We overspent a little on Christmas. Maybe a little more than a little, which is better than a lot more than little, or the dreaded lot lot. One big culprit is that we signed the kids up for a bunch of stuff as part of their Christmas gifts. Archery and tennis lessons for Davin, and voice and dance lessons for Ava, for example. We tried to account for these recurring monthly expenses, but it’s not quite working out. We’re going to scale back some other activities and do them every 2 weeks, which will help offset the added cost.
Oh, another thing, I think I’ve finally come around on credit cards.
Most financial advisors will tell you credit cards are OK as long as you stick to a budget and pay them off every month. That’s what we’ve always done, and we made good use of our rewards. Dave Ramsey is one of the few who recommends that you don’t use a credit card at all. I’m leaning more toward Dave’s approach. It is easy to find articles that talk about the psychology of buying with plastic. Americans spend 5% to 10% more on average when they use a credit card, and sometimes much more. That means the 1% or 2% rewards points they’re getting is not making up for the extra spending. That’s why last Summer I found that we were spending $400 per month on Amazon, but we couldn’t figure out what the heck we were buying. On the flip side, Dave also recommends tearing up your cards and having a zero credit score, however, that makes it more difficult to get a mortgage, rent an apartment, or do any number of other things that rely on a credit score. It isn’t impossible to make do with a zero score, but it is difficult. For those of us who responsibly pay off our cards, I think there’s a middle ground. Continue to use the credit cards for some bills and for limited, purposeful purchases, but use cash or a debit card for everything else. I’ve started using my debit card more, and it definitely makes me think twice before swiping. I know that would have helped us keep our Christmas spending in check.
Even with that extra spending, we are still on track, thanks to a larger than expected tax refund that’s coming our way. It seems like every time we slip a little, something else helps up make up the slack. The Roman philosopher Seneca said, “Luck is what happens when preparation meets opportunity.” I think many times we see the reverse, when a lack of planning meets misfortune, and we call it bad luck. The great thing about preparation is that it helps you out regardless of what life throws at you. Sure, bad things happen financially, but with preparation, instead of becoming disasters, they become inconveniences.
I want to highlight one thing from January. We spent $44.32 on dining in January. That’s probably the lowest we’ve spent in the last 10 years. Here’s what we bought.
- A trip to Cookout early in the month for shakes.
- A salad I bought at the cafeteria because I forgot to make a lunch for work.
- An 18″ NY style pizza that we shared as a family.
- I treated Jaron (and me) to Cookout as a part of a late Christmas present.
I am astounded. $44.32!! We didn’t even use any gift cards to go out either, from what I can remember. Lianne has been eating super healthy all month, and that has trickled down to the rest of the family. Someone brought up pizza a couple of weeks ago, and we spent two weeks talking about how great a pizza would taste. We finally got pizza last Sunday. I ate my piece slowly. It was real good. 🙂
I should find out in a month or so about my bonus, and our income tax refund should be on the way. That’s sets us up with the ability throw a lot of money at the remaining mortgage balance over the next two months. Then we just have to hold on for 3 more months and we’re done.
I may cry when we make that last mortgage payment.
I tell Caitlin all the time that when we pay off our mortgage, the following month, we are having a mortgage burning party and I’m spending the entire “would be mortgage payment” on having a blast!
Totally agree on the psychology of plastic. I so rarely use even my debit card that I forgot it at the restaurant where I went to lunch (colleague’s retirement celebration) the other day.
Lastly, as far as “luck” and “preparation,” I also believe there is a spiritual component to it. We’ve found that the longer we’ve remained faithful and disciplined in our giving, the more often “something else” makes up for our missteps.
I’ve told Lianne the exact same thing about throwing a party. Our kids were younger when we first started talking about paying off the mortgage. I wanted to do a block party the next month. Cordon off the court. Get a bounce house, an ice cream truck, a juggler, and invite everyone. Our kids are older so I’m not sure the bounce house is the way to go anymore, but we’ll definitely do something.
We put an average of $2,500 on our credit card every month before we started tightening up. Now we’re down to about $1,600, and I know some percentage of that is wasted. It’s science, but I thought it didn’t apply to us. We pay some bills on the card, but we use it for pretty much every single purchase. Lianne went to Sam’s the other day and told me that she had no idea how much money she spent. I’m the same way. It’ll be interesting to see how that changes for us over the next few months.
On the spiritual side, as you know, that is tough for me to quantify like that. I do think there needs to be a mindset shift when we give that helps us realize that life isn’t all about us. We can become proud of the fact that we give 10% of our income to charity, which is 4 times the national average. However, that means we’re spending 90% of our income on ourselves! Our mindset should be as stewards, not just checking off a 10% box. I think that’s part of the deeper, spiritual benefits of giving, and it results in a more purpose-filled life.
Of course it’s tough to quantify. It’s a supernatural phenomenon. Obviously, it is dangerous to say, “hey, I give 10% so God is going to multiply that by 10,” but I think more than the % or total dollar figure, I think God has a way of recognizing our obedience and faithfulness. I’m not exactly sure how, and frankly, a bit confused as to why, but He pulls it off time and time again.