How “Saving is Like an Oak Tree” | Three Bucket System

This is the first week without attending the personal finances for women workshop with Teacher. It was only three weeks long. I knew the day would come, but still I loved hanging with the ladies.

In our penultimate session, we discussed savings strategies. Half of U.S. households don’t have $2,000 in case of emergencies or to cover the deductible on car and health insurance. I bet very few people seriously think about that when they choose the low premium, high deductible plan. I know I hadn’t until this year.

Teacher’s recommended savings strategy includes:

  1. Emergency savings
  2. Savings to Spend 
  3. Long-Term Savings


As a financial advisor, she prefers that her clients to invest debt-free dollars. So she recommends filling up those three buckets first, then look into investment vehicles, like stocks.

“You always want your money to be making money,” she said, so always factor in APY rates and understand the wonder of compound interest (Well, it could work against you in terms of carrying debt.)

I was reading Dave Ramsey’s chapters on savings and investments simultaneously. His advice was the same on Teacher’s three savings buckets and understanding compound interest.

“Saving is like planting an oak tree,” Ramsey said. “You cannot keep pulling it up by the roots to check its progress.”

“Saving is like planting an oak tree. You cannot keep pulling it up by the roots to check its progress.” – Dave Ramsey

If anyone talks to you about a “guaranteed investment,” then RUN”, Teacher warned us. All investment comes with risks; there are no guarantees. That’s why it’s best to use debt-free dollars or the excess you have after filling up your three savings buckets.

Investment is for the long-term, so don’t go into it knowing there’s a possibility you’ll need money in a few months or so, Teacher said.

Then she went on to give the best analogies that I’ve ever heard in my life. She likened bonds to a window with one pane, and mutual funds to multi-pane window. If someone throws a rock into the single-pane window, then you have to replace the whole window. So if all of your money is in the Pepsi stock, then all of your investment goes down. If someone throws a rock into the multi-pane window, then you only need to replace one of them. With mutual funds, you have several investments – maybe Pepsi, Coca Cola, Apple, Facebook, Exxon and Twitter. If one goes down, then you could mitigate the risk with the others. Brilliant explanation!


In the last session, we discussed asset protection a.k.a. insurance. Insurances transfers the risk if something happens to you, Teacher explained. She says your biggest asset is your ability to earn an income.

Can you afford not to have health insurance? The No. 1 cause of bankruptcy is medical reasons.

We went over the major types of insurance:

  1. Health
  2. Life
  3. Auto
  4. Home
  5. Disability
  6. Long-Term Care

I was super sad about this being our last session because we could have talked on and on about all of the nuances involved in insuring your asset. I’m so happy they she provided a great foundation on which to build our knowledge. I hope all four of her pupils leave better than they way we came.

We ended our time together with a group hug. I’m a hugger, not a fighter. Seriously, I love hugs. While we were encircled, I joked and said “Now, put your right foot in…” They giggled.

We left on a high note. We left with hope.

More Resources: Sente Mortgage’s Tips on Savings Buckets

Good Read: The “Three-Bucket System” for Managing Money


6 Ways We Waste Money (And How to Stop) [INFOGRAPHIC]

Here are some of the six most common money-related mistakes:

1. Not having a budget.
2. Not having an emergency savings fund.
3. Not managing your 401(k) properly.
4. Not contributing to retirement.
5. Not setting up the right kind of savings account.
6. Not choosing the right credit cards.


Debt Slavery

debt-is-slaveryAin’t it amazing how a things come full circle?!

After finishing “The Frugalista Files,” I picked up Dave Ramsey’s “Financial Peace Revisited.” I’m plowing through. Today, I reached Chapter 8 “Dumping Debt.”

Ramsey is reiterating some great points. I dog-eared a bunch of pages.

  1. On Page 69, he talked about changing your belief system, your visual paradigm, your filter. He used this example.




Just a few days ago, I saw that phrase on someone’s license plate and started playing with the ‘w’ and the ‘h’ and the space. I chose to go with the more positive route – I am now here.

2. So these numbers are scary. “On average, cardholders carry a $8,367 balance on their cards from month to month (160 percent increase since the past decade), paying on average 18.3 percent in interest. That amounts to $929.70 a year in interest payments, according to RAM Research Corp.”

3. On page 85, he stated that debt consolidation is not always the right choice. He sounds like Michelle Singletary, who says debt consolidation is basically taking on another debt to pay off the previous debt. Doesn’t make sense, right? Consolidation could lower your monthly payments now, but you might end up paying more later. Using the snowball method, folks could pay off their debt faster and at a lower rate than with consolidation, Ramsey said. I’m glad I didn’t take the “easy road” with consolidation some weeks back. My problem now is sticking to the snowball method or Debt Dash Plan (DDP). If it ain’t one thing, it’s another.

4. Ramsey says: “If you’re going to avoid borrowing money, you should definitely avoid co-signing on someone else ‘s loan. When you co-sign, you borrow the money.” If the other person doesn’t pay, then the lender will come after you.

5. If you must borrow money, Ramsey says, then follow two basic guidelines.  First, (1) borrow on short terms and only borrow on items that go up in value. “That means never on anything except possible a home, which you should pay off as soon as possible.” Next, (2) if you can, buy less, so that you can pay off faster, and then make sure you get a very low interest rate.

If you were to finance a $80,000 on a home at 10 percent, you could pay a 30-year mortgage (360 payments at $702/mo. = $252,720 total) or a 15-year mortgage (180 payments at $860/mo. = $154,800 total). By paying $158 per month for 15 months, you save $97,920 overall.

“In order to get out of debt, quit borrowing more money.”

6. “Our problem is not getting out of debt; it is keeping out of debt.” Ain’t that the truth, Ruth. One credit card I’m trying to pay off is one that I had already paid off. Crazy, right?!

And just like I told Teacher and my classmates in the personal finance workshop, Ramsey said “Get mad!!!”

“You can’t scheme, scam, or borrow money your way out of debt. You just have to get mad.”

7. Debt = slavery.

It’s no coincidence that Ramsey book-ended this chapter with Proverbs 22:7 – “The rick rule over the poor and the borrower is servant to the leader.”

A few years ago, I used to have that phrase on my mirror. I thought I was going to work through my issues then, but I reverted to my old ways, ironically, when I started making more money. I started borrowing again, therefore, willingly enslaving myself to the credit card companies. There’s that full circle I was talking about.

DebtIsNotAToolIt’s funny how “slavery” has been a hot topic the past few years in entertainment. I saw several movies regarding the topic – Lincoln, Django: Unchained and Oscar-winning 12 Years A Slave. Kanye West rapped about the “New Slave” and J. Cole rapped about getting another expensive chain, saying “I chose this slavery.”

My goodness. I chose this slavery. SMH. Not anymore.


This image of a credit card wallet was pinned by a woman named Mary on Pinterest. She wrote: “Pull the ribbon and out pop the credit cards. “…the borrower is a slave to the lender.” Proverbs 22:7 This reminds me to spend $ wisely.”

Lessons learned from “The Frugalista Files”

Frugal is the new blackSaturday was a beautiful day in the neighborhood. It was so beautiful that my 30-minute walk turned into a 3-hour-and-30-minute outdoor, love fest. The temperatures hovered around 70 and the cool breeze swept over my skin to give relief from the sunlight. I sat on a park bench finishing up “The Frugalista Files”.

I still have no idea why it took me so long to read this book. It’s like I’m sitting in Natalie’s shoes, just 5 or 6 years later. I guess things come to you when you’re open to them.

When she was writing about going to the NABJ Convention in Chicago in 2008, I recalled my time at that very same place. I was a student, working on the convention newspaper. I wish I would have met her then. She could have warned me about the dangers of debt.

Like Natalie, I knew I’d work at a newspaper for a long time and eventually win the coveted Pulitzer Prize. But I wasn’t thinking about frugality then. I was headed into my senior year of college, spending money on credit cards that I didn’t plan to pay back. I probably charged some of my convention wear to those cards. I didn’t understand credit. I just knew that I wanted what I wanted… and right then!

I love Natalie’s candor about everything. More importantly, I loved seeing her mindset completely transform. It’s the same transformation I’m undergoing – not getting my hair done every month, cooking at home more, freelancing more to increase my income, and realizing that I can’t go to every party or trip with my girlfriends. One of my good friends keeps talking about taking trips to Las Vegas or Miami. But she lives with relatives, and doesn’t have any school loans or credit balances. She might be able to do it, but not I. My one big trip is to New Orleans. Decisions, decisions. But I like where I’m going now. I must stay on the frugal track.

Within 8 months of frugal living, Natalie realized:

“I haven’t starved. I still have friends. I still have a roof over my head. Someone remind me, why was I such a spending slut?”


She realized that so many things are out of her control, but spending and using credit can be tamed. Amen, sista!

Natalie brought up Suze Orman’s advice for anyone under 35 years old: “…do whatever it takes to pursue your passion to build your career.” I was talking to my co-worker about the fact that I’m becoming obsessed with money and tracking my spending. She said maybe personal finance is the thing that wakes me up every day. It’s my morning coffee. Maybe she’s right. I hope to get out of this debt hole and be able to help other women achieve their goals.

Natalie took a buyout from the Miami Herald, continued blogging and freelancing, and never looked back. She went from a “cubicle rat to a take-charge career girl,” owning The Frugalista brand. During 2008 alone, “The Frugalista” reduced her debt from $21,021.24 to $14,876.30. That’s almost $6,150 or 30 percent! By April 2010, she was debt free. Awesome! That’s just the motivation I need. I’m so glad she shared her story.