Could you Survive Without Earning/Spending Money?

Jul 22, 2009 @ 08:49 am by EMS

An interesting read from Style Magazine:

Could you Survive Without Money?

The article details the life of a gentleman near Moab, UT who lives in a cave and basically fends for himself.  He brings up the very good point that his lifestyle reflects life for millions of years before “modern” man and that the typical American’s lifestyle just doesn’t make sense on a lot of levels.

While I certainly don’t want to go find a cave to live it, this article does make you think twice about our constant strive for material things.

Our Updated Financial Plan – A “Total Money Makeover”.

Jul 21, 2009 @ 10:59 am by EMS

We’ve decided to do things differently…

We’re saying NO to loans…

We’ve felt that we’ve been pretty financially conservative.  We’ve always lived well within our means, only have carried a credit card balance for maybe three months in the ten years that we’ve been married, and have generally been “good citizens” with the financial assets that we have.

However, we haven’t been feeling as though we’re making the progress that we need to in order to send our 3 kids to college and still retire at a decent age.  That’s why we’ve decided to switch things up a bit.

I first listened to Dave Ramsey a few months ago, shortly after I had purchased our new vehicle which happened to be equipped with XM Radio which broadcasts his show daily from 3:00 to 6:00 EST.  Other than his political views, which I feel that he throws into the show more often than is needed, I found that in general I agree with his program.  For those that don’t know, Dave is a proponent of what some would call “extreme” fiscal conservativeness.  He advocates getting out of debt (even your home mortgage) and then staying out of it.  That means no credit card loans, no car loans, no ANY loans.  The more I thought about it, the more I liked it.  I ponied up the $10 to buy his Total Money Makeover audio book, listened to it, and decided to give his program a try.

Dave plan is simple, and that’s why it works.  He has identified seven steps that one must take to achieve financial well-being:

$1,000 to start an Emergency Fund
Pay off all debt using the Debt Snowball
3 to 6 months of expenses in savings
Invest 15% of household income into Roth IRAs and pre-tax retirement
College funding for children
Pay off home early
Build wealth and give!
Invest in mutual funds and real estate

Fortunately, we feel as though we are in a very good position to start the program.  With no credit card debt, and just $5,000 remaining on our car loan, we should be onto step 3 before the end of the 2009 (I could immediately pay off the car loan if I were to jump into our emergency fund, but that’s not something I’m comfortable with).

We sat down and established this short term timeline:

End of August 2009 – Have $3,000 on hand for connection to the water authority’s water line.  As mentioned in previous posts, we are being forced to connect to “city” water this summer.  This (unneeded but forced) expense will set us back in the plan by at least 1.5 months.  The water authority still has not given us a date as to when the bill is due, but considering they tore up my neighbor’s yard yesterday to lay down about thirty feet of pipe, I’m sure that it is sooner rather than later.

End of 2009 – Completed paying off the remaining $5,000 on the Hyundai Elantra loan.  This will give us two clear titled vehicles with under 100K miles.  The van will be the next one to replace, hopefully we are able to push that beyond 2012.

End of 1st Quarter 2010 –   At this point, I’m hoping that we will have increased our emergency fund by $9,000, giving us a total of $20,000.  We believe this total will give us 5 to 6 months of living expenses should one of us lose our jobs.

2nd Quarter 2010+ – At this point, we should be able to increase our retirement funding to 15% as well as schedule more regular college contributions.  Once we get into this step a bit further, I’ll be able to determine at what levels we can do this effectively.  We will also revisit what (if anything) we could do to pay the home off early.  While this certainly sounds appealing and I think we could definitely make headway, I want to see how the next six months pan out before we commit to anything.

Ongoing – Reduce credit card usage and do all that we can to reduce spending.  Ramsey’s plan includes shredding all credit cards and thus removing one’s ability to go into debt even if they wanted to.  However, I think that we’ve proven ourselves to be responsible with credit cards and the bonuses that they offer still make them worthwhile (for instance, just last month we received $100 in free gas just for using the credit card at particular stations).  That being said, I have committed to using our debit card for most purchases, which I believe will help decrease some of the non-essential spending that I may have been guilty of in the past.  We are currently in the process of moving the majority of our purchases from credit card to debit card and our next credit card bill should be the first in months (if not years), that I’ll have a sub-$1,000 bill.

So that’s the plan.  Please leave some comments if you’ve gone through a similiar process or think we are nuts!  I’m hoping that a side-effect of this plan will be increased postings to this site to document our progress.

June 2009 Net Worth Report (-$4,058)

Jul 02, 2009 @ 08:14 am by EMS

As expected, June was a negative month due to vehicle depreciation.  I knocked nearly $5,000 off of the value of our 2007 Hyundai Elantra.  June also was n0t a good month as far as expenses go.  We spent nearly $1,300 on a week long vacation.

Our investments held their ground with no significant increase or decrease.

July should be a fairly strong month for us (at least in the factors that we can control).  We are hoping that our expenses for July should be significantly less than they were for June, but at some point in the next three months we will have to shell out at least $3,000 to connect to the water authority’s water line that they are running down our street.  I’m still not sure how to handle this within my accounting system.  I have never fluctuated the value of our home, even though data shows that homes in our area have appreciated about 5% over the past three years.  I may take the costs from this water line project and add it to our home’s value so that we don’t take yet another hit in these rough several months.

June 2009 Net Worth



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