Friday, March 20, 2009

Budget Questions

I've been rereading a favorite book:

And I still can't make things work right.  Don't get me wrong; I think the plan is stupendous.  I wish the sense he writes was followed by everyone.  I even got a few people this book for Christmas, I like it so much.

I'm not reading it for the 'get out of debt' stuff, though that's great.  We were pretty much out of most debt (not the house) before I first read it, and by the grace of God we all remain healthy, but I still think we have much to learn about budgeting and stuff.

My major problems are:

  • How do you budget for seasonal stuff?  And I don't mean 'clothes' that you buy occasionally, I'm thinking here of... baby chicks.  Chicken feed.  And are these expenses part of our food budget?  Do you know how varied the critter feed prices are, year to year?  I'm a little afraid to add this stuff up anyways, so maybe I'm just undisciplined in it?  Too, we buy beef less than once a year, but I'll be darned if I can look at that chest freezer and know when we're going to run out.  And I certainly can't know what the prices for a decent beef will be at that point!
  • I am completely, utterly, and tremendously overwhelmed by the legal/financial stuff.  We still have (very little, now!) money in a 401(k) (I think that's what it is, anyway...) in the company that USED TO own Hubby's workplace.  Like, 4 years ago.  We certainly don't save 15% of our income for retirement (yikes!  That's a lot!), and need to have a better system for that.  Which I say every year.  I tried doing a will a few years ago, and ran into a glitch when I couldn't come up with primary and secondary preferences for guardianship of our kids.  The website wouldn't complete it without all blanks filled in, so I gave up.  I did go onto Dave Ramsey's website and submitted a form for a financial guru who is an "Endorsed Local Provider."  And then discovered that anywhere within 700 miles is "local" and that scares me.  Moreso when their website features BIG, TALL, SHINY buildings that are very... big.  Wow I'm a country hick, huh?  Sheesh.  They called the next day, but I was elbow-deep in cinnamon rolls and didn't recognize the caller id.  They emailed too, so maybe I'll call them back.  Maybe.  I just feel so... small, short, and rustic.  *sigh*
  • I have a hard time with the food budget (aside from buying live animals).  Dave loves to quote "beans and rice" and intellectually I agree, but in practice it is something else.  Not that I can't handle beans and rice, but Hubby's diet must be rotational (and let's not discuss the price of his supplements.  Are those food?).  Beans and rice will work one day out of four.  Well, perhaps I could switch from pintos to black beans to garbanzos (but not kidney or navy!), and that would work (well, except he'd divorce me before the week was out. :) the man just loves meat.), but I'm just NOT at the place where I would buy every msg-laden, genetically modified box of macaroni and cheese (tasty though it may be) for money's sake.  What's a reasonable food budget for frugal-but-not-junk household of 5-going-on-6 people?
  • What is meant by 'cash,' anyway?  Like, "Man, if you're walking in there to buy that [whatever] with cash, they'll listen to you."  Does he mean actual, green bills?  I ask because we're looking for a van (duh), and plan to buy with cash.  We *might* have to drive out of town or out of state to find the one we want, however, and if we do, how does that work?  I doubt I can write an out-of-state check, right?  But the thought of emptying my bank account and walking around with $12-15,000 in my wallet seems insane.  We'd haggle, and then do the deal, and then what?  They call the cops thinking they just found the local bank robber?  I could use my debit card, I suppose, but how many car dealerships can run a visa card?  Too, is it better to deal in 'cash' upfront, or would you get a worse deal, because they're counting on getting the financing charges out of you?  Maybe I should call Dave Ramsey's show and ask...?
 What do you think?  Is there any budgeting wizard reading this who can show me the way, the truth (and the light?)? :)  I promise, if I figure it out on my own, I'll post all my garnered wisdom here.


annie said...

Well, neither my husband nor I have ever read a book by Dave Ramsey and the local radio station keeps changing the time they air his program, so it's been months (if not years) since I've last heard his practical advice. We have debt (mortgage, car payment, student loan) and little savings to speak of (thank you broken a/c, broken cars, broken dryers, broken....). However, I do not feel as though we mis-manage our money (with the exception of the student loan, which my husband came into our marriage with. the car payment was taken under days of prayer and surrender to the Lord). We stay within our budget (miraculously at times, it seems) and we earnestly seek God's will through every financial decision. So. Here's my two cents. Since you asked, though I'm hardly any budgeting wizard.

1. Seasonal Stuff: I'd make stuff like baby chicks and chicken feed it's own category and include beef in my monthly grocery budget. For feed, I'd take what I paid previously and average the increase in price and budget slightly over that. It won't be exact, but it should even out. That's what we do for bills like propane and electricity, since they vary month to month. Some months we pay $40 in electricity, some we pay $120 (and looking at last year's bill for the same month is not always helpful, since last year it was freezing in March and this year we've already turned on the A/C twice). For beef, I'd average it out, include it in my monthly grocery budget, and put it aside each month so it accumulates until I need it. Again, it wouldn't be exactly what you need, but I'd think it'd work out pretty closely. For example, say you bought $500 worth of beef last July and you're not quite halfway through the supply, so it will likely be another 6-8 months before you need to buy more. I don't buy beef in bulk, so I don't know what a reasonble increase (or decrease) in price would be from one year to the next, but let's say it's $100 and you can afford that increase. So you'd figure from those numbers what you need to put aside each month out of the grocery budget in order to meet that need when it arises. Does that make sense? You'd have to make an annual grocery budget every year and include in it the anticipated cost so you could include it in each month's budget.

2. Legal/Financial Stuff: We have retirement with my husband's job (government, blah blah, it's actually really good for what it is and we aren't complaining). So I have no advice for what you should be doing to save for that, other than investing and I have NO experience with that (except my house, on which equity dropped rapidly very soon after we bought it so that wasn't so fun). We have a primitive will, in which we typed up who we selected as caretakers for our children and had it notarized. We don't have any other 'assets' we care about, so in the text we specify that any money earned from our possessions (house, car, etc etc) is to be set up in a trust for our children. And that's pretty much it. We talked to my parents (the intended guardians) about what that means for us, and we trust them, so we left it at that. Now, if anything happens to them...I'm at a loss. I wouldn't feel so intimidated by going to talk to one of their recommended guys, though. I would hope they aren't as far as 700 miles.....that's insane.

3. Food Budget: We made out our food budget based on the bare minimum I needed to supply my family with good, nutritious, whole foods. Because we have an extremely limited amount to budget with, there are some things I just cannot feasibly work into our budget and diet. Therefore, I cannot feel guilty about it. I would love to buy bulk, grass-fed beef but I can't and there is no way around that, it is just not within my husband's salary. Consequently, I buy beef when I can from the sources I can afford and trust God will provide for our health and nutrition. If you can't do beans and rice, then don't. No one says you have to in order to be a good steward. And food budgets mean different things to different people. A family of three we know has a monthly food budget of $200. They don't buy organic, stick to store brands, include paper towels and processed foods in their budget, and generally go over every month. Our food budget is much less than that, we buy organic local produce, no paper products or processed foods, buy the best brand we can afford to meet the nutritional needs of our family, and we never go over our budget. So, I don't know.

4. Cash Stuff: I don't take it to mean paper-money-in-hand. I take it to mean a check or other direct-to-bank means. We actually just had to buy a car (hence the car payment, which we couldn't avoid though we sought every means possible to do so) and the advice I got (from my dad, who I trust for this kind of stuff) was to not let them know you're a cash paying customer (for us, cash meant cash loan, but it's the same thing in words if not in who owns the money). Or wait, maybe it was let them know. When you find the vehicle you want, talk to them and say hey, I've got this amount of money and I'm ready to pay this moment. Okay, that's what my husband said my dad advised. :)Anyway, if you walk in cash in hand (or checkbook in hand), and tell them you want that car and you'll pay this amount today (and you go in at the end of the month), they're more likely to work the deal you want. We went through my husband's bank, which used a blank check kind of program, so it was like cash and we were able to get the price we wanted. Then they realized the check was from a bank and wanted to sell us on their financial payment whatever and it was fun to tell them no. :) And we used a debit card, Visa, no problem. I don't know why an out-of-state check wouldn't work, but I'm really clueless about such things because I've never had to do them.

Maybe I should have emailed you.

EllaJac said...

Annie, thanks for your carefully thought-out answers! Especially the 'car stuff'.

I don't mean to imply that any debt is inherently sinful (in case it sounded that way). I've seen God direct people to it; God worked a miracle for us to have this house (which includes debt). I'm just getting on the bandwagon of 'wow, debt-free is really great' and barring specific direction otherwise, that's wisdom. :)

I *wish* we'd spent $500 for that beef! Not even close. Maybe 3 times that or more. But, we've certainly not even come close to halfway gone, so hopefully it'll be another year or two until we have to think about it again. But I'm so bad at labelling $X "beef" money; I'm more inclined just to save it up and use it when we need beef, or to fill the propane tank, or whatever. Is that risky? I'm not (usually) inclined to spend big money on something superfluous (that camera calls, though...), so it's usually there when we need it...

I'm wondering if I could take a month, and instead of looking at what I SPEND, look at what we EAT, and figure from there. Some months I buy 100 pounds of grains, others none at all; honey I might spend $20+ on, but only once every 6 months or so, so things (at least in my head) seem to vary. Too, I'll spend bigger if I find something we definitely use and it's at a good price or whatever.

MamaJ said...

Very good thoughts! I have read a little by Dave Ramsey. We also have the Jim Sammons Financial Freedom seminar on cds.... Those are good too. We have not accomplished an actual budget yet, but I keep trying! We are going to cut out the debit "swiping" and try to use actual cash in envelopes. We are pretty fed up with banks right now, the coffee can in the yard is looking very appealing. (I had my identity stolen, I am going to blog about it soon. When my blood pressure goes down!)

As for paying cash to buy a car... On used cars,especially private sellers, it works fine to tell the people you are going to pay the full amount, "can we work a better deal?" In fact, we just got a few hundred knocked off Hubby's truck b/c we had the cash ready to go.

On NEW cars, Hubby used to sell cars and he says they give you a WORSE price when buying with cash. Yes, they defintely want the financing option, b/c they make a lot more money that way!

EllaJac said...

MamaJ, I've wanted to check out that Jim Sammons cd, but never have.

What about buying 'used' on a lot? What we want isn't exactly for sale on every corner, and it looks like we might have to drive up to 4 hours to find where some are... at least according to all my crazy internet searching. So, did your hubby sell 'pre-owned'?

MamaJ said...

Well, he worked at a BIG dealership, so they still wanted you to finance everything, even used! But, a small lot might be easier to haggle. You just have to be careful with the condition of the vehicle on some of the really tiny lots. But I bet your Hubby knows what to look for under the hood of an engine. ;-)

Anonymous said...

On the will: I graduated from law school and I can tell you that you should definitely definitely have a will. BUT you don't necessarily have to hire a lawyer for that. You can write what is called a holographic will. This needs to be entirely in your own handwriting and signed and dated by you. Put it in your safety deposit box and then make sure that you tell people about it. Holographic wills are not the best option and a good lawyer can help you avoid all kinds of tax problems. So I recommend going to an estate planning attorney for this. BUT a holographic will is better than nothing. If you and your husband die tragically, do you really want the STATE deciding what to do with your kids?

Budgeting will never make sense until you know what you already spend. If you use a debit card for everything, this information is easily accessed online at your bank. If you use cash, keep careful records of what you spend for the next year. Since your spending varies so much seasonally, this is really the only way you'll figure it out.

On the food budget- it's not possible to tell you how much you should be spending, although I found it helpful to check the food stamp maximum allowance for my family size. You don't have to spend that amount, just use it as a reference point. I don't find it that difficult to eat locally and organically within that budget, but then we do eat a lot of beans. But they are interesting and delicious beans with lots of variation!


EllaJac said...


Thank you for the information! While I'm completely flummoxed as to how a law-school grad finds and reads my blog, I'm quite grateful.. :)

I didn't know that about the holographic will; that might be a good temporary plan, and the food stamp allotment is indeed a good starting point. Hooray for beans!