I mentioned in my last post that the family is attending Dave Ramsey’s Financial Peace University at a local church. Last Sunday was our first class.
My husband and I are attending, and dragging along our oldest daughter–who had to attend the first class on her eleventh birthday (we may be the cruelest parents yet to walk this earth). Surprisingly she loved it! We’ll be carrying scratch paper and a calculator to future classes so she can work “Dave’s Math” alongside the video. Learning lessons like compound interest and savings rates. She walked away saying “you know mom, Dave is pretty funny.”
Homework the first night was to put together our “quickie” budget. (A quick list of all your monthly expenses).
It was in that budget that I noticed the first flaw in what I thought was our perfect plan.
We don’t plan for cash-flow.
Sure enough, our budget lines up to within a few dollars of our income (we already had our budget saved in Mint.com, as a zero-based budget)
I’m taking a look at a few cash-flow solutions like GreenSherpa to get an idea of how better to plan. I’m also hoping that one of Dave’s lessons will enlighten me on other ways to do this.
How do you budget your cash?
In the meantime, I’d love to hear from other DebtKid readers–how do you plan for cash-flow? I have a “bill box” with 31 slots in it. Bills get stuck in there based on their due dates. I’ll bet there are some better ways.
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Good to hear you’re enjoying the class. I graduated in early August and learned so much!
You’ll learn more about cash flow planning in a future lesson. I love the allocated spending plan form and find it extremely helpful.
Our family uses Quicken, which I’ve used religously for the past few years. It can be imperfect sometimes but the cash flow management is indispensable. To Intuit’s chagrin I don’t update each year, more like every other year so this helps keep the cost down.
Thank you both for your comments and thanks for the encouraging words that cash flow planning is coming! yay! Matthew–you’re buying quicken, but does the free QuickenOnline do the same things? That might save you a little money if the features are the same. Thanks again!
I probably will consider giving QuickenOnline a try again in the near future, right now my Quicken 2008 still does all the important stuff and the newer versions of the software aren’t so much better that I need to upgrade very soon. The one criticism I have of the online services I’ve tried previously, like Mint.com and QuickenOnline is it did a great job of keeping records of transactions with categories but the future cash flow parts seemed lacking. Likely they will improve these services as time goes on and even some of my experience was likely clouded by being used to how the software versions operate. Prior to using Quicken, I did use spreadsheets for everything from tracking spending to cash flow and in some ways it was easier that way since I could just set it up for my own subset of interests so that might be a good alternative as well for you.
I use Excel. I have my expenses, cash inflows, outflows and amounts that go directly into savings budgeted out for the next ten years, in addition to 401k’s IRA’s, college savings plans and money earmarked for vacations, etc. I know that sounds, perhaps, a little long term for a budget, but we are determined to be debt free in that time, including the mortgage. Unfortunately, as of now, it looks like we’ll come up a little short on the mortgage.
However, I digress, having everything budgeted out for the next months/years brings me a great amount of peace of mind. The car needed to be repaired last week and, of course, I freaked out. However, when I put the payment into my spreadsheet, my next thought was, “no big deal.” We should be back to where we are in three weeks.
It’s amazing how much free advice is online, yet people are paying money to go to Dave Ramsey seminars to build up HIS net worth. Everything he says is common sense, and not entirely correct, but the reason he appears successful is because he’s praying on people in dire straights to attend his seminars at church, work, and school.
I have many family members and friends that flat refused my (free) advice, and instead paid $100-150 to attend a session with Dave Ramsey. In the meantime I put together advice and budgets and charts for them. My advice was on spot with what he was teaching them, if not more in depth. It’s an expensive lesson to learn.
I’m no financial guru, however I’m 23, bought a home at 21, have $20,000 in my retirement, two paid for cars, and no debt aside from my $120k mortgage. I don’t live like I’m poor, I just learned from the beginning to save at least 10% to retirement, make a REALISTIC budget and stay as close to it as possible, allot yourself some fun money IN CASH!!! to keep your sanity (in my case, $120 a month is MORE than enough, and once it’s gone, it’s GONE) and set up all bills on auto billpay. After a couple months you should know when the bills will be pulled from your checking account. Whenever I signed up for a new service, I would set the auto bill pay to the day after I got paid. That way I have enough time for it to clear the bank, and then it’s gone the next morning so it’s like I never had the money to touch.
Never, ever take a loan from your 401k. You’re not paying yourself back if you’re missing gains, plus you have to pay taxes on it. You should pretend like your retirement money doesn’t even exist. Moving around money doesn’t do anything. You still owe the money, but now you’re paying back yet another institution. Get a second job or cut back expenses drastically. Never lease a vehicle, and never buy new.
Of course, Dave will tell you all of this. However, I learned all this with just a night of surfing the web. It kills me everytime I tell people twice or even 3 times my age this information, and it’s NEW news to them!
Samantha, I understand where you are coming from. But you have to look at the entire situation of each individual who decides to invest their time and money to learn from Dave Ramsey. To them, their situation may be “hell” to organize or to try to budget anything. They may have unusual bills, differing paychecks, children with extracurricular activities that change every season, medical problems, etc… that make it hard for them to simply use their “common sense”. I for one am 23, single with no kids, rent, own a car that is partially paid off and I didn’t buy it new, and have some debt around $3000. Make $27000 a year gross. I don’t have too many things to factor in for a budget of my own. However, I would never know the first place to start. I don’t have a Financial Savvy person that I know to give me the pointers I need. But if I did, I would definitely ask them for help first. I know a lot about Excel, have Quicken software that I could implement if I wanted to, but I just don’t know how to organize it all. I don’t even use a check register anymore because I try to keep a mental note of what I spend and check my online banking daily. This still doesn’t help me keep money in the bank until the next paycheck or keep me from splurging on eating out or buying more groceries than I need, or buying clothes, etc. Sometimes you just need someone else to tell you how to do something, or at least to push you in the right direction.