1 Year Ago Today – 10 things we've done to regain financial control

By glblguy

Rainbow after a storm
One year ago today was a life changing day for my family and I. Honestly, it doesn’t even seem like a year ago, but more like yesterday. See, on November 7th 2006 our lives suddenly took a huge turn for the worse, it was the day we had what I will refer to as a major life crisis. The crisis itself is actually quite personal, so hopefully you will understand if I don’t share the details, but suffice it to say it vividly stopped us in our tracks, I was out of work for 3 months, and we wondered if I would even have my job again.

Soon after, my 7 year old son was diagnosed with Type 1 Diabetes, even furthering our downward spiral. All of this happened during our most favorite time of the year…the holiday season. You can read more about all of this on my about page, or in my article where I discussed why I blog.

Looking back now, I certainly wouldn’t wish these circumstances on my worst enemy, but at the same time I don’t think we would be in the state of financial control we are in today. It would seem the old saying “Every dark cloud has a silver lining” is very true. On this anniversary, if that is the correct description, I thought I would share the 10 things we’ve done to regain control of my finances and prepare ourselves in the event anything like this ever occurs again. Let’s face it, life throw waves at you everyday, some are small, some big, and some, like mine, are tidal waves. Be prepared.

1. Relied on our faith

My family has always relied on our faith, but never like we have for the past year. We are Christians and have been Christians all of lives. Until a year ago though, we never really understood the true meaning of faith. Being Christians, we relied on the word of God found in the Christian Bible to guide us in our decisions, both personal and financial. When you start looking and reading, the Bible is full of very sound financial advice.

If you aren’t Christian, look to whatever personal faith you have to help you in finding your way and when making decisions. Without faith, I wouldn’t be writing this article and not sure where I would be today. We began practicing the advice and guidelines for financial peace outlined in the Bible and as a result our finances are way better off than they were. That’s not to say we don’t have a long way to go, but I now feel confident we can get there.

Maybe your faith isn’t Christian, and I respect that, and encourage you to immerse yourself in the faith that you have. The point is, we found new meaning, purpose, and teachings we didn’t even know where there before.

2. Understood that we were the biggest obstacle to being wealthy

Personal finance is far less about math and numbers than it is about behavior and attitude. To regain financial control, you have to look at the person in the mirror and realize that your choices have brought you to where you are. You have to recognize that financial problems are related to your behavior and your ability to control it.

We decided to buy new cars instead of used and saving the extra money. We decided to purchase new furniture on a credit card instead of purchasing used furniture and saving up cash to by new furniture. We decided to buy that big screen TV when the TV we had was just fine. It all boils down to good and bad decisions we’ve all made.

So confront that person in the mirror, and make the decision to control your behavior. Until you do this, you will not be able to move forward.

3. Established a plan and goals

How often do you get into your car without knowing where you are going? The same holds true with your finances. Without a set of goals and a long term plan it’s impossible to get where you want to be. Develop a financial plan and set short term and long term financial goals. Review them frequently, and revise them as appropriate. Doing so will keep you focused and on track.

4. Built an emergency fund

When our major life crisis occurred, we had little to no money in savings. We were faced with not being able to pay the bills within a few weeks if we didn’t have some immediate income. This is not a situation I would recommend anyone be in.

As I said earlier, life throws things at you that you cannot predict. Without a financial buffer, surviving these things can be difficult. We relied on credit cards to survive these things in the past, and as a result our debt snowballed and snowballed.

Instead, create an emergency fund. Start with $1000-$2000 dollars, and work it up to 3-6 months worth of income. This money should be liquid, in that you can get access to it fairly easily without major penalty. We have about $1500 right now, and will stay that way until we get our consumer debt paid off. Once that’s complete, we’ll migrate to 6-months worth of savings.

Just having emergency money in reserve will go a long way to easing your stress and giving you peace of mind. I cannot begin to tell you how much better we feel about our finances just by having $1500 in savings.

For a more detailed article on emergency funds, read my article on how to establish an emergency fund.

5. Live on a budget (i.e. spend less than you earn)

One of the most popular pieces of financial advice you will find is spend less than you earn. This is such a simple concept, but yet so difficult to actually put into practice. Establishing a monthly budget is the key tool to doing this.

We create a budget for the upcoming month in advance of that month. We layout our expected income and expenses on paper, so we know exactly where our money is going. Once we run out of money for that expense, we don’t spend it anymore. It is really pretty simple.

Our budget is the financial controller of our marriage. Our budget is the bad guy that tells us we can’t spend anymore money. We do our budget together and agree to follow it together. We also review it weekly to see where we are and make an necessary adjustments.

You can read more about how to create a budget and following it here. You can also find a guideline budget here.

6. We manage our finances together

Are you married? If not you can most likely skip this section, as I don’t advocate sharing your finances with anyone until you are. If you are married, do you fight over your money? Of course you do, we all do, in fact money is the number one cause of marital fights and divorce in the U.S. What to stop fighting about money? The answer is really very simple, do your finances together.

Face the mirror together, plan together, save together, budget together, and track your expenses together. When both couples have a say in the money and both agree on the goals and how your money will be spent the fighting stops. One of the biggest issues in our marriage that caused strife was one of us telling the other when we could or couldn’t spent money. We now have a budget that both of us develop and agree on. The budget now tells us how we can spend our money.

Do we still argue over money? Sure, sometimes…but honestly not very often and when we do, it’s generally because we skipped a budget meeting or didn’t communicate.

For more info on working together on your finances, take a look at these articles: How to get my wife or husband to follow a budget and In Financial Chaos? Pass the test,

7. Stopped using consumer credit

After finding Dave Ramsey and reading the Bible’s perspective on debt we decided to begin our journey to be debt free with our first goal to payoff our credit cards.

Debt is like a ball and chain the keeps both you and your money from growing as quickly as it should. If the ball is big enough, you may not be able to move or grow at all. Debt is also like a dark cloud that follows you around and never seems to go away. Personally, it caused us a great deal of stress and even made us feel hopeless at times.

Just imagine for a second how much money you would have each month if you had no debt…no mortgage, no car payments, no credit cards. For us, it would be a significant amount of money. Money we could invest and get paid 10-15% interest for instead of paying out 5-30% interest. In many cases, debt makes you poorer and other people richer.

We cut up our credit cards and haven’t used one since. We’ve paid off 3 cards, and this month should have the forth gone.

You can read more about being debt free here. You can also read through some of the article I’ve written on debt as well.

8. Placed our money where it will earn money

We’ve always kept of money in local bank checking and savings accounts which have probably the lowest rates available. Now, we keep all of our money in ING Direct Savings accounts. My paycheck gets deposited into our local bank account for paying monthly bills, and our savings money gets transferred from there directly into our ING Savings Accounts. I say accounts, as ING allows you to have multiple “sub” accounts to divide up your savings. For example, I have an emergency fund, property tax fund, Christmas fund, and an account for my earnings from this blog.

Rates have recently dropped substantially at ING, but they are still far better than your local checking and savings account. Seeing the monthly interest deposits is really rewarding. If you don’t have an ING Savings account and would like one, let me know and we will both get some free money!

Don’t make the mistake of leaving your money in a no interest or low interest account. In doing so, you are missing out on income. Make your money work for you.

9. Automated our finances

Dealing with finances, paying bills, updating balances is painful. We’ve automated our finances. All of my bills are paid automatically using online bill pay and all of our savings transfers are automated using online transfer features. I am still working on automating our budget and expense tracking, but I’ve had good success with You Need A Budget, Mvelopes, and with Mint.

With the technology facilities available today, you can honestly spend less than 5-10 minutes a day thinking about your finances. Take advantage of these services and save yourself some time and stress. Just not having to keep track of what bills are paid and which ones are due has gone a long way to making me a much happier person.

10. Stopped making purchase decisions based on emotions

In the past, we would make very uneducated and frankly stupid purchase decisions based mostly on emotion. Just a few examples:

  • Going to the dealership to buy a car without knowing the dealer cost, financing options, or even exactly what we wanted. Worst part, we would go ahead and buy it!
  • Going to a furniture store, falling in love with a bedroom set but not being able to afford in. After seeing the 0% interest for twelve months, coming home with a $3000+ furniture set and further in debt
  • Purchasing a big-screen TV, again 0% down for twelve months.

Would I have made these purchases anyway? Maybe, maybe not. The point is, we purchased based on emotion. We now have a rule, if we are out and see something expensive we want, we sleep on it. Doing so has saved us quite a few times. Your perspective on the purchase is real different once you are out of the store and dealership and have had time to think on it. That is the exact reason sales people pressure you so much to not leave and to buy now. They know from experience that if you leave, you probably won’t be back.

Make intentional decisions about your money, and really evaluate what you want vs. what you need. If you want a big screen TV, then save for it. Honestly, you’ll save money as it will be cheaper down the road anyway.

34 Responses (including trackbacks) to “1 Year Ago Today – 10 things we've done to regain financial control”

  1. Amanda D Says:

    I’m glad to hear you are doing better. Just imagine where you will be next year ;) Bible=best PF book ever! Cheers to a much happier holiday season this year.

  2. Amity Says:

    Kudos to the one year mark, and I especially thank you for being candid about your faith and gently reminding people that faith can carry us through our worst times–without telling people to believe the same beliefs. What a great way to reach out to your audience and not alienate people.

    My personal crash and burn came the first week of September of this year when I found myself on a plane heading from a small tropical island (working and supposedly living my dream) back home to my New England state, completely broke ( I used the last of my money to buy my ticket home) with no home, no job, no savings, and one very unreliable vehicle waiting for me, which broke down within the month. It was a wretched time to be me, but I was lucky that my family helped me out and I was also very fortunate to have faith that no matter how big the mess, I knew the Fixer of all messes. And it has required me to look long and hard at my character and really change a few things in my life–many changes mirror your suggestions above. Thankfully I now have a job, a very cheap apartment, a second job, a new car, and a plan to handle my debt which spiraled out of control while I was “living my dream”.

    Anyway, I appreciate what you offer people on this site and I will continue to read.

  3. Miss Millionairess Says:

    Hopefully this next year will involve a lot less trauma for you. Keep up the good work!

  4. dawn Says:

    “Thus far the Lord helped us.” I Samuel 7:12
    Faith pulls us through so much.
    Congrats on your milestone.

  5. Lynnae @ Being Frugal Says:

    Great post, my friend! Your story gives me hope that my husband and I will look back at our present circumstances and see it as a life-changing time.

    One question….do you use a spreadsheet, Mvelopes, and Mint in conjunction with each other, or do each work separately? I’m currently using Mvelopes, but it’s spendy, and if Mint does the same thing, I’d rather use the free program. :)

  6. Ben Says:

    Happy anniversary, I’m glad this year is going better :)

  7. glblguy Says:

    Thanks everyone! I really appreciate the kind comments and encouragement!

    @Amity – Thanks for sharing your story…that does sound horrible. He always has a plan for us that is in our best interest, it’s just frequently beyond our ability to see or grasp at the time. It becomes amazing clear though over time.

    @Lynnae – You will be better off for it, I know it. If you need inspiration, just read “Footprints” :-)

    No, Mvelopes is better that Mint, at least for now. Mint does a great job tracing and categorizing your spending, but it’s not good at budgeting yet. Actually, I’ve found the new budget feature to be buggy and confusing…not to mention you can’t change or add your own categories yet.

    I like Mvelopes a lot, just to cheap to spend the money.

    I’ve on a quest to find something…I’ll post about it once I find it. For now, I use Mint to get an overall picture, but use a custom spreadsheet I have (which is tedious) to keep my budget.

  8. Lynnae @ Being Frugal Says:

    Ah yes, Footprints. I love Footprints!

    Thanks for the info on Mint (which I still haven’t tried…on my to-do list). I paid for a year of Mvelopes last spring, so I have a few months left to find something else. Maybe Mint will work out their bugs by then. :)

  9. Laura Says:

    Wow, I’m amazed and inspired by the growth you and your family have gone through this past year. I hope next week is a bit less stress. I look forward to following your journey. Thanks for sharing!

  10. nebulae Says:

    Great advice on how to get straightened out financially. I disagree with the generalization that all couples fight about money (and I hear it all the time.) My husband and I have been married 25 years and we’ve never once had a fight, argument, or disagreement about money. Neither of us was educated about money in the beginning but we were by nature cautious so we always consulted each other before major purchases. At first we really had very little money to fight about! But even as we made more money and had to make more serious decisions, we always agreed with what seemed logical. BTW, we’ve never had a fight about sex, either. So please, no more generalizations! Marriage gets a really bad rap in this society as it is.

  11. glblguy Says:

    @nebulae – Welcome to Gather Little by Little and thanks for the comment.

    I agree, it is a generalization, but not one that’s off by far. I would venture to say you are in a very small minority…of course I wish I was in it with you, but I’m not. We are now, but not in the past.

    I think that is wonderful and it sounds like you have a very strong and lasting marriage! I agree, marriage does seem to get a bad rap…I can’t imagine my life not married!

  12. glblguy Says:

    @Laura – Thank you for you kind words and you’re welcome!

  13. plonkee Says:

    Apart from no. 1 (which I could tweak for the faith-less like me) these are all pretty much perfect. I think maybe you just need to get into investing – in the tortoise style. It’s unfortunate you had any crisis, but better to make changes when you had to than not at all.

  14. Just Another Blonde Bimbo at 45 Says:

    About two years ago I had the moment–I realized that at 45, divorced, with no children and living 500 miles from family and very under-employed-it was all up to me.
    I created my own excel spreadsheet to track my expenses. Unforunately, I still used money emotionally at times. For some reason, I though I was the only person in this situation!!! What an ego.
    I now take advantage of the many financial help sites and blogs out there, and am researching starting my own. Never underestimate the impact you all are having on people out there!! We are all in this together.
    I hold your family in my prayers for a good strong safe year.
    And, thank you.

  15. glblguy Says:

    @plonkee – You must have faith in something, even if it’s in yourself right? That is why I said “look to whatever personal faith you have to help you in finding your way and when making decisions”. I realize not everyone shares my Christian faith. Actually I am investing via my 401k and have been since I first started working.

    @JABBat45 – Thank you so much for the encouragement and kind comments. I always said if this blog made a difference in just one persons life it would be worthwhile. Thanks again!

  16. plonkee Says:

    I know what you’re getting at, I merely wouldn’t describe it as faith. But yes, looking towards whatever gives you strength is certainly a good thing.

    The stuff about investing not being in your list makes sense then, since you had that right to start off with.

  17. Jeff Says:

    Amazing article and very encouraging for someone starting out on the journey.

  18. Debt Reduction Says:

    Great number one – Relied on our faith! Glad to finally see someone willing to express who God is in who we are.

    He gives us the ability to create wealth and he places us in circumstances for our personal growth.

    God Bless you and your family!

  19. David Makes Cents Says:

    I would agree that everything you did here was good, except for putting your money in ING. I agree that ING probably has the best rate of banks, but even the best banks just dont earn enough. I think you should put your emergency fund there, but besides that, I feel you should have some money in stocks, bonds, or prosper(even though I know u dont like prosper).

    I wonder how that account for money made from this blog is doin?

  20. Make Friends, Earn Money Says:

    I am so proud of what you have both acheived. It’s obviously been hardwork but i’m sure it will be worth it. I think that having an emergency fund is a great way of avoiding using a credit card. If we examine credit card APR’s the average are usually around 18%. So if you can save 10% of your income each month and then use this in an emergency, you can save so much on the cost of debt over time.