Apr
15
My Top 5 Budget Busters
Filed Under Budget | 2 Comments
Mrs. Micah sent out a general tag for the top 5 budget busters meme and I’m taking up the challenge. I can actually boil them down to two things: food and my husband. Sometimes the two are combined. We don’t have a formal budget, but we have an idea of what we should be spending. Unfortunately, we often exceed that in specific areas.
Food Budget Busters
Food, specifically groceries, are probably our biggest budget buster. Our food costs are around $500 a month, which is high for a family of two, but there are three reasons for this:
We eat well. A typical dinner is chicken marsala with roasted red potatoes and a walnut gorgonzola salad. Although I shop wisely, buying good, fresh ingredients does cost more than a coupon-bought TV dinner.
Food costs are going up. The price of eggs has gone up 50 cents a dozen this year. Corn tortillas are up 60 cents. That’s a pretty substantial increase when you add it up over a year.
Food intolerances. Thanks to my food intolerances, our food costs are at least 30% higher, probably closer to 50%. My flour blend alone costs 5 times more than white flour (and therefore used sparingly.) A pound of pasta costs 3 times more (and is also used sparingly). They also make it difficult to change our diet to cheaper foods. Eating meatless meals won’t really save us any money. Even if we wanted to buy all our food with coupons, I can’t eat most packaged food.
Spousal Budget Busters
My other budget busters are, collectively, my husband. He feels that because we make a certain amount of money and have certain jobs we should be able to live a certain way. He’s also not quite as panicked by our debt. Since we see these two things so differently, we go over budget in the following areas:
Work Lunch: He eats out with co-workers a couple of times a week. They nearly always split the check, which means he nearly always overpays. Then there are the times when they change plans on the way to the restaurant and he finds himself in a steak house paying $40 for lunch, and then hitting happy hour later for another $20. That’s 2/3s of my grocery budget for the week!
Weekend Lunch: He still likes to eat junk food. Recently he’s gotten into the habit of either going out to run errands on Saturday and then stopping at McDonald’s, or waiting too long to eat and then running out to get a whole pizza. I buy him food he likes, but he wants to “treat” himself or doesn’t feel like waiting. The upshot is that he spends another $5-10 for weekend lunch.
Work Clothes: My husband is in one of the traditional professions, which means he wears suits five days a week. Cheap suits wear out, good suits are expensive. Both require regular dry cleaning. All those costs add up and there’s simply no avoiding them.
Charity Obligations: In addition, my husband has to attend various charity events for work. He nearly always gets suckered into making a donation. While I don’t begrudge him helping a good cause, it can still be a budget buster, especially since we don’t itemize and therefore can’t write off those donations. He also volunteers with some organizations that frequently run short on cash, and we often pony up the dough until they can pay us back.
I’m trying to find ways to cut the grocery budget, but the other budget busters are out of my control. Short of being a nag, it’s going to take a long time to correct my spousal budget busters.
What are your budget busters? Tell me in the comments. If you blog, continue the meme there! Like Mrs. Micah, I won’t tag anyone because I don’t know who enjoys doing these.
Feb
16
Creating a Cash Flow Budget
Filed Under Budget, Expenses, Marriage and Money, Money Management, Personal Finance | 1 Comment
This month, the Money Blog Network’s group project is budgets. I’m not in the MBN, but I’ve decided to post a blog about my method for creating a cash flow budget. It’s far more effective for my husband and me than a traditional category-based budget. MBN lists several other budget posts on their site, if you want to test a few different budgeting, and anti-budgeting, methods.
The Monthly Budget by Category
My husband and I use Quicken to track our daily spending. About once a year, my husband and I run out a Quicken budget, just to see how our actually monthly category spending has changed. Then we copy it into Excel so we can play with the numbers: how much more we would have if we paid off this loan or reduced that expense.
This is an example of what that would look like. If I were studying this, I would see that I could cut the dining budget and might consider reducing utilities expenses if possible.
The monthly budget is a helpful way to get an idea of how and where we spend money on average, but it isn’t necessarily useful for planning our monthly cash flow. The budget averages out our expenses rather than showing the blips as they actually occur. For example, auto-insurance isn’t paid monthly, but it appears that way in a budget. We have to plan for the blips, not the even keel budget. Instead of a line-item budget, we use a cash flow statement to plan our monthly bills and spending.
The Cash Flow Budget
The cash flow budget is a much better picture of our expected income and expenses for the month. These are actual bills we must pay, rather than categories that may vary every month. For example, if it’s an auto insurance month, then we know to reduce our spending in other areas to make up the difference. It also helps us plan our debt repayment because we know how much we’ll have leftover at the end of the month.
This is a sample of a cash flow budget for February. You’ll note that the numbers above don’t match the numbers here. There are two reasons: 1. I made many of the numbers up, and 2. Most of our recurring charges (utilities, cell phone, gym, etc.) are on one of the credit cards, so we don’t pay them as a separate monthly bill through our checking account.
Expected bills with variable due dates (like a bi-monthly utility) go at the bottom because we know they’re coming at some point, but not when.
At the beginning of the month, we look at our Quicken account balances for variable bills like credit cards and ballpark the payment amounts in our cash flow chart. We adjust with exact figures as the month proceeds and the bills come in. At the end of the month, we take the end number and add it to our debt payments for the next month. Once our debts are gone (except some student loans), that end number will go towards other goals like savings or investments.
In addition, it helps us see where the bills fall in relation to our income. For example, if we plan to make a big credit card payment, but know that the deposit that covers it doesn’t occur until two days later, we can reduce the payment. Then we can schedule another payment after the deposit.
Creating a Cash Flow Budget
If you want to create a cash flow budget, follow these simple steps:
- Get out your checkbook register.
- Create an excel chart with payment dates and amounts for all expenses for the last six months. Rather than the generic terms I use above, use the names of the payments, like Amex, Discover, and Sallie Mae.
- Use three columns for each month like in the above chart. We go across the sheet for each new month rather than down so several months fit on the screen at once. Although you’ll have to tweak it as time progresses, this gives you a good overview of when your various bills are due.
- Just before each month, review the expected expenses for that month and make adjustments for changes in your finances. Also review the previous month and carryover any remaining balance to the next month.
- At the end of the sixth month, copy the last month over to new columns and update the dates and amounts for month seven.
Once you get used to this system, you’ll probably find that you feel more comfortable with your finances because you always have a snapshot view of them. It doesn’t require special software and no one else has access to your data. If you don’t have Excel, you can use an OpenOffice or GoogleDocs spreadsheet, instead. This is very different from the system I used when I was single, but I much prefer it. Give it a try, you might like it!
Jan
21
Get Fit without Ruining Your Budget
Filed Under Budget, Fitness, Health Costs, Saving Money | Leave a Comment
Apparently the third Monday in January is the saddest day of the year. Researchers determined this because this is the day you’ll receive holiday credit card bills and this is the day most people realize those resolutions have failed. Here are some tips for renewing that resolution to get in shape without busting your budget.
Find a Gym Near Your Office
If you ran out and joined a gym near your house, see if they have a branch near your office that you can either switch to or use as well. That way you can visit the gym on your lunch. Not only does it fit well into your schedule, but you’ll find that you’re more productive in the afternoon. I’m fortunate that I can walk to my gym, but if you don’t have one in walking distance, look for a five-minute drive or less. That will give you enough time to do some real exercise.
Get a Guest Pass
If you haven’t already joined a gym and want to, ask for a one-week guest pass before you join. If you don’t use your guest pass much during that week, don’t join the gym. You can get fit with other options instead
Join with Family Members
Family members usually get a discount, so have yourself added to your spouse’s membership if you’ll actually visit that gym or chain. Not only can you encourage each other, but the second membership will be cheaper and probably won’t require start-up fees.
Ask for a Discount
Gyms are always running specials. Ask for one. If they don’t give you a good deal, walk away. Then go home and research offers online. Most chain gyms display their offers right on their website. Print it out and then go back to talk to the manager.
Hire a Trainer for a Few Sessions
Trainers are expensive, but I was in the best shape of my life after working with a trainer once a week for six months. Alas, I couldn’t maintain the expense, but I did hire one for five weeks recently to show me how to use new machines and learn new techniques. Most gyms have an introductory training special. My gym, 24-Hour Fitness, offer 5 sessions for around $50 for first-time buyers. Yes, you’ll get pressured to buy more sessions, but you can say no.
At the very least, take the free introductory session offered when you join. They’ll cover the basics on using the machines and recommend the right machines for you. Don’t watch other members to learn how to use them because most people use them improperly. At best, you won’t see much improvement. At worst, you’ll get hurt.
Trainers will also help you fine-tune your cardio exercises. Most people do that wrong, too. You don’t have to go at top speed the whole time. In fact, you’ll lose more fat if you vary the pace and change machines from time to time.
Quit if You Hate It or Don’t Go
Most gyms have a cancellation fee, but that fee is much lower than the cost of continuing to pay out the rest of your contract. If you’re simply not going to go, bite the bullet and pay the cancellation fee.
Exercise at Home
As I mentioned yesterday, it’s possible to get in shape at home. All you need is a plastic stool and some free weights. You might also want resistance bands or a balance ball. You can find most of this stuff at Target or a local sporting goods store. Watch the Sunday newspaper ads for sales, or check online. Free weights are usually $1 a pound, but I’ve found them for half that during sales. I recommend the neoprene-covered weights because metal weights can be slippery. Now go online to women’s magazines, men’s magazines, and fitness sites to find free workouts you can print out. Some sites allow you to enter some data to customize them to your needs. Look for routines with pictures or videos so you can see how to do the moves properly.
If you have cable, check your On Demand menu. Mine has several exercise programs, and some of them are very tough. Try several until you settle on one you like. Since these programs are already included in the cost of your cable, this is a free option. Most of the shows don’t require any accessories. You can also check your library for exercise videos.
Walk
If you don’t want to exercise at home or at a gym, consider walking. All you need are walking shoes, a ski hat for colder days, and maybe a sports bra for women (change in the office bathroom.) Most walkers don’t work up a sweat, so you won’t need to shower afterwards. You can easily do it on your lunch hour. If you live in a wet or snowy climate, you can also walk in the mall. Just make sure you leave your money and credit cards in your office, not in your wallet!
Consider Buying Wii Fit
If you already have a Wii, then consider getting Wii Fit. It’s expected to cost around $70 and release later this month. It offers a variety of programs and will track your results. You can also compete with family members. It’s definitely cheaper than joining a gym if you already have a Wii. If the Wii is in your family room, it’s also harder to avoid than the gym.
I work out part time at the gym and part time at home. The combination works well for me. Even if you don’t want to spend a lot, you can find a way to get in shape and keep your budget in good shape, too.
Jan
18
Reduce Your Family Entertainment Cost
Filed Under Budget, Entertainment, Expenses, Saving Money | 1 Comment
There are a few TV shows I love. I make an appointment to watch them every week, but I don’t watch much TV beyond those. But now I have a problem - because of the writer’s strike, most of those shows I watch are off the air. A few of them have only recently started, but I know they’ll be gone in a few weeks, too. I’m so accustomed to watching TV at a certain time that I find myself endlessly channel surfing just looking for something to watch. That has to stop, but I don’t want to spend a lot of money going out to movies. It’s too cold to engage in outdoor activities, so I’m stuck inside looking for stuff to do that doesn’t involve the computer.
Here are a few of the ways I came up with to reduce my total entertainment cost now that there’s so little good TV to watch:
Subscribe to Netflix or Blockbuster Online
There aren’t many TV series I want to watch that I haven’t already seen, but you can get full seasons of TV shows from Netflix or Blockbuster online. I’m thinking of adding season one of “Psych” to my list because I’ve only seen some of them. Then you can watch them one hour a day to fill a slot where you used to watch some other show. You can also catch up on all those movies you’ve been wanting to see, but missed in the theater. I figure that we can watch 100 movies this year if the strike goes through the fall TV season. It’s certainly better than “American Gladiators.”
Read
I know, a lot of people don’t like to read. Fortunately, I’ve been a voracious reader my entire life. Currently, I have a pile of 26 books that I’ve been meaning to read. I own them, but I got most of them for free at various events. The local library is one reason I haven’t gotten through them. Whenever I hear about a book, I order it online from my library system, and then I can pick it up a few days later. The downside to having such a huge library system available is that I’ve ordered so many library books that I haven’t had time to burn through my TBR pile!
If your kids think reading is boring, let them choose the book, and then read it together as a family. You can all read aloud, or you can read one chapter a week together and set a time to discuss it. I hear the latest Caldecott winner, Brian Selznick’s “The Invention of Hugo Cabret,” is a big hit with kids. Your library may have a waiting list for it, but the librarian can recommend alternatives while you wait.
Take Up an Inexpensive Hobby
Besides, reading, you could also take up a few inexpensive hobbies. If you’ve always wanted to learn to cook, get some cookbooks from the library and teach yourself. Visit an art store and buy inexpensive art supplies to practice painting, ceramics, or another hobby. I don’t recommend scrapbooking if you want to be frugal, but you can find other options.
Exercise
Since there’s nothing good on, why not go to the gym? If you have a low stool and a couple free weights, you could work out at home instead. My cable provider offers free exercise classes in the OnDemand section. You can also find free online routines at many women’s magazine sites like Self and Women’s Health. You could test-drive videos through your Netflix or Blockbuster account or the library. I use a printed out routine and watch the Food Network while I workout at home. For some reason, it motivates me.
Play Board Games
I have several board games, ranging from Checkers to Risk. If you have a simple dominoes set, you’ve got several games right there. These are fun all night long and also count as quality family time. Schedule a game night with some good munchies and I doubt you’ll hear many complaints. I loved playing games with my family when I was a kid. I still do.
Attend a Free Cultural Event
Sometimes, the local symphony will hold a free family night, or the library or bookstore will hold a reading. Pack up the family (for family appropriate topics) and take everyone along. If it’s just you and your spouse, you have more options to choose from. Find a free local paper and check the calendar section for upcoming events.
Invite Friends Over for a Potluck
Entertaining can be expensive, but not if you ask everyone to bring something. Every time I have people over, they always bring food even if I don’t ask. This way, you can suggest a course so you don’t have six entrees and a bottle of wine. As a bonus, you can keep the leftovers and have food for a few more days!
These are just a few things you could do to reduce the entertainment cost section of your budget. I’m sure if you get off the couch, or away from the screen, you can find a few more frugal ways to entertain yourself and your family when there’s nothing to watch on TV - and even when there is. Consider this your opportunity to wean yourself from the box.
Jan
1
What to Do with a Holiday Bonus
Filed Under Budget, Debt, Money Management, Personal Finance | Leave a Comment
If you received a holiday or year-end bonus, it can be tempting to blow the money on the big screen TV you didn’t get for Christmas or take a spur-of-the-moment trip. Instead of wasting the money, use it wisely to get a leg up on your finances in the new year. Here are five ways to spend your holiday bonus.
I know these uses for your bonus aren’t as fun as a snow weekend, but they’re more fun than paying credit card debt for the rest of your life.
Dec
17
Christmas Gifts Kids Can Make
Filed Under Budget, Gift, Holiday | Leave a Comment
Thanks to JD at Get Rich Slowly for including me in this week’s Carnival of Personal Finance. Check out the carnival on his blog for more tips on saving money for the holidays! When I was a kid, my family still exchanged gifts with everyone else in the family. That meant my sister and I had to find affordable gifts to give all our cousins, aunts, and uncles. Once the adults switched to drawing names, my sister and I still bought gifts for everyone who bought us gifts.
To stay within our very limited budgets, we usually went to a local holiday boutique or fair to buy cheap ornaments or dish towels or other Christmasy gifts. None of them were very personal, but we mostly gave them out of a sense of obligation.
Now that my family has switched to a gift swap (like a white elephant, but with presents people actually want), my adult cousins have come up with idea for Christmas gifts their kids can make instead of having them buy us little trinkets. They’ve come up with some really great ideas over the years.
Photo Calendar
They made photo calendars with bound white paper and photo reprints. Then on the long drive down from their home, they had the kids decorated the pages and marked the family birthdays. When the year was over, I unstuck the photos from the pages and put them in my album.
Christmas Tile/Trivet
Another cousin bought plain white tiles. She and her daughter spent an afternoon decorating them with rubber stamps, and then glazed the tops. I lay the tile on my kitchen table every holiday season and it always reminds me of them.
Photo Frames
Another year, my cousins assembled foam frames during the drive down and stuck their school photos inside. They’ve also made construction paper frames. They usually attach a magnet to the back and then I put the frame on my fridge for the year.
Mixed CD
One cousin sat down with her daughter and had her choose songs for mixed holiday CDs. They printed labels for the CDs and then had my aunt distribute them. We had three or four different CDs, and because they couldn’t be with us, we played them during the night.
When my sister was in school, she made a lot of photo ornaments. Some were clay, others were construction paper. They all had her school photo inside and are still hung on the tree every year. Some of my cousins have also given us photo ornaments. One year, rather than they use photos, they painted plain ornaments and gave those out. I still have one. Cookie dough ornaments are also great – but remember, the dough isn’t the same as for regular cookies. Cookie ornaments are definitely not edible.
Making candles can be dangerous for kids, but you can buy two or three inch white pillar candles at the craft store. Buy a few flat sheets of wax and help your kids cut out shapes to decorate the candles with.
Cookies or Fudge
For a few years, I decided to buy cheap holiday tins at the craft store and then fill them with homemade cookies. My mom and I spent an afternoon baking them. I made chocolate kiss thumbprint cookies, oatmeal, peanut butter, chocolate chip, snickerdoodles, and other favorites. If anyone in your family is allergic to nuts, avoid making any with nuts so they don’t get cross-contaminated, but there are plenty of cookies you can make without them. My mom also has an excellent fudge recipe. Not only have we given it to relatives, but numerous teachers have received and loved the fudge over the years.
Dec
5
Saving Money: Christmas Shopping Lists and Budgets
Filed Under Budget, Gift, Holiday, Saving Money | Leave a Comment
I’ve always relied on a Christmas shopping list and spending budget, but in past years I’ve been a little looser with my “spending limits.” Not this year. I’m determined to pay off lots of debt in 2008, which means getting a head start in 2007 by spending less while still enjoying the holiday spirit.
Here’s how I create my list and set my budget:
- In early November, make a list of all the people I have to give gifts.
- Determine my holiday budget for gifts.
- Break that down into specific amounts for each person and note that number next to the person’s name.
- Consider joint gifts and pooling resources with a friend or relative. In my family, my mother, sister, and I pool our resources to buy better gifts for my cousins. Even though we each only spend $10-12 on each child, the combined total of $30-36 means they get a gift they really want. This year, two cousins want the same video game, so we’re giving them a joint gift, plus a small gift card for each of them.
- Look through catalogs, notice items while in stores, and check online for potential gifts. Think about the person’s interests and personality. When I spend less, it’s important to get a meaningful gift. If I can’t think of anything that would be meaningful, I consider no longer exchanging gifts with that person. I no longer buy gifts for the majority of my friends because it had become an obligation rather than a pleasure. With many, it wasn’t something we discussed, we just simply stopped.
- Narrow down the gift choices, but leave a few options within my stated limit. Include sales tax or shipping costs in that budget.
- Start shopping early to be sure I get the gifts you want and avoid last minute panic-buying - which nearly always leads to overpaying.
- Start shopping online to determine appropriate prices and whether it may be cheaper to buy online, once shipping and tax are included. Note online prices on your list.
- For online shopping, I try to buy several gifts from the same site to get a discount or earn free shipping.
- Carry my list with me at all times so I can buy the right gift when I see it. This also helps me avoid overspending on an impulse gift.
- If I spend less than the stated amount, I count that as savings. I don’t necessarily have to spend more just because the gift I found was on sale or costs less than the amount I feel I should spend. A meaningful gift is meaningful regardless of the price tag. Last night, I discovered my cousin’s gift was marked down 60% for one day. I jumped on the deal, and don’t feel guilty about spending less than planned. She’s still getting exactly what she wants.
As an added bonus, my list and budget method usually means I’m done shopping by mid-December. I have the luxury of taking advantage of free shipping by shopping early and never have to battle the crowds at the mall.
Dec
5
According to news reports, 29% consumers plan to cut their holiday spending this year. It seems like every year, shoppers insist they won’t overspend this Christmas. They promise that they’re slashing their budgets. They promise they know how to control Christmas spending. Then the holiday spirit takes hold. Rather than questioning a purchase, shoppers just buy it, because it’s just $5, $10, $20.
Does this sound like you? Last year, it sounded like me. Fresh out of grad school and with money in our pockets, my husband and I were extra generous. We didn’t realize how much we’d spent until January. This year I’m returning to my usual shopping list and Christmas spending limits.
That’s why I was very interested to see a report on Good Morning America about how to determine your holiday budget. The advisor recommended spending three times your daily income. In their example, they used the simple annual salary of $52,000. That translates to $1,000 a week or $200 per day. Multiply that by three and you get $600. That’s your total holiday budget for Christmas gifts, decorations, travel, and all other holiday-related expenses.
According to this method, my husband and I can spend over $1,000 this year, which is what we spent last year. Given that we don’t have kids, that feels like too much. I’m planning to spend around $600. That includes all gifts, decorations, charitable donations, and holiday travel. Over the course of the week, I’ll be discussing how I plan to save money on my holiday shopping and maybe come in under budget.
How much do you plan to spend this Christmas season, and how do you avoid overspending?
