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Budget Busters Chez McHale

Dollars

Dollars

We are once again going through a period of major expenses chez McHale. May has brought with it some major budget busters.

We are still following Dave Ramsey’s Total Money Makeover principles and honestly I would say that now it is an adopted lifestyle. This month it’s been a really good thing.

This month we’ve had a pipe break under the floor in our kitchen, we’ve replaced the hot water tank, and another unit in our complex has required some major repairs which all the owners here have to pitch in for (this is normal in any condo/townhouse).

It has really squeezed us. In fact I’m not sure that we’ve felt squeezed quite so tight since before we started working this plan.

The difference now is that we have an Emergency Fund.

What you may ask is this thing we call an Emergency Fund?

It’s 3-6 months of our household expenses in cash in a bank account that is easily accessible in an emergency.

WOW have we ever been glad to have it this month.

We managed to scrape up enough cash to cover most of the repairs but there comes a point when you just can’t do it anymore. Enter the Emergency Fund. We were able to cover the remaining expenses in CASH because of our little stock pile.

In the days before we paid off our debts and decided to change our financial future we would have paid cash for a lot of these expenses but we would have come to a point when the money would run out and we would have used a credit card or line of credit to pay it.

I am so thankful that we are able to avoid doing so!

The importance of an emergency fund has hit home a number of times over the last year as we’ve seen the local teachers strike for months last spring, another local union strike for 12ish weeks, and watched as more than one family in our circle has experienced significant illness taking their primary bread winner out of work, and forcing the other half to go back to work during the crisis to help pay the bills.

During the local strikes especially I kept hearing stories of families where the sole income earner or even both income earners were employed by the same union – these families lost their entire income during that time. They were then going to the banks trying to get lines of credit or loans to pay their bills for the duration of the strike.

I would not want to be in any of those situations and I hurt deeply for those families. I cannot imagine what they went through.

The problem is that when you take out a loan during a crisis or emergency to get by you deal with the hangover for much longer than you may actually have to deal with the situation because you’ve got to pay it back.

I’m not criticizing any of these families they were all doing the best they could to get by. I’m just saying that as I watched these things happen I realized just how important having an emergency fund really is.

The sad thing for a lot of the families affected by the local strikes is that they were in industries where the jobs are considered very “stable” which proves to me that you never know. If they succeeded in getting a loan to help with their expenses they are most likely still paying that loan back now a year later.

For me watching from the outside it drove the home the importance of the Emergency Fund. There is a lot of security and peace of mind in knowing that if for some reason Curtis couldn’t work for a few months our bills are still paid.

Sure we would have to cut back on some of our “lifestyle” spending but really we can get by for a while without too many worries.

As painful as this month has been we’ve been able to get by. We’ve had to cut out pretty much all of our “lifestyle” spending. We’ve adjusted a few things, but the truth is, that it’s just one month. Looking at our June budget we’re able to replenish the Emergency fund after our little dip and things for the most part will return to normal.

So what about you. Could you pay for a few thousand dollars worth of emergency expenses tomorrow if you needed to or would you be running out for a loan? Have you thought much about living debt free and building an Emergency Fund? If not I would encourage you to do so!

Dave Ramsey Stole my European Vacation

Newlyweds running a tripping program in ON, summer 03

Newlyweds running a tripping program in ON, summer 03

Today is my 10th wedding anniversary. I know, it’s hard to believe but it’s true.  Honestly it’s been the best 10 years of my life and I hope that there are many more to come. As I write this I’m not exactly sure how we’re planning on celebrating but I can tell you that it will be great and it will be paid for. It is Friday so it will probably involve Pizza because Friday Night Pizza is a well bred habit for my Hubby going back to his childhood years and breaking that tradition is not usually well received.

My fav. pic from our Mexico trip in 2009

My fav. pic from our Mexico trip in 2009

About three years ago while out celebrating our anniversary we decided that we wanted to mark out 1oth anniversary with a trip to Europe. We started saving for it right away, not a lot but a little bit each month. The balance in the savings account wasn’t adding up very quickly but it was slowly growing every month.

Our First Family Picture Oct 14/2010

Our First Family Picture Oct 14/2010

Roughly a year and a half ago we came across Dave Ramsey. I wrote about our Debt Free experience here. In the process of emptying out all of our bank accounts except for $1000, the account that held our savings for Europe was emptied and we said good bye to our 10th anniversary European vacation. So yes, you could say (and I have) that Dave Ramsey stole my European vacation.

Celebrating my 30th birthday

Celebrating my 30th birthday

Now you ask was it worth it? 100% YES. I would do it again in a heartbeat and here’s why: Becoming debt free has opened up opportunities for our family that I never would have believed possible. Not only has my hubby tripled his income this year but we are on the same page financially which has greatly improved our marriage and reduced stress in our lives. I have been able to leave my full time job and focus on our family, as well as pursue other opportunities. Our future is looking brighter than it ever has and none of that would have been possible without someone pointing us in the right direction financially.

Cutest kid EVER Oct. 2012

Cutest kid EVER Oct. 2012

Will I make a trip to Europe someday? I hope so.  We may be shooting for our 20th anniversary, but the timing could be better then anyway. Instead of being in the middle of life with a young family we’ll be getting into the early teen years and hopefully a little bit more able to relax knowing that E isn’t melting down on Grammy by day two. (Last summer I left her with my Hubby for 5 days and she cried 24hours a day from day 2 on.) The Holiday will be 100% paid for up front and all our expenses during our travels will also be paid for in cash, so we’ll be able to travel in style without worrying about the financial hangover that comes after for so many couples. Personally I can’t wait, and a 10 year delay seems like a good trade from where I’m sitting.

The McHale Family ready to embark on new adventures in 2013

The McHale Family ready to embark on new adventures in 2013

So here’s to another 10 years with the man I love and hopefully many more after that. We’ll get to Europe one day, and I know that there will be many amazing adventures between now and then! The journey’s been great so far and it’s only going to get better.

My birthday ride this year

My birthday ride this year

 

 

2013 Goal Update – The Total Money Makeover

Hadn't even made a payment on it when this picture was taken

Hadn’t even made a payment on it when this picture was taken

Well, I thought you’d like to know that how my goals are progressing for the year so far. We hit a MAJOR milestone in our our Total Money Makeover last week, we PAID OFF OUR CAR! Yup, that’s right, three weeks a head of when we wanted to. I made the last payment on Wednesday February 6 2013 and that is the LAST car payment I will ever make.

I need to tell you a little bit about the journey that we’ve been on in our financial lives because it really has been amazing. In the fall of 2011 I went back to work after my maternity leave, and as many of you know working full time and having kids puts one big fat expense on the family budget – Daycare. Daycare is our single largest expense in a month, in fact it’s more than our mortgage payment every month (yeah we live in a cheap house thank God!). Pay day would come and go and after all the bills were paid there was very little money left for anything extra. We have always tried to pay cash for the luxuries of life that we enjoy from time to time and haven’t carried a credit card balance for years. Our debt had not grown for a long time but we had some as we were young, broke, and naive when we got married. Apparently it’s hard to live on $9000/year in Canada. In fact at this time last year I would say we were probably pretty financially normal in comparison to everyone else out there. What we were learning though was that SUCKS!

100% ours

Yup this is the McHale Mobile 100% ours

One day last January I was googling potty training and I came across a blog that included a host of potty training information but also a post about the family having paid off almost $60,000 in a three year period by following Dave Ramsey’s plan. I finished reading the post, found the book on Amazon and told the Hubby we were doing this. After listening to my (poor) explanation he quickly got on board. When the book arrived I read it in a weekend, and here we are a year later DEBT FREE! The next step, save up 3-6 months expenses in an emergency fund.

So how much have we paid off this year? Well the car alone was $11,781.00 and we also paid an additional roughly $10,000 on various “emergencies” (like the washing machine upstairs flooding the bathroom downstairs) in cash, and took a 2 week trip that turned into a 3 week trip home to Ontario for E’s birthday this fall. So yes, do the math, we paid cash for roughly $22,000 in necessary expenses including the debt plus went on holidays. Our annual income you ask? Well for 2012 it’s in the $55,000-70,000 range. Pretty average for a family with two incomes in the area we live in.

The even more amazing thing about this whole journey is the impact that it has had on our personal lives. The growth in our marriage has been phenomenal. It’s amazing how much better everything else runs when there is good communication about the money in the house and where it’s all going. We’ve struggled, and we’ve still disagreed from time to time about what the priorities are, but we’ve also communicated much more clearly about what we want (financially and otherwise) and set plans in action to achieve it while supporting each other. We have both set ourselves personally and relationally on paths of personal growth for 2013 that I don’t think we would have even considered if not for the Total Money Makeover that has happened in our lives, SO check it out it will change your life.

2013 Goals

The McHale Family ready to embark on new adventures in 2013

The McHale Family ready to embark on new adventures in 2013

I’ve always been a very goal oriented person – really anything I can check off a list is highly motivating for me. I regularly set goals/create to do lists for the short term, but until recently have never considered setting long term goals to give structure to my whole year. I’ve been working on some personal growth over the last 6 months and a recurring theme amongst all of the books and podcasts is goal setting, giving you something to strive for. So I figured sure, why not! I’ve tried to set my goals in a number of areas of life to allow me to round out my life and hopefully keep things in balance, so I’ve got everything from career, to fitness, to personal goals. The Hubby and I even set some joint goals that we are going to work on as a couple. He has also set his own goals which he posted on one of his blogs late last month (sorry I couldn’t tell you where to find them I have no idea).

I hadn’t really planned on making my goals public, but publicity also creates accountability. I may or may not also have a few other “private” goals up my sleeve ;).

Here we go these are my goals for the year:

  1. Double my income in the year 2013 by starting a side business. (More on that in a later post I hope)
  2. Pay off the car by March 1/13. – Last February we started our “Total Money Makeover” after reading Dave Ramsey’s book of the same title, and it has been life-changing for us in more than just the financial realm of life. If you have ANY debt at all seriously check it out, read it. It’s been an amazing journey for us and is really what has started my journey to self improvement.
  3. Run a 10K race – I know I can do this, but it’s fun to participate in the event!
  4. Run a 1/2 Marathon – got up to the distance last year but then was unable to participate in an event.
  5. Run a full Marathon – this will be the true physical stretch for me, farther than I’ve ever run before!
  6. List & sell our current home
  7. Buy a larger home hopefully with a smaller mortgage
  8. Read all the books on my reading list. (See reading list below)

While some of these may seem like lofty goals I think “Go big or Go home” is a good principle by which to set your goals. If they are easily attainable then you aren’t going to find it challenging enough to keep you interested (at least I’m not). And hey, if I only make it 3/4 of the way then I’ve still made it farther than last year and ultimately while I am always going to strive to meet and even surpass a goal that I’ve set – that’s just the way I am – making it even 1/2 way there on most of them is still pretty good.

Reading List:

  1. The Total Money Makeover – Dave Ramsey – finished Jan 4/13
  2. The Millionaire Next Door – Dr’s Thomas J. Stanley & William D. Danko – Finished Feb 11/13
  3. Wisdom Meets Passion – Dan Miller
  4. Guerrilla Marketing – Jay Conrad Levinson
  5. Entreleadership – Dave Ramsey
  6. See You at the Top – Zig Ziglar
  7. $100 Start-Up – Chris Gilibeau – in progress
  8. No More Monday’s – Dan Miller
  9. Tribes – Seth Godin
  10. Love & Respect – Dr Emerson Eggerichs – started & abandoned 3/4 of the way through – good content, just not my style.
  11. Thou Shall Prosper – Daniel Lapin
  12. Becoming a Person of Influence – John C. Maxwell
  13. How to Win Friends & Influence People – Dale Carnegie

If any of these books look interesting to you and you’d like to support the site then check out amazon.com here and pick them up!