For many of you we know that twice a year you get a tax bill in the mail for your property taxes if you own a home. In Michigan our property tax bills are split into a Summer and a Winter tax bill. A few weeks ago our Summer property tax bill arrived in the mail.
The good thing with our tax bills is that the due date is often 8 weeks or so away so there is time to figure out how you are going to pay the bill. Some of you may escrow your taxes with your mortgage payment, meaning every month when you pay your mortgage you are also paying a portion of the tax bill in advance. When your tax bill is issued the mortgage company (or bank) uses that money you have prepaid to pay tax bill.
We have never escrowed our property taxes. Ever. We have always taken care of paying our own property tax bills, and because we are self employed this provided us a bit of flexibility that we sometimes required in years past. With self employment, sometimes there is a flush of money in the budget and other times (usually when you are waiting on a customer to pay a large invoice you have issued) money is tight. We’ve experienced both and for us it is just our way of life; there is never a guaranteed paycheck every two weeks.
Anyway, the tax bill arrived.
And for the FIRST time ever we had the money set aside in an envelope and we were able to write the check to pay those taxes immediately. What a feeling that was, it honestly brought a tear to my eye as I took a second and reflected on how our commitment to the budget techniques we learned while attending Dave Ramsey’s Financial Peace University have dramatically changed our lives. It was even kind of exciting; seriously.
Ever since we started FPU in January we have been doing a written monthly budget and examining our spending. One of the lines on our monthly budget was property taxes. We took our yearly total property tax bill and divided it by 12 to get the amount we should set aside every month. Each month after we have our budget meeting I take a trip to the bank and withdraw the cash we need to stuff our envelopes for the various categories including property taxes, propane (we pay once a year to fill our propane tank that heats our home in the winter), house insurance (which we now pay yearly, instead of monthly, which saved us nearly $200!), vacation fund, car replacement fund, etc.
Because we have been making these monthly deposits into the “property tax” envelope, the money to pay this tax bill is there. No scrambling to figure out where the money will come from – it is there. It doesn’t hurt to write that check, or cause frustration or require transferring money from one place to another.
Working together on this monthly budget has transformed how we think and act with money. We’ve always been what we consider smart with money; we’ve never been big spenders or frivolous buyers (which is why we have this blog and we share money saving tips with you). We have not however made a written plan for money, telling every dollar where it will go including saving, spending, paying bills, investing for retirement and paying down debt (that mortgage!).
We have told you about FPU and even documented our journey through Financial Peace University 9 week class. We encourage you to open your hearts and your minds to this way of thinking; it is life changing. You can find out more about this class at Dave Ramsey’s website, or search for a local FPU class in your area.
We can’t stress enough how much this has helped us both financially and spiritually.
As Dave would say, “live like no one else now so later on you can live like no one else”.
