You people are amazing, you know that? I have received so many kind words and even more questions regarding details about our family finances after I posted “How We Saved 14K in Less Than 12 Months.” You have been sharing the love so much I’m just melting. So yay! I’ll be happy to tell you more, and you can take it or leave it, no harm done. I love talking about money (cue, me pushing up glasses by the nose piece). I received quite a few questions, but what I’ll cover today was by far the most common. When I say it you are probably going to close this post because your little devil shoulder angel whispered in your ear, “Seriously? That’s it? Lame….” But it’s a good one and it makes a HUGE difference. So listen to your good shoulder angel (me) and keep reading. Plus, the devil doesn’t want you to be a financial boss anyway, but I totally do.
Think about what makes you the most stressed about your finances? I would dare say that most of you feel a great deal of stress on a “month to month” basis (since you asked about it). Each month when you have to pay the bills, you feel this loom of darkness settle in your chest that feels like a death eater parked itself there for a nice slice of apple pie. Thoughts run through your head like, “How on earth did we spend that much on our credit card this month?”, or “We seriously spent $200 on fast food?” or “Are we going to be able to pay the mortgage?” Sound familiar? It does to me because last night I was lying awake thinking about the same things. We have some goals as a family and these last few months have been tighter than my volleyball spandex used to be. I say “used to” because now-a-days the derriere seems to be a bit more on the pancake side instead of the spandex worthy side. TMI? Very sorry. Anyway, these same thoughts were running through my head, but most importantly, in the middle of my worries I had this thought: “Man, someday we are going to be making so much money that I can finally be stress free!” Followed immediately by this thought (thank you Holy Ghost): “Yeah right, if you were making more money right now, you would probably be in a bigger house and pushing your income limit. Stick to your goals. They’re better.”
Which is so true! It doesn’t really matter if you make 50K, 250K or more, you probably build your lifestyle to push the limit or beyond and you still feel strapped. 250K is a whole lot more than 50K, but 250K still feels strapped if you spend it all. Yes, there are people that have a bigger income and are not pushing the limits (this is who we are striving to be), but the majority of people just push more into their month to month bills. More money isn’t the solution.
There is a misconception today that makes people believe that “more money” just means that you can “afford” to add a monthly payment for, say, a boat. You can “afford” to add a bigger monthly payment for a nicer car. You can “afford” to buy nicer or more clothes. Nope. Once your bases are covered, that “more” money should be where you move mountains! Do Aaron and I want a new vehicle that doesn’t sound like my Ninja blender? Of course! But we are not willing to add another monthly payment so we make do or do without, for now. Our little car has four wheels and gets us to the same place a new car would anyway. The key is, if you can learn good money habits before you have “more” money, then you will be unstoppable (for the better) when you finally do have “more” money. And boy am I cheering for you because money can do a lot of good in this world!
Ok, so here is another financial rule that Aaron and I live by, and also have been ridiculed for (which, remember, means that we are probably on the right track).
(Isn’t he handsome??? I whitened our teeth… don’t they look fabulous?)
Pay For Things in “Full.”
Or another way to say it is “Pay in Cash.”
This rule has been great for us because first, if we don’t have the available resources at the moment to pay in full, then it forces us to say no or get creative and find a solution, and second, it doesn’t add stress to our month to month budget and bills. Catch my drift? Here is an example. When Aaron and I were looking to buy our house, we were informed that the main sewage line had roots through it which caused the sewage to back up and flood the basement. Mmm… sounds like a dream doesn’t it. We did our best to get it worked out with the seller before purchase, but alas, it ended up in our lap to get it replaced anyway. Long story short we paid roughly six grand to get it fixed. Poopy, I know.
Now six grand isn’t pocket change. I would dare say again that most of us wouldn’t even have that much cash laying around. I say that because I read this survey, then spent the rest of that day picking my jaw up off the ground. See how important emergency funds and savings accounts are?? But, even if we did have 6K cash we would definitely be tempted to pay it in monthly payments and not fork out 6k all at once. My advice however? Pay the entire amount. Why? Because where do we feel the most stress? Month to month. Now adding 6 months worth of 1000 dollars a month (or another amount) is only going to increase that stress. And what if you forget to pay it one of those months and you get charged interest? Now you are paying more than 6k. Or what if something else happens, like, you forgot about registering your car and haven’t saved for it. Now you are paying an extra bill, plus a forgotten one within the same month to month cycle. Stressful! See how it seems like it would be beneficial to you, but in reality it’s just a headache? Most of all, pay in full because it takes the chains off of you. Seriously it’s a much worse feeling being financially indebted to someone then it is to give up the chunk of cash from your pocket.
This is a simple rule, but it is not simple to do. Nobody is on your side! Everywhere you turn you are being encouraged to only make monthly payments on something. Retailers love this because chances are they are going to make a pretty penny off you by charging interest. You can have the nicest phone available, but it may not technically be yours since you can “have the Google Pixel for only 24 bucks a month” (a real advertisement I just saw) and just add it to your monthly phone bill. That’s two years of an extra 24 bucks month to month. Bleh.
A lot of places have “12 Months Interest Free” promotions as well. They wouldn’t do something like that if the chances of making more money off of you were not there. I personally feel that it is better for our sanity and wallets if we just pay for things in full. I understand there are exceptions, but most of the time we are making an exception that is not legitimate. I know because the temptation is constantly in my mind when making big purchases. It always will be.
Here is a list of things that the mister and I always try to pay in full that are typically paid in payments these days. Many of these are and can be huge expenses, that’s why I preach having a loaded emergency fund for the emergencies, and savings accounts for the rest.
- Medical Bills. This one is hard because things happen unexpectedly that sometimes cause devastatingly high medical bills. My advice is to always have your family deductible put away somewhere, plus some. When you absolutely can pay in full, do it.
- Dental Bills. Teeth are expensive… save your buns off so dental bills aren’t a headache…. or toothache. Haha.
- Any Tech Purchase. New phone, tablet, computer, TV etc.
- Credit Card Bill (at least every month, but I try to do it every week so it doesn’t bite us in the butt).
- Vacations! Guys, we are going to IRELAND & CANADA this year and I. AM. SO. FREAKING. EXCITED!!!!! Best part? Paid for. By yours truly. We had money put aside so when the opportunity arose, we jumped. I’ll put all the details in another post another day. Moral of the story? Save, then pay in full.
- NEW (to you) CARS
- Car Repairs.
- Jewelry. We actually bought my wedding ring on a 12 month no interest promotion. Actually, a 12 month, no interest, HIGH STRESS promotion. We did pay it off before the interest kicked in, but I tell you what the temptation was great! There were many months that we were so tight I really wanted to push that off till the next month, but that would have made things worse. Just don’t do it.
- Any Home Expense or Repair
- Undergraduate Tuition. There are too many grants and scholarship opportunities available out there not to.
- Christmas. Let’s talk about Christmas. It’s such a jolly time, why ruin it by dragging December’s expenses over into January, February, March and beyond? Save little by little throughout the year, and then pay for it in full. At the time of purchase. Christmas is one of those really easy things to plan for because crazy enough, it’s the same day of the year, every year. No surprises.
I hope that gives you a better idea how to better manage your month to month bills stress. Most importantly, if you are feeling discouraged right now, please reach out to me! I would love to help you. I am not a professional, but I do have a few tricks up my sleeve from a bout of sheer bad luck and dumb decisions which have resulted in good experience. Start small and be consistent. Remember that it is YOUR money, so be smart and do your absolute best to make it stay that way.
We have our free “Riches to Rags, the Ultimate Family Finance Workbook” on the blog to help you sort out your crazy and find a starting point. There are so many aspects to family finance it’s hard to know where to start, especially when you feel buried neck deep in the sand.
You are awesome! Go kick some finance butt!!