Step Four...Debt Snowball

So by now you have created a budget, you're using the cash envelope system, and you have or you are working on saving $1,000. So let's tackle our debts now. This would consist of credit cards, car loans, and student loans. In Dave Rasmey's "Seven Baby Steps" Step Number Two is The Debt Snowball: Lose Weight Fast, Really.

Directly from Dave Rasmey, the creator of the debt snowball, are the instructions on how to do it. 

• The debt snowball method requires you to list all your debts in order of smallest payoff balance to largest. 
• List all your debts except your home; which is discussed in a later step. 
• List all of your debts - even loans from mom and dad or debts with zero percent interest. 
• List the debts smallest to largest - don't worry about the interest rates. 
• The reason you list them smallest to largest is to have some quick wins - which will get you more excited and keep you on track. 
• After you list the debts smallest to largest, pay the minimum payment to stay current on all debts except the smallest. You are going to take every dollar you can find and pay it towards the smallest debt unit it is paid off. 
• Once you pay the smallest one off then you go to the next smallest debt and do the same thing over an over. 

Below is an example to visually see what I am talking about: 

So as you can see moment starts to grow with each debt getting paid off. Then before you know it you are debt free!

But the key to any battle is to identify the enemy. Can you guess who the enemy is? It's all the creditor out there that get us on the ideas of buying now and paying later or for only x a month it can be yours or zero percent interest is same as cash. Those nasty sneaky people but we are also to blame because we fall for it. But it stops now! Let's pay off all these debts and never look back. 

There is one more enemy we need to talk about before we can be successful on this method...yourself. According to Dave Rasmey, "personal finance is 80 percent behavior and 20 percent head knowledge." So if we don't modify our current behaviors then the debt snowball method will never work for you. You need to be dedicated to paying off your debts and at the same time not taking on any more debts. So can you make a promise to yourself that you are going to do whatever it takes to get out of debt and that you are not going to create any more debt? If you answered "yes" to both questions above then you are ready! If you only said "yes" to one of the questions or said "no" to both then this will never work for you and you'll probably stay in debt forever. 

So the way out of debt is to outmaneuver the enemy and run your life. So get gazelle-intensity on getting out of debt. For some people it might only take a few month months and other a few years to get out of debt. It will be challenging at time but I promise once you are out of debt you will feel relieved. You will also find you have a lot more money then you think. Which then the fun begins. 

Dave ends step two with saying the following which I think is very powerful!

"The Debit Snowball is very possibly the most important step for two reasons. One, you free up your most powerful wealth-building tool, your income, during this step. Two, you take on the entire American culture by declaring war on debt. By paying off your debt, you make the statement about your stance on the issue of debt." 

Here's to getting finiancially fit AND getting out of debt once and for all!! 

Rustie J 

Money Saving or Rebate Apps You Need Now!!

Since we all carry around smartphones these days let's put them to work. There is a wide variety of money saving and rebate apps out there for your enjoyment. I'm gonna share with you the ones I like and/or use and how they work. 

Target's Cartwheel App

I love this one since I shop at Target religiously so I always have something to save with here. So in this app Target loads hundreds of offers across all categories in the store. When you find one you want to use you hit the "add" button. When you first start you will have a smaller amount of coupons you can clip but the more you use it the more slots you get. Offers range from 5%-50% off. One of the best parts you can combine these with printed out coupons and your Target Red Card discount. When you go to the registere to check out you just show you cartwheel barcode and discount come off your purchase. 

Wal-Mart's Saving Catcher App

I don't shop at Wal-Mart but if you do you need to get this app. It is super simple to use. Once you purchase items from Wal-Mart you upload a picture of your receipt to the app. Then they compare prices to top competitors in your area. If they find a competitor has the exact same item for less they will give you the difference in the Wal-Mart eGift Card. 

Coupons.com Mobile App

It works pretty much the same way as if you logged on from your computer. The only difference is since you can't print off your mobile device once you clip your coupons you send a link to your cliped coupons to an email address of your choice so you can print them off later. 

Retail Me Not App

This is a marketplace across the globe to find hundreds of thousands of digital offers from your favorite retailers and brands. So you simply type in the retailer you are looking for and the search results will show you in-store and/or online offers and give you the barcode and/or code needed to use the coupon/discount. This app allows you to always have access to a discount at your favorite retailers. 

Shopkick App

This is a newer app that you collect "kicks" (points). The two main ways to get kicks is checking into stores while out shopping and going to find selected product in the store and scanning the bar codes (and sometime answering a few questions about the product). You do not have to buy the product you scan to get the kicks. So why collect the kicks. Because the kicks you are earning can be "cashed" in for digital gift cards. The current retailers participating in trading kicks for gift cards included Target, Starebucks, Macys, TJ-Maxx/Marshall's/Home Goods, JCPenney, Old Navy, AE/Aerie, Best Buy, Sephora, Lowe's, Toys-R-Us, Game Stop, Sport Authority, Nike, and others. You can also donate your kicks to a good cause. Each retailer has a certain kick amount that equals a certain dollar amount. I really like this app since it's easy to use and if I'm out shopping and can earn free money for checking into a store and going to look at some product then why not! If you want to join me in using this app please sign up through this link: http://get.shopkick.com/berkeley30763

Ibotta App

This is also a newer app that you get money back from shopping at the stores listed in the app. Each week they load selected items that when you buy from the retailer listed you will get cash back. Once you purchase the item you do an activity to unlock the rebate such as read a fact, watch a quick video, or give feedback on the product. Then you scan the bar code of the item to verify the item. Then you upload a picture of your receipt to prove you bought the item. Then within 24 hours the rebate is added to your account. Then once you hit $5 in rebates you can cash out by sending the money to your pay-pal account, venmo account, or select a gift card. I like this app since I get money back for items I need to buy anyways and it's simple to use. Why not get money back! If you want to join me in using this app please use the referral code: mdvriim or this link: https://ibotta.com/r/mdvriim

Checkout 51

This is a really new app. As of right now weekly they upload a handful of items that you can get money back for uploading your receipt to the app. This app however works for any retailer. You just select the items you bought and upload your receipt. Then normally within 24 hours the amount in credited to your account. Since it is so new you need to collect $20 before they allow you to cash out and at this time once you cash out they will send you a check. I like it since it's easy to use and why not get money back. 

I hope y'all try some or all these apps to help save you money or get money back for things you are already buying. 

Rustie J

Marie Claire - 20 Small Changes Article

In a recent article published by Marie Claire magazine titled "20 Blink-And-You'll-Miss-It Small Changes That Will Dramatically Improve Your Life" they list the number two item as...Start Carrying Cash!! 

So as you can see I am not the only person out there that thinks it is a good idea! 

To read the rest of the article and find out about the other 19 items you should do now go to:

http://www.marieclaire.com/celebrity-lifestyle/small-changes-improve-life?src=spr_TWITTER&spr_id=1449_93061552

Rustie J

First Stab At Extreme Couponing

Ok, so I'm calling it extreme because to me it was. It was nothing close to what those ladies on the television show can do. But I was very pleased with my first adventure.

So this week at Target they had a few offers for personal and home care that I decided to take advantage of and buy a large supply of some items. Hey, at least now I know I won't run out. The three offers I took part of are as follows:

• Free $5 Gift Card when you buy any two Tide items listed.
• Free $10 Gift Card when you buy any three laundry care items listed. 
• Free $5 Gift Card when you buy any four hair care or personal care items listed. 

So what first got me interested was getting the gift cards back to spend on a future purchase. But that is also when I decided that I want to get this stuff for a steal so I need to go find me some coupons. I got my coupons from the Sunday paper (yes, they still print them), Coupons.com, and Target.com. 

Here is what I did for each offer:

Any four hair care items listed:

I got 4 bottles of Pantene Shampoo at $4.99 each = $19.96

I then used 2 coupons that where each $2.00 off two Pantene hair products = $8.00

So with just the coupons it was a total of $11.96 or $2.99 a bottle of shampoo (40% off).

But if you take into account I got a $5 gift card that would now bring the total down to $6.96 or $1.74 a bottle of shampoo (65% off)!!

Any two Tide items and any three laundry care items:

I need to call this one out together since the coupons I used helped in a combined effort on this one. 

I got 2 bottles of Tide detergent at $9.99 each = $19.98

I got 3 boxes of Bounce dryer sheets at $9.00 each = $27.00

I then used a large variety of coupons - (1) $2.00 off one Tide product, (1) $2.00 off two Tide products, (3) $0.50 off one Bounce product, and (1) $5.00 off any three Tide or Bounce products = $10.50

So with just the coupons it was a total of $36.40 or $7.28 each item (23% off).

But if you take into account I got a $5 and a $10 gift card that would now bring the total down to $21.40 or $4.28 each item (55% off)!!

I'm excited to use my $20 worth of gift cards for the next grocery trip to Target. 

I'm proud of my first attempt at a more extreme couponing effort and look forward to saving more in the future. 

Rustie J 

Step Three...Save $1,000 Quick

In Dave Rasmey's "Seven Baby Steps" Step Number One is to Save $1,000 Fast: Walk Before You Run. 

Some of you might be saying I already have a savings account and have $1,000 or more in it today. Congrats if you do! You are already a head of most people today. Because a shocking stat is that "49% of Americans could cover less than one month's expenses if they lost their income." I think that statement is just plain sad but it's the truth and you can either be an "average" person or not. I'm picking not to be average. 

Now you might be saying I won't lose my job so why do I need savings. I think that statement you just made might have been one of the stupidest things I have heard. Of course no one plans to lose their job but just look back at the last ten years. And if that is not enough for you then listen to what Money magazine has to say - "78% of us will have a major negative event in a given ten-year period of time." Y'all know I'm a positive person so I'm not trying to rain on anyone's parade but it's gonna rain at sometime and you need to be ready. 

So what if you are a person that has never saved a dollar in their life or thinks there is no way I can save $1,000 because that will take forever. I'll first say you're wrong you can do and it won't take forever. You are just gonna have to be committed and creative. Once you commit to saving $1,000 and make it a proiority it will become easier as you will have the correct mindset. But how do you make the $1,000 appear? You might have to tighten the budget up a little more to put some money aside each month, maybe you sell some of the items just laying around the house, maybe you pick up a side job for a little while, and maybe you come up with some other creative ideas. It will take some elbow grease but I promise you it will be worth it. I mean what better feeling is there then to know if something happens you have some money set aside ready to help. And if you just said if something happens I'll just reach for my credit card to pay for it - slap yourself and hard. 

Some of you might be asking what do I do if I already have savings and more than $1,000 in my account. In a later post we will talk more about saving at a professional level and having 3-6 months of living expenses ready at all times. 

Good luck to everyone saving for the first time. I know you can do and just think about the peace of mind you will have when you have a small emergency fund. 

Here's to being financially fit!!

Rustie J 

Step Two...Cash Envelope System

So by now you have created a budget for the month. Congrats! Your on your way to being financially fit. Now you need to learn about the "Cash Envelope" system that Dave Rasmey teaches.

It's a simple concept - pay certain bills with cash! Pretty novel idea. So from your budget worksheet you need to figure out what you can pay cash with. I think it is everything that is not a bill you pay each month (all the residual bills and credit card bills) should be paid with cash. So on my budget worksheet I take cash out for the following lines: Grocery/Going Out, Pet Care, Personal Care, Home Care, Medical, Entertainment, Clothing, and Miscellaneous. 

The one thing you are probably asking yourself right now is what about Gasoline for my vehicle. I think takings cash out for this has gotten to hard since we have to pay up front now for it. So make sure you leave enough in the bank account to cover this - which should be easy since you budgeted for it already. 

Once you figure out your monthly amount of cash you get to take out to cover the above expenses then you need to divided that in two. Why two you may ask? Well you are going to take half out on the first of the month and the other half out on the fifteen of the month. You might be asking why not take it all out up front? Think about this...you blow though all the money in the first two weeks. What are you gonna do now? And if you just said put it on my credit card - slap yourself. If you take it out in two payments to yourself you'll be able to budget better. 

Then you should create an actual envelope for each category and put the cash in it. The goal is to not steal from one envelope to pay for another. If this is the case you need to go back and look at your budget again to see what needs to change for next month. 

When an envelope is empty it's empty. You have no more to spend in that category for the month. Now from time to time you might need to shift between envelopes because something happens - do that I am not saying you can't. But note when all the cash is gone you are done spending for the month. You might find you need a better budget or there are things you need to stop buying. 

Now if a true emergency happens and you are out of cash in your envelopes what do you do? That's when you turn to you savings (we'll talk about in a upcoming post) to pay for it. Do not reach for the credit card to pay for it - again if you do slap yourself. 

You might be asking why can't it just leave my cash in my bank account and swipe my debit card - it's the same thing. Wrong! It's not the same thing. A funny thing happens when you physically have to let the cash leave your hands and give it to a retailer. It's harder to do that just swiping a piece of plastic. You start to rethink each purchase and if it is really worth it. You might think I'm crazy now saying it but it true. Just you wait. 

One other funny thing happens. It starts to become a game. What type of game? A game to have money left over at the end of the month. Again, I might sound crazy but I love seeing that I have cash left over at the end of the month. I like it so much that towards the end of the month I get even more tight about what I will spend it on. 

Here's to getting financially fit!! 

Rustie J 

Step One...Create A Budget

Our first step to take is to make a budget that we will live by. This way we can see where our money is going every month.

My personal favorite is is Dave Rasmey's "zero-based cash-flow" plan.

Here are some instructions for using this plan from Dave Rasmey:

• Every dollars of your income should be allocated to some category on the sheet. 
• Money "left over" should be put back into a category even if you have to make a new category. 
• You are making the spending decisions ahead of time here. 
• Fill in the amount of each category and at the end of month fill in the "actually spent" column to see if you have areas for opportunity. 
• Create a new sheet for each month. 

You can find a template from Dave Rasmey here:

http://a248.e.akamai.net/f/1611/26335/9h/dramsey.download.akamai.com/23572/daveramsey.com/media/pdf/forms/fpu_monthly_cash_flow_plan_forms.pdf

Each month our dollar amount in each category might change due to what is going on in our lives. But the important thing is to try to plan for as much as you can. Yes, there are many things we cannot predict that can happen (hence why we have savings - which we will get to in another post later) but we need to plan for as much as we can. Also, you might want to put money aside a head of time for big spending times like birthday and holidays. This way we don't use credit cards - we use money we have! 

Here are the steps I take each month when building my budget:

1. List my monthly take home pay for the month. 
2. List residual bills and amounts (mortgage/rent, car payment, car insurance, utilities, and cell phone).
3. List variable bills and amounts (food, gasoline, personal care, home care, pet care, entertainment, clothing, and miscellaneous). You will use the cash envelope system for these items which we will get to in another post. 
4. List credit cards and amounts. You will use the debt snowball on this which we will get to in another post. 
5. List transfer to savings. 
6. As Dave states I make sure that I plan every penny into a category. 
7. I keep track of my spending of each category though the month and look to see where I have opportunities for improvements. 

Here's to having a budget and taking the first step to getting financially fit!!

Rustie J