Practical Burden Bearing Pt:2

practical-burden-bearing-pt2

We recently discussed practical ways that we could help bear the burden of dealing with online pornography for a friend struggling in that area. In this post, we are going to flesh out some ways that men struggle in the area of money management. We all deal with money, at least in our personal lives. Some of us even get paid to manage other people’s money. Much of what we know about money management comes from our upbringing. For instance, if you were raised in a home where flagrant mismanagement was the norm and impulsivity ruled, you may find yourself following along that same path. Or, your parent(s) may not have taught you much about how to manage money, so your concept is, “As long as the balance is in the black, there’s nothing to worry about.” Whatever part of your money management skills can be attributed or blamed on your upbringing, there comes a time when you have to take responsibility for the way you choose to manage the money that flows through your hands.

For me this time of reckoning came when the water got shut off at my house. I still want to deny a percentage of responsibility, but it did happen on my watch. It was at a time when my wife and I were still paying bills based on the current checking account balance. The water bill came in the mail, and I contend my wife brought it in from the mailbox and opened it. By my logic, when she opened the bill she assumed responsibility for paying it. She was blissfully unaware of this understanding. Days went by, and the bill re-surfaced on the kitchen counter. I realized it didn’t have a “PAID” stamp on its face. The due date was the day it re-surfaced, and so I logged into the online system and paid it. Problem solved, right? Wrong. A few days later, I learned that the online payment system is not instantaneous, but takes a few days to process. When weekends and holidays are involved, it can take even longer. I learned this when I woke up and tried to quench my sleep induced thirst with a glass of water, and was greeted by the sound of silence coming from the tap. In disbelief, I went and asked my neighbor if their water was working, because it must have been a problem with the water line. His water water flowing just fine. I called the water company and asked about the outage. They kindly informed me that when they weren’t paid for the service they provide, they turned off that service. I was forced to admit that my “system” for managing bill payments wasn’t working. With that, my desire to get a handle on our finances was ignited and I decided to do something about it.

In learning to manage money, one of the first things that may need to be addressed is where your money is currently going. This may seem easy enough, but I’ve had several conversations with folks who are shocked to find out where their paycheck actually goes. At the time of our water bill incident, my wife and I both had jobs and were making decent money. It wasn’t that we didn’t make enough money to cover our bills, it’s that we didn’t know where our money was going. When we got married, I’d worked up a spreadsheet “budget” based on our income and our forecasted expenses. This was a good start. It allowed us to buy a house that was within our means to without falling prey to the prevailing mentality of “Hey! You qualify for a floppity-jillion dollar mortgage, even though you only work seasonally at Toys ‘R Us.” The problem was that I never checked in on that “budget” regularly to make sure it still fit our lifestyle.

To dig deeper into where our money was actually being spent, I printed off six months worth of transactions from our debit card (we rarely used cash, so almost all of our expenditures were represented by doing this). I then got out my handy-dandy highlighters and went to work categorizing the things that were immediately apparent. $35 at an Exxon station? Well, I’ve never bought that much beef jerky in one place since high school, so it was most likely fuel. Restaurants were easy to pick out, and shocking to see on paper. I’d “budgeted” that we’d spend $250 per month at restaurants. Averaged out over the six months I’d printed, we’d spent nearly $750 per month eating out each month. Groceries were a bit confusing, as we didn’t always buy only food at a grocery store. Not only that, but we also bought food items at places that didn’t sell primarily food. So, some things were more difficult than others to fit squarely into a category, but I had a rough idea of where our dollars were going. It was a  rude awakening for us. We had to admit that we were both impulsive spenders and that our budget was less than successful.

We were living “paycheck-to-paycheck”, not because we didn’t make enough money, but because we were managing it quite poorly. We were managing our finances from a reactive standpoint. If you find yourself in a similar situation, much of what you might call financial planning is time spent checking account balances and juggling due dates for bills to coincide with paydays, along with determining if the account balance is high enough to buy groceries and those tickets for a concert next week. That’s exhausting. It can feel productive because you are, indeed, actively involved in your financial situation, but you get frustrated because you never feel caught up. All it takes is a single forgotten due date or unexpected expense (car insurance, doctor visit, car repair, a spouse bought something without discussing beforehand, etc.), and your financial battleship is sunk. Then, once again, you find it’s time to pull out the credit card to make ends meet.

In order to get out of this cycle, we need a plan. That plan is a living breathing budget. It’s not a static spreadsheet expenditure projection. It has to adapt to your life on a daily basis. Having a budget allows for proactive management and oversight of your finances. My wife and I have been using a tool for budgeting known as YNAB for several years. We have gone from living “paycheck-to-paycheck” (and having debt to deal with), to living on last month’s income (meaning all our expenses for this month are already covered by the money we made last month), to being debt free (except for the house). I don’t say this to brag. I know there are plenty of people in better financial standing than my household. I say this to encourage the folks that feel like they’ll never be able to get ahead. The single most important thing YNAB brought into our life was awareness. By using the methodology prescribed, YNAB forces you to be actively involved with your finances. This is in striking contrast to systems like Mint.com that lean toward the “do-it-for-me” mentality. Being unaware of what your money is doing, but trying to manage it anyway, is simply trying to make complicated decisions without the necessary information.

YNAB (pronounced: “Why Nab”) is an acronym for “You Need A Budget.” The methodology is simple, as there are only four rules. As much as I’d like to dig deep into how to use the system, their in-house documentation is superb, and I’d only be reiterating what they already do so well. Maybe, we’ll do another post to cover some of the basics of the YNAB methodology. The software is regularly $60. However, they offer the software freely to college students, because they know how important money management is during that stage of life. If you land on their page through one of the links above, or through the link at the end of this post, you’ll receive 10% off the price.

Whether you choose to use the YNAB methodology or not, I strongly encourage you to seek out help from a trusted friend if this is an area of life you struggle with. If this is an area you excel in, reach out to your close friends that seem to always be stressed out about money matters. Don’t be afraid to put your numbers on the table and seek or give help.

You Need A Budget Referral Link (10% Off)

Disclaimer: The referral links to YNAB contained within this post were obtained from the author’s personal use of the product. While the author was not compensated for this recommendation, if a reader uses the link to purchase the product, the author does receive monetary compensation.

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