The bills are coming! The bills are coming! Tucked between dusty holiday greetings and New Year Party invitations, the reality of the budgeting bottom-line waits for us to finish our bonbons and eggnog.
Almost exactly a year ago, I quit working outside the home so I could be more available to my kids. It didn't take long to realize that part of my new "job" required saving money anywhere I looked. As any new employee, I needed a training manual.
Dusting off a copy of Dave Ramsey's "Total Money Makeover," I read it cover-to-cover. A woman I "ran" into on the PA Turnpike actually sent it to me. Actually, another man ran into her, creating a minor collision by the tollbooth at King of Prussia. I saw the accident and left my address as a witness. She sent me the book as a thank you. A year later, I sat reading valuable insights that would refocus and guide me along the path to financial freedom. Note that I didn't say I have arrived. Life is a journey and learning self-control in all areas takes discipline and commitment.
Ramsey outlines seven baby steps to financial freedom, starting with saving $1000 in an emergency fund. If you spend it, you do whatever it takes to save that amount again. The next step is to pay off debt using what Ramsey calls the Debt Snowball, paying off little bills first and working your way up to the big ones.
Pausing to elaborate, these first two steps take some serious brain retraining if you are not hip to the frugal hype. Frugal is IN now. With economy troubles, families are turning to the traditions of their parents and grandparents to pinch pennies.
The first two steps are where the accountability becomes real and families have to decide where to cut to keep from going into debt or to pay off debt or both. Ramsey suggests taking a small notebook and writing down everything spent — at least until you are able to sort the categories, compare it to your income and know exactly what has to be paid, what can be postponed and what can be cut.
Ramsey's initial suggestion is to use a cash-budget system. After accounting for all fixed costs, create an envelope system for groceries and miscellaneous expenses so that when the money is gone, it is obvious that you are going to have to wait until more money comes in to spend again. Some people use credit cards for everything so they can earn travel points, etc. Credit cards can cause a lot of trouble. If you have control over your finances and you are paying your card off every month without accruing finance charges, the points might be worth the effort. However, if you are not, then a cash system might more advisable until you get control. It creates a tangible reality of how fast cash goes and how that $1 extra topping at your favorite ice cream shop could have paid for a half gallon of ice cream or a box of spaghetti noodles for your family at the local discount grocery outlet.
Ramsey's next steps include doing anything it takes to create a savings of three to six months worth of expenses, investing for retirement and children's college, paying off one's home early and building wealth.
In today's world, these steps are critical to our lives. I am not a guru of couponing yet– but there are many sales and discounts out there, if you just keep your eyes and ears open to the possibilities that can help you achieve your financial goals.
Begin the new year by enjoying the simple things of life — a child's laughter, a favorite tear-jerking movie on DVD, and time with family and friends. Those moments are priceless.
Article edited from original run in The Phoenix.
Photo Sources: alykat and cafemama
Sarah Peppel is a professor of "Writing for the Media" at Valley Forge Christian College, co-author of a budgeting handbook for single mothers, a featured storyteller at www.StoryofMyLife.com, and online blogger of product reviews and frugal tips. Her everyday blog is Genesis Moments and she contributes reviews at Reviewsings.com
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