Simple Sustainability: Money

This post is in reference to a series on sustainability conducted by Rhonda at Down To Earth.

Money isn’t everything, but it is a necessary evil we need for society-living. Money, and the acquisition of money and what it can buy, is an obsession for many people. When is ‘enough’ actually enough?

Being debt-free has been very liberating for us. We paid a conventional, 30-year mortgage in 16 years. The pay-off for us was in 2003. If you have a mortgage, pay it down. Use any cash-windfall or extra money towards the principle amount owed in the mortgage. Paying down a mortgage will directly reduce your mortgage debt burden.

We believe in a cash-system. When we purchase any large item (a durable good), such as a vehicle, we also pay cash. We do not assume loans or make purchases through debt. Why make someone else rich? If we cannot pay cash for something, we do not make the purchase. It’s that simple.

Our regular bills include the following:

• Car insurance
• Health insurance
• Life insurance
• Real & Personal Property taxes
• Utilities (Electricity, Phone)
• Entertainment (Satellite TV and computer)
• Food
• Medical (doctor, dentist, medicine)

We are a one-income family. Wages are auto-deposited.

Health insurance is partially paid through an employer and the remainder we pay is automatically deducted from the wages.

Car insurance and life insurance are paid-in-full on a yearly basis. Paying ‘up front’ means that we do not have any additional billing fees. This saves money, but requires pre-planning to have the money at the time a bill is due.

Our Virginia real and personal property taxes are due in June and in December, so they are paid in 6-month timeframes. There is no incentive to prepay the full year, so the State Government doesn’t get our money up front.

The electric bill is every other month; the cell phone is every month. Both bills are paid when due. Normally, we can guestimate the amount we will owe on the electric bill. The cell phone is a flat-fee under 600 minutes. But last August, one of my son’s was in a very bad automobile accident and we used more time on our cell phone than normal. I contacted the Sprint/Nextel service and explained the circumstances. I had been told that they make special allowances for extenuating circumstances. They graciously provided a $100 credit. Did you realize you could ‘bargain’ or ask a ‘favor’ with your phone company?

Food and all other purchases are made with a credit card transaction. The credit card bill is due at the end of each month and is paid-in-full when due. Our credit card has a cash rebate system, and we actually MAKE money by using the card. In 2008, we made $800. We take the rebate in cash and apply it to the next credit card bill. How great is that? The cash rebate system works for us because we never have an outstanding balance, so it is pure profit. For us, paying by credit card is not only easiest, but we have a complete, running record of all money spent. There is a line-item for all purchases, so if we are naughty, we know…..

We almost never have cash-on-hand. Who needs cash when you can use plastic, right? Actually, we have a debit card if we need cash, but we do not spend on-the-fly. In our world, there is no such thing as a convenience store, a latte, or impulse buys. I’ve still never had a Starbucks and somehow I have survived.

IRA contributions for me are automatically deducted from wages, so at the end of each year, the full $6,000 is already earmarked in a savings account, ready to be transferred into an IRA. Pre-tax retirement deductions for my husband are also automatically deducted from pre-tax wages, and those dollars are contributed into his 401K and 457K plans. We won’t use what we don’t have, right?

Any extra money in checking accounts are moved into regular savings or a CD. There is minimal investment in the US stock market now.

I enjoy finances and am the bill-payer, financial “planner”, and tax preparer. I also keep the books for my husband’s part-time LLC. I understand the basics of each system, stay current with the stock Market and the US economy, and I trust myself much more than I trust strangers and large corporations.

Last year, the U.S. economy plummeted. For many, including us, we were forced into making changes. Not because we were foolish with money, but because the housing market crashed and it effected the national real estate market.

Read my Plans Can Change post. Were you ready? How have you adapted to the financial changes? Are you preparing for more financial changes?