I make no secret that it is important that my community financially thrive. I make it my priority to share our financial journey in hopes of preventing you from making mistakes we have made in the past. With that being said, let’s jump right in to today’s Personal Finance 101 Q&A.
To start, I did not grow up learning about proper money handling and how to be financially responsible. Not using that as a crutch but giving you guys an understanding of the root to my financial pitfalls. My family didn’t always do right by money, and I truly felt it was a generational curse. On the other side Rick had parents that always did right by their money, but Rick just fell short of learning those tips growing up, and didn’t follow the ways of his parents money handlings.
I remember getting my first credit card in college and maxing it out. Not truly understanding credit utilization and the importance of why you should keep your credit utilization low. I was never taught the value of having good credit. Again, not using that as a scapegoat, but early on I don’t ever even remember thinking about credit.
As Rick and I came together (when 2 people come together that don’t know how to handle finances) it became a hot mess. I was an over spender and Rick was a procrastinator. With that, we were blowing through our pay checks and missing payments. After struggling the first few years of our marriage, we were fed up with living check to check. At that point we decided to make a change to our lives for good.
We had to sacrifice a lot. We moved into a small apartment and had Cam and Calvin share a room so we could focus on saving money. We came together to complete a budget and started tackling our debts. As time went on we started to make progress and felt the weight of our financial stress slowly lift off. It took lot of consistency and discipline. Fast forward to now and we have so much more financial freedom, great stewards of our money with a full mindset shift.
Everyone’s path to repairing their finances will be different and unique to them. This is just a personal look into our journey. I am by no means a financial advisor or money guru. I am simply a person that was horrible with money and found a way to recover and thrive. I strongly recommend learning about personal finance. I’ve heavily looked at Dave Ramsey sites and read his books. I also read Pinterest a lot as there are some great personal finance 101 resources there as well.
Can you explain the family business meeting?
We learned about this at one of our church’s couples counseling. This has been such a key factor to our success working together. Having your finances jointly is not easy. I handle money differently than Rick. What we have learned that one hand must always know what the other is doing, so communication is key. Family business meeting are designated times to talk about the family operations and finances. We put it on our schedule, and that allows us both to be mentally prepared for talking finances. We go through our budget, talk about any discrepancies, go through our family schedules, and check in on goals. These meetings have helped us work together effectively. You can do it weekly, bi-weekly, or monthly. You want this to be a safe space, so you have to come into this seeking to understand rather than nag, No one should be pointing the finger or criticizing the other. Definitely make sure first look at how you can improve rather than looking at the other’s faults.
My husband procrastinates, what’s helped Rick?
What has worked for Rick to not procrastinate, is he sets up almost all of his bills on auto-pay. He sets reminders in his phone . Rick used to avoid everything and it would make me angry because most times he would cause more issues by not handling it. So if there is something to handle he sets up reminders to handle the task when needed.
Being a wife of a man that procrastinates can be frustrating. I then remind myself that I have plenty to work on as well. NAGGING IS NOT THE ANSWER! I will send Rick a snapshot of key items in his lane [honey do list] that he happily accepts (because he knows he can put off things). I give him space to work it in his order, and then we share updates in our family business meetings.
How did you get on the same page with money?
This is not easy! First we started by sitting down and going over our values and establishing what is important to us. Ask each other what is important to you financially? What are your long/short term financial goals? While your values don’t have to be the exact same it is important that you guys compromise and establish a median.
We then mapped our family financial goals as a team. If you do it together it eliminates each of you working a different plan. It’s also important to remember that you both have strengths and weaknesses. What you may be great at that may be your partners weakness. Rather than criticizing the weakness figure out a way to come together to diminish each others weaknesses.
Don’t be afraid to even go to counseling for help with communication. We did and it helped tremendously! You can also look into Dave Ramsey’s Financial Peace University course. This will help you both come together to work on finances.
Do you have joint account?
Yes, we’ve always had a joint account. There has not been a time when we weren’t combined on our finances. It does come with challenges as you have 2 people dipping in the same pot. Communication is key. We have our family business meetings to check in on expenses. We also have a threshold that anything above that amount we must talk about and agree before buying.
How do you handle a disagreement when it comes to finances?
We first get to the root. What is causing this fight and speak to it. Sometimes it could be something small but the anger is coming from a unresolved problems. We now always share exactly what is causing the frustration, but we do it without attack words and yelling. We seek to understand, don’t go on assumptions.
We try not to cut each other off and leave our defensive guard at the door. If it is a problem we cannot work through sometimes we will table it until we’ve had time to think about how communicate politely and effectively. If we can’t get a resolution we may seek wise counsel from other married couples on advice to work through problem.
Remember you guys are working towards ONE goal and you must work together in order for it to come together.
Did you guys save money and paid off debt at the same time?
Yes, we initially set up a small portion to come out of our pay checks and then deposit in our savings account to grow our savings and emergency fund.
Did you have student loans to pay off?
Yes we do. God willing it should be paid off this year. Speaking of student loans. If you are parent and able I strongly recommend budgeting a portion to your kids college. Even if you can’t cover all of their college even some will help. This will help your kids have no student loan debt or very minimal. I wish that I didn’t have these student loans hanging over me, but all I can do now is make a plan of action to tackle it.
Did you ever have a debt go to collections?
Yes, and on my credit report. Ugh! My recommendation is before you pay that debt try to negotiate to have the creditor Pay for deletion. Don’t just pay it without a fight. I’ve had collections on my credit report that I was able to get removed when I paid in full. We will call if the first person says no, we will call back the next day and ask another person. Before you pay that debt always advocate to get it removed so it doesn’t permanently affect your credit.
How did we get out of debt faster?
Let me first say getting out of debt has not been fast. It has taken a lot of patience. Stick with it. We have tackled our debt faster, by cutting out extra expenses. Along with adding multi-streams of income.
Did you have to deal with either person not sticking to the budget? How did you handle?
Absolutely, we did! It still can be challenging at times. We have dealt with Rick paying for a bill that he didn’t not communicate needed to be paid. On my end I would often blow past the clothing budget for the month.
First, we before discussing this with the other person. We always make sure to first think before we speak and remember that we are on the same team. I know this should seem as something easy to think about. However, finance issues can sometimes have you feeling like you are not on the same team. You vs. me.
Rather than accusing, nagging, or criticizing I seek to understand. Ask questions on why was it handled this way? Explain how the actions made me feel that we weren’t working together. And then share how you would appreciate for this to be handled better. Whenever I come to Rick in this calm manner he almost always owns the ball drop, and shares how he will improve.
What your financial priorities? Savings? Debt?
I feel this will change depending on the season of life you are in. Initially for us our highest priority was debt, now that is no longer our top priority as we’ve paid off most of it. I would say that our priorities are always the same but the order just may shift.
Priorities (not in any particular order): Tithing, Personal Saving, paying off debt, saving for boys college, retirement savings, and living life. We do work hard, so yes we do have it a priority to live life and enjoy the fruits of our labor within our budget.
How did we start saving? Where to start?
I would recommend if you have a regular pay check to have a certain amount go to your savings from your pay check so you don’t have to even notice the amount going to savings. While that I happening try doing the snowball method. I used this method from Dave Ramsey when pay off our debts. We tackle the smallest debts first and then work on payment plans after that for the large debt.
How did you save to build your dream home?
We save an amount from our pay checks each pay date. It started out smaller and then we slowly increased it and it goes directly to our savings account.
Anytime we receive an influx of money via bonus etc. we put in our savings.
We added a side hustle to generate more income – Rick was an Uber driver in the beginning of our financial overhaul process to bring in extra income, he also had a photography business. Initially my blog did not generate any income at that time, but once it did we used that income to save as well.
Paid off debt to free up income
Reduce monthly expenses
Advice to save for vacation – Initially we were not saving for a vacation. We had many spending freezes and had to sacrifice. We are now in a spot that we’ve added a travel fund where we contribute a small amount from our pay checks to go to a travel fund. I recommend adding this if you are in a good spot financially.
Could you have hit your goals without the side hustle? Yes, but it would have taken longer. My side hustle now generates more than my full-time job and that has been huge for us hitting our goals. I also want to say don’t be afraid to grab another stream of income. Never in my wildest dream could I have imagined my side hustle would generate more than my corporate job. Multi-streams of income has been a game changer for us.
What budget method do you guy use?
We use the Zero-Based Budget. You can learn more about it here. For us it was the easiest method to execute.
Where do you start? How much of an allowance you give yourself? And kids.
You should first list out what are your short term financial goals and long term. What do you want to accomplish? As you are building the budget you must keep your financial goals in mind.
We start our budget by first totaling all of our income (less taxes), whatever our take home pay was that is the total number we used to create our budget. We then went in our bank account and started categorizing all of our expenses. We made sure all the aspects we spent money on were accounted for. Once we did that we checked how much we spent on average in each category to then build our budget limits.
Following the Zero-Based budget method we then built our budget.
I do allow myself to have an allowance for personal shopping. Based on what allows us to still hit our goals.
Most important small change in the budget for biggest impact?
Canceled extra expenses – What I realized is sometimes you can’t add more income you are being paid. It takes time to grow some side-hustles. But you can free up your money you are already receiving but cutting expenses. We cut and reduced expenses which allowed us to have more room in our budget to save money.
Here’s the expenses we cut/reduced:
Cable – We no longer have cable and just have digital streaming.
Home phone – Canceled home phone since we never use it.
Hair/nails – I would regularly go get my hair and nails done. I now limit all of my self-care appointments to every 4-6 weeks.
Cell Phone – Lowered our data plan because we did not need unlimited. Tip: Shop other carriers to see if they can offer you more for less. Or you can see if your employer offers a corporate discount. Our cell phones currently utilizes a corporate discount.
Eating out – Initially we limited cut our eating out $100 per month.
Misc Subscriptions – I had multiple paid apps I never used. I even had a faxing service I was paying for. We canceled all subscriptions that were not essential.
Do you budget monthly or by pay check?
We budget monthly, and we also have projections for the year. This is important to give you a big picture and ensure you are meeting your yearly goals.
When does your fiscal month start – We do ours based on the calendar month.
Important personal finance 101 categories to use when budgeting?
We use Giving/Charity, Saving, Housing, Utilities, Health/Medical, Food, Kids Activities, Clothing, Transportation, Debt Pay Off, Personal, Travel
Hardest budget category to not go over in?
Eating out, hands down! With us having the baby we did increase this category but it is still not easy for us because it so much easier just to grab food out.
What do you currently take off your priority list?
I don’t think we ever completely take something off our radar. We may just reallocate so some categories are being contributed to more.
What personal finance 101 resources did you use to create a budget to get out of debt and use now?
We put our budget in Google sheets that way whenever we made an update the we both could see it immediately. We do not use an app however, for many that is helpful.
Budgeting Apps: Digit, Mint, Quicken, YNAB, and Good Budget
I built our budget by simply googling free budget templates and then putting it in my google spreadsheet. For debt I made a debt tracker. I listed our debts, debt amount, creditor, contact information, amount paid, and then I remaining balance. I did a formula to track how much is left on the debt and I totaled out all of our outstanding debt. I then sort it smallest to largest.
You mentioned how you redid your finances to buy a house? Can you elaborate?
Prior to getting our home we were not budgeting and saving. We decided to stop living this way and we started working on a plan to start our road to financial restructuring.
We budgeted, save, paid off debt, and add a side hustle.
I want to buy a house. Credit is fair, money is tight. What would you do first?
I would first go through my bank account and look at the output. What am I spending my money on? If there are any expenses I can eliminate I will take steps to cut. The extra spending you do will be money that can go into savings. Next, I would start having a small amount that isn’t noticeable come out of my pay check to grow my savings account. Lastly, I would explore if there are any first time home buyer down payment assistance programs. I have not personally used one, but know others who have and it has helped them secure a home.
How much will you put down on your home – I never share specific numbers because it is all relative to the home that you are buying. However, we want to have a low more payment so we will be putting about 25% down. For a conventional mortgage you only have to put down 5% and for FHS 3.5%. I always recommend putting down at least 20% to avoid PMI being added to your mortgage payment. I have my home buying tips blog below to read.
What was your first step in repairing your financial state?
Making the decision to change and then we assessed our mess. We pulled our bank statements, opened mail, pull credit report, and gathered any other pertinent information to be able to see where we currently stood with our debt and financial status.
How do you approach each other when you feel one is spending more than the budget? With kindness and seeking to understand.
Top 3 personal finance 101 recommendations for financial success after years of overspending?
What was the most impactful change y’all made in your goal of turning your finances around?
Being consistent. Anyone can make a budget. The hard part is actually following it. Once we BOTH started following it and holding each other accountable that is when we saw a shift.
If you are knee deep in the restoration process, keep going! It does get better, and when it does it will feel like a weight is lifted. Stay encouraged and consistent!
Do you have any extra questions that weren’t answered in this ‘Personal Finance 101‘ Q&A? If so, let me know in a comment below!