Good morning George. I’ve just finished your Money Tools & Rules book! Thanks so much and well done on a great book!
We have two kids between 7 and 10-years old. I have done up a budget and I have reduced my monthly expenses a reasonable amount to add to my payments towards my credit card and line of credit debts. I have that goal of paying off those debts to be able to buy a house in the future, while also looking to gain a foothold in investing.
Part of my reply that relates to (this portion of) the email: I only ever answer questions of what I would do since I never have all the information. Plus, caring isn’t telling someone what they want to hear, it’s caring enough to be honest and direct.
Nice that you’re one of the rare people that put their spending on paper to be able to see it AND reduce it a bit – that’s pretty impressive. And remember you’ll be way over here and there – just keep tweaking it for the variable bills and DO have some “me” money in there and some “kids” money. And tell them in an age appropriate way some of the budget stuff!
When they know the rule of what their “me” money is AND what it can go to (clothes, field trips (?), school extra billing (?), dollar store, snacks, etc) they’ll learn to live within their own budget and it’ll take most of the hassle out of shopping with them. Make it cash in an envelope for each of them so that they can “see the money,” or lack of it, towards the end of the month! This, however, is not their (hopefully) earned allowance! That’s their money to invest – give – spend as you’ve defined the rules for it.
Your investing goal is confusing as it states opposite things in your full email: If you’re NOT adding to your investments, you just need to follow the step up plan in the book to the letter, which would be credit card only – minimum payment on LOC. Then the LOC with the minimum you paid all along AND all the money you’ve paid extra on the card that’s now cleared.
If you meant ADD to your investments as well: Unless you’re a doc, vet, or someone else making maybe $150k or more, you’re doing the exact opposite of what works. I hope you’ll email me in a few years that you’re in roughly the same position, just a few years older. Plus, you won’t meet the debt ratios, etc. of the Trudeau stress test for debt load, total debt service ratio, etc. if and when you want to qualify for a home purchase.