Seeking advice about how to use windfall

[sweetness]

Sorry, I don't see this in any of your posts until this one.

I'm so sorry! Just went back & reread my OP, and I didn't even mention that he's been unemployed for 3 months (I thought I covered that)! My husband quit his job (in another state) to move here in October and work in this ministry. Since we've been here, he has only done handyman work 'on the side'; and his permanent job did not start until last week. Ugh, now I feel like I'm further complicating things!

At this time, we simply can't afford to budget 1/12 of our annual expenses. We just absolutely cannot afford to. We are already on an absolutely bare bones budget. We are just trusting the Lord to bring in those things as we need them (things like life insurance, dentist, optometrist/contact lenses, homeschool curriculum). And He does! We just really want to use wisdom in being stewards of this $10,000.

Thank you all for your help and consideration! I feel kind of like I'm coming off as defensive and ridiculous! It looks like I wasn't thorough enough in my OP. But I do really appreciate all the advice, and it gives us something to thing about. I can't wait to discuss it with my husband (it is now 4:30 a.m. ~ I'm up nursing the baby, so not currently a good time for a Budget Committee Meeting ~ LOL!).

[disneysteve]

I didn't even mention that he's been unemployed for 3 months

At this time, we simply can't afford to budget 1/12 of our annual expenses. We just absolutely cannot afford to. We are already on an absolutely bare bones budget. We are just trusting the Lord to bring in those things as we need them (things like life insurance, dentist, optometrist/contact lenses, homeschool curriculum).

That greatly changes the picture. If your husband is unemployed, the debt snowball gets put on hold and you pile up cash, or just cover the necessities, until the income resumes. Not only that, but you are now living on a deficit budget as you aren't able to cover all necessities, like medical care.

Take that $10,000 windfall and park it in your money market account. Use it as sparingly as possible to cover NEEDS until your husband's income is back in place. Once that happens, sit down and create a new budget based on his new income. Be sure to include, if possible, all necessary annual expenses (1/12 of them per month). Then you can decide how to use what remains of this 10K windfall and that is when resuming the debt snowball would be appropriate.

[sweetness]

Thanks, Steve. He did start the new job last week, and we had our January "Budget Committee Meeting" to spend his January checks on paper. He's not making a whole lot, but things will loosen up in a month or so once we get our Baby EF back and we don't have these credit card payments.

So, what exactly is the protocol for living on a deficit budget? I guess that should have been my initial question. I feel that we are making enough to get by, but as I've mentioned we can't cover annual and occasional expenses out of the normal paycheck. We've been blessed to receive lump sums from many different avenues (God's provision!) to take care of these things, but it's impossible to plan all that out on paper! My dad is extremely well off and blesses us often. We also qualify for Earned Income Credit; and with 6 kids, our tax return should turn out nicely for us. So... we have pretty much 'played it by ear' as far as those type of expenses go. At the beginning of each month, we have our BCM and plan that month's expenses. For example, January... we wrote down all the bills, budgeted for food/gas/diapers/etc., and wrote down the other currents needs (a tire, repairs on a toilet, new dryer vent hose, shoes for one of the kids...) and "made it work" best we could on paper. It's tight, but it works.

[disneysteve]

So, what exactly is the protocol for living on a deficit budget?

I am not an expert on the Dave Ramsey plan but I believe his advice is that you sit down and list all expenses for the month from most important to least important. He starts with food, lights and water, shelter, and goes on from there. When you have your budget meeting each month, you go down that list until you run out of money. If there are still things remaining on the list when the money is gone, those things don't get paid that month. That might mean even the minimum payment on the credit card doesn't happen or a home repair doesn't get done quite yet (e.g. if you have 2 toilets in the house and one is broken, it stays broken for a while).

Just make very sure that everything on your list is truly a need and there isn't any possible place you can cut back that you haven't already cut back. Sounds like you've already taken care of that but I'm just saying it for general info.

[sweetness]

Okay, that pretty much sounds like where we are. I've heard Dave teach that those "below the line" don't get paid. Fortunately, most of our true *needs* are "above the line." LOL

If not, we have Someone who meets them! We are blessed to be able to say that a bill has never gone unpaid in over 10 years of marriage, and I can't think of a true need that we've gone without. He's thrown in a whole lotta wants, too!