February 2011 Nine Year Mortgage Newsletter


1. Pay the Rent/Mortgage First: Regardless of your financial circumstances, you need a roof overhead, a place to call home, a sanctuary from the world at the end of the day. So, your housing comes off the top of your check.  If your check is not big enough, you may have to relocate or find a roommate. When applying for a loan, I was told the house payment or rent should not be more than 25% of the monthly income. Any amount above and beyond that percentage and you will surely be financially challenged.

2. Pay the Utilities Next: The roof over your head will be very uncomfortable, if you are freezing to death in the winter, or roasting to death in the summer. You need to keep up with your utilities. If you are ever required to pay late fees or reconnection charges, it will be extremely costly and put your finances further in the toilet.  If your utilities are too high, you must conserve. In the winter, turn the heat down a couple of degrees and wear a sweater, if necessary. In the summer, turn the air conditioning down to a bearable temperature. When you are not at home, keep the house about 10 degrees lower than when you are home. The same goes for nighttime. Crawl deeper under the covers and save.

3. Pay the Remaining Bills: Before you do anything else with your money, pay your creditors. You bought it, your pay a monthly fee for service, or you already used it, and you need to pay. If you do not pay your bills, the cost rises for the people that do, your credit will be ruined, and debt collectors will start to call.

4. Buying Groceries: You have met all your financial obligations, and you need to buy groceries. Now what? You already know you do not have enough to shop for your favorite food items. You need to shop sales, used coupons-even if they may be a pain to collect, buy generic, and cut back on your list.  For example, I love a good steak. However, I am on a hamburger budget. So, I buy hamburger. Sometimes, even when hamburger seems too expensive, I purchase eggs, beans, potatoes, and peanut butter. These are excellent sources of economical protein. What you buy at the store may not be your favorite items, or even your preferred brands, but you are doing the right thing to stay within your budget.

5. Say “No”: If staying within the budget is still impossible, you need to learn to say “no”, even to yourself. Personally, I like to watch television, when I have the time. However, if the privilege of cable keeps me from observing the first four budget constraints, it is bye-bye cable. I would much rather feed my kids than watch the news.  If you have more expenses than you have money, obviously something has to go. You may have to say “no” for many things you or your family want, but it is more important to budget for housing, utilities, absolutely necessary bills, and food.  Anything else is optional.

How to stay on a tight budget, and live within your means…

As a single mother of two growing children, I have a tight budget, even with child support payments. Just when I think I am getting ahead, somebody needs a new pair of glasses or a dental visit. Forget that my youngest is having growth spurts and needs a new wardrobe two or three times a year. With my oldest going to college soon, and still paying off my own student loans, I have tough money decisions to make.

Just like everyone else, I have to prioritize how I spend any income. First of all, the house payment, car payment, and student loan are automatically deducted from my account, so nothing is paid until that money is subtracted from the budget. Next, I pay the utilities. Since my first full-time job was working with the electric company for 10 years, and the fact that the family lives in cold country, I know letting those bills slide will only cost me more in the long run. Then, I am trying to pay off credit card debt, one teaspoon at a time. As you all know, paying the minimum is not an option, if a person ever hopes to get out of debt. So, I try to pay extra, and try to keep up with my debt plan software.

Finally, I can go to the grocery store. Now, I know many will say to go to the store first, feed the kids, and then worry about the bills. Some have even criticized me for doing the opposite. However, it works for us.  Since I have a fluctuating income, some months we have a Mac and cheese budget, and other months we can do better.  I will say this—my family has never gone hungry. We may not always get to eat our favorite foods, but my kids always get filled up.

I know I said “finally” about the grocery store, and some of you may be wondering why I put food after debts.  It’s because I believe food is where we can save the most money, and so it’s the most flexible. Others ask me about the entertainment piece of the pie. Well, going to the movies is a once or twice a year treat. We have a library of movies we can watch on the television. We play games on the computer or get out a deck of cards. Between school, work for my boys, and extracurricular activities, we are not really concerned about an entertainment allowance.  We have decided to set them aside for a higher goal, and as a family, we are all on the same page. I can say that I believe the battles we have fought, and the hard choices we have made, will stick with my sons for the rest of their lives.  I believe that as a Mom, I am teaching lifetime skills, and leaving a legacy that will bless my grandchildren.  This is a huge reward for me.

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