Saturday, September 17, 2016

Finance Basics - Lesson 2

I will start by saying I'm not an expert in Finance.  Please see an accredited CPA or Financial Planner for assistance with your personal financial situation.

Principle #2 in the Family Finance workbook states:  "When you track your money, you control it".

This is where we start to move beyond the very basics and start to get into some work.

For this lesson, I'm going to deviate a little from this book and go to a course that can be found online from BYU.  There are also accompanying videos on YouTube you can also view.

Keeping with a principle found in The Seven Habits of Highly Effective People, I would like to start with the end in mind. 

Why do you want to get out of debt?  What purpose would it serve?

Here is one response from one of my favorite YouTube vloggers:

Have you reached rock bottom yet?

I have.  I reached rock bottom in 2012 when I could no longer afford food.  For Thanksgiving.

I was working at a school making wages that were in the poverty level range, and I was doing everything I could to not have to go on food stamps, but the money was running dry.

I had already cut the cable years before as I couldn't afford it.
I had already gotten rid of my smartphone and the Verizon bill that came with it as I couldn't afford it.
I was coupon shopping and reducing what I bought, buying the cheapest foods I could, as I couldn't afford anything else.
I had already been working seasonal jobs in order to bring in extra money, but even that was cutting it close.

Depression was setting in big time, all I wanted was to be dead.  Then I would be with my husband again.  I felt like I was in a tunnel of despair and there was no way out.

Yep.  That's rock bottom.

I owed everyone and wasn't sure how long I was going to be able to handle all of the bills I had on a monthly basis.

Thankfully, I had some great people from my Church, including a very patient man who is a CPA and has seen others in this boat.

That's when the light started to come, although it was still a long way off.

At that point, I wasn't looking at what goals I wanted for myself, I just wanted to be able to afford to eat at Christmas.

We started at ground zero, looking for any wiggle room we could find, but there wasn't very much there.  I began looking for other jobs, in the meantime emergencies hit me, forcing me to use money from my IRA to cover, which left me with a tax bill with the IRS.  I was doing everything I could to stay away from payday loans as those are basically walking into whirlpool where you have to file for bankruptcy to get out.

Thankfully, a job within the school district came up, I applied for it, passed the tests required and interviewed.  When I found out I had gotten the job, I literally sobbed at my desk.  That was November 2013.

The new job doubled my take home pay, plus the job was year round - so there were no more unpaid holidays that would always set me back.

I was able to catch up on bills that were past due.
I was able to buy food.
I was able to put a little bit of a buffer on my checking account, rather than counting every penny.

I was able to breathe again.

Then I was able to take a second look at where I was financially.

I pulled out the Oprah Winfrey Debt Diet DVD I had purchased years before, and began watching it repeatedly, to start planning, to start doing.

I saved up as much money as I could and got the IRS paid off.  That was the big debt I paid off (interest and penalties and all) in 2015.

In March 2016, I paid off my car loan early.  This freed $300 per month.

By summer 2016 (a few months ago), I had saved up $1,100 in my savings, and was adding to the buffer in my checking.  I was also starting to pay down the next debt, which stemmed from $9,000 worth of emergency dental work from 2014.


Then I got hit with another whammy, my home was invaded with bed bugs.

Double ouch.  It wiped out the savings, but at least I could cover the extermination bill paying cash.

Yes, I'm so thankful.

I'm still going through the extermination process (I'll save that for other posts), however things are looking up, and the changes this is forcing me to make will benefit me in the long run.

I the meantime, I'm re-building my emergency savings and looking towards getting back into paying off the debt.

And I'm starting to make goals.

what I've come up with so far:

Long Term Goals

- A comfortable home (condo)

- An emergency home in Snowflake (I need to purchase Mom's property)
     - Emergency Preparedness
     - Location for a personal time out
     - Set up the home with provisions for an older person (Mom and eventually me)

- Travel
     - Places in Arizona
     - Amtrak train rides
     - Alaskan cruise
     - visiting temples
     - Church History sites
     - UK
     - France
     - Italy
     - Other parts of Europe - including Sweden, Switzerland, Denmark, The Netherlands
     - Solo road trip
     - See General Conference live
     - BYU Education Week

- Mom
     - Continued support - physically and financially (get out of debt)
     - Buy Snowflake property
     - Furniture and renovations in the condo
          - Couch and chairs
          - Bed
          - Bathtub/shower
     - Savings to cover medical expenses
     - Vehicle?
     - Will, living will, powers of attorney

- Employment
     - 10 years at work (this has now been reached)
     - Get out of debt
     - 1 year of savings
     - Start my own business?

- Finance Degree - pay cash for this

Here is a video from that finance class at BYU to cover this lesson:

What are your goals?

Long Term (including retirement)

Bucket List

10 year goals

5 year goals

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