Money$

I had a request this morning to write a blog about our budgeting process.

I have been wanting to write a blog about this for a while, because this is a pretty major part of my life right now, and is something that Dave and I are really focusing on.  That being said, we haven't really been doing this very long, and so I am worried that if I write this and then majorly screw up, you will all make fun of me.  But I think it is an important topic, so I am going to talk about it anyways.

There are three major components to our money situation, they are:

1) Banks

2) Jars

3) Debt Repayment

This post will revolve around these.  If you are interested in only one area, you can just check out that section - because I know this will be long!

Banks

Individually, Dave and I have both had individual accounts with the Bank of Montreal for the majority of our lives.  I first got mine before we took our trip across Canada as a family, which was the summer between grade 4 and 5 for me.  So, I have had mine for a long time.  I am not exactly sure when Dave had gotten his, but he has also had his for a long time.

And individually we had never reached our cap on transaction limits, and being students, we never had to pay fees to have our accounts, so we had had pretty positive relationship with them.

When we got married, we chose to each keep our own individual chequing and savings account, and get a joint chequing and savings account.  We functioned primarily from the joint chequing account.

Which worked great until October or November of last year when we got charged about $40 because we had used too many transactions.  So, of course - we were upset and Dave called BMO, and asked them to take the fee away, or reduce it or whatever, and they refused to.  And then Dave said that we would take our business elsewhere - and they told him to go ahead and do that.

Needless to say, we were not impressed, so started looking for somewhere to move our money where we wouldn't have to pay fees and would get more than a 0.00003 (or something like that) interest rate.

Well, soon after we discovered ING.  I have always enjoyed their commercials, and found out that my sister and brother-in-law had an ING account and so asked them about it, and my brother-in-law told me how much he liked it.  We were pretty cash poor at the time, and didn't have the money to open an account and make it worthwhile (if you put $100 in, they will give you $25 extra! yippee!), so we didn't end up opening one until last month. 

I am really enjoying ING so far.  There are no brick and mortar banks in the area (they have 'cafes' in some larger cities), but there is 24/7 phone access, and you can chat with them online or email them.  We set up our savings account, and have since opened a chequing account.  We are waiting on our bank cards, but are pretty excited to get them soon.  You can use the bank cards for free at any ATM within their network, which is actually quite a few!

This has been a major switch for us.  ING has no fees, and although our savings doesn't have very much interest, it is 1.5% which is a lot more than at BMO.  Once we open other accounts with them, we will be earning a lot more interest as well.

Jars

We use jars to budget our money.  You see, we tried to just use our debit cards and track that way.  But it is a lot easier to pull your wallet out and swipe than drive home, grab the money from the jar, and go back out.  You only do it if you really need it.  That helps.  It also helps us save money.

We have a jar for every single thing in our budget.  Now, some are grouped.  Our jars are as follows:

• Fuel
• Auto Maintenance
• Entertainment
• Gifts
• House & Personal
• Food & Dining
• Pharmacy
• Rent
• Health Insurance
• Auto Insurance
• Home Insurance
• Sponsor Child
• Weight Watchers
• YMCA
• Phone
• Credit Card Payment
• Tuition Payment
• Savings (for our emergency fund)

Literally when we get paid, we then take most of the money out of our account in bills and coin and distribute it in the appropriate jars.  Although many people only use this system for their variable accounts, I find using it for all of our accounts makes it so that we never take money that should be used for something else (or if we do it makes us feel bad and we record it).  But it means that almost all of my bedroom shelves are filled with jars.  If we have automatic withdrawal on something we put the money in the appropriate account the day before.  

Don't worry - I have never had a line like this at the bank - but mostly I send Dave anyways.

You need to understand that this system means a lot of trips to the bank, but that I hear that it works really well, and I hope it continues to work for us.

Debt

I am scared to death of debt.  I was reading an article today that said that the average Canadian family carries $100,000 of debt.  I feel like debt is very limiting to people.  It makes us slaves to our creditors.  I believe that God frequently addresses the issues with debt in the Bible, and I honestly think that he speaks out against it.  And even if you don't believe in God, I believe that as long as we are in debt, we are working to get ourselves out of it, which really means we aren't working by our own freewill.  So, if you want to be free - don't be in debt.  

I understand that living without debt is hard in today's society.  But I believe it has to happen.

I also understand that Dave and I are lucky - neither of us have student loan debt.  So the debt that we carry right now is not very high.  But it is crucial to me that we pay it off.

I bought Dave Dave Ramsey's Total Money Makeover book for his birthday.  He hasn't read it yet, because if you don't know yet - my husband is a pretty slow reader and so he is still working through Paris 1919.  If you are a history buff like my husband, you might like it.  I wouldn't know.  I wouldn't touch those kind of books with a 50 foot pole.  Gross.  I like fiction books like the ones written by Jodi Piccoult and John Grisham,

If you're crazy and want to know what this book looks like in order to buy it - here it is.

But anyways, since Dave hasn't read the Total Money Makeover yet, I decided that I should.  So I am in the middle of reading it.  I like Dave Ramsey's ideas though.  If you are concerned about your financial future, pick up the book and read it. Even if you don't plan on making changes, he is great at showing you what the reality will be (like if you have a $110,000 mortgage at 7%, it will cost you $280,000 if you choose a 30 year payment plan, and only about $190,000 over a 15 year plan - all for only an extra $250 a month).  He has a lot of insight and a great plan.  He walks you through baby steps (don't be confused into thinking that the baby steps take only a couple days, this is long-term commitment, people!) to help you get out of debt and be rich!!!!! 

This is the good book.

The first step in Dave's plan is to save $1000 buckaroo's.  Which seems like a lot, but this money is gong to act like your buffer when you don't use credit cards anymore.  So you can no longer say "I NEED this credit card in case an emergency comes up".  Now you saw "I have this money in savings I can use in case of emergency!".  This is the step Dave and I are on.  At the same time, we are kind of cheating and paying back some debts just because of when they are due and wanting to pay them.  But this is our primary focus.

Dave Ramsey also has other books, he does a class type thing called Financial Peace University, and he has a radio show.  You can find out more about him here.

You also need to know that I have recreated forms from Dave's book that help us track our money better.  Those, along with the other ones that I made up make up 27 pages of forms we fill out to track our money every month.  If you want to see those, I can send them to you - but they are very beneficial 

Maybe when I reach the next steps I will talk about them too, but I think this post is long enough already.  Have any questions about how we deal with our money?  Ask me!

Also - I need your opinion - whats the best way to go to school without getting into too much debt.  I'm looking at going for my masters next year, and I can't figure out the cheapest way to do it!