How to Have a Debt Free Christmas – The 4-Gift Christmas Challenge

Christmas Gifts on Credit….the Gift that Keeps on Giving…

How much will you spend on the holidays this year?  If it’s close to $1,000.00  then you are pretty much average.  How much of your monthly budget is that $1,000.00?  It goes without saying that the holidays and holiday spending can be a budget buster.  And it’s not just the gifts that are purchased, there is extra money that goes into the food budget, into holiday decorating (do you have a Clark Griswold in your family?), traveling, getting the carpets cleaned and other purchases that are made to make the day(s) picture perfect.  And that’s what we all want, right? Is to create a feeling that will last.  There is nothing wrong with that!!!! You heard me right.  There is nothing wrong with that.

Our household loves Christmas and we love to decorate.  One of my greatest desires is to make sure that my children will have fond memories of the holidays. That they will look back and have snapshots of great moments that make them feel good.  So I completely understand that the expense that goes into the holidays is not always about “stuff” – it’s about the feelings that we have and the expectations we have about what these moments mean to us.

THE DECEMBER DILEMMA 

What is not good and not all right is to borrow to make all this magic happen.  We do not want the “high” of the holidays to be followed by the January “blues” when the mail carrier delivers the credit card statement and what we thought was just a few bucks here and a few bucks there has multiplied into a bill that cannot be paid off immediately.  Did you know that a credit card balance of $1,800.00 with 11.99% interest being paid at $100.00 a month will take 20 months to pay off? Do you really want to be paying for last year’s Christmas next Christmas?

The other danger is that holiday gifts are purchased at the expense of your current budget.  How does this happen?  If you have not budgeted for your holiday purchases and you don’t have any sources of extra income to pay them, then it logically follows that the money for those purchases is going to be at the expense of something else in your budget.  The cost of this?  Late fees, NSF fees, playing catch up for a few months into the New Year is not how you want to start the New Year.

4 Gift Christmas Challenge

 

THE CHALLENGE

So what to do?  PLAN!!! You know what they say, “those who fail to plan, plan to fail!”  I know…the holidays seem to sneak up on us every year – but it’s really more about poor planning on our part, isn’t it?  The holidays are not one of those sneaky holidays that change every year.  Each year they are in December – EVERY DECEMBER.

One way our family has opted to keep our Christmas budget under control, especially since adopting all the boys, is to do the 4-Gift Christmas Challenge.  The Challenge is simple…for each child, we purchase something they Want, something they Need, something to Wear and something to Read.  It has been such a cost saver for us and each child gets a mix of presents we can feel good about giving.

THE BUDGET

The easiest way to be ready for the holidays is to simply budget for it and put money in an account or some other stash where you can keep it and keep adding to it throughout the year.  Other ideas:

  • Get a seasonal job to pay for the extra holiday expenses
  • Budget gifts into your monthly budget and purchase gifts throughout the year
  • While you are attacking your mountain of debt –
    • have a year or two (or three) of hand-made gift giving.
    • agree on one family gift.  We know a family that did this and the parents surprised the kids with a new family dog on Christmas morning.
    • tell other family members that you are not giving gifts this year while you are getting out of debt.
    • Get creative!!! There are lots of ways to make your holidays inexpensive.

We have opted to budget for our Christmas for the past several years and limit the amount we spend on gifts.  What is interesting is that as we get further along in our debt repayment the desire to spend on gift giving has decreased.  We would much rather see our debt reduced than a bunch of boxes under the tree.

THE CHRISTMAS SPIRIT

I would be remiss if I didn’t mention that one of the greatest ways to put the holidays, and what is really important about them, into perspective is by sharing it with others and by finding a way to serve someone, anyone, during this season.  You want to create memories for your kids?  You want to teach them about what is most important in this life? You want to teach them responsibility and to appreciate all that they have?  This is how it’s done.  Serve with them – shoulder to shoulder.  Serve in a shelter, deliver food to the homeless, adopt a needy family and deliver presents to them, visit a hospital, there are so many possibilities and opportunities to serve.

What’s up with that?  A message about serving in the middle of talking about holiday debt?  Here’s what I am getting at.  It’s a paradigm shift.  It’s getting off the crazy train of debt.  It’s realizing that what you have IS enough and you don’t need more “stuff” and even if there is some “stuff” you really, REALLY, want…you have to want to be debt free more.  You have to reach a point where you are satisfied and a really powerful way to create contentment in your own heart is to pour into other people.  It’s really difficult to  have everything be about YOU when you are staring into the face of someone else who needs help – it becomes crystal clear that it is not about you – but THEM.  When this shifts for you, something happens and your spending will decrease, which means more funds available to attack your debt and get off the crazy train of debt for good.

A happy DEBT FREE holiday to you all!

Love and Prosperity, 

Your GirlFIday. 

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3rd Quarter Update – Our Net Worth Decreased and Why That’s OK!

2550 Days to FIRE……450 days into our FIRE journey.

3rd quarterupdatePINTEREST

 

I really cannot believe we are over a year into this journey.  It feels like we just started.  We still have the same excitement, the same passion for our vision for our future.  Our “why” is big and requires some big moves.  These quarterly updates fuel that fire.  Speaking of big moves…

I did it! I retired my law practice.  I never would have imagined that this is where I would be if you had asked me, even just five or six years ago.  Then, the goal was to build a successful practice – a business – and I was on my way to doing so.  I have always been a working mom, working outside the home, that is (All moms are working all the time). But adopting the boys – doubling the size of our family – it changed everything.  Anyone who has heard our adoption story would understand that.

From the time we increased our family, I felt the pull to leave my practice and to work from home.  And it was a gradual progress.  First, switching my focus from trial work to appellate work so that I could work mostly remotely.  Next, it was closing out as many of my cases as possible to decrease my case load to only a handful at a time.  Even then, it was just too much. These were serious cases with serious issues. I was long past full burnout by this time and approaching critical mass.  I was not serving my clients in the way that they needed or being the best version of ME for my kids.

So, the final stage was to start closing out each case and not replacing them with new ones to let my practice just naturally phase out.  The thing about appellate work, though, is that if the Court of Appeal wants to have argument on an issue – it’s not like you can say no.  I felt like I was in the mafia – I kept getting sucked back in every time I thought I was close to being finished.

After getting another email that one of my cases was going to be set for argument and having a complete mental meltdown at the thought of the preparation it would take and the several trips back to Phoenix that would be required – I knew I just had to pull the trigger.  I had to just make a clean break or it was not going to happen.  I called the county and turned in my contract.  Next, I filed Motions to Withdraw to formally be removed from my remaining active cases.   That was it – it was that simple.  I was really done.  An enormous weight was lifted and I no longer had this undercurrent of tension – just waiting for another case to be set for argument. …and so, I am now retired.

Retired from LAW is more precise.  But I am not truly retired.  My attention is now focused on my other businesses, my real estate business and our podcast, House of FI.  The passion and excitement I used to have as a baby lawyer has returned, and it feels so great to be enjoying what I am doing.  I highly recommend if you are unhappy in your job – find a way out.  If you can’t find a way – make a way.  Life is so short.

Financially speaking, it was not the best decision, however.  And because of that, it’s one that brings my husband quite a bit of angst. You see, for the majority of our marriage I have been the bread-winner.  And now the roles are reversed.  This is new for him and I completely understand his fear.  I am the risk-taker, the dreamer.  He is my yang.  He is the level-headed one; being a W-2 employee brings him comfort and stability.  And that is totally OK.  In fact, with my income not being predictable at the moment it is a good thing, for all of us.

What does all of this have to do with our Quarterly Net Worth Update?  Well, it leads to the reason why I am not freaking out about or net worth taking a dip. GASP! Yes, we are on the path to FIRE and we decreased our net worth. That’s not how this is supposed to go.

Well, there is a good reason and the decisions were not made lightly, nor were they made without bouncing several different scenarios around with trusted input from others.  You see, quitting meant a significant reduction in our household income.  In order to prepare for this, we had to make some additional extreme cuts to our budget, with no real means to do that, except one.  Our house.

We made the decision to take a small amount of equity from our home to pay off a few of the monthly expenses that were impacting our monthly budget the most. Overall this will result in a decrease in our monthly budget of about $1,500.00.  And that’s huge.

The other VERY temporary step we took was to put all retirement contributions on hold.  These will resume as soon as I can increase my income and do so consistently.  My expectation is that should be no more than six months.

It’s a scary thing, quitting a lucrative job, for one where the income is uncertain.  But reducing our month expenses in addition to increasing my husband’s net payroll deposits will smooth out this transition period (and will let my Hubbs exhale a little bit.) In the short term the decision gives us a bit of anxiety – but in the long term this is what makes sense for our family.  We have four little boys, some with special needs, that need us to be available – physically and emotionally.  These changes are an investment in them – and that is worth more than an amount of money.

Now for the numbers:

In our 2nd Quarter update, we had cut $4500.00 of expenses from our budget since beginning this journey.  Since then we have made the following additional cuts:

  • Completely cutting cable down to just internet, $60
  • Credit Cards: $300
  • Taxes: $1086
  • Cell Phones: $54

Total: $1500.00

Now to our net worth.  The decrease in net worth was only about $1700.00 overall since March of 2018.  One of the ways we were able to lessen some of the impact was by selling our trailer in July.

I think having decreased our monthly expenses by $6000.00, quitting a job that was draining my spirit and to only have taken a hit of $1700.00 to our net worth is still pretty spectacular.  Since beginning this journey 450 days ago we have increased our Net Worth (decreased our negative Net Worth) by $84,588.00!  Nothing to be upset about there.

I am looking forward to being able to see some positive gains by the 4th Quarter.

Love and Prosperity, 

Your GirFIday

2nd Quarter Update – How We Cut $4500.00 a Month From Our Budget in One Year

2 quarter update 2018 PINTEREST

“It’s Only Crazy Until You Do It” – Nike

As mentioned in my last post….I’ve been a bit busy launching our podcast; so, our second quarter update is a bit late… But it is well worth the wait, I promise.

One of the most important bits of advice I can give to anyone else who is trying to build wealth – pay off debt, save more…spend less…any of these things or all three… TRACK WHAT YOU ARE DOING!  Why?  Because it is a loooooong road sometimes.  There will be times when you are certain you are doing horribly and that you haven’t made any progress.  Overspending, under-saving.  But if you track and periodically come back to the numbers, you can see your progress and, I promise you, it’s not as bad as you think.

It’s the daily, small incremental changes that add up and compound and lead to big results.  But you are not always going to see them.  You are not always going to FEEL them.  To see them, to know you are making progress, you have to know where you started and review your steps along the way.

And let’s be honest, sometimes, we are not doing the things we need to do.  The road to financial independence is not easy.  It’s hard to be on level ten all the time.  If you have a record of your progress, you can not only go back and use your previous wins as motivation, you can assess what you need to fix or where you have let a bit of lifestyle creep work its way into your life.

One of the major commitments Curt and I made when we began to journal our progress with this blog was to be transparent.  We have flubbed things up, more than once.  We have let our budget get a bit loosey-goosey sometimes.  We made purchases we probably shouldn’t have.  We let our chaotic lives get the best of us and settled for convenience over financial responsibility.  And I bet you have too.  And if you haven’t, man!  That’s great! You should be extremely proud of your commitment. That’s not sarcasm, that’s the real deal, hands in the air, admiration.

The reality is –  life happens.  And that’s ok.  Just shake it up, learn, and move on.

So, my second piece of advice is…remember this is YOUR journey.  Your journey is not measured by anyone else’s.  You are in competition with no one.  This is about where YOU begin and where you are going.  As long as you are focused on your future – that dream you have for yourself and your family – that will be your ultimate destination.  And when you arrive?  It’s going to be glorious.  But if you keep looking at the progress of others and worrying that you are not keeping up, you are going to waver and drive yourself off a cliff.  You will never get to where you want to be.  So, stay in your lane!

Got it? Good….now we can move on to the good stuff. (wink). But one final thing, we share this information for one reason only. And that is for your encouragement.  We started in a place that, even now, can feel unsurmountable.  The purpose of our sharing our journey is to show others that it IS possible.  Even when you are standing at the bottom of the mountain, looking up, and the road to the top seems an impossible task.  It’s not.  Trust us, it’s not.  You can do this. Just make a move.  Put your financial plan together and get to work, one foot in front of the other. Just begin.

Without further adieu, here is the stuff ya’all came for.

In our previous post, A Year in Review, we reported some of our overall gains at the beginning of this year.  Here are the highlights:

  • Reduced grocery budget by half (We were spending over $2500.00 a month before **cough** cough*)
  • Paid off and/or reduced debt and expenses for a total monthly savings of: $3186.00
  • Through a combination of debt pay off and increased savings we increased our overall net worth by $46,689.00. (A negative net worth, so a significantly LESS negative worth!)
  • Opened additional retirement accounts for both Wendy and Curtis and began funding them.

Now for the update. Below are the additional areas of progress made since January of 2018:

  • Paid off credit cards
  • Sold trailer
  • Sold my precious Lola Beetle (sobs)
  • Paid off small student loan
  • Consolidated/Reduced Wendy and Curt’s student Loans
  • Paid off a couple of cell phones

These additional changes resulted in another $1321.00 in monthly savings.   Overall, for the year and one month we have been on this journey, we have reduced our fixed monthly expenses by over $4500.00 a month.  That figure does not include the cuts we have also made in our discretionary spending (i.e. food, fuel, fun money, clothing etc..).

$4500.00 a month!  That’s pretty phenomenal! So, what have we done with that money?  The decreases in our spending have allowed us to pay off some of the debt, but also increase our saving rate.  At the time of this writing our saving rate is at about 38%.  Which, considering we started at about 5-7%, that’s spectacular.   The other thing it has allowed is for me to transition careers. As a lawyer, I have been a high income-earner for many years.  Going in to Real Estate, which allows be to be at home with my sons, has also meant that income is no longer coming in predictably – at least not yet.  So, part of this over-all reduction has allowed me to make this shift.

When we no longer have the burden of debt hanging over our heads, when we have savings, we provide ourselves with options. And, for me, more than anything else, being able to be more “present” in my son’s lives has been the greatest benefit of this Financial Independence Journey.

I hope you have found this information valuable – but also, that you can apply some of what we have done in your own lives so that you too can build the future you want for you and your family.

Stay tuned next week when we discuss the gains we have made in our net worth.

Love and Prosperity,

Your Girl.FI.day

 

 

 

 

 

Leaving My Six-Figure Career…and How You Can Too!

Leaving a six figure career PINTEREST

At the time of this writing I am weeks away from walking away from a six-figure career. The last few years have been my most successful ever.  I am good at what I do.  And I am miserable doing it.  The weight of the responsibility of doing good work – the gravity of the consequences when, even the best work, results in a horrible outcome for your client…. it’s just too much.  Some spend their lives bearing this burden.  But the good criminal defense attorneys, the GREAT ones…it comes at a cost.

For over ten years, I have built my solo law practice and have grown my profitability every single year.  I don’t say this to toot my own horn – but simply to explain why leaving my practice is of significance and perhaps, also, be a source of encouragement for others who feel trapped in their current careers.

To continue my law practice, to continue serving my clients, would almost guarantee our family would reach our financial goals within about half the time that we have projected, and far in advance of the retirement age of most of the country – before we turn 50. We would be debt free.  We could retire comfortably.  We could do other work without regard for how much income it brought to our household – volunteer – complete passion projects.  How amazing would that be?

It WOULD certainly be an accomplishment.  But the cost…. it’s just not an expense I am willing to justify anymore.    I am sure there are some who would look at this decision and think that I am crazy…irresponsible even.  And maybe it’s true. In fact, it’s quite likely.

But the decision has not been made without serious contemplation.  A weighing of consequences and risks.  Introspection.  An inventory of the needs of our family – both financially and emotionally.  Input from our children, the Bigs and the Littles.  But primarily – I reflected on my own mental health.  Taking an honest, brutally honest, look at who I have become and who I wanted to be, not only for myself, but for the people I love.

We have been given this amazing opportunity to raise, not only our oldest children, but now – we are mom and dad to the most precious gifts, our Littles.  They were never part of our plan.  They were not a consideration when I became a lawyer fifteen years ago.  Life is funny like that, right?   You think you know your life…

In a matter of two years everything we thought we knew about our future was turned on its head.  It was an amazing turn of events and it was the beginning of the realization that our wants and our needs as a family were now different.  Not just the needs of our family as a unit – but my own.  Who I was as mom.  Who I was as a professional. Who I WANTED to be.

I wanted to be a better mother in my forties than I was in my twenties and thirties.  But not only a mother – a better friend.  A better business owner.  If I wanted to be all of these things, it meant I needed to make some changes.  I did not know exactly what that meant at the time, so I went about the business of figuring it out.  The entire process took several years.  If my story is resonating with you, don’t be discouraged – this process will hopefully not take as long for you as it did me.  My wish – is that memorializing this process will help you in your journey to discovering where you want to be, who you want to be and crafting a plan to get there.

I am in the beginning stages of career transition as a Realtor.  I also Blog and am launching a podcast, House of FI, in the very near future.  My income is uncertain.  I have no real safety-net.  But I AM certain – deep within my bones and throughout my spirit, that I will not fail.  I will succeed.

Have I always felt this much conviction?  No.  Fear has, at moments, been debilitating.  It has been a process.  A process I am now sharing with you.

In the next several weeks, we will be walking through the steps of making a career change.  The first step I recommend for any change is MINDSET.

If you are not willing to engage in a positive change in mindset – chances are very high that you will fail.  Your mind is your most powerful asset.  And we become who we believe we are. Thoughts are things.

But how do we change them…

Put your phone down.  It should not be the first thing you see in the morning.  Looking at your phone makes your thought processes reactionary.  You respond to the images and words you see.

Don’t look at your email for the same reasons.  It can all wait.

Read.  Read EVERY day.  A minimum of 15 minutes.  At the beginning of the day.  How you begin your day matters. If you are not sure what to read – I have started a list of my favorite books.  Each has impacted my life in a significant way. You can find them here.

If you simply can’t find 10-15 minutes to read in a quiet spot, then get an audio book.  Listen during your morning commute.  As you work-out.  While taking a bath.  But do it.  It’s Non-negotiable.

Make daily affirmations and/or motivational videos/audio’s part of your morning routine as well.

I used to think affirmations were silly.  But then I changed my mindset.  I began exploring affirmation APP’s and recordings on YouTube.  I ended up finding a book written by Florence Scovil Shinn, written in the early 1900’s.  It’s full of timeless affirmations and real-life experiences.  It finally clicked for me.  I wrote down several affirmations that spoke to me, I recorded them on my iPhone and saved them to my notes.  They are just a few minutes long, but I listen to them every day.  Some are merely affirmations of gratitude.  Saying thank you for life, health…family. Expressing gratitude is one of the best ways to build positive thoughts.

I have come to realize and believe, wholeheartedly, the affirmations I speak into my life every day have contributed to my success and over-all well-being. When I speak positive words out of my mouth, they travel to my ears, then continue to my brain.  My whole body.  I FEEL BETTER.  I FEEL empowered.  I am more determined.  The negative feelings and fear leave me.  I walk taller.  I speak more confidently.

So, give it a try.  (I find it works best when I put my headphones on and listen while I walk or work out.)

To Recap, your first step…. work on your mindset.

Flood your body and mind with positive and encouraging words every day in the form of books, motivational recordings and/or positive affirmations. Make it a habit.

Now that we have gotten your mind in the right place, we can move forward to discovering your “WHY”.

Love and Prosperity

Your girl.FI.day

Photo by Thought Catalog on Unsplash

5 Grocery Shopping Rules to Save You $1,000.00

5 Rules to Save at the Grocery Store

5 Grocery Shopping Rules to Save you a $1000.00

Two times in our lives we have had reality smack us in the face when it came to realizing how much money a month we were spending on food.  The first time was when we first discovered Dave Ramsey years and years ago, and the second time was last year when we discovered the FIRE Community (Financial Independence/Retire Early). I thought I had it all together when it came to our food budget.  I knew all the rules.  I used to lead Financial Peace classes for Goodness Sake!  I was careful about our spending.  When we made the commitment last year to begin saving for retirement I didn’t know where we were going to  get the extra money to do so.  So, I began cutting expenses wherever I could.  Imagine my shock when I took a good hard look at our banks statements and realized we were actually spending more than double what we had budgeted every month for food.  Whoopsie-doodle…..life had certainly crept back up on us and we didn’t even realize it.

We went back to the basics and reacquainted ourselves with several rules that had helped us in the past.  They work.   And if all used together are an almost fool-proof way to “find” extra money in your own budget. Get out your pen and paper and commit them to memory.

  1. DETERMINE HOW MUCH YOU HAVE TO SPEND

Your food budget is one of the best areas you can cut expenses to make room in your budget for savings.  Don’t believe me? Take a look back at your own bank statements. Go back three months and see how much money you spent on food. (Seriously, do that – like right now) Did you look?  Are you shocked?  OK.  So, now you are ready to really get to work.

Commit to eating at home and sticking to the budget you have set for yourself.  You won’t find anyone here telling you to live on “beans and rice” (although delicious, if you ask me).  So be realistic, while at the same time make an honest effort to cut back and meal plan wisely. If you normally were spending $1,000.00, try cutting that back to $600.00.  See if you can do it.  If not add a little back in.  If that was too easy, then cut back some more.  Then take those savings and either supercharge your debt repayment and/or your retirement accounts.

In our house, we typically have two major shopping “hauls” a month.  On these trips, I try to get most everything we need for two weeks at a time.  We have a large family – so two times a month works better for us.  You may be able to extend this to just one large trip a month.  We then have one or two smaller trips in between to replenish things like fresh fruits and vegetables.

  1. USE CASH

Studies have shown that people spend more when they use a credit or debit card when they shop.  My suggestion for you, especially if you are just beginning your financial independence journey, is to use cash when you shop for groceries.  You will spend less.  Spending less is the goal – so anything you can do to achieve your objective is preferred.  Once the cash is gone – it’s gone and you are done shopping.

I have one caveat.  IF you are disciplined with credit cards and are diligent about paying them off every month – using your credit card is a good way to collect lots of different types of rewards points.  However, this also means that you should still stick to the budget.  If you hit your pre-determined amount to spend for groceries, it is time to stop shopping.

TIP:  A lesson I learned from my mom is to keep a “tally” as you shop.  On one-side I have my list and on another I keep a running ledger on how much I am spending.  I round up to the nearest quarter.  This gives me an automatic cushion for taxes on non-food products and makes it easy to do the math as I am shopping.

  1. SHOP FROM A LIST

Contrary to popular belief, shopping is not a recreational sport. From this day forward, all shopping is a planned event. (GASP!) Whaaaaaaat! Yes, it’s true, there will be no last-minute excursions to the store. And definitely no stopping by the grocery store “for a few things” unless you are armed with two things, a list and money left in your food budget.

Heading into a store with no plan is like heading into a jungle without a guide and with no protection. You are vulnerable. A store, any store, whether it be a clothing store, a hardware store, or a grocery store, has one purpose – to sell you STUFF. To separate you from the money in your bank account. They go to extreme lengths to do it. But let’s be frank, it’s really not all that hard to do right? I’m guilty of it. Stopping by the store to get “one” thing that is just a few bucks but, somehow, I leave with 25 items and spend $100.00. How the heck does that happen? Because you are not as good at the sport of shopping as the retailer. But you can be.

  1. STICK TO THE LIST

If it’s not on the list, it does not go into your cart. Impulse buys will wreak havoc on your food budget.  This is an exercise in two things.  First, it helps create discipline, and Second, it helps you get better about planning.  Of course, if it’s an absolute necessity – you get it – but you still stick to the budget.

  1. DO NOT PAY FULL PRICE, IF AT ALL POSSIBLE.

Not everyone is a fan of couponing.  We are all busy. I get it.  It takes time to collect them, then match them with ads, cut them out, keep them organized, not let them expire etc… So, if you ARE a couponer – you get mad respect from me! My husband and I used to coupon regularly, and even taught others how to do it, but when we moved to Southern California, it became more difficult.  Also, several stores eliminated their “double coupons” which really made couponing worth it and then, Walmart stopped price matching.  Which totally sucked! T.V. shows like, “Extreme Couponing”, likely ruined it for the rest of us. Ruiners!
Keep your grocer ads nearby when you are making your shopping list. Scan them and look for savings on staples like meat, milk, fruits and vegetables.  Then, plan your meals around what is on sale.  Also stock up.  A stand-up freezer to stock up on sale items is something to consider.

This step may add a tiny bit of time to your shopping but in the long run the savings is totally worth it.

  1. OTHER RULES OF THE ROAD.
    • Eat before you leave the house – if you shop hungry you are far more likely to impulse buy.
    • Do not shop with children. This can be difficult especially if you have little ones.  However, I urge you to find a way to shop without them.  Try going after they go to bed or after a spouse/partner gets home.  Swap with a friend.  Then do the same for them.  Shoppers tend to spend more when they have children with them.  The little crumb-catchers want all the things and can be relentless.
    • Shop the perimeter of the store. Try to avoid going down every aisle.  The foods in the middle are more often processed and less healthy. Processed food may last longer but by eating more fresh and whole foods, you will live a healthier life and realize long-term savings in reduced medical expenses.
    • Consider the dollar store for some items. For instance, our local dollar store carries the same bread we would normally purchase at the grocery store for anywhere between $2.50 and $3.00.  By purchasing them at the dollar store, I save $1.50 a loaf at a minimum.  When we buy bread at the dollar store we purchase multiple loaves at a time (sometimes 10 or more) and freeze them until we need them.  By doing it this way, we can save between $10.00-$20.00 every time we go.  That’s real dollars – and those savings add up.

There you have it.  Now you are armed with a plan that will help you add real dollars back into your budget.  If you stick with the plan, these savings can super-charge your savings goals.

I am almost embarrassed to tell you that when we took a good look at our food spending, we were wasting over $1,000.00 a month on groceries and eating out.  $1,000.00!  It’s insane.  But we don’t realize how quickly a trip here and there, a trip through the drive-thru because we are exhausted, or lunch out with friends multiple times a month adds up.  You do not have to deprive yourself – that’s not what this exercise is about.  It IS about setting a goal to save and finding a way to do it with the resources you have.  By shopping intentionally, you can easily put hundreds back into your wallet and that should make you very happy!

Happy shopping…er…I mean savings!

Love and Prosperity,

Your Girl.FI.day

Sharks, Scorpions & Alligators – Payday Loans, Title Loans & NSF Fees

sharks scorpions & Alligators

Payday lenders and title loan companies are Sharks.

You must train your brain that every time you drive by one of these lenders or see one of their commercials to hear the Jaws theme. They are predators and they prey on people who are afraid they can’t make it to next pay day. Let me ask you this, do you think these lenders are in rich or well-to-do neighborhoods? No, of course not. But you drive through a struggling neighborhood or near a military base, and you will see one just about on every block. And once you borrow from one of them do not expect to pay off your loan. You will keep paying interest on it indefinitely. This is how they make money. It is called predatory lending and that is why in many states, pay day lenders have been shut down by the law.

These same pay day lenders are now making loans on titles to vehicles and it is the same trap. Let’s say you own a vehicle that is worth $5,000.00. The title lender will loan you $3,000.00 and place a lien on your vehicle and charge you interest every month. Every month, you will pay them, for example, $300.00, of simple interest. None of this monthly amount pays down your balance. You cannot come up with the $3,300.00 to pay it off for next month, so you keep paying $300.00 a month. No matter how you try you can’t get together $3000.00 because something always happens. You intend on paying more next month, but there are some doctor visits or something else happens and so next month you only make the minimum payment. This goes on for a year. At the end of the year, you have paid them $3,600.00. You have paid them what amounts to 120% in interest and you still owe the original $3,000.00. Does this sound smart? Well, it is certainly smart of the title lender. But for you, not so much. As a bright line rule, just DON’T DO IT!

The same principle applies to the payday loans. You borrow a sum with the intention of paying it all off the next payday. But the next payday comes and you can’t pay it back, so the payday lender says,” OK, just pay us the interest and we will make a new loan.” Every payday, you pay the interest but the balance of the loan does not go down. Even with a small amount, you will end up paying more than 100% in interest in a very short time.
When I am up late at night and the commercials for these sharks come on, one of the things they hook you with is the guilt, “avoid NSF fees”, “avoid the embarrassment of bouncing a check” or some other measure that plays upon your fear. Now, get ready, because I am about to get harsh here. A simple solution to NSF fees is to NOT WRITE CHECKS UNTIL YOU HAVE THE MONEY! Novel idea, I know. But it is the truth. Let me remind you that you are not alone. You are not the first person who has bounced a check.

Hopefully, I have earned the right to speak frankly with you because I have been in your shoes. Just about every mistake I discuss in this blog, I have made. We have been there. We know what it is like to have your rent or mortgage due and to not have the money yet. So, we risk it and give the landlord a check hoping they won’t deposit it until tomorrow and that it won’t clear for 2 days and by then your deposit will go through. But WHOOPS! It deposits in 24 hours and now you have to have an uncomfortable conversation with your landlord. So, next month when you are back in the same boat, you go get a payday loan or title loan so that you can avoid that whole scenario. The problem is that you have now gotten suckered into something you cannot get out of and it’s going to cost you a ton of money you can’t afford.

So just don’t do it, no matter how tempting it is. Instead, call your landlord or whoever it may be and explain the situation. Nine times out of ten, if you are honest and simply explain it, they will give you an extension. They may charge you a fee, but it will likely be less than what you would have paid in bounced check fees, that often create a snowball of fees. I have never had someone not work with me, if I simply call them and explain the situation.

I once paid over $300.00 in NSF fees because 1 item cleared before I expected it to. Most banks have a policy of paying items largest to smallest. The reasoning, I have been told, is that the higher items are for more important items, like mortgage payments and car payments. The reality is, if they pay largest to smallest, they get more fees because more items will overdraft. That’s the real truth. Banks are in business to make money, period. And NSF and overdraft fees are expensive, often $25 to $35 per item. In 2009 the Huffington Post reported that banks make 38 billion, that’s right Billion with a capital “B”, in overdraft fees per year! They also reported that was double what they made in the year 2000. Overdraft fees are income for banks, plain and simple.

Have you heard the fable about the scorpion and the frog? A scorpion asks a frog to carry him across a river. Leary of the scorpion and not wanting to be stung, the frog says, “but you will sting me”. The scorpion assures the frog, “if I stung you, both us will sink and drown”. Feeling better, the frog agrees and begins carrying the scorpion across the river, but midway across the scorpion does indeed sting the frog, dooming them both. When asked why, the scorpion explains, “what can you expect from a scorpion, it is simply my nature.” I’ve heard this fable told in many versions, sometimes it is an alligator toting a rabbit across and half-way the alligator attempts to eat the rabbit, but the moral is the same. Sharks are sharks.  Scorpions are scorpions.

The moral of this story for you is to beware of sharks. Like the scorpion or the alligator, sharks will always be sharks and they will always do what is in their nature. Your goal is to survive. And in this journey to be debt free, your efforts in doing so will be much easier if you stay out of shark infested waters.

And if you need a life preserver, I am here to help.  How can I help?

Love and Prosperity, 

Your GirlFIday

Debt Triage – First Stop the Bleeding

Debt Triage PINTEREST

In an emergency room, patients are treated based upon the urgency of their need for care.

If you are reading this and you are living pay-check to paycheck, and/or you have past due bills, or are just trying to stay on top of all the debt you have accumulated, you have a debt emergency.

The very first step for anyone in your circumstances will be to “triage your debt”. What do I mean by “triaging” your debt? It is this – Before you can dive in and begin working a system of overall debt repayment and savings, you have to first start with vital matters.

Are you behind on your rent/mortgage? Utilities? Your car payment? These are your necessities. Take a look at them first. Make a list and address each one of the following in order:

Food and Shelter

Your primary needs are food and shelter, then critical utilities (cable and internet are not critical- unless you work from home and cannot work without internet). Before you can even begin to start paying down your debt, you must get these items current. If you lose your shelter and cannot provide sustenance for you or your family, the least of your worries will be making sure your AMEX credit card gets paid. Talk to your landlord, will they forgive late fees, will they let you pay your rent a week late so you can get caught up on your utilities. Will they break the rent into two payments so that you have more to go around for each paycheck? Be honest with them – be creative. As my grandma used to say, “closed mouths, don’t get fed!”  You won’t know, unless you ask.

House-hacking.  One idea is to “house-hack.”  Can you temporarily rent out a room in your home.  Or can you rent a room/rooms in someone else’s home. Housing costs are most often our biggest expense and if you are able to change this one thing, it may be enough to give you the relief you need to get all the other areas under control. It may be humbling. It may be inconvenient. You maybe sacrificing your privacy.  Remember this is temporary and sometimes, we must do the hard things.

Utilities

After food and shelter, are utilities. If you are behind, call each one of them and work out a schedule of repayment AND STICK TO IT. Often, the dread of calling can be debilitating – I totally understand.  But, I promise, you will feel better once you have a plan.  I also know (from experience) that in the vast majority of instances, if you simply explain your situation – a lot of the time they will be able to help you. Besides, you also don’t want to find yourself in a situation where they get turned off and you have to pay reconnection fees.  This will only compound the problem.

Transportation

Next is transportation. Can you negotiate with your lender to perhaps postpone a month’s payment so that you reflect as current and then possibly use the freed-up expense to get caught up on your shelter needs? Will they forgive late fees? What else can you do? Perhaps you temporarily use public transportation or some other means of transportation and forego a vehicle all together? Be creative here.

Perhaps you need to sell your car and purchase one outright to get rid of your car payment?  Maybe you car share.  Remember, this is an emergency and you need to do what you can to stop the bleeding.

All Other Debt

The last priority is to bring current all debt.

But, before you begin focusing on your debt there are other steps that you will need to take, including assessing your income vs. outgo, total over-all debt situation and creating a budget. For now, focus only on triage – assessing in order of urgency and treating the most critical of issues before moving on. This is not to say that your overall debt situation is not important or that it is not an emergency. It is – debt freedom is an emergency. However, as with the emergency room, for now it can wait until critical needs are stabilized.

In an emergency room, the doctors and nurses work quickly, they work with purpose, they assess, treat and move on to the next patient. You will do the same with each necessary expense that is past due. Doctors and nurses also do not pretend that a situation is not as bad as it seems – to do so would cost lives. You have to triage your debt with an open and honest heart. Truly determine where you are with your necessary expenses. “Treat” each debt emergency as if your life depended on it, because in reality – it does. How can you be the parent – wife – husband – employee – friend – you are meant to be if you are consumed with worry about where you will live or how will be get your next meal – you simply can’t. And I am here to help you do that.  I care about your well-being and I want to see you succeed financially.

In the next several series of posts, we will be addressing the financial fundamentals so that you can achieve financial independence and begin saving.  But for now, first things first. Be brave.  You can do this!

Love and Prosperity,

Your GirlFIday