Ugh. We are getting ready to do another “budget year”.
If you know me personally, you know what a “budget year” is.
For those of you who don’t know me personally, or aren’t familiar with our term “budget year”…it’s torture. OK, it’s not really torture, I actually enjoy it because it’s a huge challenge and requires you to think outside the box and track EVERY expense for budgeting purposes. It’s fun. If you’re a numbers person.
A “budget year” can best be explained like this: if you don’t NEED it, you don’t BUY it. For an entire year. Ask yourself that question before every.single.purchase. Simple as that. (If a year is too big for you, try doing it for just a month. Or even just a week.)
We challenged ourselves to do a budget year for 2010. We wanted to see how much extra we could pay towards our mortgage (we have no debt other than our mortgage). Before starting the year, we set an initial goal of paying an extra $1,000 toward our mortgage every month. But once we got started and saw how easy it really was, we upped the goal to $20,000 for the year. I won’t divulge how much we actually saved that year, but I’ll let you know that with the excess principle paid to our mortgage, we saved over $14,000 in interest. It also shortened the length of our loan by FOUR YEARS! FOUR YEARS!! Take that monthly payment ($1250) times 48 months and that’s $60,000 in our pocket! SO yes, scrimping and saving and nickle and diming every opportunity we had for 12 solid months….totally worth it.
We haven’t decided how extreme we are going to take it this year. Our kids are quite a bit older and we naturally have more expenses as a result. Higher cell phone bill, higher cable/internet bill, school lunches for 3 kids (1 in high school!), all three kids are in martial arts now which costs us a minimum of $350/mo (not including test fees, weapons requirements, extracurricular events, etc.). We have a few beach weekend trips planned and we are going to Mexico this summer. We also started paying our kids allowance! Our monthly expenses are simply higher now than they were back then, so I doubt we’ll be able to make such a significant impact like we did in 2010.
Want to do a Budget Year yourself? It’s all NEEDS versus WANTS.
1. Groceries. Your grocery bill is the easiest place to start. Start out the year by eating from your pantry and freezer. Don’t buy anything from the grocery store except milk, eggs, cheese, bread, yogurt, fresh fruit and veggies (and flour and sugar for baking, if you run out!). This gives you the opportunity to eat the meats you have in your freezer (start with the oldest stuff first!). It also gives you the opportunity to eat those canned goods that you overlook all the time- like canned pumpkin, cranberry sauce, condensed milk, tomato paste, canned beans, etc…..it might mean creative cooking, but at least those things will finally be used! It’s actually a fun challenge! No waste- you are using what you’ve already purchased. It feels good! Today, for example, I was going to make a white bean and chicken chili. Well, I’m out of chicken breasts. I guess we are having white bean and ground elk chili instead! Hope it turns out! (You can read about our 2010 January grocery challenge here- we spent under $100 for the whole month feeding a family of 5, plus running a daycare!)
When you do resume your grocery shopping, be frugal! Instead of buying chili for $1.54/can….wait until it goes on sale for $1.00/can. Or better yet, buy a bag of dried beans, some ground beef (on sale) and onions and seasonings and make a big pot of it! (I buy my onions on sale and chop them up and freeze them for cooking). There’s always opportunities to buy better (and usually healthier). Don’t re-stock your frozen foods or canned goods until they are on sale for a good price.
2. Toiletries are next. Do you really need new moisturizer or new shampoo or hair products? Or do you have 3/4 empty bottles tucked back in your cabinet that you could use up instead? Use the travel sizes and samples that you might be storing. Empty all of it into a container so it’s easier to use! I’ve been known to cut open a lotion bottle to use a spatula/scraper and scrape out every last little drop from the bottle! You betcha! No waste again- feels good to get every last drop out and not throw those chemicals into landfills.
3. Clothing. No new clothing for a year. Here’s a fun way to look at your closet differently. At the end of the season, you’ll know what clothing you can donate to charity, which is another feel-good thing to do! With the kids, we’ll make sure their basic needs are covered, but there will be no frivolous purchasing of clothing just because something is cute. If you feel bad for my kids, feel free to stock them up with Old Navy or Target giftcards so they can get new clothes- lol!
4. Entertainment. We don’t go see movies in the theater. We do not buy DVD’s when they come out. We rent about 2-3 DVD’s per month from Redbox. We DO have cable TV, so we eventually see those movies that we missed in the theater (it just takes a couple years before they air!). I thought about cutting back our cable services, but we are already paying such a low rate for what we have, I can’t justify dropping it back any lower. (We have Xfinity Triple Play (phone, internet, tv) with a DVR and 3 receivers, every channel that exists- including premium channels, and NFL redzone- for $164/mo and that includes the taxes. If you can find me a better deal, let me know- but read the fine print on those “special offers” cuz they don’t include the extra receivers or taxes and we’d end up with just 64 channels!)
During our “Budget Year” we tracked all our expenses. There was a category called “Leisure/Entertainment” where we tracked dining out, entertainment, holiday expenses, party expenses, alcohol purchases, magazine subscriptions, etc. For the entire year (minus Christmas) we spent $1,400. That translates to less than $120 per month! I know people who spend that per week on dining out! Which brings me to….
5. Dining out. Hard for some people but not for us. Although, Jim and I DID start doing a bi-weekly date night at a local pub for cheap eats and drinks ($20 every date and that includes tip!), …. we will probably continue that. $40/month to maintain a strong and healthy marriage is a small price to pay! Other than that, our dining out consists of attending family and friends’ birthday functions and that’s it. I simply cannot justify paying $16 for a meal for myself that I can make for the whole family for less. That and the calories and fat. (Probably more the calories and fat- I’m not willing to give up my weight loss!) And take that $16 times 5 people in our family and a single meal out would cost us $80 + tip. That’s about 1/4 of what we spend a month on groceries! I can’t do that! See this related post: Bank Commercial Rant (snack spending)
6. Household items. This one is actually hard. I find it to be a bigger challenge than the grocery challenge. Of course you have to buy toilet paper and light bulbs and cleaning products, but DO ask yourself for everything else- is it really necessary? And is there a cheaper place to buy it? Or a cheaper product? Are there coupons for that item? (Check Amazon.com for household products- you’ll be surprised how cheap you can get some basic household items!)
7. Holidays. When we did our budget year, the Easter Baskets contained “needs” rather than fun things. Shampoo and body soap is a need, so let’s make it fun and get the kids some character- themed soaps, shampoos, toothpaste. Books are good (better than candy). Maybe some nail polish or chapstick for the girls. And lots of activity coupons for things we wouldn’t do this year otherwise (like a trip to the Zoo, or go Bowling, or to China Moon Buffet or Chuck E Cheese). The key here was to not spend money on something that’s going to be flushed down the toilet 6 hours later. (Sorry for the visual, but that’s where chocolate and jelly beans end up!)
8. Fuel. Yes, it costs money to drive your car around. I don’t drive to Fred Meyers except on days where my kids go to karate, because I’m already going to be right by there. Every trip we make is calculated. Even Redbox rentals- we have to be near one to rent a movie, but furthermore we have to have plans to be near one the next day to return it! Otherwise, that $1.20 rental is now costing $3.00 because of the gas used to pick it up and drop it back off. Our kids ride the bus to school….my neighbor drives her daughter every day. At 3 miles round-trip for dropping off, driving a vehicle that gets 13mpg, paying $3.49 (yearly average)….each month is costing $17 in gas plus wear and tear. It adds up. Dropping off and picking up? $34/month. It might sound stupid, but it adds up. Especially if you do that A LOT. Heck, I work from home, but our kids have so many activities every week that I drive about 7,000 miles per year. And that’s mindful, careful, calculated driving. I could probably double that number, easily, if we just hopped in the car whenever we needed/wanted something. I figure I’m saving at least $600/year by planning my driving.
OK, after proof-reading this post I realize that we might sound extreme, maybe even a little lame. But the moral of my story is that if you really want to save money, you can. And the first place to find savings is to look at what you are buying on a daily basis….is it an actual NEED or is it a WANT? If it’s not a NEED then don’t buy it.
When you find yourself with excess cash in your checking account because you didn’t spend it- well, turn that cash into MORE cash by applying it to your debt. If you have credit cards- use that money to make a large lump sum payment and get that card paid off! And then stop using it! If you have a car loan- same thing.
Make your money work for you. Don’t work for your money.
Links to related blog posts: