Merry Christmas!

I hope you all spend some time with those you love today to celebrate Christ's birth.  I pray you will all be touched by this season and find some time to think of those less fortunate as well. 

We are dealing with 8 inches of snow right now.  In Texas.  It has caused some problems for some trying to traveling, but it is beautiful.  It makes me thankful I have a warm home, ample food and clean water, and my family and friends.

We were able to deliver presents to the family we adopted this morning despite the snow and ice.  It was so awesome to see their faces and how thankful they were for a few pieces of clothing and a toys.

Christmas Spending

Well guys, its two weeks before Christmas, and I’m going to be finishing up my shopping this weekend. After our first two years of marriage, Mr. DFx40 and I realized that we needed to prepare a little better for Christmas. So our third year of marriage we started saving $25 a month for Christmas related expenses. We also accumulate $100-$150 in cashback on our credit card every year. That makes our Christmas budget $400-450, but we rarely spend that much. This year we will be buying presents for 32 people this year, and here are a few tips on how we keep our costs down:

Couples Gifts
My brother and his fiancé love movies. More specifically, they love Disney movies. For them we will purchase one or two movies that we know they want. Then we will add popcorn, hot chocolate, or some other edible gift to round it out. This will cost between $20-$30.
Last year we stumbled across some deeply discounted wine in June. We paired these with books, movies, and other edible gifts for the couples we knew would appreciate the wine. Because we had the ability to purchase the wine early, we were able to spend $20-$25 on each couple.

Picture Exchange
My aunt suggested a great idea a few years ago. Every three years when we get together we exchange pictures as our gift. These pictures mean more than a gift because we only get to see them 2 times a year. This year we took our pictures at our local Botanic Gardens, which were free to visit. They also allow amateur photos if you don’t use a tripod. We have a printer that prints good quality photos (most printers do these days) so the only substantial cost here is buying a frame for each family. Because we all knew the arrangement, we were able to look for discounted frames throughout the year.

Draw Names
This is what the adults did on Mr. DFx40’s side of the family when there were 15 people to buy presents for instead of 5. It worked great because everyone bought gifts for the three children, but only one adult gift. This meant we could spend $30-$40 on a good gift (or less, we changed the limit over time) and still save money over buying 15 cheap $5 gifts.

Christmas Gift Exchange Game
We play the Christmas gift exchange game at our office’s Christmas party every year. The limit is $10 so most of the time we purchase edible items and just work it into the food budget. When I was younger we got together with my father’s first cousins (16 people) and played this game. Because of that experience, I can offer some advice. This game might not work with young children who don’t understand why their gift is being “stolen.”

Just Visit
I believe that the reason Thanksgiving is so awesome is because you get together with family, eat, play games, have fun, and don’t have to worry about presents. Sometimes I actually enjoy Thanksgiving more than Christmas because of this. There is nothing wrong with getting together and not giving presents. However, if you’re like my mother and can’t (or won’t?) bear the thought of Christmas with no gifts, consider the next tip.

Adopt a family
We were very blessed this year and we were able to adopt a local family with our bible study group. The family is made up of 9 children ranging from 2 months to 15 years old. The two youngest children live with their mother and the other 7 children live with their grandparents. We were able to purchase each child a pair of jeans, three shirts, pajamas, and stocking stuffers. We also bought each child a bible with his or her name engraved on it, a few family games, and a restaurant gift card and free night of babysitting for the grandparents. There were ten of us to split the costs, so we were able to come up with the money pretty painlessly. This will be the most rewarding and appreciated gift I have ever given.

What about you…how does your family handle gift exchanges? Have you ever gone the non-traditional route and not given presents?

Entitlement

One night a couple of weeks ago I came home from work late and found my husband in his pajamas watching a tv show on the computer. The first thing I noticed about the house was that that it was messier than I left it when I went to work this morning. Then I looked a little closer and noticed that he hadn’t even laid out the load of laundry like I had asked him. So I changed out of my work clothes and walked to the laundry room. As I walked through the kitchen I realized the dishwasher needed to be unloaded and there were dirty dishes from breakfast and lunch in the sink and on the counter. Sigh.

I went into the laundry room, folded the load of laundry and walked through the living room to put it away. He didn’t even look up from the computer. So what did I do in response? I huffed back into the kitchen to clean and start dinner, banging pots and pans around in the process. Halfway through making dinner he had the audacity to walk in and ask me what was wrong.

Oh yeah. I might have forgotten to mention that it was the only day off he had that week. And being the patient man that he is, he responded with a gentle explanation to my tantrum. After a week filled with two 12-hour clinicals, 18 hours of class time, and two 12-hour shifts at work, he was enjoying his only evening off. Oops.

Our sense of entitlement gets us into trouble sometimes. When we feel entitled to have things our way all the time we end up hurting other people and our relationships suffer. A sense of entitlement is what gets many people into debt also. We feel entitled to spend more than we make because we work hard, we don’t get paid enough, or we don’t get recognized for our work. The list goes on and on.

There are very few things that I think humans really need: basic shelter, clothing, food and water. Anything else other than that is a luxury. But think about all the people around the world, including children, who don’t even have all of the things on that short list. It wouldn’t take much for us to scale back on our “necessities” to ensure that others basics needs were met.

What about you…in what ways do you find yourself feeling entitled? Is there anything you previously felt entitled to that you have gone without to help someone else?

Budgeting for Home Repairs

We bought our house two years ago when we moved to be closer to family. Because we co-owned a house with my parents before we moved, we knew that owning a house on our own would mean more expenses. And I'm not talking about utilities, insurance, or taxes. I'm talking about all those little (and not so little) repairs and updates that go with owning a house. Our "new" house was built in 1980.  The previous owners had completed some updating, but there were still a few things we noticed (some before we moved in, and some after) that would need to be updated or repaired within a few years of moving in. 

What we knew to budget for when we moved in.
New Fence: The fence at our house was in pretty bad shape, and just needed to be torn down.  But to keep our dogs in for a while, we made a few quick repairs with left over fence planks. 
HVAC Unit:  The sticker on our HVAC unit showed that it was 18 years old so we knew we would need to replace it in a few years. We had the unit serviced and they didn’t find any huge problems with it, it was just old and inefficient.
Paint and small repairs:  Two of the three bedrooms had never been painted and were the original dingy, white. Their little girl’s bedroom was a Barbie purple that didn’t match any of our décor. We knew we would want to paint, but it wasn’t urgent. Our new house also only had ceiling fans in the living room and office, and living in Texas we new we would want to install new fans in each bedroom.  Our house also didn't come with a storm door.  Not a huge deal, but there are 2-3 months of the year we can turn off the AC and open up the doors.

How we decided how much to save.
New Fence:  We had money left over from selling our first house (and paying off my student loans) that immediately went to fund most the new fence. This was our priority because it was in the worst shape, and my dogs are smart.  The repairs we made wouldn't keep them in the yard for long.  We measured the length of our fence and headed to Lowe's.  I'm a spreadsheet junky so I was able to estimate the number of metal posts, 2x4s, and fence planks we would need and get a pretty good estimate.  We only had to save for two months before we had the rest of the money to replace the fence.
HVAC Unit:  Luckily we had friends who replaced their unit and ductwork shortly after we moved into our house. Their house was 200 square feet smaller than ours, and they moved the location of their unit because of remodeling. Because we are good friends they didn’t mind telling us how much their unit cost. We used that number as our goal of cash on hand to have before we replaced our unit.  We decided we would plan on replacing the unit 2-3 years after moving in.  So we took the estimate, divided it by 36 months, and started putting that money in savings.
Paint and small repairs:  Painting the bedrooms was something I had mentioned to my parents and a few family members. Because I had shared this with them, for my birthday they pitched in and gave me $100 to paint. The ceiling fans ended up being Christmas presents from my parents and grandparents, and the front door was a birthday present from Mr. DFx40. 

Why I’m glad we prepared.
Just over a year after moving in we had a little trouble with our HVAC unit leaking water, so we took a closer look. That’s when we discovered the sticker showing that the unit was 18 years old was not correct. The actual installation date of the unit was when the house was built. In 1980. After that discovery we ramped up our savings because we weren’t sure the unit would last through the year. And unfortunately, we were right. Our air conditioner stopped blowing cool or hot air this October. When the technician came by to service it he said it had quite a few leaks, and the coils were aluminum and couldn’t be repaired. They gave us an estimate on 5 different units, two of which qualified for a $1500 tax rebate. After some discussion and prayer we decided to go with the less expensive of the energy efficient units. After the $1500 tax rebate, the energy efficient unit will actually be cheaper than the regular units! It does make us a little nervous for our savings account to take such a large hit, but it does feel good to have the cash ready and not have to use credit.

Since we prepared early on for this, we will reap many benefits.  First, we don't have to take out a loan to replace the unit. We have the cash on hand. Secondly, things were timed almost perfectly for us to get a $1500 rebate on our taxes that can go directly back into the emergency fund, which equals almost 1 month of expenses for us. Thirdly, we will actually be putting the cost of the unit on our credit card, getting 5% cash back, and paying it off at the end of the month.  I'm pretty excited!

What about you...what home expenses have you budgeted for?  Which ones have taken you by surprise?

How Would You Teach Others about Money?

When my cousin moved in a few weeks ago, Mr. DFx40 and I sat down and talked with him about his situation and what happened. After this talk, we realized that there were quite a few things his parents had never taught him. So we shared the vast amount of knowledge (please note sarcasm) we have gained from our 25 +/- years on this earth.

Routines
Cousin DFx40 tends to be a little forgetful. Sometimes he forgets to pay his bills even when he has the money. This seems to be a pretty common problem. Setting up a few simple daily, weekly, and monthly routines are the best way I can think of to solve this problem. I suggest putting these in writing, whether it’s on a piece of paper on your desk, on a calendar, or tattooed on your arm.

Set a regular wake up time. Even while he was searching for a new job (which took 5-6 weeks), we had him set his alarm and get up at 7am every morning. When he did find a job he was already used to getting up every day and it isn’t a big adjustment when his hours vary each week.
Eat three solid meals a day. Eating breakfast every morning is just going to make you feel better, and better equip you for the rest of the day. And since he was already waking up in time for breakfast every morning, this was easy to add to his routine.
Have a desk day once a week. I find it easier to keep up with junk mail and bills if I designate one day a week to deal with it. Set up a station (in an area you will use) to sort your mail and bills as soon as you bring them inside. For Cousin DFx40, this is just a corner of the desk in his room.
Review your situation regularly. At first we sat down with him every week to go over where he had applied, where he was still going to apply, and if he had any offers. Now that he has a job and is working regularly, we meet with him every other week (which happens to coincide with payday) to review his bills, savings, and goals.

Goals
After our talk, we realized that Cousin DFx40 was so overwhelmed with his situation that he had no goals. He was completely lost on what he wanted to do and what he was doing. This can be crippling, especially if you are in a situation your unhappy with. If you don’t have a goal (written down or not) you are not likely to change where you are.

Write them down. I think writing something down makes it real. We have our goal, DFx40, printed out and placed on our refrigerator. Since the kitchen is a place we visit frequently, we see our goal at the very least three times a day, but usually more.
Keep track of your goals. This goes back to reviewing your situation regularly. Find a frequency that works with your goals, sit down and look at where you are. If you find that you’re not quite on track, either readjust your methods, or your goal.
Celebrate the victories. This doesn’t mean go on a $500 shopping spree when you pay off your credit cards. It means if you’ve given up going out to eat to pay the cards off, celebrate by eating out.

Budget
I realize I am in the minority of people who love to budget. It makes me feel in control and I like to have a tool to measure how I’m progressing towards my goals. Also, it keeps me honest. This doesn’t happen to be something Cousin DFx40 loves as much as me. Thankfully, since he doesn’t own anything, and doesn’t have many bills, we were able to keep this relatively simple.

Write everything down. This means all forms of income and every reoccurring expense. Then total both of these up and figure out if you even have enough income to cover your expenses. If you don’t, you have no choice but to increase your income or decrease your expenses until you can cover everything.
Figure out how much is left. When your income does cover your expenses, figure out the exact amount you need. Don’t forget to take into consideration any fluctuating expenses you might have (food, utilities, etc).
Start automating savings. Once you figure out how much money you have left after paying all your bills, you can figure out a savings amount that you can afford, and that will allow you to reach your goals. Once you settle on an amount, set this up to automatically transfer at the beginning of the month. This may be scary but you already know your income will cover your expenses without this money. If it never stays in your checking account, you won’t even notice it is gone.
Budget entertainment from what’s left. I don’t’ think that anyone benefits from not having some type of entertainment fund built in to their budget. If you don’t have this allowance, you are much more likely to throw the budget away and give up. However, I do think that this should be determined by what is left after paying bills and saving.

Cousin DFx40 wrote down his routines, goals, and budget on a single piece of notebook paper and put it on a bulletin board in his room. We also have a copy of the paper so we can help keep him accountable. If you have someone you are comfortable with I recommend sharing some of your goals with them.

What about you…what advice would you give a friend or family member who is struggling financially?

Would You Take a Roomate?

There is a reason things have been vacant around here for the last three weeks. Mr. DFx40 and I became roommates with my 20 year old cousin last month. Before you make too many assumptions, let me give you a little more information about the situation.

His Situation
Cousin DFx40 always impressed me when we were growing up. He had a job throughout high school to pay for a used car he was bought from his parents and to pay for his insurance. He had this job while being heavily involved in more than one extracurricular activity. The reason this impressed me is because I didn’t have my first job (outside of babysitting) until my freshman year in college. My parents also supplied me with a used car they were through with and paid for my insurance. Cousin DFx40’s parents were divorced when he was pretty young, and he didn’t get much direction before or after he graduated from high school. After his first year of college he dropped out because he wasn’t sure what he wanted to do, and he didn’t want to take out more student loans until he figured it out. He found a job that offered more hours and moved in with another family member. Then he got himself into a little trouble when he lost his job and didn’t tell anyone for 3 months. When his parents and his roommates parents found out, they confronted him about it and gave him a few choices. Move home, move in with aunt and uncle, or move in with us.

Our Situation
You might think we’re a little off to offer a spare room to Cousin DFx40 based on his previous record. But when we sat down and really thought about the decision we realized there were many more reasons in favor of letting him stay with us than against.

We understand his frustration. Even though both of our parents helped with out with out insurance while we were in school, we did marry young and we both paid (and are still paying) our way through college. We knew how overwhelming it could feel, and we still feel overwhelmed at times when we look at how far we still have to go.

We are in control of our finances. If our electric bill or food bill goes up drastically before he is able to pitch in we will still be able to fit it into our budget. And because we have been able to pay off so much of our debt, build our savings, and pay cash for Mr. DFx40’s current tuition, we will be able to give him some tips and teach him how to manage his finances.

We have plenty of spare room. We live in a 3 bedroom house (not counting a large game room with walk-in-closet) and we have an extra bathroom. That is more than enough space for all of us to have privacy whenever we want (or need). There will be times when it might get a little cramped, but I think we were created as social creatures and we need daily human interaction.

He is family, and I love him. Enough said.

Your Situation
I will be the first to tell you that although our situation is going smoothly (so far), having a roommate is not for everyone. You may have small children in your house, you may not have an extra room, or you may not know anyone to share an apartment or house with. In this case I suggest you look for other ways to save or make money. But if you are in a position similar to ours, you have the extra room, and you know someone well who needs a place to stay I say go for it. But I do have a few suggestions.

Agree on things before they move in. Decide on things like how much you are going to charge for rent and if that number will cover any increase in utilities. Also think about food. In our situation we are buying and preparing food for him, so we will include this in our rent. He is welcome to eat out whenever he wants, but he has yet to choose that option.

Put something in writing. This is just as important for you as it is for the landlord of an apartment complex. If something goes wrong between you and your roommate, this will be a very important document to have. If things don’t go wrong, it is still good to look at every once in a while to remember what everyone agreed to. I suggest reviewing it regularly to make sure everyone’s needs are still being met.

Learn to be forgiving and always get a second opinion. Sometimes with roommates (especially family) feelings get hurt. Learn to forgive and learn to talk to someone you trust about the situation before any confrontation. I have already discussed a few situations with my parents to determine if I was overreacting or justified in my feelings. It is nice to have some input from a neutral party.

What about you…have you (or would you) ever had to take a roommate? What steps would you take to make sure everything went smoothly?

What Will Your Retirement Look Like?

Over the last year or so, many people have changed the way they view and define retirement.  Some people close to retirement realize that they may not be able to retire at all, or that they will need to work at least part-time through retirement.  My ideal retirement would not necessarily be job-free.  I mentioned earlier that my goal is not to retire at 40 when I become debt free, but to partially retire.  Becoming debt free and partially retiring will allow me to spend more of my time and money on others than I am able to now.  A few of the ways I hope to be able to do this are listed below.

How to use time to impact others:

• Take walks with my husband or play with my children (if and when they come) instead of watching TV
• Call my parents and friends just to see how they are and send more hand-written notes
• Watch a friend' house or take care of their animals when they are out of town
• Volunteer at a food pantry, soup kitchen or children's home on a regular basis
• Build an orphanage or dig a water well in another country

How to use money to impact others:

• Help a child with part of their school expenses, or pay off a loan for a grown child
• Send my husband, family member, or friend a gift for no reason
• Treat a friend to dinner or simply give them cash if they are struggling
• Pay for someone's toll behind me when I travel
• Give gift cards to the homeless or donate to a charity

If I have excessive bills and debt I will end up spending most of my time working to pay them.  In the same way, if all of my money is tied up in bills and debt repayment, I will not feel I am able to spend money on anyone or anything else.  I want to be debt free so I don't have to spend 40+ hours a week sitting behind a desk or spend all of my income on bills and debt.  Hopefully, I will be able to spend the time and money that was previously tied-up on other people.

Until the time I no longer work full time and send all my money to pay off debt, it will be a struggle to think of ways to live missionally.  However, if I review the things listed above, I realize that many of these things are within my reach now.  I came across the 10 Day Give on Christian Personal Finance last week and decided to sign up.  If you are interested, go to http://www.christianpf.com/10daygive/ and sign up too!  According to the website, the 10 Day Give is, "a challenge that is designed to help us get our minds off of ourselves and start thinking about how we can help others."  This should be a perfect opportunity to live missionally and to pick other peoples' brains about new ways I can use my time and money to impact others on a daily basis.  Hopefully when I do retire, it will look a lot like the 10 Day Give!

What about you...what do you want your retirement to look like?  What are some ways you would spend your time and money in the 10 Day Give?

What is Your Purpose?

Are there certain blogs that you read every day?  Have you ever thought about what keeps you going back?  Is it the delivery?  The topics?  The purpose?  If you look at my sidebar you will see the blogs that I read almost every day.  I find that I keep going back to certain blogs for two main reasons:  the writer's delivery and their purpose for writing.

Delivery
Let's face it.  Some people are just more taleted than others at delivering a point.  Everyone who writes honestly has a distinct voice; no one is going to write a post on a topic the same way.  One of the blogs I read in particular, Punch Debt in the Face, keeps me coming back every day mostly because of his outrageous delivery.  He makes a pretty boring subject a lot less boring.  Check out his financial mad lib and finance rap - awesome!

Purpose
It's pretty hard to keep getting up every day and going to a job if you don't have a purpose, whether your purpose is to receive enjoyment or to receive a paycheck.  In the same way, it's pretty hard to write a blog and keep coming up with new content if you don't have a purpose for writing.  For example, consider the following three blogs and what their writers say about their purpose.  

Jim at Bargaineering says the purpose of his blog is to educate, "both myself and others about the complicated topics in the personal finance world."
Bob at Christian Personal Finance says his mission and the mission for CPF is to, "make, save, grow, and give money."
Jen at Millionaire Mommy Next Door says her mission is to, "inspire and empower others through financial education so they too can enjoy the life they want to live.

This blog has a purpose too.  But in order to understand the purpose of this blog, you need to know a little bit about the goals I have for my life.  One of my goals is to be debt free fifteen years from now, before I turn forty.  But this goal is just a piece of the main goal of my life, which is to live missionally.  I believe that to live missionally you show love to your family, your friends, and people you don't even know.  One thing I've discovered is that to live missionally you have to spend time or money (I'll talk more about this in later posts).  With that said, the purpose of this blog is threefold:

To teach and be taught
To hold myself accountable as I journey towards being debt free
To inspire others to live missionally

What about you...what goals have you set for your life?

Welcome to Debt Free by Forty

Welcome to Debt Free by Forty, or DFx40 for short. I realize I didn’t choose a very original name, but I chose it for a reason. If you haven't guessed, I want to be debt free before I turn 40. If you’ve taken the time to read the “about me” section you know that I am 25 years old, which means I have 15 years left. Just to clarify, my main financial goal is not to “retire” at 40. I do want to at least partially retire, and hopefully that will happen earlier than 40. But I’ll talk more about that later.

What about you...do you have a debt free goal?