Give Only What You Can

This is the time of year when the charities hound you with "End of the Year Fundraising" mailers. Last year, I was so overwhelmed with convincing pleas of neediness that I ended up going in to debt to give to charity. It is so hard to choose which charity to send money to, because they all have a great sob story (who can resist those adorable puppy eyes from the ASPCA, or the skinny starving children in Africa?). The only way to make it out of December unscathed is to... you guessed it... have a BUDGET. You can give as much as you like to charity this month, but make sure it is all accounted for in your budget. And make sure to prepare for the surprise mailers from new charities by not giving away all of your budgeted money to the first charity who knocks on your door. Be strong when the puppy eyes are staring up at you from the page... you can only give what you can this season, and not a penny more.

The Freedom of a Budget

It may sound backwards, but a budget really allows you the freedom to spend your money however you want. I know a lot of people hear the word "budget" and automatically associate it with constraint and boundaries, but my experience has been quite the contrary. With a budget, you can spend your money however you want, as long as the spend is budgeted for and your total spend for the month comes in at or below your take-home pay. For example, last night I went out to a nice dinner for a girlfriend's birthday. It ended up costing me about $50, and normally I would have been freaking out about spending this much money for one dinner. But at the beginning of the month I had budgeted for this night because I knew her birthday was coming up. So at the end of the night, signing the bill was not painful or frightening. My budget allowed me the freedom to have a nice night out with my friends... all due to the fact that I had anticipated the cost and allowed for the spend.

Black Friday Scares Me

I am just full of realizations this week: if something sounds too good to be true, then it is. This is the rule, not the exception. ARM mortgages? Too good to be true. Work from home and make $10,000 a day? Too good to be true. Black Friday super deals? Also too good to be true. The lure of Black Friday, with the massive marketing and "cut-throat prices" scares me. My mom and I once went out in the dark cold morning on Black Friday, and ended up spending stupid amounts of money (let me clarify, credit card money) on stupid amounts of stuff. We didn't need any of it, but we just bought because we got a $10 gift certificate for being one of the first 100 people through the door. Dumb dumb and dumber. The only way Black Friday can be safe is if you have BUDGETED (there's that dang word again) for the purchase and have a clear goal in mind (buy a 50" LED tv). Don't go in the stores without a shopping list or goal, because you will end up like me and my mom and spend money you don't have and buy things you don't need. Or do like I do and just avoid the madness and chaos of Black Friday altogether. I don't need more stuff anyway.

An Attitude Change is Also Necessary

Another thing I have come to realize on my journey to defeating my debt is that you must CHANGE YOUR ATTITUDE TOWARDS MONEY. As Dave Ramsey says, you must tell your money what to do. You must have your money, not let it have you. And not only must you budget your money, but you must also realize that money is finite. Just because I want something and I have a credit card sitting in my wallet does not mean that I can afford it. If the cash is not in my bank account and budgeted for this purchase, then I cannot afford it. Period. End of argument.

Defeating Debt is about Behavior Modification

I realized something last night as I was watching Lesson 4 of Financial Peace University: getting out of debt is all about behavior modification. In order to get rid of the $41,000 of debt looming over my head, I must change the way I spend. I can no longer impulse purchase or get some "retail therapy." I must live at or BELOW my means, no longer above them. I can't afford nice purses, I can't afford to go out with girlfriends every weekend, I can't afford new clothes from Nordstrom's. And to be honest, these truths are hard to admit because these habits have been ingrained in me my whole life. I am so determined to get out of debt, though, that I have realized sacrificing these habits, this way of life, is worth the reward of no longer "being slave to the lender." I will defeat my debt.

Financial Peace University

My mom and I started attending Financial Peace University back in October, and we are both really enjoying it. It is a program that Dave Ramsey created (if you can't tell already, I am a big fan) that teaches you how to manage money and gain wealth. It is a 13 week course and you meet one night a week for about 2 hours. Our class has met 3 times now, and covered the topics of money management, relationships and money, and cash flow planning (aka budgeting). Next week is about dumping debt, so I am really excited about that class. If you are interested in joining a class near you, visit the Financial Peace University Homepage.

More Lessons Learned

In October, I also learned first-hand about Murphy's Law. As Dave Ramsey says, the minute you save up the emergency fund money, then something unexpected is going to happen and you are going to have to spend that money and start saving all over again. Well that is exactly what happened to me last month. I had just finished saving the $1,000 baby emergency fund (step 1 in Dave Ramsey's Total Money Makeover), when my horse went lame. I tried to diagnose it myself, but after 6 weeks of unsuccessful attempts, I had to call the vet in. We discovered that he has arthritis in his right hand leg, but that discovery cost me $800. No, that isn't a typo. It cost me $800. So now I am busy refunding my baby emergency fund for that next unexpected expense. The silver lining, however, is that because of my baby emergency fund, I was able to pay cash for the vet visit and not use my credit card and increase my debt. Thank goodness for Dave Ramsey and his advice about always having a baby emergency fund!

October was a Month of Learning

I learned a lot last month about managing my money. And I learned it the hard way.

I learned not to pay more than the minimum amount due on my credit cards until the following month. For example, I sent one of my credit cards a payment for $1,062 on the first of the month. But by the middle of the month, some expenses came up and I was all of sudden overspent. If I had just paid the minimum amount due ($144), I would have had about $800 of extra cash that would have kept me from overspending. So now I wait until the following month to pay more than the minimum. This month I have managed to earn an extra $200 by tutoring after work, but I won't be sending that money to the credit card companies until December, after I am sure that November expenses are paid for.