Debt Free in 2016!!!

We did it! In February of 2016 we walked into the bank and paid off our mortgage!  It was the last debt we owed and the culmination of eight years of "gazelle intensity". It was also very anticlimactic. The bank doesn't bring you a cupcake or have the branch employees gather around you and sing a song. You get a piece of paper telling you the mortgage is paid in full, that they will mail any escrow balance to you, and that you are now responsible for paying the property taxes and home owner's insurance. The branch employee handling our transaction did tell us congratulations! No matter how boring the bank made the transaction we wanted our children to know that it was an important day so we took a family photo of everyone holding the letters "DEBT FREE". However, getting the three year old to cooperate meant it ended up spelling "DEBT FREW"!

Are our lives much different now? Not really, we had already learned to live on a budget and paying off our house just meant we had more money to budget. It is great to finally start putting money into our house repair/remodel category.

So if living debt free seems like a dream let this be a reminder that it is possible!

What our children really want for Christmas!

The Thanksgiving and Christmas holiday seasons are probably the easiest times to over spend. Often we think our kids need or want the latest gadget, games or gizmos and really all they want is our time. Think about this simple truth as you enjoy a reminder from the folks at IKEA.

2015 Update

Much has changed since my last blog entry over a year and half ago. As a member of the Church of Jesus Christ of Latter-Day Saints,with a lay clergy, I accept various responsibilities to serve in my church. When I began this blog I was teaching a financial management class to our local congregation, called a ward. My duties changed from teaching the class to working with our missionaries to now assisting the leader of our ward, known as a bishop, as one of his two counselors. While I love this opportunity to serve it is very time intensive. In addition to that my wife and I have 7 children so we are a little busy!

Even with all of the changes I haven't lost my passion for personal finances and I am happy to write that my wife and I are on track with our goal of paying the house off (currently only $13,000 remaining). While I had hoped to do it on my birthday, next February, it will likely be later in the year! Either way, not a bad place to be at age 45.

Once the house is paid off we will take that money and put it towards retirements Has it been easy working towards this goal? No, but it hasn't been as hard as I would have thought. I have been very fortunate to have a wife who shares the same goals in life so when I am weak she is often strong and vice versa! Without her we would never be able to achieve our financial goals, especially with such a large family.

Over the years we have used various computer programs, spreadsheets and web sites to help us keep track of our finances. Some worked better than others but all seemed to be missing something. Earlier this year I started using You Need a Budget (YNAB for short) and LOVE it for creating and maintaining a budget. While I am a big fan of Dave Ramsey, and even tried his EveryDollar web site, I found I prefer YNAB's four rules and software especially since it focuses specifically on the budgeting part of finances. They offer free training classes and I like following them on FaceBook. You can even check out the owner's Wednesday Whiteboard videos. If you decide to purchase you can save $6.00 and I can earn $6.00 by buying it here. They will be switching to an annual subscription plan, however the software you purchase will still be usable but you won't be getting all the new bells and whistles. You can read more details about it here.

Happy Budgeting and Just Learn To Grown Debt Free!

Finding More Money to Apply Towards Your Debt

After you have made your budget you may find that you just don't have any extra money for paying your debt off faster than making the minimum payments. Now is the time to get focused, a little creative, and crazy!

Many years ago I served as missionary for The Church of Jesus Christ of Latter-Day Saints for two years in the area south of Santiago, Chile. I began in a small rural community called Peumo. I remember visiting people in homes that were about 30 feet by 30 feet with only two interior walls enclosing a 4 foot by 4 foot bathroom (see diagram below). It was not uncommon to see a husband, wife, children, and sometimes a grandparent all sharing the same house often with only a sheet hanging from the ceiling to provide privacy for the married couple. Some homes had a television, all were older models, and most people did not have telephones. Most people rode bicycles or took public transportation anywhere they needed to go.

I tell this story so you can seriously look at your budget and ask yourself what you can do without for a while so that you can eliminate your debt! Ask yourself what do you HAVE to have versus what you WANT to have. Do you really need cable television, Netflix, a data plan on your cell phone, and to eat out for lunch? Hey go crazy, how about cancelling your cell phone for a year or two while you get rid of your debt. We had a friend co-present at one of my financial management classes and she has never owned a cell phone. Think of the money she has saved over the years by avoiding this financial stalactite.

When my wife and I decided it was time to get our financial lives in order we realized we were in a house that was too big for our britches. While we loved the neighborhood and the house the 30 year mortgage didn't fit into our financial plans. It was a sacrifice to move but the definition of sacrifice is the act of giving up something valued for the sake of something else regarded as more important. The financial peace we received by not having such a huge mortgage has been well worth it.

Your sacrifice doesn't have to be forever, just long enough to eliminate the consumer debt and get you back in charge of your finances. So if you feel like you don't have any extra money I want you to think inside the box, that is, remember a 30 x 30 box where people live very happy lives without much of the 'stuff' we 'need' in our lives!

Just Learn to Grow Debt Free!

The dreaded B word - Budget

When I teach financial management classes I love to look at the attendees faces when we talk about budgets. Some actually grimace at the very mention of the word. Then I ask them to share words they associate with budgeting. Constraining, stressful, dreaded, limiting, and painful are just a few. I usually have one or two attendees from a previous class in attendance and I ask them to describe how they now feel about budgeting. Empowering is probably the most common. Empowering, really, a budget can be empowering. Yes, because you are telling your money where to go instead of watching where it went.

Last year Dave Ramsey's national radio show started doing a live video feed of the program at http://www.daveramsey.com/show/videos/. Whenever I have the time I try to listen to the program and have noticed a pattern, even Dave points it out. Everyone who is debt free has one thing in common - A budget!

How do you begin using a budget?  First, I recommend going to Dave's web site and downloading the quick start budget. This is a very simple and basic budget that won't overwhelm you on your first attempt. It just covers the basics and gets you familiar with the concepts. If you are married use this as a good starting point to learn how to work together as a team.

Next it is time to work on the the Monthly Cash Flow Planning found on the same web page. This is where you write down everything and begin to really tell your money what to do. You will spend more time on this form than you did with the quick start budget. Make sure you include everything in this budget. For you debts write down the minimum payments and later we will figure out how to pay them off faster.

Congratulations, you have done your first monthly budget. Now every week review it to make sure you are on track and before the beginning of the next month create a new one for the upcoming month. As you become more comfortable with creating a monthly budget you may decide to shift to different format than Dave Ramsey's forms. The important thing is to find what works for you.

Happy Savings!

Who am I? Meet Mr. JLG Debt Free

Who am I? Why did I start this blog? Where did I learn so much about managing finances?

Who am I?
The name is Jimmy L. Gay, hence the "JLG" in "JLG Debt Free". A few years ago I also found an acronym that I like to apply to my initials, "Just Learn to Grow". I believe God sent us to earth to learn to grow and improve ourselves. Constant learning is one of my hobbies and sometime ago my wife and I realized we were not heading in the right direction with our finances. We finally decided to get our financial house in order and discovered what peace can come into a marriage when you don't have frequent disagreements about money. I became so excited about the positive changes in our lives that I broke one of the cardinal rules of civilized people and started talking to people about money. What I discovered is that many people, like my wife and I, didn't know how to manage their money and were looking for help so I started a weekly lunch time discussion group at work and was surprised that many people came and were eager to learn.

Why did I start this blog?
After the success of the financial discussion group at work I started offering a series of classes at my church and continued to be amazed at how many people were thirsty for the knowledge of money management. While teaching this class I asked myself why I was being so selfish by only sharing what I knew with those who live in my community, why not open it up to the world. In addition, I am always looking to improve my writing so what better way then to post it where countless numbers of people could critique it!

Where did I learn so much about managing finances?
Stephen R. Covey says,“When you engage in work that taps your talent and fuels your passion that rises out of a great need in the world that you feel drawn by conscience to meet -- therein lies your voice, your calling, your soul’s code” I believe helping others learn to manage their finances is my "voice" and I spend a lot of time to be knowledgeable in the topic. I read blogs, news articles, books, and talk to people about finances. I am also married with 6 children on a single income so much of what I teach we have applied it in our own financial lives.

Financial Stalactites - One Drop at a Time

When I was younger I enjoyed spelunking. If you aren't familiar with the term it is the hobby of exploring caves. One of my favorite things to find is a stalactite which is created by the constant dripping of mineral rich water. There are some expenses that I like to compare to stalactites because while they seem small their ever constant dripping adds up over time. Eating out once a day is a good example. Assume you spend $5.00 each day, you work 5 days a week, 48 weeks a year for 40 years. $5.00 x 5 x 48 x 40 = $48,000. Now that may not seem like such a big deal, especially since it happens over 40 years.

Now imagine that same amount of money invested over 40 years making a 5% annual rate of return. Would you care to guess how much money you would have at the end? $164,892.00. Go crazy and dream that you could make a 10% rate of return and you would have $632,907.00.  (For an easy online calculator click here.)

Now if you don't think this applies to you because you don't eat out every day I challenge you to find the financial stalactites in your life? My wife realized that hers was a cell phone. She had an iPhone and by the time we paid for the talk time, texting and data plan it was $43 a month. That breaks down to almost $10 a week which if invested could be from $65,957.00 to $253,163.00. (Stay tuned for a future article about how to save money on cell phone bills.)

As you look for these wealth killers remember that the average person makes over $1,000,000 in their 40 years of working (35,000 per year * 40 years = $1,400,000). The challenge is that the money doesn't get delivered in one lump sum, it trickles in drop by drop. What are you doing with your drops?

Happy Savings,
Jimmy

P.S. Feel free to post your thoughts and comments on the blog.