When it rains it pours. The weather in Texas has been just awful lately. Everyone is complaining about how it never rains this much in Texas. After doing a little rain research I am here to tell you it has rained this much before… it’s just been a while. The Average rainfall for Texas is not quite 50 inches a year. It has been 6 years since we have even seen normal rainfall rates because we have been under drought conditions, (though my bet is this year we will see normal if not above average rainfall totals since we are nearly half way there already). Since the weather seems to be coinciding with my finances as of late so I thought I’d share with you some of what I’ve learned on my journey to get out of debt, as it seems that the rain has been falling in spades, unexpected expenses have been falling in spades too. . .
My husband and I are trying to slowly and steadily chip away at our debt by using a budget and Dave Ramsey’s philosophies about handling money. While we might not be perfect it at and Dave may question some of our techniques, I am happy to be able to say that if I were to talk to Mr. Ramsey today I could tell him even though we may not always be 100% on with our budget we are 100% better at cash flowing emergencies today than we were a year ago and we continue to make progress every month.
This time last year if we were to have an unexpected expense that had not been penciled into to the budget that I had, (which was more of just a list of bills that needed to be paid so I wouldn’t forget), most certainly a credit card would have come into play and instead of our total monthly bills going down, they would hover around the same amount from month to month (like they seemed to do for years).
Since we’ve been working a new plan on paying down our debt by using a real budget (Check out https://www.everydollar.com/) I can easily go in to the budget and reaccess where the money is supposed to go and divert it to whatever unexpected expense has come up. This year it seems like it’s one thing after another. . .having to lay rock for a driveway so out cars don’t sink in the mud, having to dish out money for unexpected but exciting career advancement opportunity, having to get the septic system pumped for the first time, a new fan to replace the one that was about to die, a new mower for our 1/2 acre lot, car repairs, an increase in our mortgage escrow. . . et cetera, et cetera. I am happy to report that all of these things have been cash flowed and NOT put on a credit card. Our total monthly debt continues to decrease and budgeting, while forever a challenge, is getting a little easier every month.
How do I cash flow? When planning out our monthly budget I like to leave a little wiggle room. We have expenses that arise quarterly and yearly and we have a few bills (like the electric bill) that can have a drastic difference in them from month to month. I like to proactively plan for these things, so instead of waiting for the month these bills are due to come upon us and hope that we will have enough money to cover these bills I plan in advance. The bills that are due quarterly I divide up to find the monthly payment and set that amount aside each month into savings. I do the same with the bills that have to be paid yearly. For the bills that fluctuate greatly from month to month (For us it’s the electric bill) I take an average of the payments over a year and divide by 12. I use this number as my “payment” number in my budget. Any month that the actual payment is less that “payment” amount in my budget I divert the additional amount into the savings account. This way when the bills are due I already have the funds set aside to pay them and don’t have to stress about having to come up with enough money.
The bonus to this method is that if a true crisis emerges or an unexpected expense comes up that I can’t cover from the normal budget funds I can pull the money from the quarterly/yearly categories and use the cash that would have been set aside to instead cover the unexpected expense now. This considerable lowers my stress levels and then leaves me time to plan how to fund back the money that should have been diverted for the quarterly/yearly/etc. expenses, and lets my debt snowball continue to roll.
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