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.

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. 

Christmas Season

I have had several people asking me if I was going to send out a Christmas edition of the newsletter. I wrote several drafts but none seemed to feel right and then I saw "The Reason Behind Christmas", a short video produced by the The Church of Jesus Christ of Latter-Day Saints. The video sums up my feeling much better then I can put into writing. The link is provided below.

Merry Christmas!!

http://www.mormonchannel.org/video/mormon-messages?v=2874125972001

Buying used

"Buy used and save the difference" is the family motto of the Duggars. Stars of their own reality show, "19 kids and counting", the Duggars have been debt free for about 20 years and achieved that status long before their success as reality TV stars. I must admit that I learned this trick later in life. When I first moved out on my own the only thing that was used was my car and honestly that is because I didn't know about bank car loans. When I moved out of my parents house I bought a new television, stereo system, computer, and more. The funny thing is I bought my first computer on credit so that I could track my finances in Quicken!

Now my wife and I are frequent shoppers at thrift stores, Craigslist, and even free things from friends and family. We have also found it best to buy seasonal items (Halloween Christmas, summer clothing, etc.) at the end of the season since they are largely discounted.

Let me give you an example of how much you can save buying used . The first weekend in November, the largest subdivision in our town has a neighborhood garage sale. This year, our first living here, we went and browsed the sales. I was soon asking myself why I would ever pay full retail price for something new when I can buy it used for pennies on the dollar. The answer to that question is simple; I buy things new  because I want it now and am not willing to wait until I can find it for a good deal used. I want it now! Isn't that really the core of many of our financial woes?

Below are the spoils from this year's garage sale hunting. First I list the price we paid for it, then the item description, then what it sells for new.

$1.00 American flag and flag pole $16.97
$2.50 small shredder $20.00
$5.00 Children gate $70.00
$35 surround sound stereo system and DVD player $80 and up
$1.00 three pair gloves $4.00
$.50 Sidewalk chalk $5.00
$1.00 Play dough $6.00
$3.00 Books $50.00
$2.00 multimeter $5.00
________________________
$51.00 paid for $256.97 worth of items

It is important to note that for us our garage sale budget comes from the same budget that groceries do. Since we use cash for that category it keeps us from overspending.  So we will be eating more beans and rice for the next week until our cash envelope gets refilled.

Happy savings!

Weekly family financial meeting

We did it! We had a weekly financial meeting that didn't take over an hour.What is a weekly financial meeting? On Tuesday mornings at 5:00 AM Karoleana and I sit down with the laptop and review the past week's expenses, we insure they are grouped in the correct category, if it is a pay week we fill out the withdrawal slip for filling up our envelopes with cash and we write the tithing check, we discuss any items we need to prepare for and review the progress on our financial goals.

We started our weekly meetings in June of this year and initially it would take us about two hours and often we had some heated discussions. Even now, we occasionally have some heated discussions but they are certainly not full blown arguments and they are usually resolved within a few minutes. Do you have a weekly or at least monthly family financial meeting or does discussing money usually lead to an argument? Finances are the one of the top reasons for divorce. Just Google "financial problems in marriage" and see what comes up.

How do you improve your communication with your spouse so you can discuss finances without arguing. Below are some ideas.

1. Discover your common financial goals. Do you both want to retire with an income that allows you to visit children and/or grandchildren or to serve missions as a senior couple. Do you want to be able to help your children with the costs of college or missions. Do you want to live in a bigger home or go on nice vacations. Agreeing on the "why" you want to manage your finances makes it much easier to discuss the "how" to do it.
2. Gain a testimony of how Heavenly Father wants you to manage his resources. (Remember they are his resources, not yours!) Look up scriptures and conference talks about debt and finances and learn how the church manages their finances.  Elder Bednar's October 2013 conference talk, "The Windows of Heaven" is a great one as well as President N. Eldon Tanner's "Constancy amid Change".
3. Take some private time to ponder and meditate upon why you get stressed about finances. Was your family always struggling financially when you were growing up? Does the idea of managing your finances sound too much like 'controlling' your finances and you hate feeling controlled? Did you grow up with parents that had plenty of money and now it is hard to go without things you could afford while living with your parents?
4. Learn about finances and relationships. How much time do we spend watching our favorite sports or television shows yet we can't find time to read a book about how to improve our relationship with our spouse or how to manage our finances. One of my favorite books about relationships is "Men Are from Mars, Women Are from Venus: The Classic Guide to Understanding the Opposite Sex". My favorite finance book is Dave Ramsey's "The Total Money Makeover". (See me if you would like to borrow a copy).
5. Share what you learned with your spouse. Not in a preachy, "look how you need to change" sort of way but in a "this is interesting, what do you think" sort of way. I think of it like the difference between a golden retriever and a chihuahua. The golden retriever brings you a ball and drops it at your feet as if to say, "I would really enjoy it if you threw this, but I understand if you can't right now". The chihuahua jumps in your face, licks you to death, and barks constantly until you will do anything to get it to go away. (Sorry, if I offended any chihuahua fans.)
6. Find some help. Many years ago my wife and I were going through a tough time in our marriage and we went to see a counselor at LDS Family Services. Wow, that counselor had some great insight and to this day we still refer to some of the skills she taught us. Just like any professional, if you don't hit it off with them keep looking until you find the right one. Also don't forget your bishop is a great resource and you can always attend one of my financial classes.
7. Recognize all change is a process and not a destination. Just like everything else in life, we don't become masters of any skill overnight. It take practice. Remember practice doesn't make perfect, practice makes permanent so be sure you are practicing correctly.
8. Prayer - This probably should have been at the top of the list but don't forget to pray to Heavenly Father. Remember, as with many things in life, he may not remove the challenges we face but he will help us know how to deal with them.

Walmart's Ad Match Guarantee

One of our families favorite treats are pomegranates and this picture shows my wife's latest purchase of 45 of them. At Walmart's normal retail price of $1.99 each it would have cost a whopping $80.00. However, thanks to Walmart's Ad Match Guarantee she was able to buy them at $.33 for a grand total of $15.00. Yes, that is a savings of $65.00. On shopping days her grocery cart is full to the top of fruits and vegetables and usually the total bill is $75.00. Below is how she does it.


Tuesday - Preparation Day: Most of the ads are Wednesday to Wednesday and El Super has "Miercoles de Frutas" (Wednesday of Fruit) where their produce is discounted for Wednesday only. Most of the ads are online by 9:30 PM Tuesday night. Using each grocery stores "Add to List" feature she adds what she wants to her list and then prints it out. By the way, always have a shopping list as this saves you from 'impulse purchases'.

Wednesday - Shopping Day: Wednesday morning she goes shopping around 5 or 6 in the morning. Getting there early means she gets the fresh picking of the fruit and vegetables but the downside is there is usually only one or two check out people. Be patient with the check out person as they don't always have the competitors ads memorized and it takes extra work plugging it into the point of sale system. Also if you buy a lot of items that are Ad Matched be prepared for the check out clerk to have to call over the supervisor for an 'override'.

Using Walmart's Ad Match Guarantee means she normally only goes shopping one day a week and only at Walmart. Yes, there are times that they won't have a food item she wants but it isn't worth driving to the other store. Take a few minutes to familiarize yourself with Walmart's policy as the biggest caveat is for fresh produce and meat items the price has to be offered in the same unit type (lb. for lb.; each for each).

11-11-13 Update from Karoleana
El Super and Food City have killer deals on fruit and vegetables on Wednesdays so I go to Walmart on Wednesdays and usually walk out with a grocery cart filled to the brim for $50.  The other stores occasionally have some good deals but if you are short on time just look at El Super for sure and then Food City. This has REALLY helped our grocery budget! Happy saving.

Happy Shopping!!!

El Super 

http://elsupermarkets.com/zip-code-locator

Food City

http://myfoodcity.mywebgrocer.com/CircularMain.aspx?s=292147000&g=69e33c4c-f0ec-4800-94f1-2201ad317617&uc=1F3D3152&st=CBC978306

Safeway

http://weeklyspecials.safeway.com/customer_Frame.jsp?drpStoreID=1771

Bashas

http://bashas.mywebgrocer.com/CircularMain.aspx?s=292147426&g=df633706-c018-4358-a9d5-ad9c0d302e98&uc=B535B151&st=06FC78232

Frys

http://frysfood.mywebgrocer.com/Circular/FRYS-MARKETPLACE-679/006793393/Weekly/1

Albertson's

http://albertsons.mywebgrocer.com/Circular/Tucson-Silverbell-and-Speedway/B16278487/Weekly/2