FPU: Big Tax Return = Big Screen TV! NOT!!

Posted on February 9, 2014 by jmcoyan@gmail.com

There may have been a time in our lives when a large tax return meant some new expensive toy for the family. We are no longer those people and have really changed how we look at our tax returns.

In 2010 we embarked on a new journey to become debt free after attending Dave Ramsey’s Financial Peace University class at our church. We are still working on that journey. The entire experience has been life changing for us. This experience changes how we look at our tax return. Most of our tax return is earmarked before we even receive it. We fully fund irregular expenses we know we will experience in the upcoming year.

I must admit: This practice would most likely not be endorsed by Dave Ramsey. He would like you to manage your money and not have the government hold onto it for you all year. For us, it works as it actually forces us to live beneath our means. It is a fool-proof way to save funds that we know we can’t touch until we file our taxes. If the government makes an extra 5 bucks in interest off of our withholding, then they can keep it and we’ll appreciate that this money was saved for us Smile

That being said, you can bet we file our taxes very early in the tax season. We file our taxes the first Saturday in February. Since we both claim “single-zero” on for payroll deductions our return is usually pretty big.

For 2014, the following will be fully funded from our tax return:

Debt Reduction – we will pay off our last credit card, if there is still a balance once we receive our tax return. (That card is down to about 1 and 1/2 payments til zeroed-out.)

Emergency Fund – will be fully funded at $2000.

Car Insurance – set aside enough funds to pay car insurance on all vehicles every 6 months to receive a discount.

Christmas – yes, we fully fund Christmas in February! What peace of mind! (Because you know Christmas is going to happen again this year.)

City of WBL – irregular bills are hard to budget for so we fully fund them from our tax return. This a quarterly bill that used-to sneak up on us at times….not anymore!!

Soccer Fees – our youngest plays traveling soccer

Camp – our youngest goes to camp each year.

Duct Cleaning – This year we are having the ducts in our home cleaned. Between illnesses and allergies, it seemed like a good thing to get done. This was last done in 2007.

Summer Fun – this is a new category we are funding this year. We found that small parties, mini-weekend-vacations and other fun events over the summer wreaked havoc on our budget. This year we set aside extra money to go to participate in summer fun!

Training – as a licensed social worker, I need to attend 40 hours of training every 2 years to renew my license. I need to complete 26 hours this year. This will fund the conferences, meals and lodging for me to complete my training hours.

We should be able to fully fund all of these items from our tax return. This is a huge relief to us to know these expenses will not have to be worried about! As you can see there is no Big Screen TV on our list, but instead many other things that give us a huge sense of relief knowing they are fully funded for the year. The concept of saving for future expenses is called a “Sinking Fund”. If you want more info you can read our blog post about “Sinking Funds” and how we organize our finances.

We are different people with different priorities….we live a simpler life striving towards our goal to be DEBT FREE, (and financially secure when we retire!)

Wishing you all a wonderful week!

Blessings…

Paul and Jen
Joyfully Living Below Our Means

FPU: Sink Your Debt With A Sinking Fund

Posted on October 13, 2013 by jmcoyan@gmail.com

Hi Everyone –

We hope you are all having a great week! Did you get a chance to make your budget?? Remember it is a work in progress. You may need to tweak your budget for a few weeks or even a few months until you find what works for you. This week we thought we would expand a bit on our sinking funds and how we organize our finances. It is very important to know where your money is and where you need it to go. A sinking fund is kind-of like a lay-away account where you sock away a little money each week to pay something that month, (or year, etc.) In addition to your budget, this micro-planning and saving for future monthly, quarterly, biannual and annual expenses will keep you on track to debt-freedom. We do this by maintaining two checking accounts we utilize to organize our funds.

1. Household Account – This is the account we initially put all of our weekly income into and pay out all our expenses for that week. This is simply an in-out account and we maintain a very low balance here throughout the week. After our weekly budget meeting, we may have $ 7.83 in our household account. This account is very close to zero based budgeted….we leave very little unaccounted.

2. Freedom Account – This account is absolutely VITAL to our success. This is a holding account, (or sinking funds or “layaway account”) for our funds that must be earmarked for future expenses that we know are going to come due eventually. We maintain a spreadsheet naming every dollar in this account and fully funding every expense we have or will have. The funds in this account come from 2 main sources. 1) We move funds from our household account into this account when naming all our dollars at the end of our weekly budget meeting. 2) The other source of these funds is our tax return. We tend to receive a good-sized refund each year because we both claim single-zero for the year.. While Dave Ramsey would not advise this, it works beautifully for us and has kept us on-track and ready for even the largest expenses. It actually forces us to live below our means, (which is what people with debt REALLY have to do! This. Way. Works. It is the most iron clad way to save our money and not spend it!)

The following is a list of the categories or line items in which we have earmarked funds in our freedom account.

Emergency Fund – we maintain $2,000 to assist us in an emergency so we aren’t tempted to use a credit card. This is for *real emergencies like car or home repairs. Funded as much as possible with weekly pay and if not at 2000 come tax return time, it will be put back there with tax return money.

House Payment- we save 1/4 of our house payment each week to fully fund our mortgage before it is due each month. It is easier to come up with a little each week than to come up with the full amount when it is due…and a lot less painful. This is funded with weekly pay.

Tuition – we save 1/4 of our son’s elementary school tuition each week to fully fund by the due date each month. This is funded with weekly pay. While tuition is not a large expense, it comes due at a time of the month when a number of other things are also due. Having this item saved in advance helps us to meet all our obligations during that time of the month.

Snow Ball – once we have funded our weekly amount due into the house payment and tuition, the rest goes into the snowball. We collect all extra funds and when our credit card comes due, we pay everything in this line item onto this bill.

Car Insurance – We pay our car insurance twice a year to receive a discount. Every 6 months we are prepared to make our payment. This ended our days of being surprised that the car insurance was due again! This is fully funded with tax return money.

Christmas – we finally have figured out that Christmas will happen every year. We agree upon an amount we will spend on Christmas food and gifts. The agreed upon amount is moved into the Freedom account from our tax return. We have enjoyed a cash only Christmas for the last few years. What a relief! (and fully funded way back in March with tax return money.)

City of WBL – this is another of those bills that can sneak up on you since it is only due every 3 months. We set aside enough funds to cover a years worth of this bill from our tax return. We are never surprised and this item is always fully funded.

Camp – Tommy will be going to camp this year, which we set aside funds from our tax return to cover this expense.

School Fundraiser – Each year our son’s school has a fund raiser – we set aside a set amount each year to purchase a table at this event and to donate to a cause very dear to our heart, the Christian education of children.

Our Freedom Account is what Dave Ramsey would call our sinking fund. A sinking fund is simply a financial strategy that will make a huge difference in your life! Sinking funds are reserve funds set aside for a specific purpose. If you can set up a spreadsheet with every expense you will be paying over the year, track your saving for each of those expenses in advance and deposit that money into your Freedom Account you will avoid the gotcha’s of irregular expenses. Back-to-school time, Christmas shopping and Summer getaways are no longer capable of derailing your budget (…and Yes, if your sinking funds are funded and you’ve saved a little cash for a hotel or campground stay, you CAN occasionally go!) Oh, and back-to-school, Christmas, birthdays and mini-vacation are never an emergency, right?

Since we are still working on paying off debt our sinking fund is limited to monthly and annual bills for the most part. Once we are debt free these categories will be more fun and include new furniture and vacations…..until then, we limit our sinking fund to annual, quarterly or monthly bills. Trust me, we frequently dream of that vacation and how great it will feel once we are debt free. Only 2 years, five months and 2 weeks……but who’s counting!

Wishing you all a wonderful week!

Blessings…

Paul and Jen
Joyfully Living Below Our

2013 Financial Goals

Posted on June 9, 2013 by jmcoyan@gmail.com

We are happy with our progress in our goal to become debt free except for our mortgage. We are following Dave Ramsey’s baby steps. It has become very exciting to see our snowball finally moving. We are keeping our eye on our goals! We are finding it very helpful to write yearly goals and share a weekly victory to keep us motivated. This has been LONG process for us and it can be a struggle to keep motivated.

1. Increase Deferred Comp/Retirement Savings DONE!

This is a secondary retirement amount. We started this account by only putting very little into this secondary retirement account. We will double our amount we save into this retirement account. We also have a primary retirement account matched by our employers.

2. Pay off our Chase Card by March 2013. DONE!

3. Accomplish Tommy’s MCS through 5th grade. DONE!

Tuition paid for 6 years of private elementary school. A wonderful foundation for our son, worth every single penny.

4 Pay off our last credit card by December 2013.

We are on track to pay our final credit card off just before Christmas, if no major unplanned expenses hit us. We are so excited to think we will be going into 2014 with no credit card debt!

5. Update our will to reflect changes we have discussed.

It is time to change our will now that our children have gotten older. It has been 9 years since we had our will initially written.

What are your 2013 Financial Goals??

Blessings…

Paul and Jen
Faithfully Living Below Our Means!

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FPU: Jen’s Little Secret….

Posted on May 17, 2013 by jmcoyan@gmail.com

We all have our struggles, it is true. While I might be great at budgeting money and living a frugal lifestyle, my secret is that I am not good at denying my children ANYTHING!! I struggle daily on what my heart and my head tell me. My heart tells me that my boys are my life and I would do and give them anything! My head tells me that I have to stop doing this and have my son earn his money to buy what he wants. How else is he ever going to know how to do this as an adult?? As my parents might have said, “Money doesn’t grow on trees!”

While I am not extravagant in what I give my child, I know I am missing the mark on utilizing these teaching opportunities. And we all know I am still going to give him things, but maybe a little less I will share with you some examples from the last week and see if you can relate.

1. It is starting to warm up in MN and we hear the icecream truck coming down the street. Don’t ask me why, but this guy *knows to park in front of our house! Tommy goes running to his “Spend” envelope and finds he only has 1 dollar. He asks me for a dollar and of course I hand one over to him. Hubby reminds me about how our son needs to do his chores and he would have plenty of money for the ice cream truck.

2. I am dropping off my son at school and the school book fair is set up. Our little guy informs me that his class gets to go shopping today and he needs some money. I did think twice about it this time….but in the end, I couldn’t say no. I gave Tommy some of my fun money, which is where a majority of my fun money goes. I am always spending it on the kids or some other gift, etc.

3. Hubby and I are packing our son to go to an overnight trip with his school to an environmental camp. The packing list says to bring some money for the camp store and a treat on the way home. Hubby, because he is MUCH better than I am at this, asks our son if he has any money in his spend envelope. Well, the answer is “no” of course. I of course plead my son’s case, he can’t be the only child without some funds on the trip. Hubby opens his wallet and give our boy $10 from his own fun money, because as terrible as I am at giving my sons anything they want…..my hubby is that way with me….he loves me.

As I am typing up these examples, I think to myself what harm would have been done to Tommy if I had said “No”?? No to ice cream truck….he would have had a bowl of the ice cream from in our freezer. No to the book fair….he would have read his library book or one on his shelf from previous book fairs. No to spending money for the trip…..he would have still had a great time and made wonderful memories with his class and learned that doing his chores would have given him money to spend, but memories and fun don’t need to cost anything.

Dave Ramsey says that personal finance is 20% head knowledge and 80% behavior and for me this problem is 90% psychological. I grew up the youngest of 5 children and wasn’t the richest kid in school. I would cringe when the teachers would ask, what did you get for Christmas and my classmates would have this long list and I would say my one thing. While my hubby and I budget for Christmas, you can bet my children get more than one present. I just grew up knowing that my family didn’t have the things others did. No trip to Disney world but we always went on a family vacation every summer. My parents seemed content and didn’t seem to worry about the need to keep up with the “Jones”.

Looking back at that as an adult, I have a totally different take on it. While the embarrassment stayed with me, I learned some very valuable lessons from my parents. My parents didn’t have a extravagant home, but they never refinanced and owned their home while I was at home. I remember my parents making the last payment on the house after the man they had a contract for deed with passed away. At Christmas, while I might not have had numerous gifts, the one gift I wanted was always under the tree and I felt loved. To this day, I still can remember the joy of my “Baby Alive” I received when I was little and the clock radio I received as a teen. And of course, my best memory is of the puppy my parents got me, Chico. Never mind that I drove them nuts acting like a dog so they would get me a dog. These gifts meant so much to me. My parents knew that and always did their best to make sure I felt loved.

I don’t recall my parents using a credit card much in my life and they paid cash for most things. My dad bought his vehicles and boats with cash and he still does today. We bought items at Garage Sales and my mother sewed. We always had a garden to grow and preserve our harvest for the winter. We would even go to the colony to get more produce to meet our needs. So was I affected by my parents saying “no “to me….yes, I learned to appreciate what I had, work hard, garden, sew, cook, save money and be frugal. I am so thankful for that today! My mom is amazing and taught me so much!

I am realizing while writing this what a disservice I am doing to my son by not saying “No” sometimes. I learned a lot from my experiences with money as a child. As a parent it is my job to provide for my child, but also to teach him about life, which includes how to handle money. This is my job and I need to take is seriously. It is better if he makes a $10 mistake now than a $10,000 as an adult.

I have had a discussion with my son about how he will need to do his chores to have spending money. That Mom will not be giving her money to him when he wants it . We have a list of chores on the side of the fridge and he receives $1 for each completed. Most weeks, we only can give him $1 or $2 for chores completed. He could easily earn $10 a week, if he did his chores. Time to teach the value of money and hard work! It is my job as a parent to prepare my children for the real world, just as my parents did. The lessons we teach our children now about how to save, give and spend will lay the foundation for their financial future as an adult. This will be very hard for me and I am sure I will slip up, but I am going to give it my best!

Blessings,

Jen C

Summer, Soccer and Avoiding the Golden Arches

Posted on May 11, 2013 by jmcoyan@gmail.com

Summer is nearly here, I hope! It is hard to tell in Minnesota. But summer means crazy schedules and the desire to spend as much time as possible outside. Summer in Minnesota is too short to miss a single nice day. We have one son left at home, but we are super busy with his soccer schedule. Those of you with more than one child in sports….I don’t know how you do it! With hectic schedules it is harder to eat at home….but it is possible to avoid those quick drive through meals with a little planning!

Planning is the key to most of our success in this pursuit of becoming debt free. If you want to save time and money, menu plan! How do you menu plan when you have to be at soccer practice three nights a week at 6:30 and Mom doesn’t even get home from work until 5:30 or 5:45?? Planning, planning and more planning is the answer. On soccer nights we plan easy meals that can be made ahead, which saves us time and money and a million calories!! Supper is ready and in the fridge just waiting for us.

We look at what evening we will be home during the week and then make a few nights meals that evening. A few weeks ago on a Monday evening, Jen made two additional meals in addition to our evening meal. She made Beef Enchiladas and Chicken Salad for Tuesday and Wednesday night meals. Jen makes the enchiladas to the point of going in the oven, then puts them in the fridge with the heating direction on them. Then we can call home and have who ever is home put supper in the oven and it is ready when we arrive at home!

Beef Enchiladas ready for the oven!

Chicken Salad can be made ahead! Cut up some fruit and have a bag of Sunchips and croissants on hand and supper is ready in a matter of minutes! Plus this meal is healthier than McDonalds and cost less as well.

Other meal ideas that can be made ahead – most sandwiches, such as ham spread, seafood salad and Summer Sub Sandwiches – crockpot meals and Pasta Salads. Jen recently subscribed to the Emeals Healthy Lunch Menu Plan, which makes for great make ahead quick meals on very busy nights! We can even grab the meals out of the fridge and eat them on the way to practice, if needed.

We hope this post gets you thinking of how you can spend a little time each week to plan your meals and avoid the golden arches this summer! It is great to pack a lunch to take with you on an outing as well. Lunch always tastes so much better outside at a park!! Of course we occasionally have a meal at the Golden Arches, but when we do it is a real treat. Just remember you can make your own healthy food fast with a little planning.

Happy Budgeting!!

Paul and Jen
Faithfully Living Below Our Means!

Financial Peace University: Leap of Faith

Posted on February 28, 2013 by jmcoyan@gmail.com

This is your chance to make a new beginning. Take the chance and take this leap of faith with us and get started on changing your financial future. You might be reading this and saying, right now my kids are little so this won’t work for my family. Or you might be thinking, we don’t have enough money to start this.

When your kids are young is the perfect time to start this journey as you will be teaching your children through example financial skills that they will take with them into adulthood. If you don’t have enough money to do this…..that means more than anything this is something you NEED to do. Have faith, you are stronger than you know! The biggest hurdle you have to jump over to start this journey is yourself. 80% of your success begins with changing your behavior.

Don’t go it alone, join a local Financial Peace class which is offered at many churches across the country. Go to Dave Ramsey.com to find a class near you. Keep in mind; if you are married it is crucial that you and your spouse begin this journey together. Couples must have agreement on spending, saving, debt reduction and planning or your plan will fail before it even starts.

Learn how to beat debt and build wealth with Dave Ramsey’s Seven Baby Steps. This is the foundation of Dave Ramsey’s Financial Peace University.

Step 1: $1,000 in an emergency fund

Step 2: Pay off All debt except the house – debt snowball

Step 3: Three to Six expenses in Savings

Step 4: Invest 15% of income into Roth IRA and pre-tax retirement plans.

Step 5: College Funding

Step 6: Pay off Home Early

Step 7: Build wealth and give!

Where do I start??? Stop going into DEBT. If you don’t have cash for your purchase, don’t buy it. After our first class we took all of our credit cards out of our wallets and did not use them. We even cut some of them up….not all of them, that was too scary!!!

Dave Ramsey on Baby Step #1 –

Focus on Baby Step #1 – $1,000 in an emergency fund. This step is extremely important. By having $1,000 in the bank, you end your dependency on Credit Cards for unplanned events. We have saved $1,000 and spent it on an emergency more times than I can count! But the whole point is we had the money we needed and didn’t have to rely on credit.

Next week we will talk about how we started on a budget for the first time in our life! There is that word; you knew it would be coming……BUDGET! It is a good thing, really! Until next week find those financial statements, make a list of your debts and total them up. It is very important to write them all down so you can see the number. That is the prep for Baby Step 2.

If you have any questions or would like us to blog about how we handle any aspect of our FPU journey, just leave us a comment. We would be happy to share what we have learned along the way.

Blessings,

Paul & Jen

Other Articles in our FPU Series:
Our FPU Story: That was then…..This is now
Financial Peace University
FPU: Leap of Faith
Budgeting…Time to Make a Plan
FPU: Inside Our Weekly Budget Meeting
FPU: Sink Your Debt with a Sinking Fund
Groceries: Cut the Dance and Start to Wiggle!
Summer, Soccer and avoiding the Golden Arches

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Financial Peace University……

Posted on February 18, 2013 by jmcoyan@gmail.com

Have you ever yearned for peace regarding your finances? Ever wish you were more prepared for emergencies and not living paycheck to paycheck? Our family had weathered a few financial storms over the years and long-yearned for financial peace, so we decided to check out Financial Peace University. Little did we realize how very much we needed FPU in our life! FPU teaches God’s ways of handling money.

We’d never made a big deal of discussing our finances. Once in FPU classes we realized we were not alone in being off-course with ourf inances and communications. We found the consistency of the weekly meetings helpful in really developing and keeping the consistent groundwork we needed for success.

FPU was life changing for our family. One revelation for us as parents was that we could literally change our family tree. We are providing our children with the tools and examples of how to handle their money God’s way. Even our 5^th grader understands that when he earns money, he will divide it to give, save and spend.There is so much joy in knowing our children’s future will be brighter due to FPU. After watching a couple of the videos with us our son and his fiancé decided to take the course to start their life together on the right foot financially. It is with great joy that we now watch our son and his wife living within their means and enjoying financial peace of their own! We only wish we had started our marriage at the financial place they have.

Financial Peace University has been wonderful for our marriage.The FPU principles keep us on track financially as a couple. We have a simple weekly budget meeting to make financial decisions and pay bills together. We have shared goals and values which has increased the sense of unity in our relationship.

Since graduating from FPU we’ve loved serving as course panel members! We are reinvigorated in our journey and renewed in our commitment by the new FPU graduates. We are lucky to also be joined on the panel by our son and his wife. This strengthens our commitment as a family to live peacefully, free of debt.

Through participating in FPU you not only experience a transformation; you witness how FPU gives others the tools to be more at peace financially, and spiritually. Watching the transformation from a sense of despair to a sense of hope and possibility is incredible to witness. Truly, through Christ all things are possible!

We love sharing our passion for FPU with family and friends so they may enjoy the financial peace we are discovering. We choose to live like no one else, so later we can live like no one else…DEBT FREE! We would like to invite you to check out the upcoming Financial Peace University at First Lutheran Church in White Bear Lake. Join our family in the journey to beat debt and discover the financial peace we all yearn for.

For more information on attending FPU contact Jeff at First Lutheran Church in White Bear Lake. FPU starts Tuesday, February 26th at First Lutheran. Don’t live in the White Bear Lake area??? Use the find a class page on Dave Ramsey’s website to find a class near you.

Financial Peace University will teach you to take control of your money, invest for the future and give like never before. Take the plunge, you will not regret it….FPU is life changing!

Blessings,

Paul and Jen

Look for more articles in the future about our Financial Peace journey…….

Other Articles in our FPU Series:
Our FPU Story: That was then…..This is now
Change Takes a Leap of Faith

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Tag Archives: Financial Peace Universit

FPU: Big Tax Return = Big Screen TV! NOT!!

FPU: Sink Your Debt With A Sinking Fund

2013 Financial Goals

FPU: Jen’s Little Secret….

Summer, Soccer and Avoiding the Golden Arches

Financial Peace University: Leap of Faith

Financial Peace University……