Include the Entertainment category in your budget

What is the use of have a meticulous budget if you don't get to have some fun too?  No matter how big or small, I feel it is important to have an entertainment category in the budget.  We are looking forward to our family trip to Yosemite, San Francisco, and Modesto.  The blessing of a budget is helping us afford it.

The entertainment category is great to have when siblings want to head to a sporting event, musical, or the movies.  This is great when you just want to go get some ice cream.  The only down side to the entertainment category of the budget is there has to be a limit. 

Enjoy the journey.  Make some memories.  Have fun!

Sacrifice

This week Janell and I made a sacrifice that will hopefully help us with our goals for the coming year. We had been paying quite the premium for our cable/internet bundle after the introductory period expired a couple of months ago. Now that Janell is done with her Bachelors degree (Congrats Janelly!!!) we have decided to go with basic cable and basic internet. The switch happens Monday. So, now we will have to deal with the much slower speeds while online.

I guess the point here is that reaching our goals takes sacrifice. We must give up something we have or want to get something better. In business, opportunity cost is what you give up to get something different. We must decide if what we are sacrificing is worth more than what we are getting for the sacrifice or not. The answer is subjective and thus it is different for everyone.

Hopefully we are sacrificing the right things for that which will last. Giving our time, talents, and money is worth the reward of a strengthened relationships with family and friends.

Commitment

In the book, "How Successful People. . . Keep their lives out of the toilet" by Sandra Phillips and Don Aslett, I learned a new way of thinking about commitment.  Commitment is the "I will . . ." attitude.  This differs from I wonder. . ., I wish . . ., I will try. . . ., I'll see what I can do . . ., I will do it as soon as . . .Instead of just having an intention to do something great we must make the commitment to do so.  "Yes. I will."  "I promise."

According to Yoda, "Do or Do not. There is no Try."  After the commitment is made there must be followthrough.  Distractions, detours, and temptations will certainly follow the making of  a commitment.  If we are truly commited then we will not falter from achieving what we said we would do.  

Stick to your task till it sticks to you; 
Beginners are many, but enders are few. 
Honour, power, place, and praise 
Will come, in time, to the one who stays. 

Stick to your task till it stick to you;
Bend at it, sweat at it, smile at it too; 
For out of the bend and the sweat and the smile 
Will come life's victories, after awhile. 
-Anonymous 

Improve Your Credit Score

Recently I was reminded of a friend in my ward.  He and his wife wanted to buy a home several years ago, but found that it would actually take some time.  When they went in to inquire about a Mortgage the lender told them they had no Credit scores. Essentially they would have to build their credit before purchasing their home.   So, unless you are going to buy your first home or your next home with Cash it is a great idea to pay special attention to your credit score.

Another secret I recently learned reminded me to keep improving our credit scores.  Higher credit scores mean that borowers are less risky to investors.  Therefore, they are willing to loan you money at a lower interest rate.  If you don't have great credit then you will likely get charged higher interest rates.  Even worse, you may not qualify for a loan at all.  Remember if you are qualifying with both husband and wife then both credit scores need to be great because your interest rate will be affected by the lower of the two spouse's scores.

Delay Gratification

Today I just wanted to do a short post about the benefit of delayed gratification.  This principle really goes with not buying things that don't increase in value unless you have cash.  When you want to get something it pays to give it some time.  Make sure that after "sleeping on it" you still want it, you can afford it, and you can afford it now.  

Janell and I recently purchased a bedroom set.  This is something that we have wanted (especially Janell) since we got married.  Well, now that we have had a few years of saving we can afford it.  We found something we really like on sale.  So, we slept on it and decided to go ahead and make the purchase.  Wow, it really gives you satisfaction to pay with the debit card (Cash).  

In our "I want it now" world it actually means more when we put off things we want until we are truly ready financially to get them.  When considering a purchase we can ask ourselves the following questions:

Can I afford to get this?

Can I pay cash?

What do I have to give up to get it?

Does it make sense to buy it now or later?

Only pay "cash" for things that depreciate

This post got started a couple weeks ago, but the internet went down.  Now I finally post it.  I don't remember the source of this train of thought. Nevertheless, it is good advice. Don't buy stuff on credit that is going to depreciate or go down in value. Sometimes this isn't always possible, but the ideal is there. When we buy stuff on credit the value of the product or service can go down. This means that we could owe more money on a product or service than it is worth. For example, The value of a New car goes down several thousand dollars right when you drive it of the lot. Why should we owe more money on the car than it is worth.

There are some things that do go up in value after they are purchased.  For example, the value of an education generally goes up every year.  We can certainly earn more money with higher education.  So, if it takes some debt to get an education it can definitely be worth the "investment".  Likewise, buying a home is likely a great long term investment.  Debt can be used wisely in buying a home.  In most cases over a long period the value of a home will go up.  location, bad neighborhood, flood,  cracked foundation, etc are some examples of when a home may not appreciate.  Tough economic times can also cause the value of a home to temporarily stay constant or go down in value.

The Moral--when you cannot afford to buy something that depreciates with cash. . . . .don't buy it until you save the money to pay "cash".  Let interest work for you instead of against you.

Take baby steps

I jumped on Dave Ramsey's website tonight.  He does a national radio show about personal finance. Dave seems to focus on real life personal finance for the average American.  I love step number 1. $1,000 emergency fund.  hmmm, it seems like I've heard something similar before.  Setting a goal for how much to start an emergency fund with will certainly be beneficial When we have an emergency in our everyday life.  Starting now with a budget has helped us work on building our emergency fund.  

Dave quotes John Maxwell on his website, "A budget is telling your money where to go, instead of wondering where it went." In other words we should plan on paper or on the compter what we are going to spend before we spend it.  This also sounds familiar--Spiritual creation before the physical creation.  This principle has sure helped us begin building our emergency fund while saving for other things as well.