We are just a week away from sharing the heart of our plan for reaching your financial goals, whether its trying to get out of your consumer debt, pay off your home, reach that savings goal that you’ve been working on, or essentially attain most every financial goal you might have! In the first post we shared why that crash-diet financial plan just didn’t work for us. And last week we shared more about why the plan we used to pay off over $100K in consumer debt demands a more holistic approach to paying off your debt. We are trying to teach others how to manage their finances by just being wise, good stewards of their finances.
Before we share the details behind the plan we used (and still use today), we wanted to remind you of some additional ground rules. We already warned you about remembering you are in this for the long haul and that this is a learning process and that things just won’t go to plan. With those we thought we would remind you of a few more and encourage you to come back and remind yourself of these from time to time. There are too many to remember and when you’re in the midst of that actual plan it can become easy to forget some of these – especially the ones that might be a bit more painful than the others. And finally, while you may be looking for an order to these, we’re not going to promise that the first few are more important than the others. Each and every family and situation is different. You’ll know which ones are more important (especially after you see the why in them) and which ones you are trying to rationalize because you don’t want to do it. 🙂 Sure, you may find it odd that we just said that, but honesty is important here.
Don’t get into any more debt
We know what you’re thinking. We’re out of our minds. Do we really need to specify that not getting into any more debt is a ground rule for working through our process? Well, with that being asked, the answer is yes. First, we really do emphasize that the process we’ll be sharing next week can help you achieve most of your financial goals whether you are in debt or not. But according to an article on the NY Times, they state 83.5 percent of families headed by persons under the age of 35 were in debt. This tells us that many that read this may be in the same boat.
If you’ve been reading through our Deep in Debt to Debt Free series, you know how addicted we were to spending – and just as much how addicted we were to debt. It fueled us. We loved buying and stocking our new house with furniture sets, loved driving those newer cars, loved the lifestyle that our debt could buy. And stopping that was hard. And it began by deciding we wouldn’t go into debt for anything else. Even that item…on sale…in the store down the road…that we just had to have. We needed to stop.
We have shared that being intentional with what you do is probably one of the greatest tips we can give. And with that we won’t expound on it much more. You already know that setting your mind on a goal and then having it in mind with every decision you make will help you get closer to achieving it. When you’re trying to cut a few pounds, you don’t just mindlessly graze on the snack jar next to your chair – you intentionally consider how that and every decision you make will help you towards your final goal. Its the same whether its your budget, your spending, earning extra income or any other decision you are working on. If you have your end goal in mind and decide the next step based on that goal, you will have a much higher success rate.
Agree and resolve to communicate honestly and openly in regards to finances and goals.
This truly is a big step in working through not only the process we’ll be sharing, but any process you implement in regards to your finances. We shared this with you earlier this year when we encouraged you to set your financial goals for the year. When you not only involve the whole family, but agree as a whole to communicate honestly and openly about the finances, you’ll find this process much easier. And not only that, but you’ll also see your children learning some deep wisdom about financial matters. Whether they are learning about the evils of debt or about the hard work it takes to reach your financial goal, this will be a great opportunity to train your children. No, we are not suggesting you cause them to worry. You know your children and situation. But we have seen the other side of children not being prepared to manage their finances when they are adults because so much was hidden when they were young.
Communication with close friends and family
You may be wondering why this is one of the ground rules we set. But it makes sense when you consider it. Does your family love to go on trips with extended family? Do your friends like to eat out on a regular basis? If you share with those who are close to you that you are working through reaching some financial goals, hopefully those loved ones will understand, respect what you are doing and minimize presenting you with temptation. 🙂 Even sharing with family that you may be cutting down on gifts for holidays will help prevent you from going overboard in your spending. There are just too many ways to share how this can help you reach your goals, but hopefully you can start to understand why we list this amongst our ground rules.
Agreeing on a regular meeting time and sticking to it (daily, weekly, monthly, etc)
This really goes hand in hand with being intentional. Sure you can set a goal to meet on a regular basis to discuss your status, but we have found that unless you have an actual time scheduled, its easy for that meeting time to become the lowest priority of the day. Do you live in so much chaos that a specific time isn’t available? Then possibly agree that you’ll meet during a certain meal or that right after will become that time. Making sure to meet, to communicate and work through your goals and status to ensure you stay on track will help keep you and your family on the same page as you work through this process.
Keep each other accountable by setting a spending threshold
As we said before, not only did we use our process as a way to pay down our $100K of consumer debt, we still use it today. And yes, we still abide by this rule as well. This honestly is a handy rule we found to help us work through our debt and spending. What we mean is that you define a certain amount (it will depend on your family, of course) that you won’t spend above unless you consult your spouse or parent. For example, when we were deep in the heart of paying off our debt, our threshold was $5 (yes, that low), but today its higher at $25. What this does is helps prevent you from making a brash purchase with the end result of negatively impacting your budget. It also helps you be intentional in your spending.
After setting your large goal, make sure to achieve very achievable small goals
Back in the day, when employees had to define their annual goals, we were instructed to make them S.M.A.R.T. As you have probably seen before, the goals were to be S – specific, M – measurable, A – attainable, R – realistic, and T – time-bound. And honestly, this ground rule is really short-hand for making your goals S.MA.R.T. If you don’t make your goals attainable or realistic (by breaking them down into smaller goals), you’re just going to get frustrated too soon. Take that goal of paying down that debt into smaller chunks. Can you instead break them up by creditor? Or even take that lofty savings goal and break it down into chunks that you can actually see progress. We have found that making your goals smaller will truly help motivate you – meaning a higher success rate and increasing your motivation (and speed in reaching those goals) in the future.
Agree to stop old attitude and old spending habits
Seriously, if you think about it you know why you are in the situation you are in. You can probably list out pretty quickly those temptations, those craving, and ways you’ve spent to get where you are at. And although we are going to encourage you to take small steps towards achieving your financial goals, you also know you can’t fully get there without changing many of those attitudes and spending habits. We shared about our covetousness, our greed, and denial (lack of honesty) that landed us into our $100K of consumer debt. And we shared about our repentance because of that as well. We’ve learned that there are true changes that will need to occur and that you need to remember this as one of the ground rules – or else you may never see a true change and find success in reaching your financial goals.
Agree and understand that there will be sacrifices made, but it will be for an ultimate end goal in mind
As you work through this process we will continue to try to provide those resources to make changes that will last for a lifetime. But there will be changes, especially as you start seeing success in meeting your initial goals, that may only be temporary. Possibly your family will set a goal to not spend as much on clothing or gifts as you work together in achieving your goals, and know that you won’t always have to have that rule in place. Those are the types of sacrifices we are talking about. When your whole family can agree to sacrifice something (not just one person in the family) with the common goal of achieving your financial goals, you’ll be that much closer to successfully achieving those goals.
Family committing to sticking to the budget
We mentioned this before but wanted to state it again. Including your whole family in the process will not only teach good stewardship, but help prevent one family member from blowing the budget and failing all your effort in meeting your financial goals.
Setting the rules and set clear goals with spending
Make sure to set those rules clearly at the first. You’ve heard your children make those excuses before, “But mommy/daddy, you didn’t say X”. Setting the rules upfront and making your goals clear (specific to borrow from the S.M.A.R.T. principles) will prevent you from hearing one of those excuses later. And it might even prevent you from making one of those excuses as well. 🙂
Consider the consequences of messing up the budget
As you consider how exciting you will be to meet your goals, make sure to discuss with everyone in your family the consequences of not reaching your budget. No, we don’t mean setting up a guilt trip or trying to manage by fear. But it can be good to understand not only the why of reaching your goals but also what you are trying to avoid. We remember the misery, the sense of not seeing the light at the end of the tunnel when we were in so much debt. But not only then, we also realize today that if we don’t work together intentionally, that all the work we’ve invested to this point could be lost. Obviously, this one will be different according to your family and situation, but its sometimes just as important to know what you are avoiding as well as to know why you want to reach your goal so badly.
Wrapping it all up…
As we originally stated, we know this is too much to take in all at once. Sure, many of these tips might be obvious, especially when you understand them. But we’ve found that often the most useful tips are ones you already knew. Its just a matter of intentionally applying them to your situation and working altogether as a whole family.
As you develop your family economy, you’ll see just how important each of these tips can be to help you stay on track. We encourage you to consider each one as you work together on your family’s financial goals. And we would definitely love to hear from you what other goals we might have missed that you have found useful as well!
Thanks for this! I just printed it out. 🙂 Under “don’t get into any more debt,” I am curious if you would include a mortgage in this? Whether or not we are willing to take on a mortgage is something we go back and forth on, should our lives ever settle down enough for that to be a possibility!
Hi Desiree, when writing the rule about not getting into more debt, the original intent was truly about not getting into consumer debt, or rather those items that you could do without. But your question about the mortgage has been one we have thought through quite a bit (and will probably be writing a post more thoroughly about in the near future).
As far as a quick answer, my thought is to try to take a more Biblical approach to explaining this. Although debtors are referred to as “slaves to their creditors”, we don’t even hear that debt itself is directly sin; covetousness yes, debt no. So with the home buying itself, though the lender states you are approved to “buy more home”, it would probably be best to not spend to your limit, but rather buy a more reasonable home.
In addition, I would caution somebody that we also see the command to forgive debts every seven years, so a good approach would be to prefer a mortgage with less years (say a 15-year home loan) rather than the conventional 30-year loan.
Possibly the best way to consider this with these thoughts is to encourage your children (the future generation) to seek and try to save up for a house (the better way) while understanding that at this time a mortgage could be acceptable for your family.
But as we mention in the article, each family and situation will be somewhat unique, so that is something your family would need to work through together. And I would love to hear other comments as well if I need to be corrected. Hope that helps! 🙂
Thank you so much for sharing openly about your decisions. These ground rules are SO important for me to hear and I hope to sit down and make it our family ground rules today!
I appreciate all your tips on finacial burdens and how to rules on relieving them! After filing a Chapter 7 5 years ago my husband & I are trying to get our credit slowly re-established. We have two children & he works but I’m on disabilty but am near graduating college…things are tight & your tips have inspired me to FOLLOW SOME RULES…lol! Thank you!