Monday, May 21, 2012

Wheel of Life - Finances Interview

If you're anything like me, this is not your favourite topic.  I find money boring.  Well, not money itself.  I actually kinda like money.  But talking about it and budgeting and not spending it?  Ugh.

So, I'm not going to talk about money and finances and budgets today.  Sonja Sarr from Practical Stewardship (Faithfulness in Finance, Fitness and Food) is going to do that for us.  Sonja and her husband, Jonathan, were able to dig themselves out of a $38,000 pile of college debt.  Their story is inspiring and I'm so thrilled that Sonja agreed to talk about her financial philosophy with us.

What are some of your favourite money-saving tips?   
Paint yourself into a corner with your money.  What I mean is after you've paid your monthly bills, leave yourself a set amount of money in your bank account or envelopes (whatever system you use) for the rest of the month or pay period.  My husband gets paid once a month, so after our bills are paid, I leave $300 in our bank account for the rest of the month for gas and incidentals.  We pay groceries out of my piano lesson money, which is cash.  The remainder of his salary that is left over goes into a separate savings account.  The account is untouchable until we reach our goal, whether it be saving for a car or private school tuition, etc....    

This tip might sound really funny, but keep your kitchen clean.  Every night.  One of the biggest places in the household income we can cut is the grocery/eating out budget.  The easier you make it to eat at home by not having the dishes stacked up in your sink and actually knowing what food you have in your refrigerator, pantry and freezer, the more likely you are to eat at home and prepare nutritious meals.  We get into money troubles when we are not thinking about the future.  We should live in the now, and think toward the future.  

Save on gas and walk to places or carpool.  Our society says we have to have our own cars and drive everywhere, but it's simply not true.  Combine trips so you are not making several trips throughout the week.  

If people are stuck with large debt items (e.g. school loans, credit card debt), what are some of the strategies that you would suggest for tackling that debt?  
I believe you get into debt dollar by dollar, and you get out of debt dollar by dollar.  Every last dollar counts.  Make a financial goal.  I love Dave Ramsey's idea of paying off the smallest debt first. Paying down the debt can get sooo addicting.  When we were working on paying off the $38,000 in college loans and got under $1000, I would make weekly payments at times, because it was so addicting to see the numbers going down.  With my piano lessons I also had an envelop that after buying groceries, I would put all the "extra" cash into an envelop.  The money in the envelop was untouchable.  It would go straight to paying down the debt.  

What sort of internal dialogue do you go through before deciding on whether or not to make a purchase (big or small)?  
I am sure that you have heard this before, but I'll state it again.   We are trying to get rid of clutter around our house, so I ask "do I need this?"  "Will I really, honest to goodness, use this?"  "Would this money be better spent in my cash envelope to pay down the debt?"  If I am at a store and haven't already determined that I am going to purchase a certain item, I will walk away from the item I wish to purchase, and figure I can always come back to it if I really need it.  

Are you a fan of budgeting?  How do you manage your own budgeting?  
I am fan of budgeting, but I do it loosely.  I think you need to know where your money goes.  All the time.  Keep the checkbook balanced, too. I won't walk out of a store until I have my checkbook balanced.  I always need to know how much money we have for our incidentals. 

Are there any other tips or ideas that you would like to mention?
If saving money and paying down debt is hard for you, determine in your mind to do it no matter how difficult the storm is.  I think true, lasting change is slow, so commit to changing your spending habits on one thing and then keep adding a new change every month.  Going cold turkey often doesn't have staying power.  But, sometimes you have to get REALLY aggressive to get out of debt.  We need to hold possessions loosely and realize what is most important.  Is it really important to have all this stuff?  Stuff doesn't make us happy, although it might seem like it temporarily.  People and relationships makes us happy. 

A great big thank-you to Sonja for lending a little insight into an effective way to manage our finances.  If you are looking to follow Sonja (and Jonathan), here are a few ways to do so:

What are your favourite money-saving tips?


Danni@SiloHillFarm said...

I was kind of dreading this topic on the wheel...but I actually enjoyed this post! Such sensible suggestions. I find it almost impossible to do a budget with my husband working on commission only. Seems like it's feast or famine. But, I found some ideas here that are helpful! Thanks!

Adrianne Surian said...

What a great tip about keeping the kitchen clean... GUILTY! The first thing we say if we're tired is, "let's just go out".

If anyone out there has a budget-phobic partner like I do, though, I found that running a list of where our money got spent for the week and keeping ONE immediate and attainable goal front and center (like, the car needs new brakes this week, or we are going to save an extra $100) got my husband thinking much more budget-friendly. Trying to envision the long-term goals overwhelms him.

Great share, Terry!

Rosemary@villabarnes said...

Great post! Yes, it is a difficult topic to face, but we all need to think about how we spend our money. Especially nowadays. I've always known how to be thrifty, but the trick is to keep that going when your finances are in an upswing. I slip there sometimes.

Unknown said...

I love how she says how you get into debt one dollar at a time so you have to get out of debt one dollar at a time too. Great post! Budgeting is something we are always working on at our house.

Macey said...

My fun money envelope would be really tiny.

Gloria said...

Great post! Build up an emergency fund, because things always happen and then you can breathe easier if you have a money cushion. Also, use that fun money it's important to let off steam and make merry sometimes ♥

Pam @Threading My Way said...

I like the tip... ask myself whether I really need it before I purchase. This is something that I do and it does work if you are determined and have will power.

Mindy said...

I liked this post. I'm still working on the other half to implement the envelope system.

Anonymous said...

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Anonymous said...

Thanks, Terry, for interviewing me! I wish everyone many blessings on their journey to get out of debt.

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