Family and Finances: Episode 3, Part 2

Well, we ultimately got out of debt and removed that from our budget, and we started looking at our fixed expenses, for instance, our cars. Let's talk about cars, because most families in America spend about 14% every month on transportation. You and I wanted to eliminate that aspect of our overhead, so share a little bit about what we did. Well, I don't know where to start, except we decided not to finance cars. That's the first place we started, and I remember thinking, how do we do that? I don't know how we're going to live that way. Cars seem so expensive, and how would we ever be able to go and buy a car? But we had to make that decision, that we would pay for them with cash. We would not finance them. You did not trade in our cars. You would sell those yourself. Yeah, sell them or do something with them. Sometimes we've sort of given them away. But we said, if we buy them for cash, drive them as long as we possibly can, basically wear them out, and just keep them up-to-date, repaired, then we will have overall less cost. And I was calculating our total expenses for vehicles, say, for the past 20 years as we've been doing this, and it's really, really low, compared to what most people have in their budget. Well, and you've always wanted to buy super-dependable cars, cars that don't require maintenance, that have long lives, and that's served us well. Well, the maintenance cost of a car is so expensive anymore, that if you have something that has to be repaired often, I think you should get rid of it, so you don't have to plan for that in your budget, if you have a car that's not going to break down. But if you pay for those in cash, all of a sudden, you can take 7% out of your fixed cost, or 10% out of your fixed cost, and use that in other places in your budget. Also, let's talk a little bit about the mortgage, because when mortgage costs exceed what you really can afford, then you're basically stuck, where your budget's not going to work.

Most people want to figure out how to change everything else, except their mortgage. We've done the research that people who do well on their budget and with their finances have a lower cost of living than other people, maybe their peers. They've made a really good decision that that cost of a mortgage or their rent is going to be lower than the national averages. I did one of those online calculators the other day as we were looking at some real estate of what we could afford in terms of what the ... You plug in your numbers. How much do you earn? How much can you put down? What can you borrow? It really shocked me, because what the lenders said I could afford is probably two times greater than what I would ever even consider doing. As far as a wise financial decision, and I think that's where people get in a trap on their budget. They maximize their ability to leverage for a house. In today's world, you lose income or have your job, your hours cut back, then you're in serious trouble. People get upside down pretty quickly, and they get what's called a negative mortgage or underwater on their mortgage. Their budget's not working, and nothing's working. They're suddenly house poor. You have to look at all of those fixed expenses and be sure they fit into the right categories. Then you start to look at your variable expenses. Do you remember when you brought our monthly grocery expense down? Well, I've tried several times. Tell me what time you're thinking about it. That's when we had four boys at home, and you calculated that we were spending $1,000 a month on groceries. This is not eating out. Well, I remember one summer, it was terrible, because two of our boys were playing tennis.

We told them, just go ahead and stay and eat at the club, eat lunch. That was all summer long. When we got the bill each month, I was shocked, just shocked, because they were snacking, they were eating lunch, having an afternoon snack. It was ridiculous. Yeah, I think you put an end to that pretty quick. I'm thinking that they spent $1,000 one month on food. Well, what I'm remembering is that we were going through feeding those four boys. going through so much money you said Chuck we can't afford what we're doing and I said well we've got to eat and to me I didn't think there was any room to change that thousand dollars a month number and you drove it down to four hundred dollars a month and the way you did it is you said the new rule is we're not going to buy at the grocery store what you want and you were pretty much talking to me because I go to the grocery store with a cart and we'll throw in there anything I want that's how I go shopping you go shopping with a list and with coupons and I didn't think it was possible to feed our family for a month and reduce six hundred dollars out of our budget but you did it and there was some fussing you know we started buying generic cereal instead of name-brand cereal and we started buying things that you know maybe weren't real popular items the biggest most marketed items but we ate well well and today I still I will stock up on things that are on sale and those you know I like to get the clearance items and I'll just we have lots of space so I will I will stock up and so we always have some kind of snack or something to feed guests or when the kids have friends over. Well when you think about making a budget work I look at things that people can do that will really help them to put this into action number one is to agree with your spouse if you're not in agreement with your plan and with your goals then you're always going to be going back and forth and uncertain about whether you really want to achieve it you and I agreed it was time we had to do something we couldn't keep living going backwards we had to make progress and so we were in agreement finally that a

budget would be good for us I think secondly we realized we had to have grace because it's difficult to make it work every month and sometimes people get frustrated and they get disappointed and they they sort of throw their hands up and say we just can't do it you know we're not good with numbers or it doesn't work for our house or we can't get along about this and there's just no grace and once there's grace when you realize hey let's try again let's let's keep at this until we get it right the beautiful part of that about that grace is there's such long-term reward from getting it right and from doing it you know when I look at where we were to where we've come and it's almost an equal split do you realize that 21 years of doing it the wrong way in 21 years of doing it God's way it's almost an equal split do you ever think like this I wish we had started when we were young oh goodness yes we oh I can't imagine where we'd be now you know one thing for me that has been helpful is I try to challenge myself I remember those early days when we were cutting back on groceries I would think okay I can serve this for two dollars a person and then the next night I'd see if I could beat that you know cuz I'm sort of motivated by the challenge and we took some kids some boys through a class remember that well we started teaching teenage junior high boys how to budget mm-hmm and I remember you laid down the challenge I we'd laid put all this out to them and we said one night everybody bring five dollars and we're gonna use it for a party and so the first challenge was they could go out to eat for five dollars this was some years ago but whatever they had left over we would use to throw a party the next week this was this was probably 20 years ago yeah it was mm-hmm and so these guys all fussed every one of these boys like we can't eat on five dollars and there'll be nothing left over a week and you just held the line well just try it so they started researching where to go eat and they ended up at CC's Pizza which I'm not sure would pass the health code in our city at that time but it was very very inexpensive and they went to the buffet they ate and each one I think had about 50 to 75 cents left over when they came back and they gave you nine dollars and you looked at it and said

okay they had spent like 45 or 50 to eat out you had nine dollars left over for the party and pick up there I can't I think I made soup I know I made brownies I had a box of that made brownies from. You made bread, you made soup, and you made brownies. I remember the meal. And they said to you, we ate better than at the pizza place. For a dollar a person. Or less. And they were like, how did you do that? And when we go back and talk to some of those boys, they remember that lesson. That you really can stretch your money further than you think is possible. And so those are some of the things that we learned to live by ourselves. And I'm not a frugal person. Many people listen and think, oh well, Ann is so frugal and she probably enjoys that, which you do. I don't enjoy it. You don't have time to think about it. I don't like to think about it. And so I've allowed you to be the captain of the budget. You set it up, you manage it, and I follow as best I can because I know it's good for us. And I know you're better at it than me. If I had to do it, we would still be back where we were when we were first married. We'd make no progress. It's not comfortable with me. Most people would think, well, it must be easy for me. It's not. But it's good for me. And it's good for us. And I think it's the right thing that God wants people to do. I think one thing that really helped us initially was when we had to write down every dollar we spent. Yeah, we carried little notebooks and we would write it down for a whole month. And I would give you my notebook and you would total it and we would realize all the spontaneous spending and the things we didn't realize where the money was actually going. Right. And that's really the beginning of a budget is knowing where the money is going before you start the allocation. Well, we change spending patterns and develop new habits. I remember one young couple told me that before they got married, they both went to Starbucks a lot, studied there just, you know, almost every day. Well, when they got married, they started tracking their expenses and they were shocked at how much they were spending. Three hundred dollars a month at Starbucks. I remember talking to that couple. Yeah. I remember the other couple that we were sitting in their lake house that they had paid for with cash. It was a second home. They built it for themselves, their children and grandchildren to use. It had 12 bedrooms. And they were talking about the faithfulness of God to provide for them. But they both still have envelopes that they've

carried. At that point, it was like 50 years of marriage. And she got out her envelopes and said, here's how much money I have for my hair appointments every week. These are non-negotiable. Yeah. You know, that's always in her budget. She had her grocery envelope in there. She had, you know, little gift envelope for gifts for the kids and grandkids. Everything was allocated and they didn't need to be on that budget, but they wouldn't consider ever changing it. They loved it. And both of them did it and they had plenty of money, but they were just so careful with how they used it. I think God honors that when we're really careful with what he's given us. And we get out of thinking that, well, it's all mine and I can do with it whatever I want.