As I’ve mentioned in previous posts, my husband and I are currently following Dave Ramsey’s baby steps to achieve financial freedom.  http://www.daveramsey.com/new/baby-steps  Our main goal for the next few years is to be debt free.  We are currently finishing saving for our Emergency Fund, and as soon as that is finished, we will begin to attack our debts from smallest to largest until all of them are paid off.  In order to do this, we did a 180 from the way we dealt with our finances before.  No matter how much debt you are in, you can achieve financial freedom and become debt free.  Here are 5 steps you can take to kickstart your debt free journey: 

1. Sit down with your spouse and come up with a monthly budget (If you're single, find someone to hold you accountable).  Extra money should go towards saving for an emergency fund and then debt repayment.  Try to live on as little as you can, so that you can be debt free within the next few years.  Do make sure that your budget is realistic though – you need to actually be able to live on the amounts you have set aside for each category.  If you don’t leave yourself enough for groceries, you will have to pull money from another category or get into more debt to be able to eat.  Then you will be in more financial trouble than when you started.
2. Resolve to live on cash only while you are paying down your debts.  It is much easier to overspend when you are constantly swiping your credit or debit card and can't actually see your money disappearing when you spend it.  In order to do so, take out cash for each budget category that isn’t a payment set up on automatic withdrawal (some examples of categories would be groceries, gas, clothing, entertainment with friends, etc).  Put the amount for each category into its own envelope.  When the money in that envelope is gone, you can’t spend any more money from that category until the next month (or next pay cheque – depending on your budget and pay schedule).
3. Take stock of what you own and see if you have items you can sell.  Maybe you have an extra car that you own but don’t really need, or extra furniture, or computer equipment, or even a vacation property.  If you are really serious about getting out of debt, you can sell what you don’t need and put that money towards your emergency fund and then towards your debts.
4. Set up a meeting with your bank to review your account type and charges to see if there is any way you can save money.  You might be paying a high monthly fee for a bank account that comes with features you don’t need (such as a certain number of withdrawals per month, overseas transfers, or a safety deposit box).  If you talk to a representative at your bank, you can see if you can switch to a different account that you will be charged less for.
5. Analyze your spending over the past few months and determine where you can cut costs.  My husband and I don’t have cable, and we also got rid of our cell phones in order to save money.  That may sound extreme, but we have quickly learned that you have to make sacrifices in order to pay off debt, and we save a lot of money each month by using a landline instead of two cell phones.  Is there anything you are spending money on that is a luxury and not a necessity? Maybe you can sacrifice getting your hair cut at the expensive salon and opt for a cut at a cheap salon instead.  I have done that, and I have had fantastic service for less than half the price I used to pay.

Are you struggling financially?  If so, I strongly recommend reading Dave Ramsey’s book, “The Total Money Makeover.”  http://www.daveramsey.com/store/prod326.html?ictid=gc8.326.C11  If you follow the principles in his book, you will be well on your way to a bright financial future.  If you can’t afford to buy the book, see if they have it at your local library – that’s what I did when my husband and I needed serious help with our finances.  Also, check out the rest of the resources and articles on Dave’s website:  www.daveramsey.com

Do you have any tips for achieving financial fitness?  If so, I’d love to hear from you in the comments section.

_Christmas is around the corner, and you may already be dreading the post-Christmas spending hangover.  If you haven’t budgeted for Christmas ahead of time, you may be charging a lot on your credit card during the holiday season in order to have the funds for gift giving.  But Christmas doesn’t have to be a revolving door of debt.

Follow these tips for creative Christmas gift planning in order to stay within your budget:

1. Set aside a monthly amount in your budget for Christmas.  As financial expert Dave Ramsey likes to say, Christmas is not an emergency.  You know every year when it is going to happen.  If you plan for it ahead of time, the holiday season will have less of an impact on your finances.
2. Shop early.  If you are saving money each month for Christmas, you can look for sales year round and start buying gifts early.  If you can’t buy gifts really early because you don’t think it’s appropriate to ask what someone in your family wants until closer to the holiday season, start buying stocking stuffers early.  Stocking stuffers are usually pretty generic and can be bought year round.  Look for sales on little cosmetic, home improvement, kitchen items, etc. that would make for good stocking stuffers. 
3. Evaluate whether or not it is economical to online shop.  You may be able to find a discount online for an item you were looking at in the store.  Some companies even have a gift wrapping option, which may be cheaper even with their shipping cost than having the gift shipped to you and paying at the post office to ship the item to a family member who lives in another province or country.  Online shopping is also a great time saver for people with a busy schedule.
4. Turn your gifts into hitchhikers.  Is your Aunt who lives close to you driving to Texas to spend Christmas with another one of your aunt, uncles, and cousins?  If so, send their gifts with her so that you don’t have to pay to ship them yourself.
5. Utilize your local dollar store.  Dollarama in Canada has some really nice, quality items.  We like to look there for stocking stuffers – especially since we are on a tight budget and paying $5 a piece for stocking stuffers for a large quantity of people isn’t feasible for us.
6. Search for discounts.  Maybe you can find a Groupon to use on a Christmas gift for someone.  You could end up paying $15 to receive $50 worth of goods or services with the Groupon.  The other person never has to know, and you are still able to purchase them a quality gift that way.
7. Use your talents.  Is there something you can make for someone like a photo project, Christmas baking, etc that will help you save money but still come from the heart?
8. Implement a Christmas wheel if you have a large extended family to buy for.  If you are trying to pay off debt or simply stay within a budget, having a large family to buy Christmas presents for can be a budget buster.  Ask your family if they would be willing to implement a Christmas wheel or draw where each person only buys for one other person.  Chances are that other people in your family will feel relieved to have a Christmas wheel as well.  My mom’s family does this, and every year, my grandma calls and lets everyone know who they are buying for that year.  It works very well.
9. Remember the true meaning of Christmas.  Christmas is about the birth of Jesus Christ, who came into the world to die for our sins so that we may have life.  Christmas is not about material possessions.  Are you spending too much on Christmas?  Why?  Could you cut back on your spending and find ways to give to others in need during the holiday season?  

       
        What are your creative Christmas gift ideas?

_ Because I am living on a strict cash budget in order to save for an emergency fund and pay off debt, I don’t have a lot of money to spend on clothing.  However, my wardrobe is aging and is seriously in need of an update.  I am learning how to find cheap, but stylish clothing in order to not break the bank.  It is a lie that you have to spend a lot of money on fashion.  Our clothing budget is $20 a month to share between the two of us.  We take turns using the clothing budget or forgo buying clothing some months in order to save our budget to purchase higher priced items.  I will be featuring fun frugal fashion finds whenever I acquire a new item for my wardrobe in order to inspire other budget-conscious women to bargain shop.  I have found some items at garage sales and a couple at thrift stores, but by far my favorite place to look for cheap clothing is the Suzy Shier Outlet store that opened recently in the city.  They even have women’s work blazers, skirts, and pants for ridiculously low prices. 

_ Pictured Above:  Today’s item is a cute, grey sweater dress with a belt. 

Price: $10 (from the Suzy Shier Outlet Store)


Yep, that’s right.  $10. 


What is your fun frugal fashion find?

Those of us who adhere to strict budgets have an easy excuse for not exercising.  That excuse is, “I can’t afford a gym membership.”  I used to believe the lie that I had to have a gym membership in order to stay in shape.  So, I would shell out hundreds of dollars a year to pay for a membership I couldn’t really afford and was using sporadically.  Last year, my husband and I got ourselves into serious financial trouble through financing a gym membership / personal training sessions without closely reading the terms of our contract.  That membership is finally paid off, and we haven’t set foot in a gym since.  For years and years, there were no gyms for people to join in order to get in shape.  Instead, they went for walks, used a jump rope, or found other ways to stay physically active.  Yet in our North American culture, we are told all the time that if we want to be fit, we have to belong to a gym. 

Since my husband and I started our cash budget, I’ve tried to brainstorm creative ways to exercise.  Walking is great, but realistically, when the Saskatchewan winter temperature is -40 some days, walking is not always practical.  I became frustrated trying to think of ways to exercise inside my apartment in the winter time.  Using a jump rope really isn’t an option unless I want to become the noisy neighbor upstairs.  My husband and I thought about buying some cheap used exercise equipment, but that is not currently an expense that fits into our budget.  I was starting to feel frustrated trying to figure out a way to exercise inside when one day my husband realized that we already have a Dance Dance Revolution game and mat.  Even though DDR is old school now, we can still use it to stay in shape this winter.  And on less cold days, we can go for a walk. 

If you are paying off debt, sit down and really think about whether or not you need your gym membership.  If you are paying $90 a month for a gym (which seems to be the going rate here), that means you are spending $1,080 annually on your membership (plus a possible yearly membership fee).  At this rate, you are paying about $3 every day for your membership.  How often do you actually go to the gym?  Once every two weeks?  Once a month?  If you are only using your membership once a month, you are throwing away $87 a month for exercise equipment you are not using.  If you took two monthly gym membership payments, you could buy a used EFX machine or recumbent bike and a couple weights for your house – people are selling them like crazy online and are willing to negotiate on the price because most likely they’ve barely used the equipment.  Do you really need to drive to the gym to use their EFX machine?  And if you’re like my husband and I, and don’t currently have a gym membership / can’t afford to buy used exercise equipment right away, do you have anything sitting around the house you can use to exercise?  Maybe you could jump rope in your garage.  Or make use of a rebounder (mini trampoline).  Or you might be like us and have old DDR equipment sitting around.  Or an old exercise tape.  Or old snowshoes or cross-country skis.  The list is endless.  Make use of what you have to exercise on a budget.  Then you can take your previous monthly gym membership payment and apply it to your debt.

What are your tips for exercising on a budget?

If you are trying to pay off debt and are using the envelope system for cash management, creative budgeting is not your friend.  You know you are practicing creative budgeting when you are borrowing (really stealing) from one envelope because you want to buy something that fits into the category of another envelope.  In the first few months of budgeting, you will probably under budget in certain categories, and sometimes you will have to make up for this in other categories.  This happens.  But what I'm talking about is when you know you don't have enough money to buy something, let's say a new sweater (your clothing fund is spent for the month), but you take money out of your gas fund to buy one.  You are supporting a bad habit by buying something that you cannot afford.  My husband and I are wanting to purchase a cheap EFX machine - you know, the kind they don't have in the gym that you can buy used for $100.  We are trying to find a way to exercise during the harsh, Saskatchewan -40 winter weather when going outside is not an option.  So we were browsing used exercise equipment online tonight.  I was tempted to inquire about a machine.  Not to purchase yet, just to inquire.  But then my husband kindly reminded me that Dave Ramsey would say that we didn't need a machine right now because right now we don't have the money for it, so we shouldn't even be inquiring about it.  He was most certainly right.  Following a monthly budget teaches us financial discipline, and helps us combat the instant material gratification that is taught in our culture.  We are taught that if we want something, we can have it immediately.  We don't even have to put that item on layaway until we have paid for it.  We can simply finance it with 0% down and no interest for the first 90 days.  Financing cars and appliances has snowballed into financing things like a kid's skateboard.  Yes, I actually read about someone who did that on Dave Ramsey's website.  Financing is normal.  Carrying a huge debt load is normal.  And creative budgeting opens the door to taking on more debt.  Because if you creatively budget away your grocery money because you want to buy a DVD or another item, and suddenly at the end of the month you have no money and no food, you might pull our your credit card so that you can eat.  And if you take all of your left over pet money that rolls over at the end of each month and buy a new dress that you simply have to have, where are you going to get the money to buy that bag of cat food next month?  So instead of creative budgeting, remind yourself that when your envelope is empty, it is empty.  You simply cannot spend any more money in that category until next month when there is money in that envelope again.

Do you have a creative budgeting story?