When we started this blog we dedicated a handful of posts to how we financially planned to purchase our forever home. We discussed setting financial goals, paying off debt and saving for our down payment. All went according to plan and here we are living on our dream property, renovating our dream home. But we are failed to realize the impact of financial set backs on those forever plans.
What to Do When Your Budget Goes Awry
It would be great if I could tell you that one year into home ownership and we still had all of our credit cards paid off and our savings was flourishing. However, that would be a lie, and if you’ve ever renovated a home you already know that. Our budget has taken some serious hits. I wish I could say it was all accidental findings but a lot of it was poor financial decisions on our part. It’s interesting how quickly you can fall into bad habits after spending years of breaking them.
Getting Back on Track
The key is to get back up, wipe yourself off and start again. That’s the best part about budgeting, when it isn’t working rework it! In the fall we got ourselves back to a normal budget but it just wasn’t working for us. After overspending during the holidays we realized we needed to go back to square one; cash envelopes. See http://www.daveramsey.com for more information on his baby steps. They have helped us in the past and they are helping us once again. It’s okay to admit defeat, if you live in denial your will never get better.
Set New Goals
When we were working towards the house we had very clear goals in mind. Dollar amounts that we wanted in our savings to afford our closing costs and down payments. This worked. What didn’t work was when I hired a tree company and I had a idea of what I wanted to spend instead of a true number. Same thing happened with the sprinkler company, the electrician and pretty much everyone else I hired. I knew better but I was making the mistake of not having a hard and steady goal. That has since changed. I know I need $1000 for a flooring company to come in and do some work for us. I will set a goal for that amount and not hire them to come until it is sitting in our savings account.
Don’t get Lured by Promo Rates
This was another mistake we made. Although we paid everything off by the time our “12 months at zero percent” we didn’t break the payments down correctly. This resulted in one big payment during the last month of the promotional period in order to avoid interest. It’s not terrible but it’s not healthy for that month’s budget. We knew this, but we will made the mistake.
It’s All Going to be Okay
Here’s the thing… it’s all going to be okay. Just in the same way a farmer panics when the chickens stop laying, financial set backs are unfortunately part of life. The best part about it is you can stop what you are doing and easily make adjustments. We follow a modified version of Dave Ramsey’s plan. The reason why? Well, it works for us. There are a great deal of resources available to you, just make sure you are getting everything from a reliable source. Start with your local bank, many of them have tools to help you budget and save. Just don’t ignore it! Money problems only occur because people don’t want to face them.
Here are links to some of our other posts about getting ready to buy our house:
Comment below and share with us your tips for keeping on track and dealing with financial set backs!