Financial Peace University Class 1: Super Saving!

"Winning at money is 80 percent behavior and 20 percent head knowledge. Most of us know what to do, but we just don’t do it." - Dave Ramsey

Last night I started my first of a 13-week class, Financial Peace University (FPU). FPU was created by BFF Dave and is designed to help you learn how to better manage your money. This week's class spoke about savings and how it is crucial to make savings a priority.

As I've mentioned before, the first of the seven baby steps from Dave Ramsey is to start a $1000 emergency fund. Though I have worked on this baby step in the past, my plan is to restart this step and hopefully save a $1000 throughout the class. While it is said most people can do this in a month, I know that would be quite the hefty challenge to do in a month so I'm giving myself a bit more time.

For this week, we will be reading various chapters in BFF Dave's book, Financial Peace Revisited as well as creating a 'quickie budget.'

So, here are my beginning totals. According to data from the class, the average person pays down approximately $5000 of his or her debt and is able to save approximately $2000 during the duration of the class.

New emergency fund: $0
Balance on my car: $7,426.99
Balance on my student loans: $46,248.21

I challenge anyone to embark on this 13-week journey with me! Maybe you would like to create your emergency fund or would like to try to pay off a credit card. Let me know if you would like to motivate each other along the way!

My goal is to post an update from the class and updated totals every Wednesday as my class is every Tuesday through August 9th.

New Tires! BFF Dave would approve.

So today, April 13th 2011, I am getting new tires on my kia sportage.

Why on earth is this important?

It's quite the accomplishment really. Since around October/November, I've been on a crusade to save money, reduce spending and payoff debt. It - in one word - sucks. It's hard, it makes life even more difficult than it already was and it can sometimes be frustrating.

Today is one of those moments where I feel like my hard work is paying off. New tires are not cheap. Peter put a little bit towards them because he wanted to make sure I had very good, very safe tires but I saved $530. I DID IT. For three months, I've tucked away $10 here or $20 there. Our tax return was small, but we decided to put that towards the tires. Whenever I spent under my budget on groceries or other things for the month, that went towards my tires. Instead of buying a new shirt or new pants, I threw that money towards my tires. Whenever I had any spare money at all, it went into my "Tire Fund" envelope.

Other than housing or the down payment on my car, these tires are probably the largest purchase (in terms of the amount of money) that I have made. I know that perhaps $530 doesn't sound like that much money, but to me, it's a mini-fortune! AND I SAVED IT!

The best part about it, is that I paid cash for new tires without having to add to my enormous amount of debt - woo hoo! Yay! This is my first of hopefully many 'paying cash' milestones :)

I *really* needed this accomplishment because I've been really down the past week. I started last week with two additional sources of income. While not much, they did provide a nice little bit of padding for my savings account. This week, both of those side jobs have ended - which is fine. We are going to be ok; these jobs were helping to fund my next savings goal ($2000 saved) so it will just take me a little bit longer to get there.

Another thought that weighed heavily on my mind was the possible government shutdown. Neither Peter or I work for the government; however, most of his customers where he works are government contractors or employees. If they had shutdown, it is highly likely Peter's income would have suffered.

But it made me question how would we survive if either of us either lost our jobs or if we were laid off for an undetermined amount of time? It is a really scary thought! My goal after reaching the $2000 saved mark is to try and get enough in savings that we would have one-month of expenses stowed away for our emergency fund. I know that BFF Dave wants you to have your debt paid off before working on your three to six month emergency fund, but life is way too uncertain and we must all be prepared for the unexpected.

So, more cuts will be made to my budget. Through couponing, planning ahead and looking at various grocery store sales, my goal for the rest of April is to trim $30 each week off of our grocery budget which would lower our grocery budget each week to $50. It will be a challenge, but through savvy shopping and proper planning it is totally doable!

Goals for the remainder of April:
1. Register and pay for BFF Dave's Financial Peace University class being offered in Leesburg starting in May.
2. Cut grocery budget by $30 the last two weeks of grocery shopping for April thus allowing me to pay for said class.
3. Using the final round of paychecks from the side jobs to reach $2000 goal.
4. Plan out May's budget.

I can do this. I will do this. And again, I do apologize if I seem boring or ridiculous about saving money. I'm just so determined to be debt-free by the time I'm 35...and considering I have approximately $55,000 (remainder on car + student loans), I have a looooong way to go. I refuse to waste money right now.

Everything I spend money has a line item in my budget. If it's not in the budget, it doesn't happen. You may be thinking, but Ashley if you are saving money, the doesn't that mean you can spend it? ABSOLUTELY NOT! Emergency funds are intended for emergencies, not for going out with friends, new clothes, shoes, random things that look nice. Emergency funds are there when true catastrophes happen (job loss, death in the family, major illness). If you don't have an emergency fund, I highly suggest you start one. BFF Dave suggests a $1000 fund to start (or even $500 depending on your monthly income and expenses). Currently, we live paycheck to paycheck. If either of us were to miss out on a paycheck, our ability to pay our bills would be jeopardized so trust me when I say this: if we can get an emergency fund, you can too!

Looking for ways to save money? Perhaps some of these thoughts will help:
Do you really need cable? Internet? Nope. (We don't.) Those are luxuries, not necessitates.
Do you really need to spend a ton of money on groceries? Nope. Be a smart shopper!
Do you really need a fancy coffee drink every morning? Nope. You will survive. I promise.
Do you really need a new pair of pants? Nope. There will be plenty of clothes to purchase - when you are out of debt.

Also? Every time I feel discouraged or feel like I'm not getting anywhere, I'll just look at those new tires and receive an instant dose of encouragement.

“Your actions should show you care about money by learning something about it.” - BFF Dave

Why is saving money, being on a budget and working towards your goals so difficult?

Because it causes you to stare at yourself, criticize your habits and realize that you – yes you – made and continue to make really, really bad decisions. No one WANTS to be criticized and told that he or she is doing things incorrectly, but to make serious changes it is a necessary evil.

I am really struggling this month and I’m not quite sure why. I have done a fairly good job of saying no, putting money into savings and being a better budgeter but this month has been disastrous. It is also frustrating knowing how hard I’m working and not seeing that reflected in my bank account.

BFF Dave says to do whatever you have to do to take in extra income when you are going through his baby steps plan. I’ve already started a part-time job one day a week, but I briefly considered picking up a second shift at the gym on Wednesday nights, but after one evening shift I was so sore, so cranky and so tired that the extra money didn’t make up for how awesome I felt. Sorry, BFF Dave…

BFF Dave also says that fixing your financial plan is 80% behavior and 20% knowledge and I truly believe that. I know WHAT I need to do, I need to actually do it. It’s like saying you want to lose weight, but not changing any of your behaviors. You can’t lose 20 pounds and still eat fried foods, drink sugary drinks and eat massive portions daily. I can’t save money and pay down my debt if I lose focus and start falling back into some old traps.

Saving money + paying off debt = happiness (and a house in the future.)

Spending money frivolously + not paying down debt faster = failure (and no house in the future.)

I choose happiness over failure.

So, here’s what I’m going to work on this weekend:

-Organize my coupons.
-Plan my menu for the week and make a grocery list.
-ONLY buy items on said grocery list.
-Figure out the budget for April.
-Figure out the budget for the rest of March.
-Change direct deposit form for work so that $25 automatically goes into savings.
-De-clutter and go through items to see if anything could be sold at a consignment shop or on Amazon.

Final quote from BFF Dave, “I am not against the enjoyment of money. What I am against is spending money when you do not have money to being with.”

"One of the habits of highly effective people is that they begin with the end in mind." - Stephen Covey

I've always been a fan of figuring out where I want to go (the end picture) and working backwards to get there.

So, the end result = being debt free.

Alright, what debts do I have?

As of today, the 10-day pay off amounts of my debts include:

Toyota Financial Services for the Sportage ~ $8449.07
Direct Student Loan Servicing ~ $46,601.98

(It's ok to cringe at the student loan total; I did.)

This makes my debt total (if paid within 10 days; let's be real - the student loan payback amount is scheduled to be more like $85k. double cringe): $55,051.05

This morning, I made a lofty set of goals (I know, I know...more goals? Seriously? Yes, seriously. Don't judge me.) based off of my upcoming birthdays, the biggest, loftiest one being:

I will be student loan debt free by age 35.

There. I said it. It's in writing so it has to happen. I have 8 years and 9 months from March 2011 to make it happen. Also, that's 105 months, in case you were wondering.

Other goals include:

By November 2011 - age 27
-Be at goal weight (50 pounds to go!)
-Run a 5k
-Run a 10k
-$5000 in savings
-$1000 in my 'need to pay for it' fund (i.e. car taxes, tires, etc. - NOT the same as my emergency fund)

By November 2012 - age 28
-Maintain weight loss
-Have car paid off (will end up being 1 year and 5 months year)

2013-2018 include focusing on continued savings in various savings accounts :)

By November 2019 - age 35
*HAVE PAID OFF STUDENT LOANS*

Side note: I apologize in advance for all of the cool, fun things I may have to say no to along the way - dinners, weekends of fun, traveling, cable, internet, etc. But, I have some lofty goals to accomplish and my priorities are very clear. Thank you for your support and understanding!

Signed. Sealed. Delivered.