Friday, September 4, 2009

"Act Your Wage"

If you are familiar with this phrase and the man who uses it, then you already know what I'm going to write about today. Although I've mentioned it briefly a couple of times in previous posts, I haven't gone into much detail about it. But it has been a part of our daily lives for the past couple of months now- we have been transforming the way we handle our finances, our spending habits, and our everyday life, and it has been amazing to see the difference.

I've never been accused of being frugal - anyone who knows me is aware that I'm a spender. My dad is good about saving, as are my siblings - I fell far from the tree in this respect, I guess. Don't get me wrong -- I'm not broke, I've never been through bankruptcy, or really suffered through any dire financial straights. I just like to have a good time and enjoy life, certainly more than I like to save money. The majority of my expenditures aren't on BIG things, but those little everyday things. Trips to Target can easily result in a receipt totaling $200+, and for what? I go to Target with a short list of necessities and come out with a gazillion awesome things, most of which I didn't really need. And clothes? Shoes? We don't even need to go there. I have always told my husband I'm "saving him money" since I love to buy secondhand from the higher end resale boutiques here in town, but believe me, I still can spend the dough.

And likewise, I married someone who also likes to enjoy life. We both have a history of being spenders; he is more of a big ticket type of guy, and has had a Harley, a Jeep, an ATV, and a bass boat (he sold all those boy toys after we were married, though) in just the few years I have known him. So, between the two of us, we certainly have our work cut out for us. We both have known for sometime that we really need to crack down on our debt, pay off the credit card balances that we have, and get in better financial shape. But in spite of our resolve to do better, things really didn't change. As they say, how can you do the same thing over and over again, yet expect to get different results?

But then along came Dave-- Dave Ramsey, that is. And for two non-budgeters, this has been a life changing experience. Bye bye, debit card and hello, cash! Bye bye, impulse spending, and helloooooo, planning!

All I've used for the past two months is cold, hard cash, with the exception of the debit card for planned purchases, such as my every-6-week hair appointment. But for the weekly things, we now have cash. I have $100 to spend every week on groceries, and I've done a great job with that - we have all that we need, and I don't get all the extras that we really don't need anyway. I make a list, and I stick to it- we still get lots of the yummy things we like to eat, but also we're eating healthier because we're eating at home more instead of eating out once or twice a week.

We use cash for gas money (no more convenience of "pay at the pump", darn!) and we each have $25 lunch money each week -- this is to cover our lunches out, or if we want to get dinner out in the evenings. The lunch thing hasn't been as big of a deal for me, because I bring my lunch most days anyway, but I think Dave has had to adjust. Luckily, he still has client lunches out sometimes.

This has been a huge change for us - just in how we are looking at our money. You think a lot harder about buying something if you know that you only have x dollars for the week or month in that category, and after it is gone then it's gone. So there have been some things we've decided not to do or buy, and BD (Before Dave) we wouldn't have thought twice about it. Just slap it on the debit card (or worse, credit card) and there ya go. Figure it out at the end of the month, when you're paying all the bills, and wonder why you don't have enough money to cover everything.

But for the first time in my life, I am looking at budgeting and finances in a different way. I don't feel anymore like I'm almost punishing myself by not buying things that I want, but rather I'm helping myself by saving and planning. We ARE acting our wage, and we do have a plan. And it is not an easy plan, but it is worth it. Every bit of our income is allocated to something each month, so no dropping $200 at Target. We now put a monthly amount aside for all of those yearly big expenses (vet bill, vacation, home repairs, Christmas, etc) so when the time comes then we will have money for them, and not have to dip into savings or worse, pull out the credit card. And Dave (my Dave) is the spreadsheet king, so he is awesome at tracking all of this.

You may be thinking "This is such a drastic change - how will they ever be able to stick with this!?" and it is a valid question. All I can say is that it really has been a mindset change, and when you start seeing the results then it is easier to keep plugging away. And there is wiggle room in this plan, with a "blow fund" each month, where you have extra money (extra cash, in an envelope) allocated so you don't "blow" your budget when unplanned expenses come up. So that does help.

Plus, we are working at this as a team, and a lot of the time we "blame" Dave Ramsey for not "letting" us buy/do those things that one or both of those would like, when before it would have been one person wanting something and the other saying no. Just like that whole Martha's Vineyard day in August, where Dave was wanting to rent a motorcycle or Jeep to drive around on the island all day. When he was considering it, I said something like, "Well... that would be so cool, but I wonder what Dave Ramsey would say..." (not that I didn't already KNOW what Dave Ramsey would say -- "What!?!? $200 for a motorcycle for one day!?!")

And Dave thought about it for a minute, and then agreed that even though he REALLY would've liked to rent the motorcycle, we didn't really need to spend money on that. And he decided it without me saying "Honey, that's not in the budget, blah blah blah"... so that was it, we didn't rent the motorcycle, The End. (Well, except for the miserable day of riding the hot, smelly crowded bus all around the island, but I already told that story in a previous post!) And there have been other things that I have wanted, and I get to hear that reminder from Dave, that "Dave Ramsey won't let us"... Dave Ramsey, the guy you love to hate!! But seriously, it is just a good way to keep in our mind what we are working towards, when before it was easy just to think that we had money in our account, so why not buy what we wanted?

I have to give (my) Dave the majority of the credit for our success so far, in that he is keeping us on track, and that is a HUGE part of the process. It takes both of us to not spend, but it also takes time and work to make our money and budget work for us, and he is really the one that is doing all of that. We can see our debt shrinking, and that is an awesome feeling; we have a spreadsheet that he downloaded from the Dave Ramsey website that shows when we will be debt free - cars paid off, credit cards paid off, second mortgage paid off, ALL of it. And it is not in the too distant future, at all!

We are well into the first steps of the debt-free program, and once we do pay off our debt, then we will be able to grow our savings account,
ramp up our retirement accounts, start paying down our mortgage, and all of those other things that we really hadn't thought about being able to do with our current financial status. We have agreed that when Dave's current car goes to Neil when he turns 16 in May 2010, then we will be getting a car that we can pay cash for, not another car payment. Down the road we may trade it in for a better car, but again, not one with an accompanying loan payment.

Living within our means, and acting our wage. It is a pretty cool thing for us, and just wanted to share. Hope everyone has an enjoyable and safe Labor Day weekend!


Anne said...

Way to go Dave and Nancy - and Dave Ramsey too! I'm so proud of you and now I bet you wish you could have done your budget at work this year, don't you!?! NOT! Hang in there, that debt-free feeling is fabulous. Wish Dave Ramsey had been around when I really needed him instead of having to figure it out for myself.

Michelle said...

I love your blog! I just placed a hold for a DR book at the library! And, I'm linking you to my blog!

Working Stay-At-Home Mom said...

Way to go!! You know, Ben and I are Dave Ramsay Fans.

Good thing to... Last month "murphy's law" did happen but all was OK...we had savings to cover it all.

Tara said...

That's great Nance!! I can understand why it would be difficult to change your habits but I'm glad you and Dave are committed to it! Good luck!! So far you guys seem to be doing great! I got a kick out of hearing you and Dave talk about Dave Ramsey this past weekend. It's almost like he's a third person in your relationship! :)