Financial Freedom and Peace

How can we save money without feeling like we’re broke all the time?

by Crystal on April 24, 2012

My husband and I recently got amazing jobs after not working for months and now our income is something we have only ever dreamed of earning. We’ve scraped by these past months and now with this extra money we want to spend, spend, spend.

How can we save money and not feel like we are still broke all the time? I guess I am not sure how to budget spending money since I’m not even sure what percentage should go where after our main bills are taken out. We are newbies at saving and really need help. -Samantha

Congratulations on your new jobs and higher income! How exciting!

Here’s some advice I would have for you:

1. Sit Down Together and Set Goals

Before you even think of setting up a budget, I encourage you to sit down as a couple and talk about your goals. Where do you want to be financially in a year from now? What about five years from now?

Do you have debt that needs to be paid off? If so, this should be one of your top priorities when you set goals. Do you have an emergency fund of 3-6 months’ worth of expenses in place? If not, this should be your second goal.

In addition, talk about what things you need to save to pay cash for: Is your car on its last leg? Are you setting aside money for retirement? Is there something fun you’d like to do as a couple in the not-too-distant future (go on a trip, purchase something, etc.)?

Discuss all of these things and make a prioritized goal list denoting your top three goals to work toward right now. These goals will give you purpose for implementing money-saving tactics and they will also give you momentum to make wise choices financially.

2. Break Your Goals Down Into Bite-sized Pieces

After you’ve determined your goals, you need to take those big goals and break them down into manageable pieces. I recommend that you set yearly goals and then break those down into monthly goals. Then, take those monthly goals and break those down into weekly goals.

For instance, if you want to save $2500 this year, you’ll need to save a little over $208 per month. That means, you’ll need to save $52 per week — or around $10.50 each weekday.

When you break your goals down into these small pieces, they become much less daunting and much more manageable. Plus, you have a very concrete number to work toward instead of a huge, seemingly overwhelming goal.

3. Create a Written Budget

Once you have your goals in place, it’s time to set up your budget. If you’ve never had a budget before, my book, The Money Saving Mom®’s Budget, outlines how to set up a grocery budget, then a barebones budget, and then a full-fledged budget. I included spreadsheets and step-by-step help to walk you through how to do it. This process is especially beneficial for people who are brand-new to budgeting and completely stressed out over how to pull it off successfully.

If you’re ready to jump in with two feet, Dave Ramsey offers a free online budgeting tool that walks you through setting up your budget and includes suggested percentages to include for each category. Remember to budget for your financial goals before budgeting for fun stuff and extras. Short-term sacrifices will always pay off in the long run!

4. Plan for Strategic Splurging

Once you’ve set up your budget and covered all your necessary bases and your financial goals, now comes the fun part: budgeting for strategic splurging! A lot of people have this idea that a budget is a straight jacket that removes all of the excitement and spontaneity from your life and instead relegates you to a miserable existence.

I heartily disagree. A budget actually gives you freedom!

When you make your money work for you, you have more to work with. In turn, this means you can budget for fun and splurging — and you can enjoy it more because you know that going out to dinner or that occasional coffee at Starbucks is something you planned for, not something that’s going to wreck your finances or keep you from being able to pay your electric bill.

Life is meant to be savored — and a budget can be a tool to help you enjoy life a lot more, without the guilt!

What advice do the rest of you have for Samantha and her husband? I’d love to hear!

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Q&A Tuesday: How do we set up a budget when we’re on commission?

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by Crystal on April 3, 2012

I am a stay-at-home mom and my husband works based on commission. I have been trying to work out a budget rather than living paycheck to paycheck, but am not sure how to budget when his checks can vary up to $700 per check. (He gets paid every other week.)

Some months we have a nice surplus, and other months we borrow from our savings to make sure our checking account stays out of the red. We don’t usually have a problem paying our monthly bills and usually can save a little, but are really hoping to pay off some credit card debt and our car. Any suggestions are appreciated! – Casey

Budgeting on a commission or variable income is very doable. In fact, my husband and I have never had a fixed combined income our entire married lives! Here’s what I’d recommend:

1. Create and Follow a Barebones Budget

In my book, I outline a step-by-step plan for getting on a budget. First, I encourage people to learn self-discipline through setting up a grocery budget. Once you’ve practiced the discipline of creating and sticking with a grocery budget, I encourage you to move on to developing a Barebones Budget.

If you’re already somewhat familiar with budgeting or already have a grocery budget in place, I’d encourage you to jump ahead and create a Barebones Budget. This will include all of your basic living necessities: food, basic utilities, shelter, and transportation. In your case, you’d also want to include your credit card bill(s) every month, too.

Write all of these budget categories down on paper and decide how much you need to set aside every two weeks to adequately cover all of the expenses. If there are any expenses you can lower by cutting your grocery bill, asking for a discount on your utilities, moving to a less expensive housing situation, or selling your car, I’d highly encourage you to do it temporarily in order to free up more money to save and pay off debt.

2. Build Up An Emergency Fund of 3-6 Months’ Expenses

Once you have your Barebones Budget in place, begin following it to a tee. As much as is possible, don’t pay for anything that isn’t a complete necessity right now. It’s a short season and your sacrifices will pay off. Instead, throw every extra penny you can toward building up your emergency fund to three to six months’ of barebone expenses.

Depending upon how often you are dipping into savings would be the determining factor for us as to whether to only set aside three months’ of expenses or to go ahead and set aside six months’ of expenses. This will then give you a cushion going forward on months that you come up short.

3. Pay Off Your Debt

After your emergency fund is full funded, it’s time to focus all of your energies on knocking out your debt as quickly as you possibly can. Continue to live on your Barebones Budget and put everything else that you can scrounge up toward your debt.

Be as aggressive and as creative as possible in attacking your debt and getting rid of it. The sooner it’s gone, the sooner you’ll be able to have some breathing room in your life again!

If you have some hiccups along the way — and you probably will! — don’t be discouraged. Stop and re-fund your emergency fund, if need be, and then get back to getting rid of your debt.

4. Create a Prioritized List of Additional Savings/Spending Goals

Finally, once your debt is gone, make sure you have a fully-funded emergency fund of at least 3-6 months’ expenses, and then create a prioritized list of additional savings and spending goals. Use this list as your guide for months when you have extra: put the extra toward the first thing on your prioritized and slowly start working through it.

If your debt is gone and you have a good emergency fund in place, you’ll have a lot more breathing room and will not only be able to put more into savings, you’ll probably also be able to enjoy some strategic splurging, too!

What advice and tips do the rest of you have for successfully budgeting on a variable income?

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Free budgeting spreadsheet download

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by Crystal on March 29, 2012

Struggling to get a handle on your finances? Kevin from Following to Lead has put together a free Budgeting Spreadsheet download you can use to determine your budget categories and help you stay on track.

By the way, I had the opportunity to meet Kevin and his wife, Stephanie, in Texas last week. And let me tell you, these people are the real deal. I was challenged and inspired by their generosity, graciousness, hospitality, and serving spirits. If you’re a foster parent or considering fostering, I think you’ll be especially blessed by Kevin’s posts.

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What a messy house can teach you about financial success

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by Crystal on March 19, 2012

I woke up to a very messy house today. After being gone all last week and taking Sunday to just rest and reconnect with family, I was met with real-life this morning: unwashed dishes in the sink, dirty laundry to be done, suitcases to be unpacked, and stuff strewn about.

As I thought about how I was going to attack the piles, I realized that the same plan of attack could be applied to finances:

1. Don’t Panic!

Truthfully, I felt somewhat overwhelmed by how bad the mess was–especially with everything else I needed to accomplish today. However, I quickly realized that being overwhelmed would do nothing to fix the issue.

In the same way, if you find yourself in a huge hole financially, panicking won’t do anything to improve the situation.

2. Make a Game Plan

Once I got over being so overwhelmed, I created a game plan: I surveyed the whole house and realized that the mess really just concentrated in the kitchen and bedroom areas. So I carved out a block of time during the day when I would devote my sole attention to dealing with the mess.

If you want to achieve success in your finances, it’s imperative to have a game plan. Dreaming and wandering around in circles doesn’t accomplish anything. Consider where you want to be financially in a year, two years, or five years from now. Write those goals down onto paper and figure out what changes you’re going to make in your life to help you get where you want to go.

3. Break It Down Into Bite-sized Pieces

After I blocked out the time to focus on the messy areas of my home, I divided those areas up by sections, set the timer, and got to work. Instead of trying to tackle entire rooms, I focused on specific areas one at a time. This made it much more manageable.

A game plan is great, but if you don’t break your big idea down into bite-si zed pieces you’ll probably find it’s just too hard. Simplify your game plan by breaking it down into yearly, monthly, and weekly goals. That way, you’re not trying to scale a mountain in one leap; you’re just focusing on the next few steps in front of you.

4. Keep Going–Even When It Takes Longer Than You Expected

I had hoped to knock out all of the messes in an hour or so. But it seems things always take longer than I hope. I got distracted, children needed help, and things came up. But by continuing to plod on, even when it was slower than I’d hoped, I finally finished and had almost everything cleaned up and put away by the time Jesse got home from work tonight.

When you’re working toward financial goals, you’re almost guaranteed to have unexpected things come up: job loss, extra expenses, cars that break down, medical bills, and more. It’s easy to get discouraged and want to give up when it seems like the going is so slow. But press on and remember that moving forward–even at a microscopic rate–is still moving forward!

Ah! So much better!

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How We Paid Cash for Our First Home

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by Crystal on January 23, 2012

I’m honored to be guest posting over on Get Rich Slowly today about How We Paid Cash for Our First Home. Here’s a snippet:

When my husband and I got married nine years ago, we had an audacious dream of paying cash for our first home. At that time, it was very much a far-off dream — we were just trying to survive the rigors and expenses of law school without going in debt. That alone was a seemingly gigantic feat.

But after three years of law school, my husband did graduate without debt, passed the bar, and we started planning for the future. Since we’d been renting for almost four years, my husband had a good job, and our second baby was on the way, pretty much everyone expected that buying a house would be in our immediate future.

I mean, after all, isn’t buying a house the responsible thing for a young couple to do? Well, maybe — or maybe not. We didn’t have much money in savings, and we weren’t sure how long we would be living in the town we were in, so we chose to go against conventional wisdom and continued renting.

Read the whole post.

There are lots of interesting comments in the comments section on the pros and cons of renting versus buying and mortgages versus cash that you might want to check out, as well. As I’ve mentioned many times before, remember that what worked for us won’t necessarily work for you in your own unique situation, but we hope that our story can serve as an inspiration for you to set big goals and work hard toward them.

Perseverance, persistence, and patience does pay off!

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Navigating the Road to Financial Success

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by Crystal on January 19, 2012

I wrote an article for RooMag recently on Navigating the Road to Financial Success. Here’s a snippet:

What would happen if you took a family road trip to an unfamiliar location hundreds of miles away and you left your map or GPS at home? Very likely you’d waste hours driving around trying to figure out which way you were supposed to go and you’d probably never reach your destination unless you stopped and bought a map or kept stopping to ask for directions.

It’s the same with finances: if you don’t really know where you are going in the first place, you’re going to be hard-pressed to ever reach your desired destination.

So many people dream of getting out of debt, saving to pay cash for another vehicle, paying off their house early, or giving more generously to others. Very few people, however, get beyond the dreaming stage. Instead, they drive around and around without a map, wishing they could go somewhere, but never determining where it is they want to go nor how they are going to get there.

Read the whole article.

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Do not give up–ever!

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by Crystal on January 12, 2012

I posted Jason’s article on how they survived a $70,000 pay cut earlier tonight and wanted to follow up with some additional thoughts and encouragement to you all…

Some of you are in a position where living on less than you make seems like a pipe dream right now. And $70,000? That’s more than three times your current income and more money than you could ever dream of making in a year.

You might be feeling discouraged just thinking about how low your income is in comparison and how hard you’re working right now to just try to barely break even.

I have four words I want to share with you tonight:

Do not give up.

I well remember the days when I felt so desperate. We were barely squeaking by. I was pregnant with our first child. Jesse was in law school and working part-time. I was so sick with my pregnancy that I was unable to continue working and I wanted to stay home with our baby after she was born.

But it all felt so impossible. I was trying so hard to come up with something I could do from home and all my ideas were falling flat on their face.

I was scared and grasping at any straw I could find. I was praying–often pleading–and asking God to provide for us.

There were so many moments when I wanted to give into hopelessness. But, by the grace of God, I kept going, even when everything seemed so dark.

And I want to encourage you to do the same.

Do something–even if it seems miniscule. Set microscopic goals.

Check out books from the library on how to save money or increase your income. Read blogs or articles on the internet that will teach and inspire you.

Surround yourself with positive influences who will encourage and motivate you. Get up and exercise.

Laugh, smile and sing… even when you don’t feel like it. These can all be huge antidotes for warding off discouragement.

Choose to be thankful, even when life feels so overwhelming. Find something–anything–to be thankful for. There is always someone who would want to be in your shoes.

Make the most of your situation, even when it seems like you have so little to work with.

And never, never give up. Ever.

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How to survive a $70,000 pay cut

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by Crystal on January 12, 2012

Jason, over at Work Save Live, has a great post up on how they survived a $70,000 pay cut. I especially love this part:

Living on less than you make is extremely difficult. It’s one of those easier-said-than-done things. What typically happens in this country, regardless of income, is that we spend EVERYTHING we make (and most of us go into debt beyond that). I’ve coached people that make minimum wage, some that make $20/hr, and others that take home $10,000/month. And that statement applies to all of them. Everything is relative. Income and lifestyle adjust in the same direction.

The fact is, regardless of your income, you MUST learn to live on substantially less than you make. Doing that will allow you to take a lesser-paying job in the event that (1) you want to pursue your dream job or (2) you get fired/laid off and can only find work that comes with a reduction in pay.

Read the full post.

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5 Ways to Maintain Your Focus–For Free!

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by Crystal on January 11, 2012

Guest post by Elise from New Life Recovery Coaching.

In my last guest article I shared how my husband and I felt when we completely ran out of money. Yes, it was one of the worst nights of my life, but also one of the most hopeful. It’s like they say: When you hit bottom, you’ve nowhere else to go but up!

As many of you shared in the comments after that piece we all seem to struggle with the emotions of despair, hopelessness, and fear when we’re dealing with our money. Especially when we’re first facing a crisis situation, it is nearly impossible to avoid panic.

Then there is the issue of social pressure. When I spend time around people who spend money very differently than I do, it is easy to feel smaller, judged, and belittled.

Over the past year or so I’ve discovered some personal ‘battle armor’ to protect my focus on changing the financial future of my family as well as my own sanity:

1. Online Communities, Coupon Groups, and Mom Blogs

I’ve got to start with the obvious one! We’re all here, aren’t we? On MoneySavingMom®, we’re connecting about how to get further on less and live differently with our money. Sometimes I’ve felt silly for relying so completely on online resources. But it also seems as if I more easily find ‘kindred spirits’ when I search for like-minded folks online.

2. Local Couponing Groups

In my corner of America, I subscribe to a local email newsletter that outlines local deals and specials. Frugal Living Northwest also offers coupon classes to church or community groups. This is a great way to meet other struggling yet hopeful families and connect over our new perspectives on finances.

3. Other Support Groups

From Alanon to Celebrate Recovery and Bible study groups at church, formal community groups can offer a level of family-type-support that sometimes we don’t get from our own families when we are struggling through big changes in our money-management habits. 12-step groups can provide assistance with setting boundaries and learning better ways of dealing with family, friends, and other sources of ‘drama’ that can stress us beyond belief.

4. Mini Staycations

As mom’s, wives, husband’s, dad’s, brother’s, sister’s, we give and give and give–even in tough times. When we can’t afford that luxury latte for a 5-minute pick-me-up or a trip to the movies with our girlfriends to decompress, sometimes we start to think that we don’t have any rejuvenation options left. It’s so easy to give in to the temptation to panic and over-spend when we feel trapped and overwhelmed.

A better solution is to plan a “mini staycation” into our week an evening or lunchtime break. Brew a cup of tea, grab an encouraging book, and just breathe for a few moments.

5. Ask questions

One of the most common things I hear from my life-coach clients is how long they waited in misery and terror before they finally simply started asking around for some support. Just the action of reaching out for answers to our worries or fears puts us on track to find them!

Bottom line: Don’t assume that because we’re making new, frugal, and even squeaky-tight financial choices that our options for emotional and spiritual support are eliminated. The community spirit that can rise up when folks share honestly about their struggles is unlike anything else I’ve ever experienced! We aren’t alone!

Elise Photini Adams is serving clients and audiences across the United States as the NewLife Recovery Coach, offering common-sense inspiration and transforming truths that she’s learned from over 10+ years in personal recovery from homelessness, addiction and abuse. Elise has a new Free Report entitled ’7 Free Sources of Emergency Cash-Free, Fast, Legal’ out now!

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