More Money Monday: Step 3

Now that you've begun tracking your spending, and have identified your goals, it's time to get started on your budget! 

Step 3: Income

Step 3 is pretty straight forward, think about where your incoming money comes from and write it down. Easy as that! It should be a bit easier than other steps because it typically stays a lot more steady and it's easier to figure out than say how much you spend on entertainment or groceries. You may need to dig through the filing cabinet or look online at your bank account to find some of the information, but once you've found it you'll be well on your way. 

To get started, use this free printable and fill in the columns, following along with the points below. 

1. List the ways that you receive money. Some typical items here would be your pay cheques, getting a bonus from work, maybe you make a little bit of money on the side through contract work, being a Mary Kay lady or somesuch, or even babysitting. 
On our budget these lines include Cass' pay cheque, Philip's pay cheque, Philip's work bonus, our tax return. We also have a line for miscellaneous revenue to allow a place for any gifts or unexpected money we take in, and a line for payable which helps us to track money that we've received but know we need to pay back out right away (say, if we earned money that hadn't been taxed, and we want to make sure we aren't led into thinking that the money we got is all ours). 

2. Calculate the amount you receive each month or year for these items. You'll find that it's easier to list things like pay cheques monthly, and things like tax returns yearly. For the annual budget, multiply bi-weekly paycheques by 26 to see how much you're raking in each year.

It's as easy as that, you now know more about your income than you did before. 

Extra Credit:

1. Now that you've tracked your income, look at your goals sheet and see if there is anything you can add that is income related. Do you want to make more money? How will you achieve it? Write these down in the "How I can drive this income" column.

If you're handy in excel (Philip is, I'm not), you can create your budget in the computer so that as you manipulate numbers you can see what it can look like with some of the differences you plan to make through your goals.

More Money Monday: Step 2

Step 2: Launch Your Debt Rocket

NOTE: This is the fun part. This is the part where you get to dream about what you want your life to look like. So if you've gotten rolling on Step 1, this is a sweet reward for your continuing efforts.

Everybody's done cheesy goal-setting exercises before, so it might seem somewhat lame to yet another one just because we said so. But this isn't going to be cheesy because this isn't a goal for your eighth-grade basketball team and this isn't a goal for drinking eleventeen glasses of water a day because Dr. Oz said so. This is a goal for you, for determining what you want your life to look like, and how you can set yourself up financially to make that possible.

Here's a free printable for this exercise, take some time either on your own or with your spouse or fellow budgeteer to sit down and answer the questions. When you're done hang it somewhere visible to you daily as a motivator and reminder.

Keep your answers as direct and concrete as possible. This makes them more measurable and understandable. And a big hat-tip to Dave Ramsey, whose Debt Snowball is a big inspiration for this piece.

First question: "Understanding the richness of my life isn't determined by my bank account or my toys, is there one luxury that I dream of having?"

This is your dream, your aspirational goal. For Carl and Ellie Fredricksen, it was moving to Paradise Falls. For Cassondra, this would be going on regular vacations. For Philip, this would be owning a hot tub or building a media room. Maybe for you, it's having built your own home, paid off your mortgage, sent your kids to college, and/or having built a dozen freshwater wells in Africa. (Sorry, was that a Jesus Juke?)

Second Question: "What are all the obstacles standing in my way of acquiring that one luxury?"

This is your Debt Universe into which you’re launching your Debt Rocket (we’ll kill this metaphor yet!). Here you get to list all your debts (from smallest to largest) and how much you’d need to save to reach your version of Paradise Falls.

A quick word on owing money: Debt is a the single biggest threat to your financial future. And while home ownership might necessitate a mortgage, there's other debt like student loans, car loans, and credit card debt (especially credit card debt) that can kill your dream before it even gets off the ground.

On top of that, debt is expensive. Add up all your debts that are not your mortgage and multiply them by the annual interest rate. For example, if you've got $2,000 worth of car loans at 6% interest, that's $120; if you've got $900 of credit card debt at 28% interest, that's $252/year that you're paying that you won't have to anymore!

So list all your debts, how much you’d need to save to achieve your dream, and get ready for...

Third Question: "What are 3 things that we can do without, starting today?"

Say hi to your Debt Rocket Boosters!

“Wait,” you say, “didn’t you say at the top that this was supposed to be fun?”

“Yes,” I respond.

“Well, I’ll admit the first question (deciding what my aspirational goal is) was fun,” you continue, “but then you had me write down all my debts, and the amount of money I’d need to save, and that wasn’t so much fun!”

“Uh-huh,” I respond.

“And now!” you exclaim. “Now you want me to give up stuff? How is that fun?”

“I admit it’s not all rainbows and lollipops,” I acknowledge, “but bear with me here.”

Look at your aspirational goal. How cool would it be to get there? Very cool. Popsicle Pete-cool. So this is fun, because we’re giving up things that are less cool than your ultimate dream, in order to get you to your ultimate dream faster.

So come up with a plan to put extra money against your debt. Write down "Give up my morning coffee from [insert your coffeeshop here]." Add it up for a year: even just $3 every weekday for coffee adds up to $750/year!

Or write "Cancel our cable TV service and switch to Netflix.” It’s easy to drop $50-$100 a month on cable, but Netflix has tons of shows you can binge-watch to your heart’s content for only $8/month (with a freebie to get you started). Even if you’re on the low end of cable TV costs, you’ll be saving over $500/year with this switch.

For us, a few things we’ve sacrificed include Philip driving to work (he busses), cable TV, and a few games’ worth of our Blue Bomber season seats. With those three changes, a conservative estimate suggests we save about $2500/year. It’s not easy, but when I remember that we’re $2500 closer to soaking the winter blahs away in a hot tub or one day having a “Winter Cruise budget,” it’s a lot easier to stomach.

So what’s your aspirational goal? What are you giving up to get there? Make note of it in the comments so we can all cheer you on!

Would You Tues: Finances

Tying in with our new blog series that we launched yesterday, we're wondering:

What's the biggest obstacle you face when it comes to your finances?

a) Saving for retirement; it seems pretty far away and is kind of hard to make a priority right now.
b) Creating a budget; numbers aren't my thing and it seems like too much work. 
c) Giving; I would really like to be giving more to the church/my community but can't make it work in my budget. 
d) Entertainment/Personal spending is out of control. 
e) I am overwhelmed by debt. 
f) I don't know what all of you people are talking about, I have more money than I could ever ask for and my problem is that the stores don't carry enough shoes to fill my closet. 

There are a lot of options there, because people face a lot of different financial obstacles. While we aren't experts, we are a couple of people who think it's important to be open and take on our finances head on - depending on the responses, we may add on or delve further into these topics in order to provide some resources or a discussion forum for them. While we are a DIY blog, and will remain that way, learning to take care of your own finances is a great tool and something we're slowly learning to be more responsible for since getting married and moving out. 

We'd love to hear your feedback, whether it be by email (cassondra.wiebe@gmail.com), Facebook, Twitter, or in the comments. 

As for us, right now we converse a lot about whether to invest extra money when we have it, or to put it into our house (which at some level can also be considered an investment). Philip was forward-thinking enough to have invested a fair amount before we got married, and now  we've taken a year or two off from putting any significant sum away because of our renovations. While we walk through this budgeting exercise over the next couple of weeks along with you we'll be talking as a couple about if we should put our money into saving for a kitchen, or put away more money for our future. 

Sparks and Recreation

Last Saturday we started a new series, where we share some of the great articles and blog posts we read throughout the week. It's just a good opportunity for you to be introduced to some new blogs, or just read something interesting. We're trying to keep some good variety, from home improvement, to self improvement, information that's interesting to bloggers or those who don't spend hours in front of the computer trying to come up with something interesting to write about. 

On Simple Mom this week, Tsh shared recipes for some of the homemade beauty products she uses. Philip has had a ball making fun of this the whole week (coming up with his own "homemade beauty remedies" including tomatoes as deodorant , but I have to admit I was somewhat intrigued. Nothing really to lose in trying it, so once our bathroom is set up I'm going to give a couple of these a go and let you know how it was. My mom already used coconut oil as lip balm/moisturizer like Tsh recommends here, so they can't all be crazy! I'd recommend reading the previous posts she links to where she originally wrote about each beauty regimen in detail, I found them interesting!

For those of you who know us, or who have been reading regularly, you know we don't have a hot clue what we're doing (where does that saying come from anyway??). We had to patch a few holes in the ceiling from where the old air conditioning vents were, and the patching did not turn out great. Here's how we should have done it. 

This is not house related at all, although I guess it is do-it-yourself. Lately we've been buying this salad at Costco that has "7 superfoods", I came across this blog post teaching how to make a variation on it yourself. 

Can you imagine living in 40 sq. feet? This Apartment Therapy post shares photos of homes in Hong Kong where they live in 40 sq foot areas because of the housing crisis. My purging urges would definitely come in handy if I had to live in that small a space.

Until grade nine, I needed my mom to do a ponytail for me. I don't know how quickly I will learn these hair tutorials, but some of them are really cute! I also love having one link to access 20 hairstyles, very handy.

Last but not least, on Project Organize Your Entire Life, I came across this giveaway which links to LearnVest.com. It seems like a great budget tool. I get sucked in by clean graphics and pretty colors, so this is definitely tempting to me. In the coming weeks we're going to be starting a series on finances and budgeting and all that jazz so definitely get excited for that (Philip's a Marketing & Finance major so he knows his stuff). We try and be responsible with our money, plan for the future, and be good stewards of what we're given. Our system works for us, but if you don't have one, a site like this might be a great idea! Otherwise hold out for a couple weeks, and join us in a financial planning series that will help you to get your act together.

That's all for this week! What blog posts/articles did you see this week that were interesting to you? We'd love to be introduced to a new blog or just an interesting piece of information we may not have heard. We don't have cable, so sometimes we're out of the loop on this kind of stuff (although I should speak for myself, Philip weirdly knows everything that's going on all the time while I live in ignorant bliss). 

Jesus and Bob Vila

Who'd have thought it would take me so long to get to my first Friday Phil of the year. Thanks to Cassy for philling in (couldn't resist), carrying the weight all this time, and speaking so kindly about the vow art I made her for Christmas (and the vow art that I spent hours on only to see fail miserably).

Today's post has been on my mind for a while, and I hope I can do it justice. It's a little more theoretical than what we normally talk about here, but no less relevant to renovators and DIYers.

Jesus and Bob Vila: The Ethics of Renovating Homes in a Broken, Needy World

Cass likes to comment about our renovations that "we spent $15,000 replacing our HVAC and windows and nobody can notice. But next thing you know, we throw a $30 can of paint up on the wall and everybody oohs and aahs." It's mostly a comment about the discrepancies between the cost of a job and their impact on others perceptions. But on a couple of occasions, it's hit me on an even more fundamental level: we've spent more than fifteen thousand dollars on renovations? That must be wrong.

The good news is, that IS wrong.
The bad news? It's much higher.

Can I let you in on a bit of a secret? We've budgeted $25,000 for this round of renovations, every cent of which we got from selling our condo for more than we bought the house for. Right now we've blown through about 85% of that, with the remainder to be spent on the bathroom, spare bedroom, and window coverings.

But this is not Cass and Phil's financial report. (We've talked about budgets and balance sheets before.) This IS about how we think about renovations and the money we spend on them.

What's the problem, you say?

The problem revolves around a trio of questions:

1. Where does our duty of care for our fellow human beings end?
2. How do renovations serve the greater good?
3. When have we spent too much on renovations?

It's Our Duty to Love our Neighbours

The first question has haunted me most of my adult life. I've asked it of a few people, and nobody has given me a satisfactory answer. In a world with great need, where every dollar we donate could save a life, how do we justify anything that could remotely be considered a luxury?

Leave it to Stephen Colbert to call us out on the carpet.
Found at zunderfury.wordpress.com.

As a Christian couple, Cass and I have chosen to follow the words and example of Jesus as we pursue a relationship with God. And when Jesus told people to love their neighbours, he was asked "who is my neighbour?" And this led him to the story of the Good Samaritan. And in this story we find both our comfort and challenge: that we believe God has called to us to some minimum levels of engagement (tithing) and will bring people/issues/causes into our path where we are to serve and offer our talents and yes, even our money.

Now, that is little solace for the idea that a child might die of a preventable cause while everyday you can turn on the TV to see an ultrawealthy North America spends boatloads of cash building a supermansion. And it's even less solace when I take the plank out of my own eye and realize that I, relatively speaking, might as well be that ultrawealthy North American building a supermansion, when you consider how much of the world lives off less than $0.50 a day. (Answer? 162. Million. People. Almost 5 times the population of Canada.)

For this reason, our tithe will never be optional, and I am glad it goes to a church that invests heavily in supporting the poor both locally and internationally. For this reason, Cass and I strive to be sensitive to where God is showing us we need to get involved, whether with our time, advocacy, or finances, or all three.

But that far from absolves us from being able to use our money recklessly. I believe what we do with it needs to serve a higher purpose than simply satisfying our wants.

What are we doing for the world when we renovate?

What value are we adding to those other than just ourselves when we sink large sums of money into our home? This is the crux of the second question.

To answer, I'll defer the beautiful lyricism of Sara Groves, a songstress whose work has repeatedly challenged and encouraged me since the RELEVANT Podcast clued me in to her four years ago. (Download her acoustic album free at Noisetrade!)

We come to every new morning
With possibilities only we can hold, that only we can hold
Redemption comes in strange place, small spaces
Calling out the best of who we are
And I want to add to the beauty
To tell a better story
I want to shine with the light
That's burning up inside
It comes in small inspirations
It brings redemption to life and work
-Sara Groves, "Add to the Beauty"

The idea is that we are not always able to subdue all the darkness in the world, but in spite of that, there is value in simply adding to the beauty in the world. That's a basic reason we are renovating Grandpa Joe's House: to have our home add to the beauty in the world.

Additionally, working on the house is helping us learn about the things we use and how we use them. Before moving into our condo I'd never so much as put a nail in a wall. Now I've become someone who's still hesitant to put nails in walls (go 3M Command Strips!), but has torn a few out and has even refinished a few whole rooms. In the process, I've learned a lot about how houses are built, how we use energy, where hot water comes from, and a bit of what it takes to keep those critical pieces in working order. I'm a smarter, more ecologically-conscious consumer and have grown to be a handier homeowner as a result.

Beyond that, we have a dream of making our home a form of sanctuary, not in a "reclusive monastery" sense, but simply a place our family and friends can gather at any time and feel at peace. Right now, with our bathroom under construction, our spare bedroom a de facto storage room, and the basement gutted, there's a lot of time when Cass and I don't even feel at peace. But that will come, and being at peace is as much a decision as it is a situation you find yourself in, which is why we already have guests over as many days as not.

How far is too far?

The final question to ask is, at what point have we spent too much on our house? I'm not sure there's a number, but here are a few guidelines:

• When God calls us to put that money into other things.
• When the amount we spend on our house prevents us from being able to tithe.
• When we lose sight of our house's purpose and start spending money on it because the money is there.

I know this last point is a little fuzzy, but it's a guideline, a general rule, and as Coach K has famously said, "People set rules to keep from making decisions." I hope we always live in the tension of "are we doing enough to help the less fortunate?" because I don't believe we are truly alive unless God has brought that tension to life inside us.

So where are you at? What are your answers to the three questions posed above? Let us know in the comments!