Beating Broke

Personal Finance from the Broke Perspective

Are Extracurricular Activities Necessary for Young Children?

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Little Amber is performing in her first dance recital.  She’s only three years old.  She feels pretty in her sparkly costume, and she likes the way her mom has done her hair.  But, she can’t remember many of the dance moves.  She and her classmates spend most of their time on the stage looking to the wings where their dance teacher hides from the audience behind the curtain and performs the moves with the girls.

Amber’s parents pay for dance recital pictures as well as a DVD to capture the memories.  In all, they spend about $200 on the recital, in addition to the regular lessons they pay for all year.

Plenty of parents have their young children in extracurricular activities and can relate to the experience and the price.  As parents we’re told again and again how vital extracurricular activities are for our children, but is this myth true?

Do we need to have our children in expensive extracurricular activities?

Falling for the Myth

Extracurricular ActivitiesWhen my oldest child was 4, we enrolled him in a few extracurricular activities.  This continued until he was 7 at which time we decided to get gazelle intense.  Our two youngest children had no opportunity to be involved in expensive extracurricular activities because of our tight budget.

What have I noticed?  While my oldest was a busy kid thanks to school, homework, and extracurriculars, my two youngest (now 5 and 6) have a lot more free time AND play time.  Sure, they fight (often), but I also see how creative they are.  Every day they’re coming up with new stories to act out and games to play.  Contrary to the myth that kids need to be involved in extracurricular activities, I find that my younger two seem to be better off without all of the extracurricular activities.

Are Extracurricular Activities in Preschool Necessary?

We’ve also bought into the myth that kids need to start a sport or activity early—the earlier the better.  If your daughter is going to have any chance of being successful in dance or gymnastics, she should start at 3 or 4.

But that’s not necessarily true.

“Misty Copeland, who has been promoted to top dancer at the prestigious American Ballet Theatre in New York. . .started ballet lessons at 13” (NPR).

Do You Have to Outsource?

You may think, rightly so, that some lessons like swim lessons shouldn’t wait until your children are older.  I would agree with that.  However, do you have to outsource the swim lessons?  Just this summer, I looked into swim lessons for my kids.  They were going to cost $200 for 5 days’ worth of lessons, 15 minutes per day per child.  Yikes!

Instead, my husband started taking the kids to the pool one by one and teaching them how to swim.  They love the one-on-one time with dad, and we love that we don’t have to pay $600 to teach three kids how to swim!

If you have your children in extracurricular activities, there’s nothing wrong with that.  However, if you choose not to, or you can’t because you can’t currently afford extracurricular activities, know that there are plenty of other ways to teach your children things like swimming.  Some of our best athletes, like Misty Copeland, don’t even begin their sport until their teens.  Your children will be fine.

How important do you think extracurricular activities are to young children?  Do you have your children enrolled in extracurricular activities, or do you choose not to?

How a Drop in Income Turned Out to Be a Good Thing

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Over the last few months, my husband and I have lost some income.  Not a little drop in income.  About 20 to 25% of our monthly income.  And let me tell you, we weren’t earning more than the median income for a family of five to begin with.

Our budget was already tight, so when the drop in income happened a few months ago, I’ll admit, I panicked a bit.  I felt a little bit desperate.  I’m sure those of you who’ve been in a similar situation know the feeling.

And then I took a deep breath, and told myself we’d be alright.  And we are alright.  We’re actually better than alright.

Taking Stock of the Positive

The first thing I did, after I calmed down a bit, was to look at the positive side.  We had already paid off half of our debt, so we don’t have several debts to pay monthly.  We’re only left with one student loan payment every month, so that is a relief.  (When we started our debt repayment over two years ago, we had five monthly debt repayments that totaled almost $1,000 a month.  Now, we only need to pay $315 a month.)

drop in income a good thingSecondly, we’re used to living on a tight budget because we’ve been doing so as we try to pay down debt.  Our income drop, though not slight, was not going to throw us into a completely different style of living that we weren’t accustomed to.  I’m used to buying my clothes second hand.  I’m used to cooking all of our meals from scratch and not going out to eat.  The only adjustment we had to make was buckling down even more.

Why Our Income Drop Turned Out to Be a Good Thing

While our budget is lean, we still had some fat there.  We subscribe to Netflix for both streaming movies and DVD home delivery.  After the income drop, I decided the home delivery at $11.99 a month could go.  I had been thinking this for awhile, but I was afraid we’d miss the service.  Guess what?  We don’t.  I can borrow most of the movies for free from the library.

In addition, I think much more carefully about purchases now.  Buying something on a whim is no longer a possibility.  I have to think carefully before making a purchase, which has made me realize I don’t need many of the things I’ve been thinking of buying.

I also took other frugal steps that I’d been to lazy to take previously.  I had always read that making your own laundry detergent can be a big money saver.  A year ago, I bought all the supplies that I needed, but I never got around to making it.  Well, I finally did a few weeks ago, and it works great.  Sometimes it takes circumstances to prod me into changes I should have made a long time ago.

Of course, we don’t want to live with such a tight budget indefinitely.  But now I know that there are many cost cutting measures I’ve implemented that aren’t difficult.  When we make more money, that just means I’ll have room for greater savings and paying off that last student loan.

Have you ever experienced a tight budget?  If so, did you find it to be a good thing as I have?

Creating a Simple Budget the Beating Broke Way

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One of the most important parts of paying off your debt and becoming financially independent is creating a budget.  At the very least it gives you an outline of where your money goes and where it should go.  At it’s most extreme, it serves to create strict limits for your spending.  How lax or strictly you adhere to the budget is up to you and how die-hard you are about your budgeting.

One thing remains constant however.   When the end of the month comes, the ending balance should be 0.  Money in – money out = 0.  If you have a deficit, you overspent and need to compensate for that by either reducing budgeted amounts in another category or by reducing the available money for the next month.  If you have a surplus, (good for you!) then you need to budget that money until your end result is 0.  Most of us looking to become debt free will budget any surplus towards excess debt payment.

Here’s how we have things set up at the Beating Broke household.

Income.  We keep a very simple income spreadsheet.  It lists the sources in Column A.  The amount in Column B and any notes for the income in Column C.  All of that gets totaled at the bottom.  That’s all we do with our income.  It’s the expenses that we really need to focus on anyways.

Expenses.  The expenses spreadsheet is a little more complex.  I have a field for the income that I carry over from the income sheet.  I also have a field for a total of all budgeted amounts.  I then have a few calculated fields.  The first is a field that gives me the budgetary deficit or surplus.  I get that by subtracting the total budgeted amount from the income.  A second calculated field gives me the true deficit or surplus.  This is calculated by subtracting the actual amounts spent from the income.  This field is really only useful for balancing at the end of the month, but if you’ve done your budgeting properly, the amount should be small and easy to take care of.

The meat of the expenses spreadsheet is everything else.  Column A holds the categories.  I’ve broken them down into header categories and sub categories.  For instance, the Health header category has sub categories for Health Insurance, Aflac, Prescriptions, and Medical Bills.  I could go even further and list each bill, but that would greatly increase the amount of time I spend on my budget.  I want it to do it’s job (keep my money in order), not take up hours of my time.  Column B holds the budgeted amount for that sub category.  Pretty simple really.  Column C is the amount that I’ve spent to date on that category.  Column D is the % the budgeted amount is of the income/budget and Column E is the % that the actual spent amount is of the income/budget.    I’ve also thrown in some totals for each header category as well as the % of total for those as well.

Each week, we go over our checkbooks, credit cards, and all other financial happenings and enter them in the appropriate places.  By doing it every week, it keeps the task down to a half-hour or less which helps with reducing the stress level of working with your finances.  Especially if they are a little wonky to begin with.

Budget deficit and surplus.  Occasionally, we get to the end of the month and we have a surplus or deficit.  We’ve either spent less than we budgeted for or we have spent more than we budgeted for.  The latter is a little rough, but the first is always fun.  Because we don’t usually figure out the overall surplus/deficit until the month has ended, we can’t budget for the surplus/deficit in that month.  So, I’ve thrown in a field on the Income sheet that is titled “Carryover” and one in the expenses sheet that is titled “Shortfall”.  If we have a deficit, the carryover value is 0 and the shortfall amount is the amount of the deficit.  And vice versa.  This helps with taking the surplus and budgeting it as an extra debt payment or in accounting for previous months deficits.

Most of these ideas are pretty basic budgeting principles.  We’ve tweaked them around a little to fit our financial style and to be loosely based on the Dave Ramsey system.  If you’ve got questions on budgeting that we might be able to answer, drop us a line and we’ll try and answer them as soon as we can.