Don’t Bury Your Head in the Sand!

I had a dog once who, when I would scold him, would run and hide under the bed. He knew he had done something wrong and thought that by hiding he wouldn’t get into as much trouble. I think he figured if he couldn’t see me, I couldn’t see him and he wouldn’t get scolded.

There was just one slight problem. He couldn’t fit under the bed. Only his head and front paws were hidden but his back half was in full view. He had put himself in the worst possible position but since he had buried himself under the bed he didn’t know that.

It’s human (and critter) nature to think that, if I don’t acknowledge something, it won’t come to pass or it will go away and I won’t have to deal with it. We are often like the two year old who thinks there’s a monster in his room. He will cover his head up with a pillow thinking “If I can’t see the monster then the monster can’t see me and it will go away.”

We adults laugh and think how silly this is. We know that if there really WAS a monster, hiding our head under a pillow would not help us. If anything, hiding our heads would make it worse because we can’t see what the monster is doing and so we are unable to come up with a plan of attack to protect ourselves. Meanwhile, the monster takes a bite out of our britches.

Even though we find the dog or the two year old’s actions foolish and amusing, many of us do the very same thing when we don’t deal with our financial situation and our debt. Have you ever decided not to open a bill or look at a credit card statement because you don’t want to know what the balance is? Clicking your heels and saying “There’s no place like home” is not going to help.

How about your bank statement? Do you balance it every month or just throw it in with the pile of unopened bills because you don’t want to know how much is in your account? I hear someone saying “But I don’t know how to balance it.” Then learn. There isn’t a bank in the world that isn’t willing to show you how to balance a checkbook if you ask.

My grandson in the third grade has enough math skills to balance a checkbook but I often hear from college graduates, full of pride with their degrees, that they can’t balance a bank statement. It is just another excuse that helps them keep their heads buried in the sand. Learning to balance your checkbook is much easier, much less time consuming and much less stressful than hiding from the monster.

Another excuse many people use is refusing to use cash. Often when helping people get their credit card debt under control, I suggest that they get rid of the credit cards and just carry a small amount of cash in their wallets. The first thing that I always hear (and I have honestly never yet had anyone say anything different) is “I can’t carry cash because I will spend it”. This statement makes no sense to me. What do they think they are doing when they pull out their credit cards to buy something? Lack of self control is lack of self control no matter how you package it.

If you allow yourself $20 cash, don’t keep credit cards in your wallet and you are shopping you MAY spend the full $20, but when it is gone there just “ain’t no more” to spend. On the other hand, when you use a credit card, once you spend $20, you can pull it out again and spend another $20 and another and then maybe even $100. You don’t even have to keep track of how much you spend for the day. Just stuff the receipt away and put your head under the bed!

If you have a credit card problem, you will end up spending 2-4 times as much with the credit card than if you just use cash… But this is why people in financial denial love credit cards… They don’t have to acknowledge or see how much they have spent. “If I don’t see it it won’t hurt me.”

In 1 Corinthians 13:11, it says “When I was a child I talked like a child, I thought like a child, I reasoned like a child. When I became a man I put away childish things.” We need to put away childish or foolish actions where our money is concerned and start using adult reasoning concerning it.

If this is you, stop burying your head in the sand! Stop being afraid and start taking an honest look at your finances. Open those bills, balance those bank statements and acknowledge how much you spend! Then figure out how to get it under control.

      -Jill

P.S. Just to keep our e-mail box from overflowing with misunderstanding, I thought I should clarify this one thing: If your financial situation is fully under control, but you use a credit card for convenience or for reward points or some other reason and pay it off every month, this story is not referring to you. I am specifically addressing people who don’t know how much they spend or who do not spend within their income.

For more easy and practical ways to save money and get out of debt, check out Dig out Of Debt and learn more about how to keep more of your money.

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How do I begin to get organized?

It’s the beginning of a new year. There seem to be only 3 topics everyone thinks about this time of year: how to get out of debt, how to lose weight and how to get your house clean and organized. Just look at all the magazines or TV shows. People are talking about it everywhere. I myself am not immune to thinking about any of these.

I was sitting, gazing around my domain and looking at the mess. I had really let things go. As I was looking, I started thinking, “I need to get busy and clean things up but where do I start?” (not to mention that I felt too exhausted to start). “I just can’t do it,” I told myself. I’m too tired. I then realized what I was saying. The reality was that I could do it, I was just tired and didn’t want to do it.

With this in mind, I made myself get up and start, beginning by clearing the one pile of things in my kitchen that had been driving me crazy for ages. When I was done it looked so good I was energized and started on another spot. Before I knew it, I had the whole kitchen picked up and it hadn’t even taken me 30 minutes.

That day, it dawned on me how often we aren’t honest with ourselves, even in the excuses we use for not doing things. When I said, “I can’t do it,” that really wasn’t the truth. I could do it, I just didn’t want to do it or feel like doing it so, to ease my conscience, I told myself, “I can’t do it.” There’a a big difference in the meanings.

“I can’t do it.”

What would happen if each time we say “I can’t do it” we would change it to “I don’t want to do it because it will be a lot of hard work and/or sacrifice”? Saying it that way might give us more pause for thought.

“I don’t know how to do it.”

Then you need to learn how. In this day and age we have access to so much knowledge there is almost no reason for not finding out how to do something. Years ago, before the Internet, before information was so easy to get, when people didn’t know how to do something they did it by trial and error until they got it right. Today, more often than not, we seem to think when we say we don’t know how to do something it means we don’t have to bother to try or do it. It is easier for someone else to do it for us.

I always think of Thomas Edison and how it took him over a thousand tries to make the light bulb. Am I glad he didn’t say, “I can’t” or “I don’t know how.” Do you see what an impact excuses can make on our life and the lives of others?

You don’t have to learn to be an expert in everything or to do everything as well as someone else. You just need a good general knowledge that allows you to do what needs to be done.

I love it when people use “I don’t know how” as an excuse when it comes to cleaning. Do you really not know how to pick up the trash off of the living room floor or put those dirty clothes in the hamper?

Some say, “I don’t know to stop spending.” Maybe if you only put what you absolutely need in your basket, it would be a good start. Most 6 year olds know if they only have a dollar to spend they can only buy something for a dollar. It’s not a hard thing to learn.

“I don’t know where to begin.”

In most cases, it really doesn’t matter where you begin. The important thing is just to begin.

If you are trying to get out of debt, begin by stopping your spending. That step alone will make a big difference. If you want to lose weight, stop eating so much. It’s interesting that in both of these areas you begin by stopping something. If you are trying to clean your home, you can pretty much start anywhere. Just get up and move.

The next time you hear yourself saying these things, stop, pause and think “Am I being honest or do I sound just like my 10 year old when he or she is trying to get out of doing the chores or homework.” Hmmm? I wonder where they learned their excuses from? I know I had to pause and stop myself several times this past week.

If these excuses have become like a comfortable old sweater, check out our website and books to help you take off the old sweater and get fitted for a new one. You will find so many ideas to help inspire you to do things when you think you can’t, to help show you how to do it and to show you where to begin.

I will keep sharing tips and ideas to get out of debt, lose weight and clean in the future. Can we do it? Yes we can. (Well, for those of us who can get out of bed today — this is a little side joke for those with Chronic Fatigue Syndrome or Fibromyalgia. : )

       -Jill

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Happy New Year Everyone!!

Every year on New Year’s I always remember one special New Year’s Day. That is really unusual for me because New Year’s has never been one of my favorite holidays. I can’t remember ever staying up to ring in the New Year and I have only been to one or two New Year’s parties. I left those early and was home about 10:00, so for me to remember a special New Year’s Day is something.

It happened many years ago. I had gone to bed early as usual on New Year’s Eve and woke up about 5:30 the next morning. I was heating the house with our one pot belly stove and we were all sleeping and living in just a couple of rooms at the back of our house.

The kids were still sleeping so I couldn’t do much for fear of waking them. I sat quietly down at the kitchen table, started eating some leftover pecan pie (my breakfast of choice on Christmas and New Year’s morning) and thinking about the past year. That was also unusual for me to do because I never stew over the past year on New Year’s and I never give the next year much thought.

For some reason, out of the blue, I started dwelling on things. I started getting very discouraged and was feeling like having a pity party. I was shocked because I had been through so much the previous year and that whole time I hadn’t given in to self pity but all of a sudden I was wallowing in it.

You have to understand that, to me, having a pity party is as much of a sin as robbing a bank, lying or committing adultery so I started praying that God would help pull me out of it because I could tell it was going to be bad.

I grabbed my Bible because I was so sure that was what I was supposed to do and started reading it hoping it would help me but instead it made matters worse. Every verse I read said something like, “woe to you and your house.” I couldn’t believe it. Of course, by this point I was sure I had a right to feel sorry for myself so I told God, “Look– even when I read your word you tell me how miserable I am.” I was not thinking rationally at all but I still kept praying for help and trying to fight it.

My eyes fell on a pile of library books I had gotten a few days before. One of them was Erma Bombeck’s book, If Life is a Bowl of Cherries Why am I Always in the Pits? I wasn’t sure why I had checked it out because it wasn’t the kind of book that I usually read. I really wasn’t sure I felt like reading it now but I did relate to the always in the pits part. This little voice kept telling me to read it so I finally gave in and did.

Before I was through the first paragraph I started chuckling. The more I read, the harder I laughed. I was trying so hard to keep from laughing out loud so I wouldn’t wake the kids but I was to the point of belly laughing and finally Tawra called to me, “Mom what are you doing in there?!?”

I spent the rest of the day laughing my head off. Gone was the pity party. I had the best New Year’s ever. I also learned a couple of things that day.

First, we have a choice. We can have a pity party or a good laugh. Which do you think is better for us and our families?

Second I wasn’t stretching it when I said I had had a bad year. I had heard a speaker a few months earlier who gave us a list of the ten most stressful things that can happen to someone and he said that if you have 1-2 of those happen within a year’s time that you were probably under a great deal of stress and if you had had 3-4 things happen you needed to seek help.

When I heard that I had to chuckle to myself. I had 9 of those 10 things happen to me, all with in a 5 month period. I really did have something to be discouraged about but I also had something to be excited about.

Every time one of those 9 stressful things happened, God was right there to pull me through. It had gotten to the point where I almost became excited when I came to a road block because I could hardly wait to see how He would work this problem out.

What I had learned that day was, as much as He was there helping me through the “big” things, on this day He was there helping me with my little everyday pity parties too.

We have all had things happen to us this past year and will have more things happen this coming year. Life happens and we have a choice to either stay paralyzed by fear, not even trying, or to face each day with courage and with God’s help to try to figure out how to fix the problem.

Joshua is one of my favorite Bible characters. When he saw the land of giants, he essentially said, “So what if there are giants (problems). God will help us take care of them.”He had a child like faith. He was like a child that says, “My dad can do anything”. The bullies can come and He is there to fight them.

The others wanted to run and go back to their slavery but Joshua didn’t give in to his fear and he succeeded and made it to the promised land. Don’t be like those others, so paralyzed by your fear you can think of nothing to do but to go backwards and return to your slavery, whether that is debt, no job, how much you weigh or living in a messy house. Get up and fearlessly move forward, not back.

God also told Joshua in Joshua 1:9, “Be strong and courageous. Do not be afraid; do not be discouraged, for the LORD your God will be with you wherever you go.”

You either choose to believe those words or not. It is very simple. If you believe them, then you can step out this year and when the bullies start coming down the path towards you you won’t bat an eye because your Father who is bigger and stronger than you is walking right there beside you and He will take care of them. The battle is His, not yours. Don’t go back into your slavery this year, no matter what it is.

photo by: marufish

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Stop Paying Late Fees On Credit Cards And Other Bills

Here’s something to think about: Did you know that late fees on people’s credit cards account for 1/3 of the bank’s income?

Paying your bills on time is one of the easiest ways to save money. You don’t have to give up anything or do anything that takes a lot of work. You just write a check, put it in an envelope (which is usually provided for you) and mail it. Many people pay bills online now, which is just as quick.

Putting off paying a bill doesn’t mean it will somehow go away. It just means that you’re going to have a BIGGER bill to pay. For some reason, many of us tend to be like ostriches when it comes to our bills.

Our pastor was talking last Sunday about how ostriches aren’t too bright. It started me thinking about how much like ostriches we are sometimes when it comes to our bills.

• An ostrich buries its head in the sand, thinking if it can’t see its enemy, the enemy can’t see it and the enemy will go away. Never mind that the ostrich’s huge body is sticking out in plain view.

  In the same way, many of us think if we bury our bills under a pile of papers and we can’t see them, they will just go away.

• Ostriches have little wings that they flap all the time, thinking they can fly and are going somewhere, but the reality is that their wings don’t work and they aren’t going anywhere at all.

  In the same way, we often flap our wings doing non-productive things with our finances, like spending money on things that we think make us feel good. We think we are flying high and living the good life when we are really going nowhere.

  Some of us think we are saving money by using energy efficient light bulbs and turning off lights, but then we turn around and pay hundreds of dollars a year to operate a large freezer that is mostly empty or is full of food we never use.

• There is one thing an ostrich is really good at and that is running– running very, very fast away from things. How often are we like that?

  Instead of standing firm and facing our problems, we think it is easier to turn tail and run as fast as we can to get away from our problems.

  Please don’t get angry with what I just said. Instead, consider my words and be honest about your situation.

If you find my statement about late fees hard to believe, here are some numbers. These numbers are ballpark figures, but I tried to get as close as I could to average. Take a look at your own numbers and check to see what is happening in your life. Don’t bury your head in the sand.

Assuming that late fees average $35 each:

• 5 credit card bills paid late = $175 a month, $2,100 a year
• 10 credit card bills paid late = $350 a month, $4,200 a year

But it gets worse. If you have a nice low interest rate, paying your bill late usually causes the interest rate to jump up to 30% after the first time you are late. That means if you borrow $1,000 you will be paying $300 interest every year.

If you have $1,000 balance on credit cards that have been reset to 30% interest, your interest on:

• 5 cards = $1,500 a year
• 10 cards = $3,000 a year

I think you are getting the idea. So often, I hear moms say, "I wish I could stay home", or "There is no way we could live on one income," but it IS possible. In some cases, one person’s entire income is mostly going to paying late fees and interest on credit cards and other bills. This is why I get so passionate about controlling your debt. Once you learn to control it, you can radically change your whole life and lifestyle for the better.

      -Jill

Photo By: wsssst

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At this time of year, there are usually three things people are panicking about: how to lose weight, how to save money, and how to get organized. We have already touched on losing weight so this week I would like to touch on saving money.

Hopefully most of you realize that you can get into deep debt if you buy a house or a car you can’t afford. That seems to be pretty obvious, although a lot of people do it anyway. But that is not what I want to deal with today. The Bible talks about the little foxes that spoil the vine. What that is talking about is the little things that sneak into our lives without us realizing it. They start picking away at the vines in our lives until it destroys us. One of those "little foxes" is eating out.

Eating out is among the of the top causes of personal debt. Most of us hunt for the best interest rates on our mortgages and we complain about the terrible price of gas the whole time we are pumping it.

Interestingly enough though, I have yet to hear one person groan about the awful prices they had to pay for lunch today or tell how they were "duped" into having to pay such high prices at their favorite restaurant. I mean really, the government should step in and make all restaurants take steak off of their menus so I won’t be tempted to order it. Then there are those fast food places. They shouldn’t be allowed to build so close to the road and make it so convenient for me to drive in there each day. They have a lot of nerve expecting me to be a responsible adult who knows what I can or can’t afford and should or shouldn’t do.

Tut, tut. I had better behave or I will have to fire myself. HA! HA! But I do feel so much better for getting that off of my chest.

Anyway where was I? Oh, yes — saving money and eating out. I know most of the excuses we use to justify eating out when it doesn’t really fit in the budget: "I don’t have time", "I’m too busy", "I don’t know how to cook", and last but not least, "it’s so much easier to eat out".

I totally understand. I too don’t have time to do things. I don’t have time to take care of my yard, so I will hire a crew of gardeners to do it. I too don’t have time to clean my house so I will have a housekeeper come in every day and do it for me. I don’t know how to cook so I need a chef (the best French one, of course) and it is so much easier to hit my garage sales if I am chauffeur driven.

Obviously my examples are tongue in cheek but, as ridiculous as that all sounds, that really is what a lot of us are doing. In the same way that I can’t afford a gardener, housekeeper or chauffeur and I would be pretty foolish to go hire them, many of us can’t afford to go out to eat but do it anyway. I don’t think most people really realize how much they spend eating out each month and would be shocked to find that they could probably hire a housekeeper or a gardener for that same amount.

Take one week and write down how much you spend eating out. That includes all those coffees, soft drinks, things from the vending machines and snacks you buy throughout the day. Be sure to write down the amount of anything that goes into you and your family’s mouths for an average week. I’m afraid you may be unpleasantly surprised. Multiply it by 4 to get a monthly estimate and I think you would be just plain shocked.

I’m beginning to wonder if another reason we eat out so much is that it has just become a habit. Like many bad habits, we get so comfortable with them that we don’t want to change them. Even when we know that a habit is destructive to us (physically, financially and even emotionally), we still do it.

Some of us look down our noses at other people with "bad habits" like drug addicts and alcoholics and can’t understand why they don’t just kick their habits. "Don’t they see what they are doing to their families????"

What is the difference between other people’s destructive habits and our repeatedly going out to eat and charging it? We know the food isn’t as good for our families, we know we don’t have the money to pay for it, and we know on bill paying day we will be so stressed that we will take it out on everyone around us. We so proudly display our bumper stickers that say "Say no to drugs." but how many of us could proudly display a bumper sticker that says "Say no to debt, I’m debt free".

(Please do not e-mail me about drug addicts and alcoholics. If you do, you are missing the point of the article and are only making it more clear to me that you are not willing to own up to or face the real issue –your debt.)

I know those words may sound harsh to some, but if you have seen and dealt with as many families as I have, whose homes have been or are being destroyed because of financial irresponsibility, you would understand why I can’t always sugar coat things. We sink into a fog of apathy, hopelessness and discouragement and just give up trying. I really want you to understand you can fix your finances, but it will take a little bit of work and effort on your part. Don’t just throw up your hands and give up.

There is a story in the Bible (John 5) that tells about a man who couldn’t walk. He had laid by a healing pool for 38 years. If he could dip in the pool when the water stirred, he would be healed. Jesus asks him what he is doing there and he says "Well, I just don’t have anyone who will carry me and put me in the pool" (Poor little old me.) Jesus then asks him, "Do you really want to get healed?" This might seem to us a strange question but, as I once heard a woman speaker point out, if he really wanted to get healed wouldn’t he have tried some way to inch his way over to that pool even if he could only make it a half an inch a day no matter how hard it was?

Maybe Jesus asked this question because He too thought here is a man, like so many do these days, making excuses, being a victim and waiting for someone else to fix his problem for him. What did Jesus tell him to do? GET UP! (stand on your own two feet), TAKE UP YOUR BED (start being responsible for your own things), and WALK (become active in solving your own problems which may mean physical labor, or doing without some things).

You need to be like the lame man and GET UP, TAKE UP YOUR BED and WALK. If you know you are going out to eat too much then stop saying you’re a victim of "these hard economic times". Be responsible for the "bed" (or the debts that you have now) and actively start doing something about it today. It isn’t as hard as you think. I can take every excuse for eating out that I mentioned above and prove that they’re not really valid.

"I don’t have time." For the amount of time it takes you to drive to some place, wait for them to take your order and then wait for them to prepare your order, I can give you 10 menus or more that would take less time for you to prepare at home.

"I’m too busy." If you are too busy to take time to feed your family, something that is a necessity of life, then you are too busy. I have very rarely heard anyone say that they are too busy to get their hair done, go shopping, go to sports activities, talk on the phone or spend time on the computer. You really can find the time.

If I sound like I don’t have patience with that excuse, it’s because I don’t. I was a single mom with 2 teens, working 60 -70 hours a week, doing all my own yard work, home repairs, and on and on and guess what? Except when I was ill, I always found time to make breakfast and dinner.

"I don’t know how to cook." So learn. Start simple. Even my 9 year old grandson can boil himself a hot dog. You don’t have to produce a gourmet meal to make your family happy and in most cases they would prefer you didn’t. There are simple enough instructions on the back of a package of spaghetti noodles that, once again, even a child can read and follow. Warm up a jar of sauce and dinner is served. You now have two main dishes that take less than 10 minutes to prepare.

I understand that man can’t live on hot dogs alone (although I think kids can), but don’t worry — after a week or two of simple dishes, you can move on to more complicated things like frozen French fries and frying hamburgers Plus if you really get stuck, I just happen to know of this really good cookbook called Dining on A Dime that can help you.

"It’s so much easier." I guess that depends on your definition of easy. To me, going to a restaurant, sitting and listening to loud music for 30 minutes with fussy, hungry, complaining kids is not my idea of fun. Going to a drive-thru is, at times, not much better. Lately it seems as if the line of cars wraps around the whole building at every fast food joint that I drive by. I was amazed to see every restaurant’s parking lot jam packed two days after Christmas. (Must be that all those people who couldn’t afford Christmas had gotten a windfall.) Sorry, once again I digress.

You may say "The restaurant where I go isn’t that bad." but my point is that everything has it’s drawbacks, whether you stay at home to eat or go out to eat. It’s just a matter of what you make up your mind to put up with. Do you want the pain of cooking or the pain of not knowing how to pay your bills.

If you are in debt, it would be wise to start putting up with a few of the drawbacks that come with eating at home. Besides, if you are really serious about saving money, there are ways to make cooking at home much easier.

1. You can use convenience foods. There is nothing wrong with buying things like French bread, canned biscuits or bagged salad. Line the pans you use with foil, or use disposable pans. It’s cheaper in the long run to use these than going out to eat.
2. Clean up as you cook. This is very important because I notice a lot of people make a bigger mess than necessary when they cook.
   • Instead of messing up the whole stove by repeatedly laying a sticky spoon on it, use a spoon holder or cup. It is a simple thing that makes clean up so much easier.
   • Keep some hot soapy water in the sink while you are cooking and wash things as you finish with them.
   • Don’t set that carton of milk down on the counter after you pour it. While it’s still in your hand, put it back in the fridge.
   • Keep the number of utensils you use to a minimum. You don’t need to put a lid on a pot every time you cook something.
3. Don’t always think gourmet. Most families are so excited to get a homemade meal that they don’t care what you serve them. Besides, almost any meal can be made to look "gourmet". Fruit sliced and arranged nicely on a plate, muffins keeping warm and nestled in a napkin inside a basket or mashed potatoes piled high with a chunk of golden butter melting down the sides all have eye appeal. All right — I made myself hungry! Maybe it’s time to quit for lunch.
4. Clean up is one of the main reasons people hate to eat at home, but if you clean as you go like I mentioned earlier and everyone pitches in to help clean up after dinner, it should only take about 15 minutes to get it all put away.* It would take longer than that to drive to a fast food place and return home.

   *See our article, "Dirty Dishes Cause Debt."

5. Pull out those crockpots. It takes about 5 minutes to throw in a roast, potatoes and carrots. It takes the same amount of time to throw in the ingredients for chili, stew or vegetable soup.
6. If you are dragging the kids to an after school game: Instead of going to a fast food drive in, throw some hot dogs in a thermos and cover with boiling water. They will be cooked and ready to eat by the time you get there. How long does it really take to grab a few pieces of fruit, a bag of cleaned veggies and some chips to go with them? Maybe 2 minutes? How hard is that to cook?

   You could also have sloppy joes simmering in a crockpot and pour those into the thermos for an on the run meal. To make it even easier, heat it up from a jar and then pour it in the thermos.

I don’t know who set the standard that cooking a meal in 30 minutes is fast. If I took that long to cook a meal every night I would never get anything done. There are tons of meals out there that require 15 minutes or less prep time.

If you don’t know where to start, then drag out your Dining On A Dime cookbook or check out the Groceries On A Dime e-books. We share lots of ideas there to get you started. Sometimes we like to make things more complicated than they really are because that gives us a good excuse not to do them. Where there is a will there is a way.

Do you really want to get out of debt? Then GET UP, STOP CHARGING, and GET COOKING!

      Jill

This article is an excerpt from Dig out Of Debt. For more easy and practical ways to save money and get out of debt, check out Dig out Of Debt and learn more about how to keep more of your money.

photo by: hellochris

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What Do I Do With My Tax Refund?

It’s that time of year when all that "free" money starts rolling in. I’m talking about the bonus money– you know, the fun money (otherwise known as our tax refund)! That is the way so many of us think of a tax refund and, five minutes after we spend this year’s tax refund, we are already thinking about what we are going to do with next year’s refund money.

Many of us look at getting a tax refund almost as if we have won the lottery. We are going to do so much with it and it seems to have such amazing powers. I mean a $1000 tax return can buy a car, furniture, a big screen TV or a family vacation all in one fell swoop. There is almost nothing it can’t do; no problem it can’t solve. It’s our mad money– our fun money.

Not!!!!!!!!!

If you have debt, a tax refund is none of the above. It is not mad money. It is the opportunity to move closer to getting out of the debt you have already committed to pay. If you have credit card debt, use your tax return to pay off that credit debt rather than to buy that big screen TV or the couch you have wanted.

Use common sense and wise thinking when it comes to spending that tax return. It is no different than a regular paycheck. In fact, when you look at the fact that you make so much money a year, the tax refund is actually part of the salary that you say you make.

Stop looking at it as a bonus and instead think of it as more income available to pay your debts. Once you pay off those debts, a tax refund can be a great opportunity to start a savings account.

We get so many questions from people who are panicking and asking what we do for an emergency fund. Instead of throwing away that tax refund check on something that gives you instant pleasure, set aside that tax refund money for an emergency (keeping in mind that even most "emergencies" are not true emergencies).

Once your debts are paid and you have enough savings, then use your refund for fun. We live in a society where we always put the cart before the horse. People used to get married and then have children but now it is common to have children and then get married. We used to carefully save our money and buy what we wanted from our stockpile but now we charge what we want and later try to figure out how to get the money to pay for it.

Because of how we think about credit, many of us don’t give any serious thought to paying for something until it is worn out and we want to buy the next one. Once the item is worn out, how do most of us feel about still paying for it? "It’s not fair that I have to pay for this and I don’t even have it anymore…" Avoid the stress later — Pay off what you owe now and stop buying things on credit.

If you are behind on your credit payments or if you’re not making the payments at all, use your tax refund as an opportunity to get current. When we buy an item on credit or with our credit card we are saying "If you let me have this product now I promise (vow) to give you money for it later". When we don’t pay our credit card bills it is no different than walking into a store, filling a basket with whatever we want and walking out with it. To my knowledge that is still called stealing. (I’ll have to check because they change the meaning of words so often to make them more politically correct. I mean who knows, maybe it’s not stealing anymore but just "temporarily using it until it is repossessed").

When you literally put the cart before the horse, (kids before marriage, buying and then trying to save money to pay for something, etc.) it will cause extra stress in your life and will make it much harder to get where you are going.

Re-think not only how to use your tax refunds more wisely but give the same consideration to any other "extra" money that comes into your life. Once you get a handle on your debt and your spending habits, you will be surprised how far your money will go. Start by making a wise decision about your tax refund.

One other thought– Make sure you have your withholding set up with your employer to not take out so much money. Set up a direct deposit into your savings account and save it yourself instead. Considering the fact that many states are on the verge of bankruptcy do you really want to give over all that money so the government can just "save" it for you? You may not get it back one day.

For more ideas to help you get out of debt, check out our Dig Out of Debt e-books.

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Frugal Living Doesn’t Mean Being Poor

You sure have a nice house for someone who’s really cheap. I would think you lived in a shack and not a $144,000 house. Your business must be doing well. Not that you don’t deserve it, but it doesn’t match up with your poverty mindset and kind of misleading as a business owner promoting frugal living. I know lots of really poor people and they sure don’t have a house like that or TRULY can’t afford it. I still like your books but you lost a lot of credibility. Sally

Actually, Sally, it’s because we are frugal that we can afford it. I find it very interesting how people think that if you live frugally you can’t ever own anything nice. Frugal living is about spending the money you do have wisely. We have been working very hard since we were first married to be completely debt free, including our house. As Mike said, "The entire point of living frugally is so that you don’t have to be poor anymore" or, in mom’s case, even if you do live on a true poverty level income, you can still have nice things. 

We are able to live on one income because we don’t waste our money on things like:

frequently eating out
extra kids activities
buying DVDs
going on vacation (We recently had our first real family vacation after 16 years of marriage.)
We set our heat at 64 so we can save on our heating bill and we have our air conditioner set at 78 to save on electricity
We buy 95% of our clothes second hand
We don’t buy brand new cars
We only have a pre-paid cell phone (costing a total of about $100/year.)

For many years, our income was a very low income, too. In spite of the fact that we were only earning $22,000 a year (averaged) for the first 5 years we were married, we still paid off $20,000 in debt and medical bills. I know people earning three times that amount with half the amount of debt who have claimed bankruptcy. There’s no reason for it!

All these things add up big time so that we even have our house 75% paid off now!

I hear all the time from people who say you are so "lucky" that you can stay at home with your kids and don’t have to work. Luck has nothing to do with it. It takes hard work and sacrifice! I see tired and worn out mom after mom who "wishes she could be a stay home mom but just can’t". They spend $100 a month getting their hair and nails done. They are driving a brand new car. They eat out constantly because they are tired and live in houses that are way out of their budget. In the end they are working for things that aren’t even going to be there in a few hours, let alone a few years.

The entire point of living frugally is that you choose not to spend money on things that aren’t important or won’t last so that you can spend your money on things that will last. For us, the important thing is being there for our kids and providing a secure and peaceful home for them. Mike and I hardly ever fight over money because money isn’t an issue for us.

When we were first married we made the choice to live within our means and that meant living in some very bad houses that we could afford instead of "nice" house we couldn’t so that later (now) we can have a nice house to live in without being stressed out. I know many couples who were married about the same time we were, had twice the income and chose to get the nice house first. Now they are fighting constantly over money, always yelling at their kids because they are stressed out, and on the verge of bankruptcy, all because they chose to buy things they can’t afford.

Another point I want to make is that some "poor" people are making themselves poor. I’ve known many "poor" families. Many of them are always paying their bills late and live in run down houses, both parents are working and the kids are a mess, and they’re just so "poor" they can barely make it. 

The problem is when you start looking at the true picture, all five family members have a cell phone, they have a collection of 500+ DVD’s, multiple video game systems, eat out every day (it’s "just the dollar menu" "it’s just one delivered pizza") and drink nothing but sodas.  This is a case where the family has it set in their minds that they are "poor" so they are going to spend $20 here and there to make themselves feel better to the point that they spend literally thousands of dollars on junk every year instead of improving their financial position. 

So, actually, I think it gives us even more credibility that frugal living does work!

      -Tawra

Jill’s Reply

Sally, your mindset is one of the reasons so many people don’t want to be frugal– because they think that means they must be poor and deny themselves everything. They don’t want to do that and they are also worried about what others would think of them.

Being poor and frugal are two totally different things. It’s like comparing apples and oranges. Being poor means you have nothing at all. You can be extremely rich and be frugal because being frugal means being careful or a wise steward of your money. If you want to throw in being cheap, that means you can have money but you are stingy with it. Some of the wealthiest people in the world got there by being frugal and doing things like driving used cars and many of them still do these things. They don’t do these things because they are poor but because they are wise and frugal.

Also, you can’t judge a person’s financial condition by appearances. I wear top of the line name brand label clothing and shoes. My whole outfit if bought new would be worth $150 or more. I carry a never been used leather wallet which was priced $50 at the store and a leather purse priced at $60. But I was given my outfit as a hand me down and I paid $1.98 for my shoes. The wallet cost one dollar and the purse cost a dollar. I got them both at a garage sale with the tags still on them. I look like I have a lot of money, but I have very little.

Tawra’s home looks very nice too, not because she spent a lot of money but because she worked hard to get good deals and she and Mike did a lot of hard work doing things like painting the house and putting in the fence themselves. Even all of the furniture in her home except for her bed and couch was either given to her or was something she bought for almost nothing at a garage sale and refinished herself.

I’m not telling you this because I feel I need to justify myself or Tawra but to tell you that it is not wise to judge people by their outward appearances. Sometimes when we don’t have all of the information, it is easy to jump to conclusions about people that simply aren’t true.

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Rising Prices have You Stressed? Consider This…

I just wanted to give everyone a little perspective on high prices. I know some things are going up and will probably keep going up but that is the way it has been since the dawn of time.

I want you all to take a deep breath and relax. Get rid of you spirit of fear and worry. Even though it seems like we are having hard economic times now there have been many times in history when times have been a whole lot worse. 

I was just reading and doing research on prices in the 1860′s compared to now.  To help you get an idea of what I mean let me give you a couple of examples.

In 1865 in some places you would have had to work 10 hours to buy one can of peaches, 7 hours for 12 bananas and it cost one and a half months’ salary to buy a stove.

We need to buck up a little and realize that yes, we have had it pretty cushy in years past and times may not be not be as good for some as last year, but we still need to count our blessings for what we do have and think about how much worse it could be.

You will be able to survive. People have been doing it for a long time. Part of the problem is that we have a generation who has never known anything but "the good life" and, now that things are changing, instead of dealing with things and doing the best we can, we are panicking and falling apart.

You have got more strength and ability in you than you realize. In the past you have had to rely on your money and credit cards. Now you may have to start relying on your brain power, creativity and natural abilities.

You will be amazed at how good you feel and the confidence you will get when you have to start figuring out how to stretch things, food or make do with your clothes instead just slapping down a credit card to buy something new.

You can do this. Once again I say don’t let panic and fear paralyze you into not being able to think and function.

Photo By: Jim Brickett

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How To Deal With Impulse Buying

We have all been there and done that. We’ve seen so many products we just can’t do without. That salesperson tells us that their vacuum cleaner will radically change our life and make it easier. We’ve been prompted to wonder how in the world we ever cooked without that chopper, blender or juicer.

Then there are the beauty products (who doesn’t want to look 20 years younger?) or the exercise machine that will help you to lose weight and have the body of a 20 year old. They forgot to mention it will only do that if you use it and not just store it under your bed. Maybe that is why one of the first things they tell you is it is how easy it is to store…. because they know that’s what most people will be doing with it. : )

Don’t forget the trips to the shops and malls. What fun! That outfit is to die for and is 50% off. I really need to get it now because it will never be this price again… except maybe next week when they are desperate to get rid of the other 100 identical dresses and put them on sell for 75% off.

We are bombarded every day with impulse spending (or any impulse decisions) which can get us into more trouble. As with anything, you need to admit you have a problem. Here are a few signs to help you determine if you might have a problem:

1. When you are upset, do you go shopping?
2. Is your house full of items you thought you had to have but are now sitting all over your house still in the original boxes or hanging with the price tags still on them?
3. Do you spend more time during the week shopping (that includes TV, Internet shopping and garage sales) than you do cleaning your house or spending time with your family?
4. Are your credit cards maxed out with things that aren’t life and death needs?

If you said yes to even one of these questions, you may have a problem. Here are some things to help overcome impulse buying.

1. Use cash. I know in the day and age of credit cards this will seem weird and difficult at first but it is one of the best ways I know to control spending. First of all, you can see exactly how much you are spending easier than you can with credit cards.

   If you leave home with only the amount of cash you need for your shopping trip you can’t overspend and you carefully watch every item you buy. This isn’t as hard as it seems. You only once need to arrive at the cash register and be embarrassed at having bought too much to learn never to do it again. : )

   I am not saying you need to do this for the rest of your life, but it is good to do it for a month or so until you break the habit of impulse buying.

2. Don’t take anyone with you. You know good and well your girlfriends, sisters, mom or kids will tell you, "Oh that is the perfect dress for you! You need to get it." Am I right or am I right????
3. When shopping for major items, do your homework. Check out prices and check out different brands, whether you’re shopping online or in regular stores.
4. If an item costs more than $20 (other than something you buy on a regular basis, like my medicine) go home and think about it overnight. We so often think, "It is only $10 or $20, which isn’t that much," but those purchases all add up to hundreds and eventually thousands of dollars.

5. I once read that you shouldn’t buy anything, no matter what a great deal it is if:

   You can’t afford it.
   You don’t need it.
   You need something else worse. (like paying bills)

6. Be careful of sales because they are a big cause of impulse buying. Only buy something on sale if you have carefully studied the prices already and you need it. Our grocery store here has a lot of 10 for $10 sale which, at times, sounds like a great deal but I have watched and I can get some of the items for $.75 someplace else, so be careful.
7. When in doubt, don’t buy it.
8. Find other things to do besides shopping. When you are upset, do some volunteer work. This helps you put your problems in perspective. Instead of meeting your friends at the mall for a day of shopping, have them over for a cup of coffee or tea. Not only does this help you control your spending but it will motivate you to clean your house. : ) You could also ask them to go for a walk or bike ride. Not only do you save money, but you can get in shape.

The bottom line is control your money, don’t let it control you and think, think, think. Don’t feel, feel, feel when it comes to money

       -Jill

For more money saving tips check out the Dining On A Dime Cookbook and Dig Out Of Debt.

Photo by: lancerevolution

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What can the average American do to save money?

I had a reporter from CBS News call me today asking how average people who are living paycheck to paycheck can get a savings account going.

I told her that one of the first things they can do is stop eating out. She later told me, "Well, you hear the stop eating out thing all the time. I want to know what normal, average people can do to save money who are living paycheck to paycheck."

Most "normal and average" middle class Americans who are having to live paycheck to paycheck aren’t doing so because of something unpreventable like medical costs. They are doing it because they are spending more than they earn on stuff they don’t need.

What are some of the areas where you can save?

Stop eating your way into debt! Yes, families do spend literally THOUSANDS of dollars a year eating out. Add it up. You will be shocked. If you only go out once a week you will spend almost $3,000 in one year. We had one reader email and say she and her husband stopped eating out and saved $22,000 in one year!!!

Too much stuff. Stop shopping. I spend $350 a year on clothes for our entire family. How many clothes do we need? We don’t need that many clothes and I buy most of our clothes at thrift stores and yard sales. Stop shopping just to have something to do.

Too many activities. It’s not abnormal now for people to have kids in two or three activities per week each. That’s crazy! Let them do ONE and one only. You will save money on the fees, gas driving there and eating out because you "don’t have time". The "average" family will spend $300-$500 a month on activities for just one child.

Groceries- Do you buy a bunch of junk food you don’t need? I spend $350-$400 a month on groceries. The "average" family spends $500-$900 a month, not including what they spend eating out.

Cars- Stop buying new cars you can’t afford. Why are you buying a car for $30,000 when you earn that amount in a year? Add up the interest, extra insurance and taxes. It does add up to that much. If you can’t pay cash, you shouldn’t buy a brand new car.

Treats- You don’t need a Starbucks coffee or other "treat" every day.

Housing- Why do you have a 3000 square foot house for a family of four? Get something smaller that you can afford and doesn’t cost as much to heat.

Now, you may not be in this boat and if you’re not then congratulations, but a LOT of middle class paycheck to paycheck Americans are. It’s time to stop whining about the "bad economy" and start taking some responsibility for your finances.

      -Tawra

photo by: Molly DG

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