Beating Broke

Personal Finance from the Broke Perspective

Killing Debt? Have a Realistic Budget

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Do you have debt?  Does it drive you crazy?  Do you stay awake at night wondering how to pay it all off?  Does it feel like you will never pay it off?  Do you argue with your spouse about your bills?

While debt can at times be a useful tool (student loans, for example), when it comes time to pay it back, debt can be a heavy burden no matter if it is good debt or bad debt.  Debt can cause marriage problems and even affect your health.

If you have decided enough is enough, and you want to be free of debt once and for all, you might be tempted to slash your spending and put all of your extra money on your debt.  Be careful, though, because this type of plan can lead to a quick crash and burn much like a person on a crash diet will only follow the plan for a few weeks before giving up.

Before you even begin to put extra money on your debt, you must first create a realistic budget.

What Is a Realistic Budget?

A realistic budget is one in which ALL of your expenses are taken into account.  Perhaps you pay your car insurance every 6 months, and it is $400.  If you want to create a barebones budget so you can pay off debt, perhaps you don’t consider this payment, which can be a mistake.  When the car insurance payment is due, where is the money to pay it?

We have been paying down our debt aggressively, and we made the mistake of not having a realistic budget.  We did have a $1,000 emergency fund, but because so much of our extra money was going toward debt repayment, we continually hit months where we had expenses such as the semi-annual car insurance payment and no cash to pay for it.  We would rob the emergency fund to pay it, and then we would have to stop our extra debt repayment for awhile to build up the emergency fund.  This cycle creates its own stress.

A Realistic Budget May Mean Hard Sacrifices

When you add up all of the payments you have to make in a year that don’t come in regular monthly intervals, you may be surprised.  There is car insurance, house insurance, license plate tabs, vet bills if you have animals, car repairs and maintenance, children’s athletics, and clothing for the family to name a few.  Add up how much you spend on these, and you probably easily have a total in the thousands.

That is thousands of dollars that are unaccounted for in your budget.

Almost a year into our debt repayment, we finally made a realistic budget.  We were shocked to see that when we set aside money each month for a portion of our annual or semi-annual payments (like $67 for our semi-annual car insurance payment), we didn’t have enough income to cover our realistic expenses.  As a result, we had to make some hard sacrifices such as cutting cable completely and pulling our daughter out of her expensive preschool.  These sacrifices weren’t easy, but making them did relieve some stress.  Now we no longer have ups and downs in our money flow.  We set the money aside, and when the bill is due, the money is there to pay it.

We may not be able to put as much on our debt every month, but we have a set amount for repayment above the minimum payment, and any extra money that comes in also gets put on debt.

Creating a realistic budget can help you avoid the stress of not having enough money certain months to pay all of your bills when semi-annual and annual payments are due.  However, you will feel more in control of your money, which can create a positive cycle.  The more in control of your money you are, usually the more money you find to pay on your debt.

What irregular expenses give you financial difficulties?

My Container Garden: The Season is Over

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This spring, frustrated by the lack of any good growing space in our yard, we decided to give a container garden a try.  We bought up a whole bunch of pots to put everything in, got some good potting soil, and planted away.  Once we were done, we planted a couple pots of tomatoes, a couple pots of cucumbers, a longish pot of green beans, a pot of green peppers, a longish pot of carrots, two pots of onions, and two large pots of potatoes.

Last weekend, with the low temperatures in the forecast dipping below the 32 degree mark, we decided it was a good time to pull up the root vegetables, and pick anything that was ripe.  Considering the few silly things we did, and the terribly hot summer we had, I think we did O.K.

Container Garden Harvest

In the picture, you can see some of what we pulled up last weekend. I wasn’t quick enough on the camera trigger to get pictures of the carrots or peppers before they got taken into the house. Also not pictured are any of the cucumbers, beans, or tomatoes we’ve harvested throughout the summer, or any of 10 or so potatoes that we pulled out from the bottom of the potato bag in August.

Overall, I’d have to say that I was slightly disappointed with the harvest.  None of the onions grew to very good size.  What cucumbers we did harvest were all seeds and no flesh.  The heat really played havoc on most of the plants in the containers.  There were several weeks where the plants really needed to be watered every night, but we were either gone, or didn’t get home in time to do it.  I also made the mistake of planting a few too many plants in some of the containers, and I think they got crowded which stunted their growth.

The quality of what we got, however, was pretty good.  Fresh potatoes taste nothing like what you get from the store, they’re so buttery and sweet.  The onions, while small, were very good as well.  My wife made a salsa with some of the tomatoes and onions, and it was very, very good.

I’ve already got a pretty good mental list of the things that I’ll be changing next year.

  • We get such a short growing season here, that I either need to start the seeds much earlier in the house, or just spend the money and buy greenhouse plants when it’s time to plant.
  • I’ll have to be careful to reduce the number of plants in the pots as well, to cut back on the crowding issue we had.
  • I’m also thinking about building a few planters attached to the deck so I don’t have to buy any more pots.  Of course, I could try and find some second hand pots as well.
  • The soil we use may have to change a bit as well.  The stuff we bought this year, while good potting soil, just didn’t seem to keep it’s consistency very well.  Part of that may have been the need for more watering.
  • I’ll be changing the mix of plants that I plant as well.  The cucumbers didn’t seem to take to containers all that well, so I might cut those in half.  I’d also like to add a few more tomato plants, and a few more varieties of peppers.  We only planted green peppers this year, but I’d like to try some jalapeno, and maybe another variety of hot pepper.

How did your garden turn out this year?  Do you plant in a garden or in containers?

 

I Feel So Small

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Occasionally, I feel so very small.  I’ll try and explain. (Also, excuse me a bit, as this is only vaguely about money and finance, but please read to the end.)

I recently attended the Financial Bloggers Conference.  It’s a conference of people, like me, who run and write (or just write) blogs that are finance related.  Mostly, we write about personal finance.  Whether it’s by design or not, each of the FINCONs I’ve been to have had a very distinct “feel” to them.  The first had an emphasis (at least in my perception) of building the blog, and ways in which we can monetize our blogs to make them self-sustainable.  This year, the theme, as I perceived it, was all about voice.

Perhaps that can be attributed to Adam Baker (of Man Vs. Debt) and his opening keynote.  Throughout the speech, he spoke about defining the why.  Writing for the why.  Living out the why.  What is the why?  It’s the purpose.  It isn’t the product, and it certainly isn’t the site.  It’s the reason that we write what we write.  It’s the reason that we come back night after night to write articles for our sites.

For me, the “why” of Beating Broke is to share the knowledge I have.  It’s to share the knowledge I learn.  It’s to have an outlet that allows me to reach a few people and, hopefully, help them make their financial lives better.  I write articles about finance to make your financial life better.

During Adam’s keynote, I realized that I was surrounded by 450 or so other writers.  Each with their own unique voice, talents, and experiences.  The realization of that, and the realization of how many people there are out there that don’t even use the internet makes me feel so small.  I’m such a tiny, tiny, drop in a sea of information.

Later, I sat in on a panel of some of the pioneers in the financial blogging community.  During that panel, they spoke about how the community has grown, and how much the community’s influence has grown.  Another keynote speaker, Liz Weston, spoke about how our influence is growing.  She touched on how what we do, sharing information online, has become more and more accepted and acknowledged as a source of information.  Again, surrounded by the community of bloggers that I am a part of, I felt so small.

If you’re reading this, it’s because you have become a part of the Beating Broke community.  It’s a small community in the middle of a much larger community.  But, it’s a community with one overarching “why”.  We exist to make financial lives better.  We do it by making our financial lives better and then sharing that with others.

So, today, I’m going to ask you to share.  Share the community with someone else today.  Invite someone else into the community.  You’ve got plenty of options on how you do that.  With all the social media available, it’s becoming pretty easy.  Send an email, write a tweet, share on Facebook, or any number of other ways to share.  But, share.  We become better by helping others become better.

Share your favorite blog, blog post, or any bit of information today.  Invite them into the community.

And, finally, if you’re a part of the community, I want to help make your financial life better.  If you’ve got questions, please feel free to ask them.  Leave a comment below.  Or use the contact form to send me a note.  I’ll do whatever I can to get you an answer.

img credit:C! on Flickr