissapear. There will always be an "urgent need" or bill demanding that money. This is why it is so important that you prioritize your finances, and you do that through the power of percentages.

If you are self-employed the power of percentages is going to enable you to be purposeful with everything that comes through your hands, and also find the finances for your dreams. My husband is on salary at his full time job, but he also has several side businesses, which he does contract labor for and is self-employed. Every dollar that comes in through his self-employment is filtered through our agreed upon percentage plan before we look at what is usable from that money. For instance, a certain percentage goes to savings, a percentage goes to pocket money so he can feel the rewards of his labor (a huge point that I will blog on later), a percentage goes to giving, and to a dream we are saving for, and then the rest goes to our needs and is available money. So out of every side check that comes in only about 50% of that money is “available”. We never even consider the whole check, we just divide it in half. This needs to become your mentality every month, otherwise 100% of your income will disappear every month and you will perpetually struggle.

So how do you go about setting up your percentages? It is really simple actually; a simple math equation will tell you what percentage to withhold from each check for each category of your budget. However, percentages are mainly applicable for expenses that do not have a definite due date. This is because it just doesn’t work to only pay a percentage of your mortgage payment. It will still be late :). Most of your fixed bills will need to be paid by their due date and that is where having an “escrow” savings account will come into play in self-employment. If you do have a bill, like your mortgage, that is due and you don’t have quite enough to cover it after paying out your percentages, you would then withdraw the needed funds from your escrow account. You do not take the money from your grocery money, or Christmas fund, or vacation fund. This is the beauty of having an "escrow" savings account set up specifically for months when your income is lower than other months. At the end of the year it will all average out if you have based your budget on an accurate estimate of your earnings, so tap into the picture of your whole income and quit thinking in the desperation of the now.

So you have already determined your monthly budgetable income from yesterday’s blog and you have outlined all of the categories for your bills with their estimated totals for the month in your budget (from my blog two weeks ago~ see “Finding the Holes”, and “Learning for Life”). So to determine the percentage rate of each of your budgeted expenses, you would take the expense amount, and divide it by your monthly budgetable income. So if your monthly budgeted grocery amount is $600.00 and your monthly budgetable income is $4000.00, your grocery percentage rate would be $600. divided by $4000. = .15 or 15% So lets say that you receive a check for $2500 for a contract that finally pays (Yea!). You would then take that check and immediately multiply it by your percentages before you do anything else. So in our example, take .15 and multiply it by $2500. = $375.00 which you would set aside from that check for groceries. Other bills that I would do a percentage for would be your taxes (ask your accountant to tell you what to withhold for your tax payments), gas money, savings, vacation fund, dream funds, entertainment money, and any bill that is paid, bi-annually or annually and not paid monthly (like car insurance).

I am feeling a little “clear as mud” moment right now and I hope that you are not feeling that way because it really is not that complicated. Basically, the percentage allows you to prioritize living rather than always living on what is left over. The thing about leaving your dreams, and your savings for the end after you have paid all your bills is that the money never seems to be there in the end. By making yourself the lowest item in your priorities, you will continually perpetuate the feeling of deprivation and never accomplish what is really important to you. So your budget might look something like this (this is just an example, your percentages need to be based on your workable budget of what you can afford to spend in each category!):
Percentages:
Taxes 10%
Giving 10%
Savings 10%
Groceries 15%
Gas 5%
Vacation 3%
Car Insurance 2%

Leaving 45% of every check that comes in for your set bills. At which point I would pay in full whatever bills were coming due at the next bill period, and draw from your “escrow” savings account for anything that you are short on your budget.

Again, I would like to reiterate that this is a plan for people that are just making it. It is not optimal, but it is extremely necessary if you are in the situation of getting a business off of the ground, or if your income from your business is just enough to cover your budget. Optimally, your business will eventually grow to the point where you can draw a steady salary from it, but in some fields that may take a long time to happen. There are many people who live in the place of “just enough” and percentages, and an “escrow” savings account could truly help you to not just subsist, but to actually thrive. I truly believe, that having consistent money for groceries might just revolutionize your wife’s world and keep her from resenting your business, and having a plan for a vacation might just invigorate your husband into bringing his business to the next level so you no longer have to live in the desperation of paycheck to paycheck.

Your Business, Your Freedom, and Your Responsibility

Self-employment can be a liberating, extremely rewarding way to earn your income. Many people who are self-employed are doing exactly what they love and want to be doing. They are their own boss, set their own hours, and consequently have a lot of flexibility. However, it can be a very difficult venture when you are first getting your business going, and also when you are laboring in a business that may not go very far. When you are at the top and a huge contract doesn’t go through, or they are late on payment, it is you and your family who will carry that load. It is definitely a little lonely at the top in terms of responsibility, and yet the rewards can be spectacular.

So how do you budget when you are self-employed. Well, if your business is established and stable, the best option is that you will draw a salary from the business and it will be very easy for you to budget. How you set up your income from your business is entirely up to you and your accountant. You may choose to bill your business an hourly rate, or draw a monthly or bi-monthly salary, or be paid weekly. However, these are all great options in a business with an established clientele and that is at a place of maturity. Many people who are self employed live contract to contract, with their families just praying that the check will come. I am going to primarily deal with this scenario today, as all people who are self-employed have been in this place at some point in their business. Once your business is established, you can set up your budget based on a weekly, two week, or salaried budgetable income according to how your compensation from your business is set up.

The first thing to do is to determine your monthly budgetable income. First of all, take your total gross income from last year, which you can find on your recently completed taxes, and subtract the taxes that you paid or owed for the year (medicare, social security, state taxes, federal taxes). If you are making personal tax payments each quarter on your income, then you will need to set up an “escrow” savings account just for your taxes that you contribute to as part of your budget, and from which you pay your taxes. In this case you will not subtract your taxes to determine your Net income. It will instead be taken out as part of your budget. If you are withholding money for your health insurance or your 401K or IRA through your business, you will need to subtract the yearly total of those from your gross as well. If you are paying for it personally, the payments will just be a part of your budget. This will give you the "net total" for the year or the amount of money you get to take home and live on each year. To find your monthly average net pay, simply divide that total by 12.

The reason it is so critical to know an estimate of what you have to live on, and to have a budget, is that being self-employed with no idea what it is costing you to live is the quickest way to dig yourself a deep hole of debt. During the time when you are establishing your business, your budget may need to be extremely frugal so that your debt load doesn’t end up sabotaging your business and your peace at home. If this is your first year in business, you need to be especially vigilant in your finances. You will have to base your monthly budget on a pure estimate of what you will bring in this year. It is better to be conservative with this estimate than generous, because if you make less than you spend, you will end up in debt.

So you have an estimate of what your monthly budgetable income should amount to each month, the only problem is most business contracts don’t come so precisely and on time. Like a commission-based income, you may have months that are incredible, and months where you pray for the contracts and the checks to come. I am going to at this point ask you please to read my two blogs on how to set up your income on a commission-based income from May 9th and 10th entitled “Life on Commission: Feast or Famine” and particularly “Life on Commission: Finally Breathing”. They go into so much detail on how to set up an “escrow” savings account which I would just be repeating here. The premise is that you will save in the times of plenty and supplement your income from that savings in the months when business is not as good.

However, there is a dimension of being self-employed which tends to sabotage budgeting efforts. That is, you tend to live on whatever you bring in. The truth is, you will always spend everything you have, unless you are purposeful with your money. So how do you get purposeful with your money when every check that comes into your business has already been spent by you and your family? I have a plan for that, but I am going to save it for tomorrow…

In closing today, I want to leave you with this thought from one of my favorite books of all time, “Now I will tell thee an unusual truth about men and sons of men. It is this: That what each of us calls our ‘necessary expenses’ will always grow to equal our incomes unless we protest to the contrary” ~The Richest Man in Babylon
Everything that you earn will continually be used unless you get purposeful with your money. You will always have more desires than what you have income for, and if you let your desires control you, you will always be just a paycheck away from debt or financial hardship in your business and in your family. It is time to take back your income, your dreams, and your life, and this process of establishing a budget is going to help you to do just that. See you tomorrow.

The Storehouse Blessing

It is a wonderful thing to have abundance to draw from in a time of famine. Do you remember the story of Joseph in the Bible? In the story, Joseph goes through a horrible journey where he is sold into slavery, accused, betrayed, imprisoned, forgotten, but finally he is brought into the place of his destiny. For Joseph, the place of his destiny was preparing Egypt for famine. He began to take a percentage of all of the harvests in the kingdom and stored them up for the coming drought. Through his amazing stewardship and wisdom from God, Egypt was able to prosper through the drought and even have enough to sell to surrounding nations. It is a wonderful story, and we can learn so much from this lesson.

Many of us live our lives with no provision for the future whatsoever. When hard times come we struggle and bemoan our fate, and rack up credit card debt. I am a passionate believer in having a savings account. I am going to spend a whole week on the subject in the future, but for today I just want to talk about how to set one up. Whatever your income source, a savings account is so important for setting your family up for the future. However, if you are commission based or self employed it is absolutely critical for succeeding right now as well.

My husband and I don’t just have one saving’s account. We have nine that we contribute to every month. We have a “permanent savings” account where our goal is to have saved three to six months worth of salary. We have two savings accounts for different dreams that we are saving for. We also have an “escrow” savings account for certain bills that we have to pay in a lump sum every year, and we also have a usable savings account for needs that come up like car repair. We also have retirement savings (investments) and college savings for each of our kiddos. Why do we have so many? Because I have discovered that non-purposeful money just disappears. It gets eaten, or wasted, or goes to silly things instead of what is really important to us. We save at least 15% of our income each month, not because we are rolling in money.. we have three children after all! We live on a modest salary, but we save aggressively because it is that important to us and important to our future.

Now, your bank may have a fantastic, easily accessible savings account program with your bank where you can link multiple savings accounts to your account. However, if you don’t, I would love to suggest ING direct. I am totally not being paid to promote them, I just love this program so much. I have been using ING for the last nine years. They are currently offering just over 3% on their savings accounts where most banks only offer around .50% percent and with most banks you have to keep a balance of at least $100. With ING you have to have an initial deposit, but then you don’t have any fees at all and no minimum balance. You can open as many accounts as you want and give them individual names so you will always know what you are saving for. It is linked directly to your checking account, so to transfer money you would just go to http://www.ingdirect.com/ to either transfer money in or to transfer money back to your bank account. Can you tell I am a fan? I just love any program that makes saving money so easy and accessible and gives you a great rate on your money. It is just a fantastic way to be purposeful with your money.

So if you don’t have a savings account, set one up today! OK, now I sound like a commercial, but my heart is truly just to set you and your family up for success. I could tell you so many testimonies of things my husband and I have been able to accomplish with just saving a little bit towards a dream each month. It may seem like a small amount, but if you don’t start somewhere, you are guaranteeing yourself to never get anywhere.

I know that some of you are still patiently waiting for the topic of setting up your budget when you are self-employed. There is always a way to budget no matter what your income base, but when you are self-employed it requires a little more strategy and it definitely requires the use of a savings account. I just felt like I couldn’t go any further without equipping you with the information of how to set up a saving’s account. Like I said earlier, I have so much more to say on the value of savings accounts or “storehouses”, but I just want to leave you with this thought: God loves blessing your storehouses (where you store you’re your surplus, your abundance, or even just your storage for times of famine). Deuteronomy 28:8 says,
“The Lord will command his blessing on you in your storehouses and in all to which you set your hand, and He will bless you in the land which the Lord your God is giving you.”

I love this verse because it doesn’t just say “storehouse”, it says “storehouses”! More than one, and I have nine! Bring it Lord! So if you don’t even have one, you have got to get a storehouse today in order to have blessing on your storehouse. And I promise you it will be blessed, and your family will be blessed, both in times of famine and in times of abundance.

Perfect Timing

My precious little Luke was born with a tiny little hole in his neck. It is hardly noticeable. In fact, it looks like a teeny dimple or a freckle, but I always knew that it wasn’t supposed to be there. At four months old, our pediatrician told us that it was probably a sinus tube that had not closed properly in the womb. At that point, it had drained several times when he had had a cold. He told us that most likely Luke would require surgery. Well, Matt and I immediately began to pray for God’s healing in Luke’s neck. We prayed that God would seal that tube, that is would never become infected, and that Luke would not need surgery. We continued to pray for the next eight months. We knew that it was not an emergency surgery, and so we waited until Luke was a year old and then went to see an Ear/Nose/and Throat Doctor. The Doctor told us that he had performed many of these surgeries and it was never “nothing”. He gave us the best and worst case scenarios but all of them ended in surgery. So we scheduled a cat-scan and prayed like crazy for a miracle.

Now on the financial side of it, Luke is on insurance, but he has a very large deductible, plus we pay a percentage of whatever costs up to a certain point. We were looking at a lot of money out of our pocket. That night, Matt and I stood in the kitchen and prayed. We joined hands and believed God for a miracle for Luke, and that God would pay Luke’s medical bill. We had total peace to do the procedure, and we knew that if God was leading us, He would take care of us. The very next day the US government announced that they were going to be sending out economic stimulus checks. Ours amounted to exactly what we might owe in medical bills! Matt and I were so excited and grateful. Before we had even asked, God was moving on our behalf to provide for our need. And yes I know that the government didn’t just send those checks for us, but it definitely was what God used in our lives to bring His provision :)

So Luke had the cat-scan which was very traumatic… for me. I got to hold him the whole time, but I don’t think that seeing your baby be pricked with needles and be put to sleep will ever be easy. It was a very hard day for Luke, but even in the midst of all of it we felt the presence of God (Matt a little more than me, I was pretty emotional). And the test results came back saying that they could not even find the sinus hole on the scan. There was no cyst, no cancer, no tube leading up into his sinuses. “Somehow” the tube had sealed or was gone and Luke did not need surgery! We have a wonderful, wonderful God. His timing is not always instant, but I am so glad that He is still in the miracle working business.

And speaking of timing, last week I was starting to worry because I still had not received my bill from the hospital. I so clearly felt in my heart God say to me, “You haven’t gotten the bill because the provision isn’t here yet.” This past Friday our tax stimulus money was automatically deposited into our bank account, and when I went to get the mail on Friday afternoon, there was the hospital bill…

I just wanted to encourage you with this on this Monday morning. In a blog about finances, I am so incredibly thankful that we are not alone in our financial journey. God is always with us, and He has promised to work all things for good. If you have a need today, take it to God. Ask Him for His wisdom, His direction, and His provision. After all, He is still in the business of miracles, He loves taking care of His kids, and He really does have perfect timing.

Happy Mother's Day

Being a mother is one of the most incredible gifts I have ever been given. From the moment that I knew that I was pregnant with my darling Noah, I was different. I was a mother. My heart was enlarged and I knew that I would do anything in the world to keep this little life safely growing inside of me. Seeing his beautiful face for the first time was a magical moment. After a grueling 24 hours of labor, and then an emergency C-section, I was worse for wear. Exhausted, swollen, drugged, and shivering, I lay there waiting to meet my son. When they finally put him in my arms, I just started to cry. Sweet, sweet love just flooded my heart, and everything was worth it because he was safe. He was here. He was mine.

Today, on this Mother’s day, I want to celebrate with all of you precious Mom’s. What an amazing treasure and joy it is to be a Mom. May your children rise up and call you “blessed” as it says in Proverbs. OK, most of you might get a Proverbs 31 “beating” this morning. But what I think is so amazing about proverbs 31 is that in that description, it is the woman who is handling all of the finances. In today’s culture, finances are many times seen as a “man’s” responsibility. And yet this really isn’t a biblical model at all. It is just cultural. Proverbs 31 describes this honored woman as managing her household, and buying and selling fields. It says in verse 16 “She considers a field and buys it; from her profits she plants a vineyard.” This was a business woman… and I bet she had a budget J This woman knew her household and knew what it took to provide for her household, and that is what budgeting is all about.

Anyway, if you are a wife and mother today, and reading this blog so you can better manage your finances, I just want to honor you today. Proverbs 31:11 says, “The heart of her husband safely trusts her; so he will have no lack of gain.” If you are a husband to an amazing wife and mother today, what a blessing that God has given to you. The Proverbs promises you “No lack of gain”, but it does require some trust…

So have a very happy wonderful Mother’s day. My heart is so full and grateful to God today: my home is loud and joyful with my children’s voices and my wonderful husband is making me breakfast. I truly wish each of you Mom’s the same: happy, healthy children, breakfast in bed, and a home that has no lack.

Life on Commission: Finally Breathing

Some of my dearest friends in the world are realtors. And although they are wonderful at what they do, the realty business is a %100 commission business and is consequently very competitive and difficult to make a living in. However, it has very flexible hours, and can be extremely rewarding business.

So how do you budget when you might have a $7,000.00 month one month and an $1200.00 month the next? I am going to lay out a plan for you today and I hope is going to help some of you finally come to a place of balance in your unpredictable income. This is not the only plan for managing a commission-based salary; however, if you have a mountain of credit card debt, you may need to re-evaluate the plan you have in place. It is too tempting to use your credit cards during the low-income months, thinking you will pay them off during the high months, but credit cards can quickly get out of control. It is so difficult to have accountability in what you are spending. Your budgeted spending tends to go out the window when you are freefalling on credit cards.

I believe the key to budgeting on a commission-based income is to set up an "escrow" savings account for yourself, which you contribute to out of every paycheck and from which you supplement your income to pay your bills. An “escrow” account in terms of real estate is a holding fund from which your bills related to your property are held and paid out of. You typically contribute a little to it each month out of your mortgage payment, and then, for example, when your homeowners insurance is due, the payment would be made out of your escrow account. You contribute the rest of the year to be able to afford that large payment when it is due.

A personal “escrow” savings account works very much the same way except that you are managing it yourself. So this is how you would set it up. First, you will need a savings account set a side specifically for this purpose. This is not the savings account that you will go to when your car breaks down. I am going to be addressing savings accounts specifically next week, so please come back for more information on that and the technicalities of how to get that set up. You will only use the funds in your escrow account to fund your budget in the low months.

So how do you know how much to fund your escrow savings account with? We are going to base your escrow savings account on your Net income from last year. Let’s say that you earned $50,000 last year (after taxes, and whatever other deductions come out of your paycheck… this is take home, budgetable income.) You are going to base your budget on $50,000, giving you $4166.67 per month for your budget, and $2083.33 per bill period (please see my blog entry from May 5th entitled “Simplicity” which details how to set up your bill periods –beginning and middle of the month). Now you know your particular industry, and if last year was a phenomenal year for you and you don’t expect the same earnings this year, then you need to set your budgetable income at a realistic amount that you know you will earn. Also, do not include your bonus (if you received one), in this figure as you have probably spent it and thus it is not usable income for this year. You may use it in your budget for next year if you commit to putting it into your escrow savings account and not just spending it.

So here is the critical factor. After you have totaled up all of your bills and living expenses per month (this should include everything you spend money on like clothing, hair appointments, groceries, etc), I want you to subtract that amount from your monthly budgetable income total (so $4166.67 in our example). If the difference leaves you with surplus money (in other words, you spend less on your budget than what you earn, which is a good thing) you are then going to put in another category for you budget for surplus savings. Every month you will transfer this amount into a separate savings account. This is the money that you would fix your car with, or go on vacation. That way you are never taking unbudgeted money from your escrow savings account. If you do not separate out the surplus, it is very difficult to keep track of what is needed for your budget and what is extra. “Extra” spending has a way of “taking over” unless you know exactly what is “extra” to spend.

However, if you add up all of your monthly expenses and subtract them from your budgetable income total and you are in the negative, then first of all, you will finally understand why you are in credit card debt. Secondly, you are going to need to adjust your budget so that you are living within your means (which simply means that you are spending less than you earn). Thirdly, if you have reduced your monthly expenses to their bare minimum and you are still not able to bring them under your budgetable income total, then it is time to ask God for creative ideas to generate more income. Remember, He loves to “teach you how to fish” and His heart is that you would never lack, so there is a way through this. Sometimes that way through may mean reducing your car payment by driving a used car, or not eating out as much, or couponing to reduce your grocery budget. These may not sound like fun ideas to you, but if money is tight you need to be realistic about where you are and ask God to help you have joy in being as wise as possible with the resources that He has already given to you.

Now, here is how you practically work this plan. Every month when you earn over your budgetable income total, so lets say you earn $7,000, but your budgetable income total is $4166.67, you will take the surplus money ($2833.33) and put it into your escrow savings account. Conversely, any month where you earn under your budgetable income total you will draw from you escrow savings account to make up the difference. Yes, this plan takes some diligence, but it will also stabilize your income and keep you from ever having to live on credit cards.

In closing, I just want to say that you need to recognize what season your industry is in when starting your escrow savings account. If you are doing well right now and business is booming, this is a great time to start your escrow and begin to fund it every month. If business is horrible right now, you may need to take your government "economic stimulus" check (only in America ~sorry my South African friends) and fund your escrow account, or your tax rebate, or you may need to live on a much stricter budgetable income total (what you are making right now –the low point) until you get into the next season and business picks up and you can begin to fund your escrow account and then adjust your budget.

I so hope all of this has made sense to you. I truly didn’t want to leave anything out because it is the details that make this plan succeed, but if you still have questions, please post and ask them. I hope some of you will put this plan in place and write me back with your testimony. I already have one friend who has put this plan in place and it has revolutionized their finances. They don’t stress in the low months and don’t have to live on mac and cheese. They feel like they have such freedom and can finally breath when it comes to their finances. It is my sincere prayer that it will do the same for you today.

Life on Commission: Feast or Famine

My husband Matt, is gifted at so many things, but sales is not one of them (he will tell you that himself :)). When we first started dating he was working at a Christian telemarketing company in which his paycheck was based largely on commission. He had to sell a certain number of commercials in order to even receive a commission and in the five months that he worked there he hit that commission exactly --once. It was a very difficult five months, but he learned a lot during that time. One of those things being, that he will never work in commission based sales again.

However, although Matt struggled, there were people all around him making a fantastic income with their commissions (although not many, in this particular company). In all parts of the workforce, there are people thriving on commission, who are gifted at sales or whatever their commission is based on, and who love what they are doing. So what exactly does it mean to be paid on commission?

Being paid on commission, according to Webster's means to be paid "a fee for services rendered based on a percentage of an amount received, collected, or agreed to be paid". There are many people in all kinds of fields that work on a commission basis. Sometimes there is a base salary and then the majority of their income is based on commission. Commission based income includes fields such as real estate, insurance, telemarketing, farming, and many types of sales people such as car, clothing, jewelry etc. These are just a few examples, but commission based income is so prevalent today. It has wonderful benefits in that in many ways you directly control your financial income. The harder you work, and the more time you put in, the more money you can potentially make. However, it also has potential for extreme fluctuations in income. Many commission based jobs can be completely tied to the economy or the seasons. For example, some fields boom in the spring (like real estate), most flourish in times of economic prosperity, some are dependent on the weather, and some thrive only around Christmas. This can be extremely difficult to plan a budget around.

My husband's father is a farmer, and growing up Matt experienced the extreme fluctuations in income that come with a commission based income. If the crop did well and thrived, they would have a good year, but if they did poorly, they would struggle financially for an entire year. Matt describes his financial life growing up as "feast or famine". They would get paid for their crops once a year and had to live off that money for the entire year, plus buy their supplies for the next crop. (It was actually a bit more involved because they farmed on loans, but I am simplifying :)) So once a year they would have abundance and would go crazy buying all the things they wished they could buy the rest of the year, and then struggle the whole rest of the year.

This "feast or famine" mentality is so prevalent in commission based fields, but it truly does sabotage a budget and any sense of stability throughout the year. Furthermore, it really can contribute to a poverty mentality where you just waste your money when you have it because you are so excited to be free of the deprivation that you feel the rest of the time. Once again, a budget is a fantastic tool on commission based income. However, you first need to stabilize your income, and you are just going to have to come back tomorrow to find out how to do that... Sorry for the tease, but I promise to go into detail tomorrow in how to do just that. In the meantime, if you get paid today, happy payday. If you are rejoicing today that it is your last workday until the weekend, happy Friday. And if you are plowing in the field of commissions today, may you find favor and grace with whatever you set your hand to do and have a very happy day.

Every Other Friday

OK, I just need to warn you from the beginning, this blog is going to be a little bit long, but I really don't see any way around it. But hang in there, because if you are paid every other week, you are going to love me today. The lightbulb is going to come on and by the end of this blog you will understand how to manage your previously unmanageable finances.

Being paid every other week is a very common practice, but it can be very difficult to set a budget because your bills come on a certain day… your paychecks do not. The date that you are paid floats all over the month and it can be very challenging to determine exactly what bills are being paid by what check.

The key to succeeding on a budget if you are paid every other week is that you constantly need to be thinking forward with your paycheck. There will rarely be a paycheck that is for right now. Instead you will be paid ahead of your need. For example, let’s say your mortgage payment is due on the 1st of the June, but your pay cycle is for you to get paid on the 23rd of May and then the 6th of June. You would need to be aware that your mortgage payment was going to need to come out of the paycheck on the 23rd of May. If you waited until the 6th of June, you would already be late on your payment.

So here is the rule for succeeding on a set budget with a floating pay date: Any paycheck received after the 15th of the month is going to go towards paying your first of the month bills. Any paycheck received after the 1st of the month is going to go toward paying your middle of the month bills. This will eliminate so much stress and guarantee that you will never be waiting on a paycheck in order to pay an overdue bill. If you can get your budget onto this system, you will never have to stress about if the money is going to be there. You will never again be in a panic because you thought you had a lot of money in the bank and so you spent it and now you don’t get paid for another week and your mortgage is due.

So for May, the check that you receive on either the 2nd or the 9th would pay for the middle of the month bills (any bill with a due date on or after the 15th of the month), and the check that you receive on either the 16th, 23rd, or 30th would then pay for your beginning of the month bills (any bill with a due date on or after the 1st of the month).

Now as you many notice, May has 5 weeks and that again brings up the issue of the “extra paycheck” that we discussed on Tuesday (under the title, “By the Hour”). On a two week pay cycle, your “extra paycheck” will either fall in February and August, or May and October, depending on which week your company has payday. If for January your paydays were on the 4th and the 18th, your “extra check” would fall in February and August. If your paydays in January were on the 11th and the 25th, your “extra check” will fall in May and October. So if you are on the first cycle (the 4th and the 18th of January), you will only receive two paychecks in May and May will be a normal month with your paycheck on the 9th going to the middle of the month bills, and your paycheck on the 23rd going to the beginning of June bills.

However, if you are on the second cycle (the 11th and 25th of January) then you will be receiving an “extra check” in May. In other words, your paycheck for the 2nd of May will go to pay your middle of the month bills, your paycheck on the 30th will go to pay your beginning of June bills, and your paycheck on the 16th is bonus (your “extra check”).

If you have already used your 2nd of the month check to pay your beginning of May bills, this “extra check” will be a lot more fuzzy for you. You will feel like you have more money, but will not be able to pull the entire check out because without a budget in place you have probably already used it. A budget is going to be such a blessing to you, because instead of just having a “good month” twice a year, you will be able to be purposeful with that money and actually put it toward your dreams, like taking a vacation, or a new computer, or a fence around your backyard, or paying off debt. Without a budget in place, you will live up to your income… your entire income, no matter what it is. So even if you don’t get to do it this month, if you will begin to set your finances to the plan that I have laid out today, you will bring stability to your finances and come October, you will be able to actually save and be purposeful with your “extra check”.

Again, if your budget has little flexibility you may need this check to live on the rest of the year to supplement your income. If this is the case for you, the way to do that is to take the “extra check” and put it into a savings account. Divide that check by 6 and then draw out that amount each month to supplement your income.

So now how do you find your budgetable income if you are paid every other week? This is the easy part. If you are on a salary, your bugetable income will be your "net" (after taxes and withholdings) paycheck amount. If you are paid hourly it will be your average –to-lowest net paycheck amount (please see details on how to reach this amount in “By the Hour”.. all of the info is the same except that you will divide by 26 instead of 52 to find your average paycheck). So, for example if your net paycheck amount is $1600, you will have $1600 in budgetable income to plug into your budget for the beginning of the month and $1600 for the middle of the month.

I hope this has all been clear to you and that you can finally begin to see a way for you to succeed on a budget. I know that many of you may already have a plan in place, or you may have ideas on how you can make this plan work better for you, and that is wonderful. This is not the “only” plan, but it is “a” plan and it will work, and if you will use it, it will help you to finally understand where your money is coming from, and to finally have purpose in where it is going.

Where Your Heart Is...

OK, so I know that I am supposed to be talking about two week paychecks, but I really have something else on my heart for you today, so two week paychecks will just have to wait :)

Have you ever wondered what Paul was talking about in the Bible when he wrote to Timothy,

“The love of money is a root of all kinds of evil, for which some have strayed from the faith in their greediness, and pierced themselves through with many sorrows.”

That verse is often quoted, “Money is the root of all evil”, but that is not what it says. It says, “The LOVE of money” is the root of evil. As is true with so many things in this life, I do not think it is money that is at issue, but rather where is your heart positioned when it comes to money. It is not how much money we have that is at issue, but whether our trust is in that money, or our trust is in God’s provision.

I think if Paul were writing this today, he might have written,

“Dependence on credit cards is the root of all kinds of evil, for which some have strayed from the faith in their greediness, and pierced themselves through with many sorrows.”

Ouch, I can feel the collective groan as I write this, but I feel so strongly that in our culture we have replaced our trust in God and His provision with a trust in a plastic card. When you have a need, big or small, what do you do if it looks like God is going to be “late” in His provision? What if the bill seems too big and you have no idea how to pay it? Where do you go? Where does your heart turn? I think many times our mouths cry out to God to deliver us and our faith goes toward putting it on the credit card. IT is certain, IT is dependable, IT is on our time schedule…. IT has our heart.

If you today cannot imagine your world without credit cards I just want to challenge you to ask yourself where your trust is. A credit card makes a horrific god. It may be a quick answer, but it brings no real solution and just adds more debt and baggage to whatever situation you bring to it. Again, it is not that credit cards are evil, but dependence and faith in them will produce all kinds of evil in your life. Only God is trustworthy with your heart and with your finances, and only a heart trusting in His provision can find contentment. A life trusting in God is not an easy path, but a life enslaved to debt is even harder. We have to choose where we are going to place our trust.

OK, so I “got my preach on” this morning but I do want to also give you the promised information… actually, I am going to do it tomorrow. Tomorrow I will deal with how to set your budgetable income if you are paid every two weeks. For today, I want to leave you with this…

“Rest in the Lord, and wait patiently for Him; do not fret because of him who prospers in his way, because of the man who brings wicked schemes to pass.”
“Trust in the Lord, and do good; Dwell in the land, and feed on His faithfulness. Delight yourself also in the Lord, and He shall give you the desires of your heart.”
“Commit your way to the Lord, Trust also in Him, and HE SHALL bring it to pass.”
Psalm 37: 4,5,&7

By the Hour

According to Forbes magazine, more than half of working Americans get paid by the hour. So if that is how you are receiving your income, you are in great company. As far as budgeting goes, it is not too different from receiving a salary in that you roughly know what you are going to make each month. However there are some notable considerations with hourly pay and we are going to look at those today.

Now I want you to hold on to your seat a little bit, because I am going to be giving you a lot of information today, but it is extremely important to understand where your money is coming from if you are going to be able to manage where it is going. I am really trying to lay this out so that it is clear and easy to follow, so please ask questions if something is unclear.

Because there are slight fluctuations in your take home pay when you are paid by the hour (you may not get the same exact amount every paycheck), I first want to look at how to determine your monthly take home pay. The first step is to determine your average paycheck. For today's blog we are going to focus on a weekly paycheck. Tomorrow we will look at the strategy for when you are paid every two weeks, as it definitely differs in the particulars, however there is a lot that is the same, so don't stop reading! First of all, take your total gross income, which you can find on your recently completed taxes, and subtract your taxes that are withheld by your employer (medicare, social security, state taxes, federal taxes) for the year. If your employer withholds money for your health insurance or your 401K, you will need to subtract the yearly total of those from your gross as well. This will give you the "net total" for the year or the amount of money you get to take home and live on each year. To find your monthly average net pay, simply divide that total by 12. To find your weekly net pay, divide the yearly net by 52. This will give you your average weekly paycheck.

However, sometimes this average may be higher than what your actual weekly net pay is. Many times this is because you may do more overtime during certain seasons, which effects your yearly net, but not necessarily your weekly net. Consequently, you need to think about what you will actually have to live on every month of the entire year when you set your budget. So somewhere between your average check and your lowest paycheck amount is a good place to set your budgetable income. So multiply your weekly amount by two and you will have your budgetable income total. Thus if you make $400 a week in net take home pay (taxes already subtracted out), your monthly budgetable earnings would be $1600. You would have $800 per bill period (first and middle of the month ~see yesterday's blog) to pay your bills.

In setting up your budget, we are going to be basing your entire budget on a four-week month. However, if you are paid weekly, four times a year you will receive an extra paycheck in your month. For 2008, those months are February (because of Leap year), May, August, and November. For this year, these months all have five Fridays in them and consequently you will get an “extra” paycheck. I am going to deal with this issue extensively later on because it actually affects everyone when it comes to budgeting. However, I am mentioning it today because if you receive a weekly paycheck, it is an enormous factor. You cannot base your budget on a five-week month because it only comes around four times a year. You need a livable budget all twelve months of the year and that means you must base your budget on a four-week month. It is better to have surplus four times a year, than to constantly be in lack and struggle to pay your bills the rest of the year.

I am mentioning this now, because May is a five-week month and you have a wonderful opportunity to set yourself up for success. If you already know that your budget is going to be tight with not a lot of flexibility, then you may need that “extra check” to live on every month. So this month, I want you to take the “extra check” and deposit it into a savings account. If you need to subsidize your monthly income, you can then divide that check by 3 and each month withdraw that amount to add to your income. It will allow you to set your budgetable income a little higher each month. For example, if you earn $400 in net take home pay a week, and on the extra week you take that paycheck and deposit it into a savings account, you would then divide that amount by 3 and withdraw $133.00 a month to add to your budgetable income. So your income for the month would be $1733.00 instead of $1600, and you would have $866.50 per bill period to pay your bills.

However, if you have more flexibility in your finances, I would still recommend putting that “extra check” into a savings account. If you don’t need that money for your monthly living expenses then it is a wonderful opportunity to begin to save towards your dreams. On a limited income, $1600.00 (from our example, four “extra checks”) can be a wonderful way to save towards a vacation, or a down payment on a house, or new furniture… whatever your dream is. My heart is not to tell you what to spend your money on but rather to spend purposefully. If you don’t have a plan in place the money will disappear, but if you have a plan, you can reach your dreams.

So that is it for today. Again please feel free to comment or ask questions. I know I have given you a lot of information, but I hope it is helpful to you in finally understanding where your money is coming from. And if your head is hurting, I want to leave you with this joke, which may feel true, but hopefully isn’t too close to the truth in your life:
http://www.netfunny.com/rhf/jokes/89q2/paychek.528.html

See you tomorrow:)

Simplicity

Albert Einstien once said, "Everything should be made as simple as possible, but not simpler." There is a lot of complexity to finances, and sometimes it is difficult to find the simple answer. Sometimes the answer is so simple and obvious that you miss it because of it's simplicity. My heart in this week, as we begin to get more into the details of setting up your budget, is to help budgeting become extremely clear, simple, and accessible to you. So please feel free to ask questions, feel free to comment. I really want to make this as simple as I can for you, but at the same time I realize that we are all coming from different backgrounds with different financial situations.

There is a simple way through the maze that has been your finances and with the grace of God and the map of a budget, we are going to find it. Last week we dealt with how to identify your bills, and this week we are going to identify your livable income. The heart of a budget is managing your money and being purposeful with that money, and simply determining how much money you have to live on each month is absolutely critical.

So how DO you determine how much you have to live on, no matter how much your income fluctuates? For some of you, this is not a difficult issue because you are on salary, and are paid a fixed amount once or twice a month, and consequently know exactly how much you have each month. However, for those of you on commission, self-employed, or hourly wages, it is not that simple. I am going to start today with those on a fixed salary, so that everyone can get the heart of where we are going with a budget on a simple example.

Let's say that you are paid $1500.00 on the 15th and the 30th of each month. Your take home pay for the month would be $3000.00. This is the total that all of your bills have to be subtracted from. Very simple and basic, and yet for some of you this may be an "Ah-ha" moment. However, even if you are paid just once a month, I want you to divide your salary into two sections, the beginning and middle of the month. It is too time consuming to continually manage your bills throughout the month. No matter when you are paid or how often, I recommend sitting down twice a month (of course you can do more if you would like) and looking at your budget and paying your bills. This system is particularly easy if you are paid twice a month as you can sit and make out your deposit and pay your bills and handle your finances all at the same time. That way you don't have to worry about your bills for the next two weeks.

Instead of trying to manage your bills all at once, like some unwieldy giant, it really does bring simplicity to divide the month in half and face it as two separate parts. Conversely, if you are continually paying bills and trying to manage your finances, it will bring simplicity to you to only do your bills twice a month. Managing your finances should not control your life, it should empower your life, and bringing simplicity is the way to do just that.

So that's it for today. Simple, easy... for today anyway. Determining your budget may not always be so easy, but once it is done I guarantee you it will simplify your life. You won't be constantly worrying about missing bills, or if you have enough money in your account, or where your money is going, because you will have a plan for your money, and you will know exactly where your money is going. The simplicity and peace that is going to come to your finances will make all of this effort worthwhile. In closing, I want to share a quote with you, because I know you are going to feel the same way about budgeting:

"As a destination, Simplicity is not the easiest place to get to, but once you find it you will never want to leave."

Giant-sized Grapes

My Mom shared something last weekend at the women's retreat that has been stirring in my heart all week. It has been such an encouragement to me that I wanted to pass it on to you on this beautiful Sunday.

In the book of Numbers in the Bible, chapter 13, the children of Israel were standing at the edge of their promised land. They had finally reached their destination after a very challenging journey through the desert. God speaks to them and tells them to send men from every tribe to spy out the land which He was giving to them. So they send in the spies into the land and they travel all over the land seeing all of the people and cities, and they see that the land is absolutely beautiful. It is everything that God had promised them. A land "flowing with milk and honey", in other words full of abundance. In fact, they cut such an enormous bunch of grapes from a vine that it takes two men to carry because it is so heavy with grapes.

However, when they finally they come back to the people to give them their report they say, "Yes, the land is wonderful and full of abundance, but there are giants in the land! We will never succeed."And of the spies that went to see the land, only Caleb and Joshua stand up and say, "Yes, there may be giants, but have you seen the size of their fruit! God has given us this land, let's go in." Their eyes weren't on the giants. To them it was a settled deal that God was going to give them the land. They looked at the giants and thought, "Look at the size of those men. Imagine what it takes to feed them, and all of that food is now ours!"

I love this story because we all have "giants" in our lives. It is so easy for us to be overwhelmed by them and back away from the destiny that God has for us. If God is leading you into something, the presence of giants should just be a great indicator that there is wonderful fruit and abundance ahead of you. What we have to get into our hearts is, "If there are giants in my life, imagine the size of the fruit they are eating and that fruit is my inheritance!" Giants in our life just mean that God is going to do something amazing, if we will just have the faith and courage to go into the land.

The children of Israel feared the giants and had to wonder in the wilderness for 40 more years and it was only their children that finally entered their promised land. In fact, the Bible tells us that of all of the people who gave and heard the report that day, only Joshua and Caleb were allowed to enter the promised land. Only Joshua and Caleb looked at the land and didn't see the obstacles, they saw the fulfillment of promises of God.

Many of you today have dreams in your heart, and even promises from God and you have allowed your fear of the giants (obstacles to your dream) to keep you from what God has for you. I just want to challenge you today, that it's not how big the giants are in your life, it's how big is their fruit! I want to leave you today with the words of Joshua and Caleb in exhorting the people to go into the land, because they are an exhortation for you today,

"The land we passed through to spy out is an exceedingly good land. If the LORD delights in us, then He will bring us into this land and give it to us, a land which flows with milk and honey. Only do not rebel against the LORD, nor fear the people of the land, for they are our bread; their protection has departed from them, and the LORD is with us. Do not fear the giants."

Numbers 14:7-9

Fishing Lessons

When my husband and I first started dating, he was in severe credit card debt. Through a series of uncontrollable circumstances he was laid off of his job, found himself in credit card debt, and took the first job he was offered in order to pay his bills. The job paid horribly and left him in a position where he was hopeless of ever paying off his debt and in desperate need of a miracle. His testimony of his deliverance from debt is amazing, and I will get him to write it sometime in the future. In brief summary, he began to ask God in earnest to deliver him from debt and God began to teach Matt about giving. He began to teach Matt about credit cards and managing his finances. He began to teach him about faith. And yes, there was a good deal of the miraculous in people feeling led to give him money, but God also sent Matt a new job.

This past week we have looked at how to identify your bills. Next week we are going to be looking at your take home income and how to budget with different forms of income (salary, hourly, commission, self-employed, etc). But for today, I just wanted to take a moment to share a thought with you. It comes from a wonderful pastor here in Tulsa named Bob Yandian. A few years ago he preached a sermon in which he said, if you are asking God for provision, be prepared for Him to send work. In other words, money in the mail is wonderful and praise God for those unexpected miracles, but sometimes God's provision of additional work for you, or creative ways to make money, or even better ways to manage your money, can be your miraculous answer as well.

I keep thinking of the old saying... if you give a man a fish, you will feed his family for a night. If you teach a man to fish, you will feed his family for a lifetime. I think this is very much the heart of our heavenly Daddy when he provides work for us when we are just wanting a quick fix. In every situation, God is so much more concerned with our hearts than our circumstances. I think that is because He knows if our hearts don't change, we will just keep getting in the same mess over and over again. God has a wonderful plan for our lives, and it is very difficult for us to move forward into that plan if we are stuck going in circles of lack and debt.

There have been many times in our marriage that Matt and I have come into agreement and asked God for an answer to a financial need, only to have the phone ring with someone wanting to hire Matt for side work. Matt is a professional musician, graphic artist, and does web design, so it is not unusual for the phone to ring. However, the timing always has the feeling of the smile of God on us, just loving providing for His kids.

I wanted to share this with you because as we look at your income this next week, many of you may be praying that prayer... Lord, I just need your provision. God is so incredibly faithful, and I know that He will answer you, but it may just come in the form of work, or more creative ways to manage the money you are already making. It may be that God has already put creative ideas for making money in your heart, and you have been sitting around waiting for someone else to come along and do all of the work. If this is you, may I just lovingly suggest that it's time to quit sitting around waiting for the fish to fall from heaven. God is so merciful and every good thing comes from His hands, so sometimes He may just send you a fish, but many times His answer is for you to learn how to fish. The good news is, if God is the one giving the fishing lessons... you are guaranteed to catch a fish :)

The Shovel and the Hole

I received my first credit card solicitation when I was still in high school. I remember thinking they had the wrong person before I ripped it up and threw it away. But in college they began coming in earnest. I would get one a week, sometimes one a day advertising low balance transfer rates, and limited time low APR's. Even then, I was concerned about messing up my good credit (thanks to my parents), and I never applied. However, many of my friends did apply and without a clue of how to manage the credit cards, they soon found themselves in credit card debt.

I need to do an entire series on credit cards and their dangers and value, but for today I just want to talk about the "minimum amount due". Nothing will dig your credit card hole faster than being late on a payment or missing a payment all together. This will result in the credit card company raising your APR (what they charge you to use their money), as well as assessing finance charge fees and late fees. If you are already in a credit card hole, a budget is imperative to you ever seeing the light of day again (figuratively speaking).

In fact, if you have a credit card where you cannot pay off the entire balance at the end of this month, you have to stop using your credit card. If all of your needs and bills are being budgeted out of your earnings, there will be no need for you to put any additional charges on your credit card and you can finally make headway in beginning to pay it down. If you continue to spend more than you earn, you will continue to go further and further into debt. The only answer is to stop spending what you do not have, and begin to live in the now through a budget.

Your minimum payment on your credit card must be a part of your budget. By not using that card any longer, the minimum payment should stabilize and you can begin to reduce your debt. After we have fully established your budget, we will return to this topic to see what you can afford to additionally pay toward the card each month. In fact, I want to challenge you never to pay the minimum payment on a credit card. Always pay more, even $5 more, as that will keep your momentum going forward and up out of that hole.

Credit card debt is the most widespread and dangerously beguiling trap that you will encounter in your finances. Most Americans are at least $7,000.00 in debt to credit cards! So if you have fallen into that trap, you are definitely not alone. However, don't despair because there is always a way out. Credit cards have never been your answer to freedom, they have always been your shovel into the hole of debt. Today, by stopping any additional spending on your credit cards and making your minimum payments, you can get rid of that shovel. It is time to get free from the darkness of credit card debt, but first you have to stop digging the hole.

Highs and Lows - Changing Seasons

Yesterday was a beautiful day here in Oklahoma. Aside from being a little windy, the sun was shining, the temperature was perfect and I got to work outside in my rose garden. I love spring for so many reasons. I love the signs of life everywhere, my roses budding, and the whole world going green. I love that my children get to play outside after being sequestered for the winter. I love the excitement and anticipation as summer approaches. And I really love that my utility bills drop to nothing because we don't have to run the air or the heat and we don't have to water the plants yet because it rains so much. It's the simple things :)

Seriously, one of the most confusing issues that people have with setting a budget is, "How do I know what to budget when my bills vary so much?" In the winter your gas bill will typically be high and then drop to nothing in the summer (unless all of your appliances run on gas). It can be a challenge to know what to budget for when your bill can fluctuate by more than $200 if you have a large home. So here is what has worked for my household, and some ideas that have helped others with their budgets as well.

This is where it is really helpful to have the last 12 months of statements or be able to access them either online or by a phone call to the company. The first step is to take the last 12 bill totals and add them together. Divide the total of this by 12 and you will have your monthly average. However, it is always better to budget too much than too little and in the months where your bill reaches $150, you will struggle if your average is only $70 and that is all you have budgeted.

There are several ways to compensate for this. First of all, you can budget your bill at the top side of your bill (at $150) and then in the low months (when it is only $30) just put the difference into your savings plan. This is a great plan if you have lots of flexibility in your budget (make a lot more money than your actual bills). However, the average person does not have this flexibility, so this plan can be very difficult for them because that is an extra $120 that they are unnecessarily putting aside each month. Your bill will only be that high one or two times a year, and many people need that money to live the rest of the year.

A second plan is to budget your bill half way between your average bill and your highest bill of the year. That way the majority of your bills will be covered by your budget, but maybe two bills a year you will need to draw from your savings to make up the difference. The third plan is to budget your bill at the average bill and start a savings plan just for that utility. Each low month of the year (months with the lowest bill), you would take the overage in your budget (the difference between what you budgeted and the actual bill) and put it into a savings account so that money is there when the bill is in the high months. This third plan requires a lot of discipline to not spend the extra money when your bill is low, but it is definitely do-able. I will discuss savings plans in detail later, but I currently have five savings accounts open which I use both to manage our money and to save for our dreams.

Another idea for managing your variable bills is to take out the variation. Many utility companies offer fixed rate programs, in which they take the average of your last 12 months of bills and that then becomes your fixed bill total. They do have to adjust it each year for rises in cost of gas, electricity, etc and for your actual usage, but they should only adjust it once a year. Many companies will also refund you the difference if your actual usage is less than what they have charged you over the course of the year.

I have used all of these plans over the years, but I have found that the easiest is to allow the utility company to average my bill for me. If that is not available, I now do a combination of the second and third plan. My budgeted amount is between the high bill and the average total and when the bill is at its lowest point I will put that money in savings for the two months when that bill is high. Most of the year I have enough to cover the bill and I don't constantly have to be micro-managing the money. There is also the factor that when my electricity bill is at its highest in the summer, my gas bill is often very low, so I can use the surplus from my gas to pay my electricity.

Regardless of what plan you choose to use to set your budget for your utilities, it is very important to have a plan. Try to think through your personality, the flexibility level in your finances, and what is available to you through your bill company. These factors will help you determine which plan will best fit you and your family's needs. Having a plan in place for your utilities means that you will no longer have to worry about your bill totals from month to month. Instead, you will be free to sit back and enjoy the weather, no matter what season you are in.