Baby Step #3: DONE!!

Indeed it is!!

We saw yet another blessing [with the delivery of our tax return], of Jairus' tax disability status. With this extra money, we finished off Baby Step #3, which is 3-6 months of emergency savings. Yeah, ok. We're just doing 3 months.

So that means it took us one month to do Baby Step #1, 5 months to do Baby Step #2 and nearly 8 months to do Baby Step #3. A little more than a year in total!

This Friday, if we find a sitter, we'll head off to see our financial planner to get Baby Step #4 (retirement savings) and Baby Step #5 (college savings) underway. With James' new job, #3 is going to be nicer to consider, as I'm sure the university has some options to help in this manner. #4 we've actually already started, but don't contribute to regularly.

I still have to admit being a little concerned about how we'll manage after this though. Baby Step #6 is to start paying off our house. For a long time, I didn't even think about that; didn't even imagine we'd get this far. And then sometime in the past year, when it seemed attainable, I was gripped with the exciting thought that perhaps we really could do it. I've come down a few notches since then...

I just can't see us going right on to Baby Step #6 anytime soon. With leftover from our tax refund we're able to replace the carpet in the family room (hallelujah!!) but that's only the first of a long list of expensive repairs our house needs before we could think about putting it on the market. Extra money after #4 and #5 are in place will be going to that. And then we really need to be establishing what they call 'sinking funds' for the repair and replacement of our vehicles. I drive a 2000 Odyssey that needs brake work (among lots of other stuff I'm sure) and James drives a 97 civic that has all manner of things going wrong with it.

Never mind the fact that we've been pretty much living in scrounge mode for the last 14 months. At Christmastime we sat down with the budget to see where we'd start allocating the extra money coming in from James' change of job. We made a 'wish' list of things like: more money to the grocery budget, money for a date night for the two of us, vehicle repairs, setting aside money to have enough in the fall for Verity to continue with gymnastics, Christmas savings. We got all that done and then within a few days I was struck with the thought that there seemed to me a good possibility that I might be losing my HCC pay by the fall....so we wiped out all those plans and started funneling it all towards Baby Step #3. We had planned to be done by the end of August....so we're ahead of schedule!! Awesome. But still...for us to reasonably live within the budget we've created, we need to have some wiggle room or we'll just keep overdrawing our envelopes. Someone on the facebook group I created about saving on the grocery budget insists that by going to cash for groceries, we'll never overspend. I think about this when for some reason the 5-6 boxes of cereal I buy don't make it past one week and the food budget is gone. Sooo, we would do what for breakfast? Maybe I need to get more creative....

But sometimes I just can't get any more creative. I just want my Lucky charms. Oh for the day we can afford Lucky Charms without the guilt. :-)

I don't often do this...

....but this is amazing....

It's not often you hear a guy with such a strong control over his falsetto. It always surprises my choir kids when I tell them the "secret"....that boys can sing higher than girls (!!!).

The Credit Card Dilemma

I've been meaning to make a post for a while related to our credit card philosophy. It's of course related to our Financial Peace journey of which I blogged most recently about here.

Dave Ramsey is completely opposed to credit card use and we have come to agree with this. Not because of any noble reason, but pretty much because we just really suck at controlling it. We've heard of families that can use their credit card wisely and with much deliberation, and pay off their balance every month. We would not be such a family.

But not only do we lack the self control to keep credit cards from getting the better of us, we just sorta despise them. Even if we were paying off our balance every month and getting all sorts of perks (points, trips, whatever) we just hate the thought of supporting a huge industry that is destroying our society on so many fronts.

Dave has alot of good arguments about credit card use, even for those people who feel they use it wisely. One that I think is quite pertinent is the evidence that when you use a credit card, you don't feel anything. When you lay down a wad of cash for that TV you've saved for, it hurts. I don't remember the numbers, but apparently you spend a significant percentage more when you use credit, because it doesn't hurt. This is why McDonalds started accepting credit cards---'cuz they knew they'd snag more business.

I got my first credit card when I was in university, although I'm pretty sure it was a credit/debit card. It was in Chicago with 1st Chicago Bank and I remember trying to explain to my dad that it wasn't really a credit card even though it had the Visa logo on it, and the purchases just debited out of my account. I think sometime soon after though I was offered a real credit card with maybe a 500$ limit.

We've fortunately never had more than 2 or 3 cards at one time. James had one for his business and a couple times I've opened one for reimbursement purposes either for a job or church. It always ended up being more annoying than helpful.

So, at some point in our Dave Ramsey journey the last few years, we came to the conclusion that we wanted to live without a credit card. Dave regularly advises this, and insists that it's completely possible. We believed it.

One small issue however, is that in the States, credit/debit cards like the one I had in Chicago are fairly common. They can be used anywhere a credit card can. Having come from a culture where our Interac system was spreading like wildfire (around 1995), having a credit card that wasn't really a credit card was awesome, as the States didn't have our debit system, or any, really, apart from the credit/debit cards. Because we have Interac, a credit/debit card is not nearly so common. None of the major banks carry them in Canada. For a while I did copious research on the reloadable Visa cards, but I was quickly disenchanted with them. So many fees....the inconvenience of reloading...I didn't even go as far as trying one.

About 3 years ago or so, I was searching for someone (some bank, that is) that carried the credit/debit cards. We had paid off and gotten rid of our Visa and we were feeling the inconvenient pinch of not having any credit card. Hotel and flight reservations. Ordering online. Car rentals, and a few other situations...it was annoying and we'd have to sometimes call upon my parents to help. We didn't like being in that situation.

Someone in a forum I believe mentioned a credit union near them in Ontario that carried the credit/debit card. They were too far away from us to be helpful, but it gave me an idea; what if other credit unions had the same? There was a Teachers Credit Union not too far from us. I gave them a call....and was very pleased to find out that they indeed had a credit/debit card. It was called a Global Payment Card and it has the MasterCard logo on it.

To get it, I had to open an account with TCU and put a small amount of money in a side account for "shares". It's a credit union thing, I believe. Then I applied for the card (oddly, just like a credit card, even though there's no credit involved) and I was of course approved. Bingo! Problem solved!

Our intent at first was just to transfer money into this account only when we needed to make a purchase using the Global Payment card. This didn't end up being terribly successful. It was a bit of a pain, because I couldn't transfer online. I had to physically go over to the branch and make a deposit. If I deposited a cheque, I had to wait 5 days for it to clear. If I didn't want to wait 5 days to make my purchase, I had to go over to our bank and take out the money, then go deposit it in the TCU.

So for about 2-3 years we did this and while it was better than having a credit card (now a banned word in our house) it did have it's annoying times.

The answer, we decided, was to switch our banking over to TCU. That way we'd never have to mess with transferring money over. Plus, Dave Ramsey often recommends credit unions because they are usually smaller and give more personalized business. It's the small town touch.

It's been great so far. I love having the convenience of a credit card, yet it comes right out of my account. The services of the credit union have been good, although there's been a few small gliches--nothing I've been ready to turn my back on them for and they've been very good at fixing problems quick.

So this has been my personal recommendation for going credit-card-less with the help of Teachers Credit Union!