Why this Dave Ramsey follower still uses a credit card

As much as I preach the Dave Ramsey financial gospel, there is one solid thing that I disagree with him on.

I think you can get out of debt and pay your bills and still have a credit card.  

Now, as Paul Harvey would say, here is “the rest of the story.”

We never struggled with credit cards.  We had a car loan and student loan when we took Dave Ramsey’s Financial Peace University.  We were young and dumb, BUT we were smart enough to know that paying 18% interest was just DUMB.

So I say this all with a disclaimer:  If you’re still silly enough to pay 13%-30% interest, or think balance transfers are an advanced financial decision, this post may not be for you.

In the last couple of years we began to use credit cards fairly heavily.  Not because we’re accruing debt, but because of the type of household we run.  My husband is a self-employed salesman and we realized that all of the money he was spending each month on gas, hotels, and even some fast food, was doing nothing for us.  After a visit to our local bank branch we realized that opening one of their cards could help us accrue some points and at the very least get cash back or some small travel.

Here are three reasons we use credit cards:

Travel Hacking  

Exactly two years ago my mom saw Bryce of 10xtravel talking about Travel Hacking on Good Morning America..  Not only was Bryce a familiar face from my hometown of only 3500 people, but he helped me (via email) come up with a plan to fly our family of 5 to Australia using credit card points.  I know that Dave likes to poo-poo credit card points ,but we were able to cut the cost of our Australian airfare by nearly $4000.  We also saved $450 on an expensive Sydney hotel and still came home with a bunch of miles to fund some free flights to Banff(we paid about $125 in taxes vs the $1356 cost).  Travel hacking takes focus, but for organized people like us, the benefits outweigh the work.

American Airlines what I would have paid

Discounts

We have two American Express cards- two major hotel branded cards- and both of them offer discounts on everything from groceries to airlines and even chocolate.  If you have an American Express card, scroll down on the main page and just “Add” these discounts to your card.  Here are the promotions currently added to my card:

credit card savings

Another example I can think of is the Fairmont credit card.  They provide breakfast coupons, spa discounts, and more when being a cardholder while also staying at their hotels.  The Fairmont card does carry an annual fee, so it’s important to weigh the cost with the benefits

Security

I know numerous people say that debit cards are just as safe as credit cards, but I beg to differ.  If someone gets ahold of your debit card number, they aren’t essentially spending the issuer’s money, they are spending YOUR money.  Credit cards also provide numerous extra benefits that my debit card does not- such as some rental car coverage, lost baggage coverage and more.  I feel safer using a credit card online (and who doesn’t make lots of purchases on the internet?).

Conclusion

So while we LOVE Dave Ramsey and will forever be indebted to him (see what I did there?) for our financial peace, we really do think that credit cards can be used responsibly.  It’s not for everyone (if you’re renting your couch, please don’t open a credit card), but we’ve found using credit cards to be beneficial to helping us reach our travel goals-  and save us some moola!

What do you think?  Do you use a credit card for travel benefits and discounts?

DR credit card

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Budgeting 101

(i.e. How you afford to do the things you want to do)

You can read lots and lots of financial advice.  There are books and blogs and e-courses,oh my!  However, we’ve found that truly the ONE thing you must have if you want to succeed financially is the dreaded B word- a BUDGET!

The months when we get off track with our budget are the months that we lose sight of the big picture.  Creating a budget gives you the space to save, invest, and prepare for emergencies.  Even if your income is small, giving “every dollar a name” (Dave Ramsey stuff right there) and living under your means allows you to do this.

If you don’t have a clear picture of what money is coming in each month and what your set expenses are each month, how can you prepare?   What happens when 2 of your little ones get strep and the Dr visit + the medicine is $190 (hmm, wonder who this happened to?), now your sickness becomes a financial crisis.

Once you budget consistently for 3-6 months, you’ll notice something.  You will hardly check your bank account!  There’s no need to check it- you’ll know that you have the money because you told that money where to go!

We’ve been doing a budget each month since 2006.  It’s never one-size-fits-all.  You must meet each month and discuss the changes for that time.  Utility charges vary by season, kids need clothes and shoes at different times of the year- you must anticipate these things.

 

A few friends have asked what we have in our budget, so I thought I would post the Excel list of our budget below.  Obviously, you may have more or less categories, but this gives you a good idea to start with!

Here are the items that we budget for every single month, along with some notes:

Church giving
Compassion Int
Missionary
Mortgage
Utilities
Electric
Water
Gas
Telephone
Trash
Automobile Gas
Grocery {Cash}
Blow/Fun money {Cash}
Eating Out {Cash}
Diapers
Health Insurance
Life Insurance 1
Life Insurance 2
Work expenses
Husband’s spending money {Cash}
Newspaper
YMCA membership
Planet Fitness Membership
Chiropractor
Babysitting {Cash}
Clothing
TOTAL SPENT Should Equal Total Pay

 

Budgeting Tips:

  1. Some items are not listed (like car insurance) because we’re able to swing them through my husband’s commission.  In your own budget, I would recommend breaking down your larger expenses into monthly expenses (you’ll notice I do this for our term life insurance policies).   For instance, maybe you pay your car insurance twice per year and the cost is $600.  Instead of trying to come up with $600 in June and December, allot $100/month in your budget and then DON’T TOUCH THAT MONEY.  When the bill comes, the money will already be in your checking account.  You can also do this in saving for Christmas or other big purchases.
  2.  You must use (some) cash.  It’s very hard to adhere to a budgeted number if you only use debit or credit.  We take out cash on the 1st and 15th each month to pay for groceries, eating out, blow money (usually ends up being eating out) and babysitting.  Having money that can be physically touched causes a different emotion than swiping a card.  I’ve tried using debit/credit for groceries and I always underestimate how much I’ve spent.  Seeing that there’s only $30 in my grocery envelope shows me that it’s time to buckle down and eat from the pantry or freezer, instead of making another trip to Kroger.
  3.  A budget works better when you stay out of debt.  Don’t look at your monthly budget like, “Oh, we have an extra $165 dollars every month, we could afford an upgrade on xyz.”  Negative, ghostwriter.  You’re looking for money to save, invest, and give.  Stop asking if you can afford the payment and start asking if you can afford IT.  (Notice there are no lines for a car payment?)  You can’t get out of debt if you keep taking on more!  Whatever you need to do to push yourself- do it!
  4. If there is money leftover, start saving for an Emergency fund (if you don’t already have one).  A $1,000 should be enough in the short run to cushion you against car repairs, a leaky roof…or strep throat. 😉
  5.  Notice these are just expenses.  I didn’t add lines for saving, investing, or even vacations.  Add whatever you need to add as long as you aren’t spending more than you make!

 

Do you do a budget?  Is it like napkin-worthy or do you really stick to it?  What’s your #1 budgeting tip?

budgeting header

There’s Nothing Evil about Making Money

Dave Ramsey will often say, “Money is amoral.” It is just a tool.  It is neither evil or good. Can money be used for evil or good?  Absolutely.  However, the $20 bill in my wallet is not evil itself,  it’s just sitting there waiting to be plucked out for groceries or the babysitter.

Oftentimes the Bible is misquoted by folks that say, “Money is the root of all evil.” Negative.  The Bible says, “For the LOVE of money is a root of all kinds of evils.”  (1 Timothy 6:10).

If you love money more than God or people when you make $30,000, you’ll have the same issue (and idol) if you make $130,000.  Or 1.3 million.

If your desire to make more income comes from a heartfelt desire to better provide for your family, but also to be able to give more away, who is to judge your motives?  Let’s give an example: My husband and I, since taking Financial Peace University, have believed that 10% to charity was a minimum amount that we felt comfortable giving.  We don’t believe in the Old Testament tithe, per se, but 10% is a minimum we believe to be a jumping off point.  God has provided us everything anyhow, it is only our money to steward.  

MMM blog header

We could argue then whether that’s 10% of net or gross  income, and we’ve moved from the first to the latter. But for accounting ease, let’s use gross.  Let’s say that first year we started budgeting, Brian and I made a combined $43,000 (I didn’t pull tax returns or anything, but that seems about right).  So that year, let’s say we were able to give $4300 to charity (which may be just a bit high).  The second year I got a different job and was working more hours, as well as had a few part-time gigs, and that year we collectively made $58,000.  So that year our giving would have been closer to $5800.

Now, who would say that I should have not pursued a better job?  How did us as a couple, making $15,000 more per year, hurt anyone?  Would anyone say we were being greedy?

Now let’s talk about those evil people in the 1%.  🙂  Let’s say that they have been thoroughly blessed and they make $250,000 per year.  This enables their 10% to be $25k!  Wow!  $25,000 going to fund missions and orphanages and pregnancy centers.  A single mom walks into their life and they can easily write her a check for $1000 and feel no pain, whereas my husband and I at $43,000 would have felt the ache of giving $1000 to someone.

I just finished an excellent book by Crystal Paine, the founder of MoneySavingMom.com.  I admire Crystal not only because she is a brilliant blogger and business owner, but because she is a transparent woman who shares her victories (and even a few failures)!  Crystal’s new book, Money Making Mom, is a must-read for every mother, working or at home, that would like to make a few extra dollars – either to help Junior play in the football league, to start a non-profit, or just to take some of the pressure off of her breadwinner husband.

The wisdom Crystal shares is business advice that I can endorse because 1. She  doesn’t believe in going into debt to start a business and 2. She knows the reality of “balancing” a family and a business.  She actually shares how at one point she was working TOO hard and staying up too late-or all night- and letting her health and sanity get out of whack.

After Crystal offers page after page of start-up business advice, she states the following,We should focus on making money to impact our family and loved ones for the better, In addition, our focus for making money should be to help those who are struggling in our community and around the world.”  YES!  We don’t go out there and work hard just so that Skippy can have an XBox and we can live in the nicest house on the street, we make more to SERVE others through our finances, but also through our time that we get back.

money makingmom

It’s not immoral to put money aside for retirement or buy yourself a few nice things. It is wrong though to be so tied to your business or your lifestyle or even your DEBT, that you can’t live for others and give back to your community.  When we love possessions more than people, we are loving money (or what it can give us), instead of pursuing excellence to better our families and their future families.  Crystal sums this nicely with, “If you want to live an amazingly fulfilling life, you must live for something bigger than yourself, something besides material desires, words of praise from others, or a long list of accolades.”  We can fight against the culture by how we live.  We need to stop viewing money as evil and see how WE can be the ones to truly use it for good.

 

money making mom bookMoney Making Mom can be purchased at Amazon

 

**As a part of the Money Making Mom launch team, I was given a free copy of the book.  I was not compensated for my views, though, and all opinions are my own.

Bad (Money) Habits

 

Throughout the last year, I’ve been reading a lot about habits.  It’s really fascinating why we do the things we do- whether it’s our purchases at the store or our bedtime routine.  Moreso, habits are changeable!

recite-17xgmk2

So what habits do we need to let go of when it comes to money?  I’m personally sick of hearing to “give up your latte each day!”  You mean a $4 Starbucks drink x 5 days a week is a bad investment?  Duh.  I want to think of some of the other little money snatchers.

1. Eating out.  Everyone preaches against coffee, but pays no attention to how much we eat out.  Go to a cash system for eating out and you’ll realize how much you really spend.  You’ll be on the 3rd day of the month with no money to burn.  The average American spends $936/year just eating out for lunch!  It’s time to pack a turkey sandwich – you’re wallet (and waistline) will approve.

2.  Target.  Oh ladies, this is a sermon to myself as well as you.  One of my New Year’s Resolutions was to “avoid Target.” It’s like crack for Mommas.  Any big box store could qualify, but Target has a Dollar Spot, and cute clothes, and shoes, and polka dotted gift bags and towels and NATE BERKUS DECOR ITEMS- oh my!!!  And I get 5% off with my Target Debit (after I add 40% more STUFF to my cart!?!).  I’ve started ordering online for store pick-up and just picking it up at the front. No joke.  You can’t buy what you don’t see.  Can’t say I didn’t tell ya! 😉

3. Fundraisers.  Ohmygosh, Mr. Yoder Toter and I had to rein this one in because every sad Boy Scout or school kid that came to our door sold us cookies, popcorn, Yankee candles, and any other item we really didn’t need.  It usually goes like this, “Can’t we just give you $10 for the school?”  “Uh, no, we’re not allowed to do that.”  “Oh, ok. I’ll take the caramel corn.”  Fundraisers can be a great thing, but if you are tight on cash or saving for something or getting out of debt, they just aren’t necessary.  Don’t even get me started on the schools asking me for more money. I digress.

4. Kids.  There is no denying that kids cost some money.   However, I nearly jump through my Instagram feed when I see babies with new fancy clothes.  Like, nicer than the parents.   If you spend $20 on a onesie that your child is going to poo up the back of, I’m questioning your sanity.  (I mean that nicely, but it has to be said).  I have been in love with Freshly Picked kids moccasins for the last year, but they are $60 and I don’t spend $60 on some of my own shoes, so why would I put them on my daughter who will wear them for maybe 3 months?  I know I’ve lost my mind a few times since having kids, but this just irks me.  Buy consignment or thrift.  Borrow from friends.  Go to Target (I’m a hyprocrite!) The end.

So change your money habits, and change your life.  I’m sure you’re daughter would rather have some Gs for college than some cute shoes!

Anyone else on the struggle bus when it comes to avoiding Target?  Please tell me you haven’t spent $20 on a onesie?!

More reading- This book will explain why Target owns you, Momma.

The quote above is from this book, which was one of my top 5 books of 2014.

 (These are affiliate links)