Our Permanent Solution for Money

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I’m talking about money, because nobody talks about money. Not enough people tell you that the farm you dream of owning or the tractor you need for that land is going to cost you so much more than the sticker price.

Everything we do on the Ranchette is planned using permaculture design. We both work full-time jobs that keep us busy much more than full-time, and we need everything to be efficient and self-sustaining. Our money is no different.

This design does not break down techniques that may be specific to your situation. There are just too many financial techniques to review. This design is about sustainability, efficiency, planning, and balance.

I attribute all of our success to our financial design. We created our design in January 2014 after realizing we would never reach our goals in our current financial situation. We have been applying it to our finances for a year now. Over the first six months there was a learning curve; we didn’t see much progress.

Over the second six month period, we were able to get the reassurance we needed. From July 1- December 31, 2014, we were able to pay $13,679 down on our debts, reduce our student loan debt by $11,500 and increase our net worth by $27,515.

OUR DESIGN

We knew we needed to develop a positive relationship between ourselves and our money by making our money work for us. We developed this flow of accounts. Money gets deposited into our main account weekly, it is then automatically transferred to our other various accounts: loans, bills, savings, and cash. Those accounts then use automatic bill pay to transfer funds where they need to go. Day-to-day spending (food, spending, animal supplies) gets withdrawn in cash each month keeping us committed to our budget.

Notice that our emergency savings account isn’t even included in this design because we don’t consider it in our design. The account is fully funded and we keep that money out of sight (at a different bank) and out of mind (so it’s there for a true emergency).

Financial Flow Chart

THE PLAN

Our plan is aligned with our goals. We will be debt free by December 2018. We found a debt repayment plan that we are both comfortable with, and we included those additional debt payments as an automatic payment withdrawn from our loans account each month.

At the end of each month, extra money sits in our main checking account. That additional money is transferred to our discretionary savings account, which we can use for whatever we’d like. We keep a small prioritized list of what we’d like to do with this money (vacations, remodeling projects, extra fun money, etc.).

In our plan and design, there is no place for credit cards. If we need extra money it comes from our discretionary savings account. If we have a disaster with our house, it comes from the emergency savings account. In the end, we’re only responsible for paying ourselves back, which is a lot less pressure than having another bill to pay.

There are several steps to creating your plan:

  1. Establish a goal– What is your main goal? Your answer should guide your plan.
  2. Find a plan– Your goal will determine what type of plan you need to settle on- a debt repayment plan, a saving plan, an earning plan.
  3. Make a budget– You can find a great resource for creating a budget here. Consider the sustainability of everything on that budget. How does each item contribute to your end goal?
  4. Develop your design– Make your design fool proof, and you will not fail. Consider your relationship to your money and what you want each dollar to do. Make it automatic.

GENERAL REFLECTIONS

During the first three months, I was not convinced this was what we should be doing. In fact, I checked our accounts almost daily obsessing over little things. Thankfully my other half is patient and continued to remind me daily that we needed to be patient, let the savings accounts grow, and have faith in the plan. One year later, I can say he is right. But, the first couple of months are the hardest.

As we move into our second year of this design, I will begin sharing monthly reflections on the first Friday of each month. I know talking about money is boring to most, so I won’t bog down the blog with more than a monthly reflection. For those of you looking for our more traditional gardening, preserving, permaculturing, animal raising posts, you can look for a monthly post in the middle of each month.

It’s going to be a great 2015. Thank you to all of you that remained faithful followers in my many absences. I hope this helps you start the New Year on a positive foot. Happy New Year!

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7 Responses to Our Permanent Solution for Money

  1. Chris says:

    Good work.

  2. Beth Snyder says:

    If you would like to change careers, I would love to have you join our team of Personal Financial Counselors! :) Love your plan! Although you explained your emergency savings is “fully funded”, this is true for VERY FEW individuals/families. So, it’s especially important to remind those that don’t have a fully funded emergency savings to include regular savings for emergencies in their plan. Although I am sure you do so, it is also important to remember to fund our retirement savings EARLY and often ~ this is usually done via one’s employer through a 401(k) or 403(b) plan. Great job! Great blog!

    • brookeO says:

      Thanks, Beth! Some days I think I would love to be a financial counselor.

      You make great points. We include any saving we are doing in our bills, so those savings accounts get paid weekly like everything else. Our retirement accounts are set up through our employers as you mentioned.

  3. Becca says:

    Love that you’re talking about finances! I think this is the “elephant in the room” for too many people.

    • brookeO says:

      It was really difficult for me to figure out how to write this post- I think that is why. Hopefully opening the conversation can help a few people.

  4. Pingback: Build a Better Financial Plan » The Homespun Journal

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