Broke is Not a Destination
“Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much” (Luke 16:10 NIV).
Hearing many stories of hardship from unpaid government employees recently during the shutdown prompts me to share what I have learned about money. We, too, did not receive a paycheck for a month, but we were lucky because of a few simple tricks.
I first realized how wrong I was about how I was handling money when I listened daily to a guy named Dave Ramsey on my commute to graduate school on a daily basis, about 15 years ago. I would come home and tell my husband all about what this guy said about money and how we were doing a lot of things wrong, it seemed. Trip after trip to the ATM, worrying about overdraft fees. Charging groceries. Paying student loans at such a slow pace with no end in sight. All the while, we didn’t feel like we were making progress; and we certainly weren’t saving for a rainy day!
We bought Dave Ramsey’s book, The Total Money Makeover, and we made all the adjustments. Ever since, we haven’t had fights about money. That’s the truth! Even more, we have been able to pay cash for three slightly used cars over the years, pay for our vacations then and there so that we didn’t have to come home to bill after bill, save for our daughter’s braces before they were actually on her teeth, and are completely debt free except for our mortgage payment. We give glory to God for it all, because I firmly believe that He scheduled my classes to happen just after Dave Ramsey’s radio show!
The big secret is—drum roll please—to give every dollar you earn a name. All I mean by that is that you give your money three clear-cut destinations. Essentially, you are planning to spend some of it, give away some of it, and save some of it.
If any one of these is out of balance, other things become out of balance too. Ever think of that? Can you give away too much money? Well, I am a strong proponent of giving to others in need, in keeping with Scripture: “we must help the weak, remembering the words the Lord Jesus Himself said: ‘It is more blessed to give than to receive’” (Acts 20:35 NIV). You need, however, to make sure that your primary responsibilities aren’t neglected first. Does your family have a home with heat and lights that work and with food to eat? Do you have transportation to a job? Giving should be a percentage of what you make, not all that you make.
The same goes for saving. You, of course, should save your money, but you can’t save all of it and live on nothing! There was a time in my marriage when my husband would have loved for us to save every penny we made. Instead of enjoying life, he would have preferred that we lived in the basement collecting lint! So, I had to have a family meeting with him to explain that that area of our lives seemed unbalanced. As a result, we now have a category in our budget called entertainment, and we enjoy life guilt free! But I can also say that I am very thankful that we did save along the way as well, especially in light of the government shutdown, because we were able to keep the lights on and pay the rest of our bills, all while not receiving a paycheck for a month.
Finally, you should not overspend either, because doing so will surely make other areas suffer. That’s why my husband and I began to use the envelope system. We give every dollar that comes in from our paycheck a place to land temporarily before being spent on bills, groceries, etc. That’s called a zero-based budget. So you assign money to each item until you spend all of the money from your paycheck on paper and get your budget down to zero. Here’s how it works.
When you take your monthly income and subtract every category out of it, you will see how much you have left over that can be applied to debt or to savings or investments. Some categories have to be adjusted in order to make sure that you don’t end in a negative. That’s when you need to have discussions with your spouse about how important cable TV is or how many times a month you want to eat out or whether you need to start dying your hair at home! But then, the good that comes out of the conversation is that you will have a clothing envelope built into the budget that both of you agreed on, so you can buy that sweater out of money in the envelope! But, when your child needs new soccer shoes, you’d better make sure there is money left in there for things like that!
So what should we carry around with us and what should we leave in our checking accounts for bills? Anything that you find yourself always using your credit card to pay for should be exchanged with an envelope so that you aren’t tempted to use that card any longer. It is here that you must practice perseverance. If you are in need of a haircut but your envelope is empty, you will be forced to wait and become Chewbacca until you build that back up! But with a credit card, you will always cheat and, chances are, spend even more money than originally intended. I usually shop from the dollar menu at fast-food places and put together a $3 meal! But if I used the credit card, suddenly I’d be supersizing everything, right?
Dave Ramsey says that personal finance is 80% behavior. What you are doing, essentially, is borrowing money to pay for avoidable consumer debt, a behavior that is not helping you in the long run. The Bible says, “The rich rule over the poor, and the borrower is slave to the lender” (Proverbs 22:7 NIV). We once heard someone quite misguidedly say that this means you should choose your lender carefully, since you will be indebted to him/her for the life of your loan. What this really means, though, is don’t borrow in the first place because you become that person’s slave! More importantly, think about what would happen to you if you suddenly couldn’t make credit card payments? Again, the government shutdown was a rude awakening for a lot of unprepared people, unfortunately.
So, put it in an envelope, people! Groceries, Restaurants, Blow Money, Household Maintenance, Hair Cuts—those are my envelopes. Nothing fancy. I take regular envelopes and use packing tape on them to “laminate” them and keep them sturdy. My husband and I plan in advance the envelopes we are going to need for the day to make sure we are armed and ready.
Jesus said, “Whoever can be trusted with very little can also be trusted with much, and whoever is dishonest with very little will also be dishonest with much” (Luke 16:10 NIV). Won’t you give Him the chance to prove that in your life?
… and that’s the truth as I know it.