Simple Steps to Be Financially Fit for 2013
We’ve always been good at living on a budget and managing our finances. My wife and I regularly try to uncover new behaviors to spend less. We have spent most of our extra income on remodeling our house and after a closer review of the money spent, we could have paid off our mortgage. We decided to step our budget up a notch for 2013.
Preparing a Plan and Detailed Budget
First, my wife created household management folders for our home. We are fans of Dave Ramsey and try to incorporate his financial freedom strategies into our budget. Our financial notebook breaks down monthly income, which as servers varies, so we base monthly income on what we made last year. Then, use Dave Ramsey’s budget tool to determine how much money should go where. These are Dave Ramsey’s allotted percentages. We added a pet’s category as we have many and dropped medical, as we have none, which Ramsey wouldn’t recommend when serious about getting out of debt.
Dave Ramsey allotted percentages per finance
Anything left over is allocated to other expenses…Dave says that every single dollar is to be put somewhere at the end of each month
Saving at the Grocery Store and on Monthly Bills
My wife clips coupons weekly and I use Ebates. I don’t always see the value, but smart purchases on a sale will save money. A larger step to saving at stores is a spending cap every month. You may have to adjust this amount, but once you find a comfortable limit, stick with it. I enjoy challenging myself to spend less. We basically buy the same items, so my wife made a price book to get those items at their lowest cost.
Monthly bills continue to haunt everyone. I shop around often for my monthly services. We saved money on our cell phone plan by switching to Straight Talk at Wal-Mart and paying for service yearly, dropped the house phone for Magic Jack and monitor the cost of cable TV and internet regularly.
Paying Off Loans
We have been successful at using our credit cards wisely, but have broken a couple of the Dave Ramsey rules. One, he doesn’t like credit cards and two advises buying a used car to quickly pay off. We purchased a 2013 Toyota Prius V for over $30,000 knowing the offset of gas saved from a hybrid will take years to recoup. Driving the Prius V cost about $45 a month at 43 mpg, versus $70 in a Mazda 7 getting 25mpg. We are confident with the new budget and savings we will be able to pay off this loan in the next two years.
Reducing the Total Mortgage
Another goal is to pay down our mortgage. After improving credit scores we made progress on the mortgage by refinancing our manufactured home to a 15yr fixed rate, but want to start paying Dave Ramsey’s 25% a month to mortgage. For us, that’s roughly $1250 a month, $450 more than we currently pay. Our house should be paid for by 2020 saving 5 years of interest.
Contributing to IRA and Savings
Savings and IRA contributions are important to a stable future. I consistently put money away to IRA’s before, but stopped during the recession when my investments regularly lost money. I moved my IRA’s into self directed IRA’s with Horizon Trust, which seems to be paying off, as I enjoy steady growth of any kind. We plan to start investing the $5000 tax free allowed yearly by government again and plan to put money aside for savings as well as opening a savings account for our daughter’s future.
This is our family plan to get out of debt and setup for success in 2013 and beyond. We would one day like to build a new home making a large down payment on it and hopefully pay it off. Good luck in saving money and having a debt free future.
Please visit my DIY website @ DIYforanyone.com for more home improvement and money saving tips.