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November 2004 - eNewsletter

One thing I do that is helpful is if I charge something on my credit card, I go ahead and subtract the dollar amount from my check register along with a checkmark (to identify it when balancing my checkbook) and that way when the credit card bill comes in, the money is 'hidden' and available to pay the bill.

Pat M.

My wife and I experienced a powerful lesson when developing our budget early in our marriage. Although we had agreed to give at least 10% of our income to charitable causes, we looked back after 6-9 months of budgeting and realized that we had failed to live up to this objective. The reason? We failed to properly integrate our giving objectives into our budget. We focused too much on our spending plan than our giving plan, assuming that because we intended to give 10%, this would take care of itself. But it didn't. Because we wrote checks to charity AFTER all the other bills and expenses were met, we always seemed to have very little left over for charity. And because we underestimated some of our expenses, sometimes there was NO money --no margin--- to give to charity. Not only were we giving less to charity; we were missing the joy in what we did give.

Our remedy: We recognized that giving to charity what is “left over” almost always leads to less charitable giving. So when money is deposited into our checking account, we immediately transfer a set amount into a second checking account, which we consider our “charity account”. We have experienced three benefits of this change to our budgeting process. First, we feel gratified that our priorities are straight … our charitable desires are in sync with our actions. Second, our spending habits have become more disciplined because we're spending-not giving---based on our margin. Lastly, because our giving money is segregated from the rest of our cash, we don't even consider dipping into the charity account. Consequently we have a pool of money set aside with the primary goal of decreasing it to meet the needs of the causes that are important to us. We have fun depleting the account!

Who would have thought that such a minor modification to our budget could lead to so much more clarity and freedom?

Aaron K.

Budgeting has a negative connotation. It is like dieting.

I prefer a spending plan. This gives the connotation of control over your destiny with regards to managing your money.

Another idea for home owners that are disciplined in their money management - Do not have the bank or mortgage company escrow your homeowners insurance and tax money. Set up you own accounts and deposit monthly into your own account. You will likely benefit form not over funding which frequently occurs with escrow accounts and may put a few more dollars into your savings account monthly. If interest rates ever go up, you may also make a penny or two more on these self escrowed accounts.

Larry K.

Making Margin:

1) Clip coupons!

2) When making planned purchases, shop online and compare prices! You can almost always find better deals if you just take a little time to research.

3) Write it down! Half the battle is just documenting where your money goes. Break all your spending into categories and allot a certain portion of your available funds to each category. Keep a running tally each month so you can adjust spending as needed if you exceed your allotted amount for a category.

4) Look for deals for switching utility and other regular payments to online billing or automatic payments out of your checking account. Some services offer a discount and many others will give you a "bonus" (usually $5-$25) for making the switch to auto pay or paperless billing.

5) Consolidate multiple cell phone payments into a family plan, many of which offer unlimited calling between family members.

6) Plan big purchases well in advance and implement a 24 hour rule for spontaneous purchases. In other words, don't buy anything spur of moment...sleep on it first. Most of the time the initial urge (for wants) will go away over night, and if not, and it's truly a need you can always go back and get it!

Jon T.

Since I get paid once at the end of the month, I take care of all my major items right at the beginning of each month.

- We do our church giving the first Sunday of the month.

- We have other giving automatically debited from our bank account. Both of these measures ensure that we don't put off giving and help avoid the temptation to give the "leftovers" to God.

- Our savings ($ market, mutual funds, and IRA) come out at the beginning of the month.

- Other big ticket items (mortgage, credit card payments) are larger sums which make it easier to track how much $ we have left for the end of the month.

Our saving categories are

- Money Market Account for small purchases and emergencies. We try to keep at least three months gross salary in the Money Market. It doesn't make great interest, but the liquidity is worth it.

- We have various mutual funds (of the fund of funds type).

-- One is a savings for a "send off" gift for our children. Though we don't plan to pay for our kids college, we would like to help them have a good start financially with a monetary gift.

- Another mutual fund is for use in case we have to support/help support our parents in their old age.

- Another is a "save to spend." This one is for big ticket items. For instance, our old van died and we needed a new one. We were able to buy a new van with cash, because of this "save to spend" account.

- IRA. We are saving in an IRA. However, we are not of the opinion that as soon as we turn 62 we quit being productive. Man was designed to work and contribute to the lives of others. We see this IRA as a means to enable us to give us more financial freedom to serve others in our later years.

We buy most things on two credit cards and pay them off religiously every month.

- One credit card is a no fee card that pays up to 1% back on all purchases. We put part of our new car on that card--instant rebate!

- The other card pays 1% back and 5% back on that credit card brand's gas.

- No credit card debt!

One technique I have employed to maintain some margin is I budget for slightly less than we make. The non-scheduled, day to day expenditures are made by my wife who didn't handle/track the budget. In the early years of our marriage, she would sometimes go slightly over budget in various categories. I would say, "try not to do that next month." However, I knew we weren't going into debt and since I said I could take care of it, she didn't worry. In the end, our expenses did not exceed our income.

Living/Giving/Saving standard

- A few years into our marriage, my wife and I decided that we had reached a standard of living we were comfortable with. We decided to get out of the rat race of trying to "keep up with the Jones's." So except for slight budget increases related to children, inflation, or when we moved to a different area (different local economy) our budget has not increased. Instead we have set as a goal to increase our standard of *giving.* We try to increase our charitable giving percentage each year. We also try to match our giving to our saving. If we give 15% of our gross income, we save 15% of our gross income. The next year: 16% giving, 16% saving. Etc.

Mike B.

What a story. I'll try to summarize. I married only to find out that with my car loan, 5k student loan and his credit cards, car loan, and student loan, we owed 120k. When he let me start budgeting, we managed to entertain ourselves on $10/mo the first few years and now we are up to $20 and we started with $10/mo in allowance and are now up to $30. He gets an extra check two months a year but I only budget on his 2 checks/mo. By doing this, when he lost his job, I had a good "cushion" and we were able to keep paying our bills to CCCS (1k/mo on 9 of the credit cards) and all of our other bills. Now, five years after getting married, and both of us working (he was without work for nine months), we have all but 30k left to pay of the original 120k, we had to buy a new car (we prayed his car to 400k+ miles) and we bought a house and all the appliances. We didn't borrow a penny for the appliances due to a rebuild of our "cushion" and will have the new car paid off in 1 yr instead of two (we were able to save up a good down payment and with the credit card debt gone in 3 months, we will increase the payments). After the car is paid off, we will focus on the student loan and then on the house. It's not been easy but we are determined to be debt free and we'd like to do it within a seven yr period if we can remain as careful as we have been the past five yrs.

Lynna G.

We are a middle income family, and over the years have developed financial priorities for our household that seem to work for us.

PRIORITIES:
1. Be content with the amount of money my paycheck provides.

2. Designate and pay our tithe from my gross income before taxes and other monies are withdrawn by my employer.

3. Pay ourselves next for saving and investing purposes.

4. Pay bills, and adjust our lifestyle to fit within the remaining monetary resources. (usually there is some money left over for giving or more investing).

My family and I are happy to live on less than our means make possible. Though its not perfect, we have found a sense of proportion between giving, spending, and saving or investing for the future. Having our future 100% in God's hands, compels us to do the best with what has been given us.

We do not consciously budget at this time by writing down every expense or source of income. We do however keep focused on the four-point priorities listed above.

My wife uses coupons, and visits the thrift stores in town. We discuss and pray about larger purchases. As a matter of fact, all purchases are candidates for prayer.

We have one major credit card between us, and do not use it if we cannot pay it off completely.

My last comment may be thought-provoking, but I believe that if we do not have the means for a certain purchase, than, it is not necessary at that time, since God does supply all of our needs in His time!

Chris T.

One of the easiest and most effective ways to stop spending money unwisely is to keep a record of all expenses in a notebook. My wife and I started this in 1997 and have really made strides in saving a large amount in unnecessary or unwise expenditures. You can also keep tabs on year to date expenses and also year over year expenses. It really works in creating margin!
Larry G.

Unless a very specific purchase is being planned that might be featured, I immediately toss ALL non-grocery advertising flyers and catalogs upon arrival in our mailbox. I never open them (saving time "browsing for bargains" and also eliminating desire or feelings of "need").

I place the difference between the regular price of a planned purchase and the reduced price I actually pay into a savings account.

I don't keep more then $10 cash with me so that I must write checks to have a written record to share with other family members each evening as accountability of my spending. I have also pasted on my checkbook cover an image of a flying bird and the words "WASTE NOT" as a visual reminder and command to not to let my funds "fly away".

Martha O.

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