A GREAT Month!

Usually, December is a hard month in which to really "pay down" debt. With Christmas shopping (which, for us, includes driving = $ for gas) and the electric bill starting to rise, this just usually isn't a very fun month.

But December 2007 will go down as a great one in the Faughn house!

We budgeted for Christmas throughout the year and are going to be right at the budget. We still have a couple more gifts to purchase, but we still have money left, too. So that came in right on schedule. Our family helped very much. We all set a limit (that was equal for everyone) on what we would spend on Christmas presents. We set a limit where we could get each person something he/she wanted, without feeling the pressure to buy anything huge. It took some savvy shopping, and some online work, but we met that goal.

Also, our electric bill (for November; paid in early December) was low for this time of year. We have been staying around 50 degrees and have actually been up in the 70s for a few days in late November, so our heater didn't have to run all that much. Also, when we went out of town for Thanksgiving, we turned the unit way down, so it would hardly run. While our water bill was a bit high, it was more than covered by the lower electric bill.

We have had two negatives this month, though. First, we have had to travel a bit more than expected, so we are going to barely make our gasoline budget (if we make it). Gas prices have come down just a bit, which is helping, but we are still paying quite a bit (about $2.85 on average). Also, our DirecTV bill had a mistake on it and the mistake was ours. We had been paying it, but we had been unintentionally late a couple of times. We just did not realize that our payment was due on the 1st of the month, and we had been waiting until the 2nd week of the month, because we pay all our bills out of that one paycheck. We had to pay the extra money, but we also had DirecTV move our "due" date back so we can continue paying without the late charge. We also went ahead and paid January's bill early.

Now, for the big "upside" factor. For the past 3 months, I have been teaching a class for Faulkner University, one night each week, on the Book of Acts. I finished last week and quickly graded all papers and sent in the necessary paperwork on the night of the final. I was hoping to get my paycheck before Christmas (kind of a "special" holiday treat). They were good to me, and we got the paycheck yesterday.

Add all these up, and December became a banner month for us:

1. First, we got cash to pay for our entire trip to the Freed-Hardeman University lectures in February. The trip is already taken care of, which will be a big help in January's budget.

2. Second, we are up to date on all bills (since we got our mistake taken care of with DirecTV). We have never been behind before--and still haven't intentionally--so this is a great relief.

3. Finally, and most exciting for us, is the fact that we paid off...are you ready for this?...over $1100 in debt this month! We did that while going Christmas shopping and taking another 2 trips out of town! By sticking to out budget and using the extra money from my class, we were able to attack our debt.

When you have good news, you just have to share it. And this was great news to us. We're not debt free, yet. But we are working on it, and this month really pumped us up to work even harder in 2008 to finish our journey out of debt!

It's THAT Time Again

Last week we had the greatest holiday of the year: Thanksgiving. For many, the day after Thanksgiving begins a frenzy that won't end until December 25, as shopping lists are filled to buy gifts for loved ones and friends.

However, when people are in debt (or saving for another financial goal) how does that family not get side-tracked during the buying frenzy of Christmas? Here are some suggestions.

1. Have a limit and stick with it. The best way to do this, in my mind, is to discuss ahead-of-time with your family how much you can spend on each member of the family. We have done this in my family and it is already helping us stick to our Christmas budget.

2. Look for sales, but don't get duped by every "sale." Just because Store A has a shirt for 25% off does not mean that the shirt is quality. Make sure that the price is good for the item you are purchasing. Some retailers truly believe in volume instead of quality this time of year. I would rather pay a couple of dollars more for a quality item. Also, make sure the "sale" is really a SALE. Sometimes prices are marked up, then marked a certain percentage "off," and you are right back at the original price!

3. Shop online before shopping in person. You can find great deals online, but you can also find out what things are really selling for. Many times, when you shop online, you end up paying more for the item because you have to pay for shipping. Factor that in! If the item is going to be more with shipping, go to the store, but make sure you know what you could have paid online. Sometimes, for bigger-ticket items, stores will bargain a bit.

4. If you find a deal, don't spend more just to reach your limit. For example, if you have $50 set aside for your sibling and you find "THE BLOUSE" that she has been wanting for $30, don't feel obligated to spend the other $20 on another gift. Take that money and pay down a debt, or use it for gasoline on your Christmas gift-giving. The people you are buying for already know you love them, and they will never know that you got a good deal.

5. Remember your goals. I can't overstate this. If getting out of debt is a high priority--truly a high priority--you will not overspend on Christmas. This is a time of year that will really test your dedication to your financial goals.

Enjoy Christmas shopping. Be kind to those in the stores. Don't ruin their experience. But make sure you don't lose focus of your goals when it comes to your finances.

WYTI Links: 11/21/2007

Here's a mid-week set of links to go around...have a great holiday week!

10 Easy Ways to Save Money Without Much Effort (via Consumerism Commentary) Thanks to Adam for submitting this link last week...

What If You Make Maximum Retirement Contributions For 20, 30, 40 Years? (Roth IRA, Traditional IRA, 401k, 403b) (via No Credit Needed)

Organization 101: A Visual Guide to How I Manage the Information in My Life (via The Simple Dollar) Trent uses a system very closely akin to David Allen's "Getting Things Done" philosophy. Here he spells it out...and includes pictures.

Would Jesus Have an Emergency Fund? (via ChristianPF) This addresses an interesting thought we probably have all considered about the balance of saving for the future and using our blessings for God's good.

MP3 Players for Nine Year Olds? Whatever Happened to Simple, Inexpensive Fun? (via Money, Matter, and More Musings) In the holiday shopping spirit...

The Envelopes: What We Use Them For

Yesterday, we posted a brief article with a link to Dave Ramsey's website. If you have not read that post (The Envelope System: A Brief Introduction), please scroll down and do so before reading this.


So, what goes in those envelopes? Here's a solid answer: it depends.


Wow, aren't you glad you read this post?


Seriously, it all depends on what you want to put in the envelopes. My wife and I probably have more envelopes than many families, but we have a good reason. We would rather the money for certain expenses build up in an envelope that is earmarked for a certain item than be "spendable money" in our checking account. Keep in mind that we are serious about getting out of debt. If there is money in our checking account, we're very likely to spend it on our next debt. Then what happens when it comes time for an oil change? Uh oh!


Here are the items for which we have envelopes:

• Groceries and other "regular" items. We include diapers, formula, cleaning supplies and toiletries in this envelope because we buy all these things at the same stores. We also put coupons in this envelope.


• Life Insurance. We pay every six months, and our premium is low, but we still like having the cash available. We just put a small amount in an envelope each month and then, in June and December, there it is!


• Eating Out. We don't eat out anywhere near as much as we did before we starting using an envelope for this item. Admittedly, this is the envelope we "cheat" on the most, but we are also improving here. We basically put enough money in this envelope for 1 "sit-down" dinner and 2 fast food meals each month.


• Hair Cuts. Neither one of us spends much on hair cuts (which is an advantage we have over many families financially!), but the money still needs to be available when the hair needs a trim.


• Termite Bond. This is the type of expense that can creep up on you and kill your budget. We don't pay monthly on this, but it isn't cheap when the bill comes due. Much like life insurance, we like having the money there in cash when we need it.


• Dry Cleaning. We don't do a lot of dry cleaning, but, well, I'm a preacher, so those suits and sports coats have to be cleaned. This is a very small amount of money, but it's always available in our envelope.


• Car Maintenance. This is, by far, the hardest envelope to figure out. We make sure to have enough in there for oil changes, new air filters, etc., but what about those "big" things, like when the transmission fails? You can't budget for those things. The best piece of advice I can give it to use the money in the envelope for regular maintenance, then just know that there will be other, bigger, stuff happen. This is one thing your emergency fund is for, if needed.


• Birthdays/Gifts. We are lucky. Our family doesn't "overspend" on birthdays, but we do have several. These need to be budgeted. Also, we have baby and wedding showers and anniversaries to think about. And, yes, this money should be enough to pay for both the gifts and the cards. Don't let Hallmark break your budget.


• Christmas. We budget for Christmas year round! We put away a little each month in an envelope, then, when it's time to shop (after Thanksgiving, Amber), we have plenty of money to get everyone a nice, but not-too-fancy, present.

I told you that we had several envelopes. Many people choose not to have so many, but we have this many to protect us from..."us!"

What items do you budget with envelopes, and why?