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.

New Year - A Time for Changes

I am writing this while riding on my exercise bicycle. It is the new year and I love to do new things. Exercising is one of those things I know I should do more of but I always have one excuse or another for not doing it. I have a bad spinal disc so walking or running are not options for me but I do love bicycle riding. However, I feel guilty for spending 30 minutes or more but not accomplishing anything else at the same time. A few years ago I saw a video article about a wealthy millionaire investor who had a custom exercise bike designed for him so that he could manage his stock portfolio from several large computer screens that were next to his exercise bike. After seeing that I always wanted to be able to do the same thing. Since I work at a desk job I thought it would be amazing to be able to exercise while I work!

So this week I decided I now had all the pieces necessary to be able to exercise while I work at the computer. I have a wireless keyboard and mouse, a dedicated office space (so kids don't mess with stuff), a recumbent exercise bike (purchased a few years ago and not used nearly enough). All I needed to do was to hook up some sort of shelf that could hold the keyboard and mouse and a way to move a computer monitor close enough that I could use it. So I spent a few hours with my trusty power tools and built myself a solution. As you can see it is not elegant or made from fancy materials but it works. I am actually typing this blog entry while sweating to my favorite workout tunes!

What does this have to do with finances you may ask? Several things.

1. Don't be afraid of ugly. For many years my wife and I lived in a beautiful new home but since it was so beautiful I didn't do any modifications to the house because I didn't want to ruin the brand new house look. Now that we live in a 40 year old home that needs some work I am not afraid to cut out some sheet rock or anything else to make it work better for my wife and I. Budgets are like an old house, they are not perfect and as such you will constantly be making adjustments to them. Don't be afraid if they are "ugly" to others, the important thing is that it works for you. Our family budget is kind of ugly, we use a combination of mint.com and a spreadsheet with a ton of worksheets. It may look ugly to some but it works for us.
2. There isn't necessarily one right way to make a budget. I have learned that while there are building codes and laws regarding remodeling and construction there is still a lot up to the builder as to how they accomplish the goal. Some people struggle with perfection or doing it the "right" way. Finances do have certain laws and codes, for example, you can't spend more than you earn for too long before it catches up to you. But there is much that is up to you such as how do you create your budget (paper, spreadsheet, computer program or web site), how often you meet to discuss the budget with you spouse, etc. Your budget and your method of budgeting will never be the same as someone else's so find what works for you.
3. You will screw something up. While building my shelf I had saved a piece of wood for one purpose then accidentally screwed it to something else. Yes I measured twice and cut once but most of the time life still happens. Your budget will be the same, no matter how much you plan something will sneak up and surprise you. Don't be upset, just move with the punches. Like anything else, the more you use it the better you get at it. 
4. Time and experience - “That which we persist in doing becomes easier for us to do; not that the nature of the thing itself is changed, but that our power to do is increased” Ralph Waldo Emerson. I think this is the hardest one for people to understand. Properly managing our finances takes time and effort. Not only do we spend time reviewing our budget and making sure we are on track but we also research methods for saving and investing money and looking at our lives and predicting what some upcoming expenses may be that we hadn't planned for. I don't know of many successful businesses that don't have at least one person who spends time managing the finances.

So this year decide to make a change. Be in charge of your finances.