Tools help families set up budget in time for the holidays _ pittsburgh post-gazette
Cornelius and Lasheri Walls of Ross prepare pumpkin seeds Wednesday with their son Cornelius III at their home. The family has regained control of their money thanks to a budgeting system.
Nadine Porter won’t be whipping out a credit card this holiday season to pay for gifts and entertainment. That attitude backfired in years past, and she often found herself
still paying for Christmas when Easter came around.
Last year things got way out of hand. She racked up $4,800 in holiday bills on four credit cards, the most debt she has ever owed besides her student loans.
“I had so much credit card debt I feared I couldn’t get out of it,” said Ms. Porter, 27, of Crafton. “I would wake up in the middle of the night thinking about it and worry about it all day.”
After reality set in, Ms. Porter began a single-minded mission to pay off the debt. “Every dollar I had I put toward it,” she said. “I ate ramen noodles — a lot. I ate a lot of macaroni, too, because it’s cheap and fills you up. I didn’t go out to eat at all and packed my lunch for work.
“I was running to the bank every week with every little deposit I had,” she said. “One time I went to the bank with $7 that was left over in my budget at the end of the week. I cashed in all my loose change.”
She eliminated the balance on all four credit cards bills by July. Aside from her fear of drowning in debt, a big part of her inspiration came from attending a series of classes focused on financial freedom held at Crossroads Church in Oakdale. The class instructors also introduced her to a budgeting system called EveryDollar meant to help her avoid another episode of holiday overspending.
“My budget for Christmas this year is significantly lower — $630. That’s for everyone on my list, immediate family and some friends,” said Ms. Porter, who works as an adoption specialist helping foster children find permanent homes and families to adopt children.
“With EveryDollar, you make your budget before the month starts so that every dollar has a name,” she said. “You are telling your money where to go instead of wondering where it went. I’ve been saving little by little for Christmas and I’ve already picked out everything I’ll get everyone and it adds up to $630.
“It’s a nice feeling to know that when you pay for everything in cash you never have to pay it again.”
EveryDollar is a free online budgeting tool created by personal finance guru Dave Ramsey and his team based in Nashville, Tenn. It allows users to set up weekly and monthly budgets. Once users set their budgets, they can track expenses on their home computers or mobile phones even as they spend money at the grocery store, the restaurant and the gas pump.
EveryDollar went online in late March and so far has nearly 800,000 users.
Along with holiday cheer, the holiday season also is the time of year when people are most vulnerable to overspending. In addition to EveryDollar, there are several other debt management tools that can help consumers avoid ringing in the New Year with holiday debt.
ReadyForZero is a free debt management app by online marketplace lender Avant. It also comes with free credit monitoring for all users. Users can manage both their personal debt and credit from a single Web and mobile interface. ReadyForZero’s tools focus on personal debt repayment while monitoring credit changes at the same time.
Qapital is a personal finance app also launched in March that allows users to set up savings goals, upload pictures to illustrate them, then designate specific actions — like posting on social media or walking a certain number of steps — that will trigger deposits toward those goals.
Consumers borrowing again
As the U. S. economy strengthens, consumers have begun to borrow again, but according to Mintel, a market intelligence agency based in Chicago, 31 percent of Americans are overwhelmed by debt and feel they will never be able to repay it all. What’s more, 47 percent of consumers agree that taking on debt is always a bad decision despite 77 percent having some kind of debt.
“For many people, debt hangs heavy on their minds with over half feeling the amount of debt they have has a negative impact on their daily lives. This is most true of young people, especially Millennials, primarily because their debt is likely to be a greater percentage of their income,” said Robyn Kaiserman, financial services analyst at Mintel.
The debt-reduction workshops sponsored by Mr. Ramsey called Financial Peace University are hosted by churches throughout the Pittsburgh region. The cost is $93 per family, which covers a lifetime membership, meaning that if a family would like to retake the nine-week class, they can do so at no additional charge.
Financial Peace University also has a home study program that includes DVDs of the lectures, which are not included in the regular class package. The home study program costs $159. Those who prefer to take an online program pay $129.
“For over 20 years, we’ve taught how important it is to budget,” said Mr. Ramsey, who preaches “debt is dumb, and cash is king” on his nationally syndicated radio show, which airs locally on 1320 AM WJAS. “I know it’s the dreaded ‘B’ word, but having a plan is the best way to harness the power of your income.
“It always amazes me when people seem surprised when Christmas rolls around every year on Dec. 25,” he said.
Cornelius and Lasheri Walls of Ross also use the EveryDollar budgeting system and attended Financial Peace University classes. Their crisis moment occurred in 2009 when they lost two close family members — one from old age and another to cancer — and found out they would have to foot the entire bill for both of the funerals.
“It was rough because two years prior we had bought our first home,” said Mrs. Walls, who works in admissions for South University, an online college based in Savannah, Ga. “We had a car payment, student loans, a mortgage and, not sticking to our plan, we charged a $10,000 dining room set. That would have been OK if it weren’t for things we didn’t know about that happened in the future.
“That took a toll on us financially and emotionally,” she said, adding, “It opened our eyes and let us know we had to be accountable for the money we are stewarding.”
Today, the Walls are almost out of debt, with the exception of her student loan.
They have been planning for Christmas all year through contributions to a holiday club they opened in January 2010 at a local bank. Thanks to the Christmas club they end up each year with $600 to $1,000 to spend.
“Too many people turn around and it’s Dec. 15 and they don’t even have a Christmas list, let alone a budget,” Mr. Ramsey said. “We tell people to prioritize, budget and pay cash for Christmas.
“It’s a dangerous time of year if you don’t plan. You can twenty-dollar yourself to death with parties, decorations, food and — this one always gets me — buying gifts for yourself.“
Tim Grant: tgrant@post-gazette. com or 412-263-1591.
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