Gather Little by Little

Three years ago, we moved across the country and almost went under financially when it took 16 months for our old house to sell. I immediately promised that I would never buy a house again. . . . Until last month when we signed on the dotted line for a home once again. Here is what changed my mind:

No more moving

Obviously we cannot tell the future for certain, but my wife and I plan to never move away from our current location. Even if my job situation changes, we are committed to staying in the Denver area. We really enjoy the weather, the culture, the mountains and above all, our church. A year ago, we expected that we could move at any time.

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For the last month or so, we have been talking about budgets here at GLBL. We have defined the family budget and set forward the major steps for setting up a budget.

There was a time when the average family did not need a budget or at least, the budget was so simple that it could be kept in one’s head. Over 100 years (and longer) ago, most people built their own houses, grew or raised their own food and made their own clothes. Physical currency was not an essential part of life. If an item could not be made, grown or traded for, then they did not need it. Folks could go days and weeks without ever having to use money for a purchase. Today, things are different.

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Sometimes you have to eat crow.

For the last three years, I promised myself and anyone else who would listen that our family would never buy a house again. This stance was mainly due to all of the trouble that we had selling our house after moving to Colorado. Well, it turns out that during our search to find a more affordable rental property, we stumbled upon a home that we intended to rent, until we crunched the numbers and realized that it was actually cheaper to buy. Okay, we are not buying exactly, but in the United States, renting-to-own from the bank is commonly called “buying” a house. We are just changing landlords, I guess, but hoping to build a little equity in the process.

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I was a little late in getting our 2011 family budget put together for this year, but better late than never, right? Well, it is up and running, but what I discovered is that since we have kept a budget for so long and because our budget has stayed relatively static for so long, we can function for a few months without looking at it daily or even weekly. I am in the middle of entering our information from January and February and even though I have not completely filled in all the numbers, I have a rough idea of where we stand simply by having a general idea of our “intake” and “outflow”.

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What is a budget?

A budget is a visual representation of your financial priorities. It is a plan for dealing with the money that flows into one’s household and a plan for how that money will flow out of one’s household. It is a systematic plan for the expenditure of a fixed resource, such as money or time, during a given period.

What purpose does a budget serve?

A budget sets financial goals.

A budget shows the small steps needed for a long journey.

A budget represents potential.

A budget will help you to organize family financial discussions.

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It is one thing to be put on The Rack for no fault of your own, but do not go there voluntarily!

I receive credit card offers for cash advances in the mail on a regular basis. The offers are almost always terrible – interest rates in excess of 20% and fees on top of the interest! I recently was sent an offer with a 23% APR and a fee of 8%, what a deal! The most significant aspect of the credit card cash advance offers is that they do not seem to be meant for a specific expense. The cash advance is simply that – the bank hands you money and you hand a whole lot back. These types of offers are not for a car or home loan, there is no asset or collateral attached to the cash advances, the money is just “emergency” or “fun” money at usurious interest rates.

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During the month of February, McDonald’s put on a “free coffee” promotion. Since I always start the day off with a little hot caffeine and since I am not all that picky about my coffee, I usually took advantage once or twice a week during the last month. Two bucks for a sandwich, hash brown and small coffee -no cream, no sugar- was too good a deal to pass up.

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I like Craigslist and both Mrs. Stew and I buy and sell frequently on the sight. Sometimes we do well . . . other times not so well, but I still heartily recommend this mostly free website. It is the modern-day equivalent of the yard sale, except Craiglist probably brings more eyes than telephone pole signs and balloons tied to the mailbox.

Over the past few months, we have been looking for a new place to rent. There are so many websites to choose from when looking for a home to buy or rent that it is impossible to keep up with all of them, so we focused on Craigslist. We were quickly exposed to the usual Craigslist scams and quickly learned to spot them. Here are three types of rental property scams that we observed:

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Another edition of our ongoing series entitled, Lessons from Luke.  Since the Gospel of Luke was most likely written to a man of means, a man by the name of Theophilus, Luke spends much of the book discussing the issues of wealth and money. Here at Gather Little by Little, we have been systematically moving through the book in an attempt to survey all of the various statements about money that it contains. Several weeks ago, we discussed the story of the Matthew the Tax Collector. Our passage today comes from Luke 9:1-5:

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Why are personal finance professionals so focused on budgets? Because a budget is a plan for spending money, a written record of spending and the consequences of that spending. A budget provides accountability for the money that flows in and the money that flows out.

One of the worst financial habits that a person can have is the habit of spending money without a plan. This is the reason why credit cards can be such a trap – it is so easy to spend a couple of extra dollars every time that piece of plastic gets run through the machine. If I go shopping with $10 cash in my pocket, I can only spend that $10. If I go to the store intending to spend $10, I often walk out having spent $11.40 or $12.75 or even $15.38 without really thinking about it.

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