Landscaping on the Cheap

Finding frugal ways to live often means turning someone else’s trash into treasure. Last week I spotted a pallet full of bricks stacked behind a dumpster of a church while driving my kids to school. I called and left a message at the church asking if the bricks were indeed garbage; could I use them for a landscaping project instead. About fifteen minutes later I got a call back and was told I could take every last one.

An edging project on Pinterest caught my eye last year and I wanted to build my own  without dropping a ton of money on supplies. By finding a way to get my hands on a pile of bricks, this project cost only $15 worth of sand. We’ll also print off these pictures and mail the church a thank you note and a check for their gift.

One of the best byproducts of living debt free is that I’ve become much more environmentally conscious and have found many ways to repurpose materials that would otherwise be trashed. It feels great to add character to my home by creating useable features on the cheap. Here’s a couple of my favorites:

Last summer we put new flooring on our deck, and I used the old boards that were free of rot to build a “woodshed” for outdoor storage. Here’s a link to the project description.

A couple summers ago adding insulation to the attic left a pile of 100-year- old wood flooring at our disposal. I knew what I wanted but couldn’t find any plans, so I just sketched it out and did my best to build this shelf for our front porch.

Before you start a project, consider the possibility of using repurposed materials. Search Craigslist, ask around and be patient. A pile of supplies might be waiting for you somewhere too.

Why We Skipped the Company Match on Our 401-K

The decision to stop contributing to our retirement accounts went against everything my husband and I had been taught. We had both begun  investing 10% of our gross pay early in our careers and always took advantage of any matching programs with our employers. We knew that for the mathematical explosion of compound interest to take effect, we needed decades of time. Ignoring these teachings was akin to sinning with our money.

After reading Dave Ramsey’s Total Money Makeover, and spending a few months in our Baby Step Two Debt Snowball, we understood that we wouldn’t get the traction we needed to retire $55,000 of debt without adding more income. At the end of the day, we decided we needed to make more and spend less. Spending less at this stage of the Ramsey Plan meant to follow Dave’s advice and stop our retirement investing until we retired our non-mortgage debt and built a three to six month emergency fund.

The steps of  Ramsey’s Debt Snowball solution are to list all non-mortgage debts from smallest to largest, make minimum payments on all of the debts but the smallest. Throw all extra money at the smallest debt until it is paid off, and then apply that money to the next smallest debt. The theory is that paying off the small debts rapidly will reinforce behavior and cause people to to believe they can win and eventually become debt free.

Using the income that had been spent on retirement investing allowed us to retire several of our little debts quickly and address some of the bigger loans with more fervor.  Personal finances have less to do with math and more about attitude, and with this single decision we began to see a dramatic shift. We started to see debt as a thief robbing us of our freedom and future. The anger and disgust we had towards our past choices and the lenders who were willing to finance the decisions compelled us to sacrifice deeply. Our focus sharpened, and we began to win with money.

We stopped our retirement investing for about three years. In that time we were able to repay consumer, medical, personal, and vehicle debt. We were also able to pay off the ridiculous ARM that covered our down -payment on our home (I should mention we actually borrowed 103% against our house back in 2004, bringing zero to the closing table). Eliminating this debt has created contentment in our home that has allowed us to take take advantage of financial opportunities in areas that we would have been reluctant to take carrying around a bunch of debt.

Investing and earning the company match for those three years would have had some advantages, but we probably would still be struggling to find a way to get out from under our debt. Paying off those debts afforded us the financial freedom to make other solid choices.

Ramsey's Insurance ELP Helped Us Save $962 a Year!

When we moved into our house twelve years ago, we had difficulty finding a company that would insure our new purchase. Our home, 88 years old at the time, featured a big slab of stucco that had fallen towards the ground, leaving a sizable crack. Because of the potential difficulties of repairing the crack,  a few insurance companies turned us down.  We decided to try contacting  the local State Farm agent who lived a couple blocks from our house. The agent walked over during his lunch break, took a look, and called back, saying he’d be happy to insure us. That friendly, neighborly, prompt service bought over a decade of our loyalty to that State Farm agent.

Last year we repaired the cosmetic stucco issue, and decided that it was time to rate the value of our insurance policies by shopping around. We asked our agent to review our policies for any additional discounts  towards our home, car, and umbrella policies. We learned we had maxed out all available discounts; our insurance coverage looked like this:

We recognized a few opportunities to save by raising the deductibles on our vehicles and our home. The goal of insurance is to transfer the risk of loss  from our family to an insurance company. With the changes in our financial standing in the past twelve years, we  are now able to absorb larger deductibles with our emergency fund so we can enjoy lower yearly premiums after having completed Baby Step Three. Even after tweaking the deductibles, our State Farm agent wasn’t able to compete with the insurance broker we found through Dave Ramsey’s Endorsed Local Provider (ELP) program.

Our new insurance agent, Brian DeMartino, is an insurance broker for Clear Choice. A broker is not captive to one large company and is able to sell insurance from several different companies, thereby securing the best rates for his clients. We will still deal with our agent if making a claim or adjustment would  be necessary, but our policies are with Travelers Insurance. Making this change was not difficult.   Working with our broker involved one lengthy phone call detailing our current insurance coverage, several emails regarding proposed policies, and a few more short calls to complete the transaction. It was quick, painless, and budget-friendly.  This change will save us close to $1,000 this year ($962 to be exact).

Here is the breakdown of our original quote:

While these comparisons between our original coverage and the new quote  are not for  identical policies, the overall value with the new company was clear. When we called to clarify that these were not teaser rates, we learned  that the auto insurance was considerably lower because we fell into a niche category of people that Travelers was working to insure. We decided to tweak our policies a bit more and dropped comprehensive on the Honda Civic and raised our deductible on the home to $2,500. These changes will leave leave us assuming a bit more risk for the savings of $308 annually. The description below is where we ultimately landed.

Insurance serves a valid role in a healthy financial plan. Shopping around is a pain, but it may be the best way to obtain quality policies for good value. If you do nothing else,at least take the time to evaluate your current insurance policies and determine where they can be strengthened or loosened to fit your needs.

Money is Finite - Make More and Spend Less

After living on a zero-based budget for a few months, we began to understand a new truth in our life. Money is finite. While cash is readily available through varieties of loans, actually living on what we make instead of what we can borrow is a giant step towards freedom from debt.

Realizing that money is finite, and trying to pay down debt from when you believed it was not, really only leaves two options. Make more and spend less. In this post, we’re going to focus on ways you can make more money when trying to pay off your debt snowball.

Free dressers simply repainted.

Sell from your Surplus - All of those things in your house that are relics from living beyond your means are open game for reducing debt. Walk through your house as though it was a thrift store and figure out what people might want, and then try to sell it in garage sale, on Craigslist, Ebay, or Facebook Garage Sales. We’ve sold vehicles, tires, tools, sports equipment, clothing, electronics (broken and working), bikes, books, furniture, collectibles, kid and baby stuff, instruments  and many, many more items. We applied our money to our monthly budget, and in the days of debt reduction, this was critical in making headway on our loans. Remind yourself that the item was attractive enough that you bought it once; someone else will see it’s value and will buy it used.

Lego Dresser sold for a great profit.

Sell from the Surplus of Others - If you start selling your things and you find you enjoy it, or are good at it, you may also find income in selling from the surplus of others. Find deals or freebies at second hand stores, repurpose them, or simply sell them to a broader audience to add money to your debt snowball. One of the ways I did this was through buying cheap dressers, sanding and painting them, and selling at  four or five times my initial purchase price. Strollers and kid toys that needed a good cleaning were worth my time, and I could easily turn around and sell for a profit. 

Sell your time - Dave Ramsey says, “There’s a great place to go if you’re broke. To Work.” There’s a season when a job is more important than a career. Paying down your debt snowball is one. Being hired by friends and family for babysitting, yard work, cleaning, and running errands could be a great way to get some quick cash. Looking into part time retail work, delivery drivers, or uber with no long term commitments can be a wise choice. The success people have retiring their debt is tied to the degree to which they are willing to sacrifice. Giving up nights and weekends for quick cash can make an incredible difference in your success.

Sell your “Brand” - What unique good or service would people be willing to buy from you? Two of my favorite hobbies are repurposing used goods and crafting. I’ve done this in my home for many years, and last year I found a product that seemed like a product I could make and sell for Christmas. I created 100 snowman kits in November and sold 93 of them before Christmas. It was really fun because I was able to share one of our favorite family gifts with new people, and I made some extra money. Your “Brand” has a place in the marketplace; it’s up to you to find it.

Sell your talent - Finding additional ways to leverage your skills within your career can be a great way to create additional income. Overtime, contract work, coaching within your field and teaching are a couple of ways this could take shape. Towards the end of our debt snowball my husband took a traveling position at his company that came with a considerable pay increase. It turned out that traveling didn’t work for our family, but the lessons he learned allowed him to grow his career, while increasing our income. 

Look for a Raise - I remember being shocked when my husband came home and said that he had asked for a raise and received it. Who does that? Apparently plenty of people do, and in certain situations, it is a reasonable way to increase your income. If you don’t see that as a possibility with your employer, it might be worthwhile looking for a new company. Sometimes the easiest way to figure out your value as employee is to find out what a new company would be willing to spend for your talent.

Be Open about your Goals - It is amazing the work that shows up at your doorstep when you begin to share with others that you are working towards a goal. We had several different opportunities to earn $100 here and $75 there throughout our time in the debt snowball. The most lucrative of these options was working for my brother installing a contact management system for relators that he was coaching. Huh? I didn’t even know this was a thing until I shared I was interested in making some additional money for our family.

Dave Ramsey’s motto in Financial Peace University is “Live like no one else so later you can live and give like no one else.” The same is true of working overtime and picking up a second job. This isn’t a long-term lifestyle commitment, but rather a short term strategy for living with intent focus on retiring debt once and for all. 

Dave Ramsey's Zero Based Budget Tutorial

Before we first began our Total Money Makeover,  I used a spreadsheet to track where we spent our money every month. When the VISA bill arrived, I’d audit our purchases and assign them to the proper category. The dread of feeling we’d overspent was confirmed by seeing the charges on the bill. While my husband slept blissfully unaware of my anxiety, I would lie awake, running the numbers and trying to figure  how and when bills were going to be paid. It was a stressful way to live, and we needed relief from that anxiety.  We found the solution in a worksheet in the back of Dave Ramsey’s book, The Total Money Makeover.

Perhaps the most incredible tool in the Dave Ramsey Solution is the zero based budget. This budget tells your money where to go at the start of the month, rather than wondering where it went at the end. This budgeting strategy is a game changer to learn how to win the personal finance game. Ramsey Solutions has introduced a free budgeting tool called Every Dollar, and it’s pretty awesome. We used the original version (Gazelle Budget) for years,  switched to the  new program a few months ago, and are pleased with the software. I’d highly recommend you give this tool a try.

Every Dollar Free Budget and Ap

The first step in creating this budget is to calculate your projected income for the month. For our family this has  been a fixed amount and is fairly straightforward. The person on a variable income would start this process by listing the lowest amount ever earned in a calendar month, additional income can be added and budgeted as the month progresses. The whole idea is to assign every earned dollar a name for spending. There are several great "How to Videos" on Dave Ramsey's youtube channel that answer a ton of money questions. Here's the one describing how to do a budget.

Like using a check ledger, begin allocating money from your monthly income into categories for your budget, subtracting from the starting balance, until you reach zero. If you know your current spending goes beyond your income, start the process by inputting the necessities first. Ramsey defines these as “The Four Walls” and include Food, Shelter, Transportation and Clothing.We  pay these items first because when these items are funded, we are able to breathe a bit more easily and think more clearly. After the foundation of  monthly living is in place,  begin to plan spending in the remaining categories of the monthly plan. For fixed bills simply enter the payment; for more fluid categories, utilize the cash envelope system.

We LOVE using cash, and have found this is the most effective way for us to stay on track with our monthly spending. Currently we have envelopes for Groceries, Restaurants, Travel, Entertainment, Kid Activities, Clothing, Christmas, Yard Care, Car Repairs, His/Her Pocket Money, Date Night, Gifts, Pets and “Other Stores” for household items. At the start of the month we lay out our budgeted amount in cash  and then slide the cash into the correct envelope. In this way, we  fund a month’s worth of living. It took a while  for us to become accustomed  to carrying cash.  We had to find  a system to deal with a day of running to several different stores and  then reconciling envelopes at home, but we’ve found that this technique  allows us to stay on the financial track.

An example comes from the way we budget clothing expense.  Each month we decide how much money we intend to spend on a category such as clothing, and then we withdraw those dollars from the bank.We  place  that money into an envelope labeled “Clothing” and  purchase only clothing using that envelope’s cash. . Shopping with cash will limit the  urge to impulse shop, and allow staying  within the budgeted amount.  Roll  over into the next month’s envelope any money left over at the end of a month.

Some large purchases, like Christmas shopping, can be best prepared for with a sinking fund. The process to create a sinking fund means making a monthly payment to yourself of one twelfth the total anticipated expenditure either by filling a cash envelope or by opening a  separate savings account. Our feelings towards Christmas shopping dramatically shifted when we began saving monthly with cash. Now, each December, my husband takes a day off of work, and we get a sitter and have a wonderful time shopping together with cash in our hands. It feels great to pick out the perfect gift without dreading the arrival of the VISA bill in January.

If you add any additional cash to your income throughout the month from extra work, commission, refund, or selling something, you must assign a category to that money. People with a variable income will want to go back and fully fund categories they missed when budgeting for their smallest month. If you’ve covered your monthly expenses,  apply the added income to your Baby Step Goals.

We’ve taught over a hundred couples how to use the zero-based budget and use cash envelope system to meet their financial goals. This works only  if the budget you created is the amount you actually  live on. If you treat this concept only  as a theory, it will never help you meet your financial goals.

This  system will reach point where it feels like it’s working well in approximately three months, so make this next month your shot at starting fresh!

Every Day Savings on Food

For a lot of families who take the nine week course Financial Peace University, finding frugal ways to feed yourself and family seem the quickest route to make immediate progress in savings. If you fail to plan with grocery shopping, you will bust your budget every month. Here’s a few steps to get started with saving on food purchases.

Step One - Pay with Cash. Each month decide how much money you intend to spend at the grocery store, and then withdraw it from your bank. Put that money in an envelope labeled “Food” and only purchase food from that money. Shopping with cash will limit your urge to impulse shop at the grocery store, and allow you to stay within your budgeted amount. The first month or two you may find that you have significantly over or underestimated how much to spend on food. Look through your pantry to see if you can get through the month to stay on track or subtract from another place in your zero based budget. It takes a few months to get a budget right, but making this single change with your food purchases will make a huge difference.

Step Two - Create a Weekly Meal Plan. I am not very good at wandering through a store and throwing things in the cart and figuring out what to prepare based on what I bring home. Instead,  my husband or I sit down and write out the weekly plan for our meals and what ingredients we need before we go shopping. We are nerdy enough that we even put the items in the order of the way we will walk though the store. When our kids were little, they knew that if it wasn’t on the list, we weren’t buying it and this 10 minute exercise saved us a bunch by curbing our impulse purchases. I use this meal plan/grocery list. I love that it has both the menu and the grocery list on the same page.

Step Three - Shop from Your Pantry. As you creating weekly menu, keep in mind what you already have on hand and be sure to use it up before it expires or spoils. Check if you already have the spices and herbs on hand so you don’t buy another container. This is a simple step that is often missed when you shop without a plan.

Step Four - Try Aldi. We LOVE this store and when we first made the change saw our monthly grocery bill go down by a third. That’s a lot of savings in a short period of time. If you’ve never shopped there before, know that you’ll need a quarter deposit for a cart (which you get back when you return it), and bring your own grocery bags or purchase them from the store at 7 cents each. It is a small store and you will not have as many options for products and there won’t be as many name brands as in a typical grocery store. For our family, less is more, and we can get our weekly shopping done in less then 30 minutes.  Aldi also has a guarantee on their products and if you are unsatisfied, they will refund you the full price AND replace if you wish. Their staff works hard and is empowered to make managerial decisions. I love shopping at Aldi and hope you’ll give it a try.

Step Five - Stick to your menu. You made the plan, now stick to it. Resist going out when you don’t want to cook and instead make eating out a special occasion. When I was a kid, going to McDonald’s was a big deal and eating out at a sit down restaurant was an event. Getting back to this mentality will go a long way in saving money.

Step Six - Freeze from your Excess. When you only need to use three stalks of celery for a recipe, but purchased a whole bag, wash, cut, bag, label and freeze the remaining for a future meal (when you only need three stalks again). Food that is thrown away is money wasted. Get into the habits of making use of your entire purchase.

Step Seven - Eat Your Leftovers. With all the guys in our house, there is not a lot left at each of our meals, but if there is, we make an effort to turn those leftovers into lunch the next day. Creating a new meal from leftover is also a great way to consume that purchased food. For our family, it’s easiest to make stir fry or fried rice with the vegetables and meat and smoothies with the fruit. 

When people first begin Financial Peace University or their Total Money Makeover, they usually are living without a plan that translates to eating with out one as well. Being thoughtful and intentional about how you spend your money on food is a great tool to managing your money well. 

What are your tricks and tips for saving money with your grocery bill?

Why You Don't Want a Tax Refund

Call me a fool, but I actually really enjoy completing our taxes. The nerd in me lights up when we can lay out the accounts for the year, tally our giving, gather our W-2s and also see what kind of refund is coming our way.

Wait a minute ... that's why I used to love tax season.

We used to get an awesome refund. Like $6,000 awesome. We used that money for vacations, savings, home repairs and all sorts of other things. It felt like we were getting a bonus every April. It felt like free money.

The Total Money Makeover changed our understanding of this pretty quickly. As we started to pay more attention to our money, we realized that this wasn’t a bonus, but rather an interest free repayment on a loan we’d given to the government. We learned that there are actually ways we can limit the amount we lend to the government,  and our goal should be eliminating our refund all together, and determining how to manage our vacations, savings and home repairs in our monthly budgets. 

We could leverage this “free money” towards paying off our debt more quickly on a monthly basis by increasing our withholdings through Ryan’s employer. At this point I think we’ve maxed out at nine allowances. 

We typically have to pay in on our state taxes and earn a refund from the federal government. We still get about $1,000 each year, but it feels less like a bonus, and we don’t count on that money as we did before understanding our finances. We apply the money where it fits our overall game plan.

Here’s a few calculators and forms you can use to see if adjusting your W-4 withholdings would help you reduce your refund.

HR Block W-4 Withholding Calculator

Turbo Tax W-4 Withholding Calculator

IRS W4 Worksheet

If you receive a tax refund as a part of an Earned Income Credit, this post probably won't apply to your situation.