This is has been a huge topic in our house lately... and really for the last 8 weeks I have almost been obsessing about money, budgeting, and saving money. I would say we are having a "money make over."
I have almost started to talk about this several times because it has been such a big part of our lives recently but it is a hard topic to tackle without getting too personal about your finances on the world wide web.
But basically 2 months ago I would have considered myself a very money smart and money conscious person... but I was wrong. I thought I was good at managing and budgeting money. But I was wrong. I realized I have been managing my money wrong for a long time and I glad that I am realizing this at 29 and not 40, 50, or maybe never.
My husband is a small business owner and this has always made budgeting a little hard for us -- as his income and expenses change month to month. Because of this we were not budgeting all of our money and in return we were wasting a lot of money that we really weren't aware of.
2 months ago I thought I was doing a good job with money by paying all my bills (always on time never late), putting a % of money in to retirement, and putting a % of money in to savings. Sounds good right?
Bills check, savings check, retirement check. GREAT! ... nope.
But what about the leftover?! Well I thought there wasn't much leftover so food, clothes, entertainment, whatever I wanted. So I just blew threw the leftover money because I didn't think it was a lot and I had already put money is savings and retirement, so it was my money to do what I wanted with!
This is DUMB and this is a huge mistakes. I feel must people probably make this mistake and don't even know it is a mistake! That's what I was doing!
Having two more kids and becoming a family of six put a financial stress on us. Right now two more kids isn't costing us anything compared to what having four kids is going to cost us in the future. Right now the added cost have been an additional vehicle that can hold our entire family, the added car insurance, their hospital bills which totaled $3800.00 (we have REALLY good insurance, that's for my hospital bed rest, c-section and two babies in NICU for 2 weeks), diapers, wipes, and formula.
We have spent very little on baby clothes and equipment because we already had so much from our first set.
So these added expenses and the knowledge of how much more expensive they are going to get with time has really motivated us to live our lives differently and spend our money differently.
I already mentioned that I was good about paying my bills and putting money in to savings and retirement... one problem with this was that I would blow the rest of my money.
I started following Dave Ramesy money management program and have turned my budgeting and money savings around totally. While I do not 100% agree with some of his theories I will say he has totally changed my thinking about money.
One thing I have been doing wrong with my money... was I had no accountability for my leftover money... because I didn't think it was a lot and I had already taken care of bills, savings, and retirement. Because of this I wasted money. Also this seems so dumb to me... but really I always felt like I didn't have money to do more... I was only paying the minimum payment on my debt... dumb.
I have been whining about my student loan payments for 5.5 years now and for 5.5 years I was only making the minimum payment (on the standard repayment plan), the same thing with my car loan, always only made the minimum payment. For whatever reason I never thought about paying more.
I have been using this
loan calculator to calculate if I make an additional payment of X amount each month... it will show you how much faster you will pay off the loan and how much less intrest you spend = saves money.
Just by taking out $50 of your extra money a month you could save so much in intrest and get rid of those stupid loans faster!
I have also been using Dave Ramesy's zero based budget... which means you budget and spend every cent you make on paper. With this method you really do save money and realize you have more money than you may think! With the zero based budget you budget everything, food, gas, clothing, entertainment, etc. So that you know what you are spending, you are not over spending, and you are not wasting... you are saving!
Another thing I have realized is that while I was saving money... putting money in savings and retirement... I was also doing this wrong. I have way too much money in retirement and while this does not sound like a bad thing it just shows I have been managing my money wrong.
My retirement account will of course come in handy later and I will be glad I put so much in so early on in my career. However, I only wish I had been doing the same for my savings. My retirement account is money that I can not touch and this account has way more money than my savings account... I am working on evening out this gap so that I can have access to money in the event that I need it... like maybe for this new house we are dreaming about!
We have been making a lot of money changes around here since budgeting hard core and without talking numbers we have put more in savings than we have in a long time and I have even knocked out some off my smaller loans (by "snowballing" them), bringing my minimum payments down! Whoop Whoop!
My husband really felt the stress and need to make more money with adding two more kids in to the mix, and for months he was obsessed with getting more business and making more money... which is good.
But then I read something that made me realize that making more money wasn't necessarily the answer. In many cases more money means more problems. More money means bigger spending, more debt, and more wasted money.
That's when the light bulb moment hit we have to learn how to budget and save our money differntly. We have to learn how to cut expenses and live smart off our money... and that has lead us to this point.
I will continue to share all the ways we have cut expenses and started to save money around here. But if you haven't read Dave Ramesy money theories/budget strategies you need to now. Just do a quick google search and you will find tons of stuff on him.