Monday, October 24, 2011

Money Monday: Making the Tough Decisions


It's Monday...so you know what that means....it's "Money Monday," and I get to update you on how the week has gone with our commitment to dump our debt and build wealth with Dave Ramsey's, Financial Peace University.

Before I get to what we learned in last night's class (week 5 of the series), I'll to share a couple of things that happened this past week during week 4: "Dumping Debt: Breaking the Chains of Debt."

As I mentioned in previous posts, we're in a considerable amount of debt. We have two high balances on "zero interest" cards and a home equity line of credit from replacing the roof on our house. When we finally put the numbers down and added them up, I was stunned.

And then overwhelmed.

And then felt hopeless that it could be changed.

I don't feel that way any more. Sure, the figures are still the same. But, my mindset has changed. True, the "bury our heads in the sand" approach wasn't going to last forever. However, now that we have faced those "demons" and have a plan of attack, not only do I feel hopeful, I feel like those demons are going down!!

After going through our budget, we found that we were able to free up $185 a month by temporarily ceasing to fund our retirement and children's education funds. While that is hard to do, that money will be better served to get us out from under this debt. If we focus all of our "extra" money minus living expenses on that debt, we can eradicate it in 2-3 years...maybe less. Then, at that point, we can not only start funding those important savings accounts, we can fund them even more!

We also had to make that tough decision to pull our son out of preschool and use that extra $225 a month to get us where we need to be. I really struggled with this one. We were able to give our two older children (both girls) two years of preschool -- the first years consisted of two days a week at a private preschool for "enrichment" and the second was the state-run five-day a week preschool that they qualified to attend for free. The first year was like our "gift" to them to get them interacting with other kids and providing that socialization outlet (as well as some light educational work). The second year was more material and is really a Pre-K prep program.

This year, for the first time, we didn't qualify for the free program. So, I we re-enrolled our son at the private preschool he was at last year. We shouldn't have. We struggled last year to make his tuition payments. I was so grateful when June rolled around and we didn't have to pay that expense any more. But, when we realized he wouldn't be able to go for free this year at our neighborhood school's preschool, and we couldn't afford the $400 fee, we continued with where he had been going.

To be honest, part of it is my level of comfort with the notion of "homeschooling." It's pretty much non-existent. I don't feel equipped or able -- which I know is pretty silly. I'm a college graduate. I read. I'm educated. My husband is a teacher. I just feel... inadequate. Overwhelmed. Second rate.  Plus, there is a real component of feeling overwhelmed with all my "mommy duties" plus other children who need me.

So it's not easy at all. There is so much more "subtext" to these decisions of letting go and re-routing money. Don't discount "feelings" rising up when you look at doing something similar. I would highly recommend getting third-party opinions and insight from people whom you trust. It's invaluable. My friends are the best. They told me things like, "You can do this."  "I'll help you if you need it." "He's such an easy going child (true) and he loves to do "homework" when he doesn't even have any assigned!"

Mostly I needed to hear..."you are not a bad person or mother for taking him out of preschool. He will survive."

And especially, "there are children starving in this world. Preschool is a luxury."

So very true. It's all about perspective.

When I finally got up the "nerve" to call the administrator to tell her of our decision, she was so gracious and supportive. Although I offered and fully expected to give and pay for the two-weeks notice (meaning we would have to pay for one week's tuition since this month was already paid for), she was kind and said we could stay through the month and then be off the hook for that extra week.

It's amazing what God will do for you when you take that leap of faith and do that thing you stress out about doing. I feel lighter. Especially since this morning, my son told me out of the blue, "I don't want to go to school." Since I know he tends to enjoy it, I asked him why. I didn't fully get much of an answer, but as I asked him if he would be okay with not seeing or playing with his friends at school anymore, and working with mommy on his homework at home, he nodded yes. As we walked to the entrance he told me, "today is my last day at school, mommy!"

I don't know where that came from, but it made my phone call easier.

I'm telling you...I could not live this life without God in it, over it and all around it. I wouldn't want to, either!

The crazy part is by reallocating these two budget items and paying the minimum on our mortgage (we were paying extra), we freed up $485 to pay towards our debt each month. It's almost shocking to see that amount when in my mind we were "so poor." I get that savings is important. Preschool is important.

But living is important.

And obviously, we were slowly strangling the life out of our family and future by the way we were doing things.

So, these choices are not always easy. But, I feel confident that the couple of years we will be hunkering down and paying things off will be worth the sacrifice.

And...we are continuing to see the provision of God in different ways.

One was that my sister and her family switched to our cable provider. Because they were kind enough to mention us a referral source, we're getting a $100 credit on our bill -- starting next month!! Basically, we won't have to pay a cable bill for 2.5 months! I love it! So timely...and so helpful in getting us off to this amazing start. I just had to laugh when I saw the email a few days ago letting us know that it went through.

Another is that we sold another "baby/toddler" item this past week. Another $30 to the Emergency Fund and someone else gets to enjoy it.

Also...it's getting a bit exciting to collect the day's mail. We never know what check, coupon, or freebie we might find in there! This past week, we received another "rewards card" for purchasing a certain amount of items in from a Cars 2 promotion. It's stuff I would have purchased anyway, and the $10 pre-paid card is nice and actually needed.

And finally, we went on that birthday date, courtesy of my mother-in-law. At my favorite restaurant, we ordered two entrees and an appetizer. However, we opted against ordering "adult beverages" as we do from time to time on special occasions...and if money allows. We both decided to stick with water, and although Rylie was looking forward to having a beer with dinner, he didn't order one. As we were talking, I saw one of the waiters walk towards us with a glass of beer. He asked if we would like to have it complimentary because there was a mix up with an order at another table (at which happened to be one of Rylie's co-workers with whom we had chatted when we first arrived) and they suggested it be given to us.

I had to laugh at the notion that God would bless Rylie with the beer he wanted -- without us even having to pay for it. We had a good chuckle over that one.

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So, continuing on to week 6's lesson, "Credit Sharks in Suits." Last night at class we learned about how to deal with persistent and overzealous creditors that pester and heckle you into paying what you owe. Ramsey is definitely a proponent of paying your bills. However, he is also a fan of being proactive about how you plan to do it and not letting scare tactics dictate when and how you pay the creditors off.

He urged us to remember to set our priorities by the "Four Walls":

1. Food
2. Shelter
3. Clothing
4. Transportation

Ramsey advocates making sure that all of these things are paid first. Not only will this keep you from being foreclosed on and or going hungry, it will put you in a good frame of mind to be able to attack your plan with confidence and a measure of comfort. He said too often people will skip a mortgage payment to pay off a debt collector, but end up losing their house -- and their peace of mind.

He also share the Federal Fair Debt Collection Practices Act, which is a law to protect the consumer from unfair collectors -- this included calling at all hours of the day/night, calling you at work, threatening illegal actions (like garnishing your wages), etc. If you are being hassled by debt collectors, you need to familiarize yourself with your rights under this legislation.

Although good information, I'm glad that we have not been down this road of debt collection. From what people shared in our small group, it can make one of the most stressful times in your life (in debt) even worse.

One thing we did find interesting was his take on the FICO score system that we've all bought into and how we work so hard to get and keep that credit score up. He said that it is an "I love debt score and not a measure of winning financially" since it's based up on the debt load you carry, your debt history, and how often you add in new debt.

Ramsey does not even have an available FICO score because he has zero debt on which to base it. His point is that if you eventually have enough income and savings to do away with debt in your life, the FICO score becomes irrelevant. You simply don't need it, because you don't need to incur any debt.

A novel idea and definitely some food for thought.

Which reminds me...I found a FREE 18-page booklet on How to Be Debt Free for the Holidays. Every little bit helps, right?

See you back here next Monday to talk about the lesson for week six, "Buyer Beware" The Power of Marketing on Your Buying Decisions."  I feel convicted already! ☺

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Related Posts About Our Financial Peace Journey (in order):
http://www.mosaicmomma.net/2011/10/financial-peace.html
http://www.mosaicmomma.net/2011/10/my-god-wink.html
http://www.mosaicmomma.net/2011/10/peace-like-river.html
http://www.mosaicmomma.net/2011/10/introducingmoney-monday.html
http://www.mosaicmomma.net/2011/10/introducingmoney-monday-part-two.html

For more info on Financial Peace, visit:
http://www.daveramsey.com/fpu/preview/


For info on Inzolo -- an online and mobile "envelope system," tool, visit:
www.inzolo.com

For more info on The Blessed Life, visit:
http://theblessedlife.com/

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