Following our means test leading up to the BK7, it was quite clear that we were spending too much, not budgeting properly, and not accounting for actual expenses. I've gone through several waves of budget slashing to try to make our monthly expenses as lean as possible. I'll share some experiences I've had with the hope it may help others or at least get them thinking about their own options.
*Keep in mind - there's more than one way to skin a cat. I don't proclaim to be the end-all be-all of budgeting or personal finance. There are more perfect solutions and certainly less expensive options. But this is what worked in our situation.*
R2F's Budget Slasher Thread
Started by
road2freedom
, Jul 19 2012 12:36 PM
8 replies to this topic
#1
Posted 19 July 2012 - 12:36 PM
#2
Posted 19 July 2012 - 01:32 PM
Subscribing!
Following our means test leading up to the BK7, it was quite clear that we were spending too much, not budgeting properly, and not accounting for actual expenses. I've gone through several waves of budget slashing to try to make our monthly expenses as lean as possible. I'll share some experiences I've had with the hope it may help others or at least get them thinking about their own options.
*Keep in mind - there's more than one way to skin a cat. I don't proclaim to be the end-all be-all of budgeting or personal finance. There are more perfect solutions and certainly less expensive options. But this is what worked in our situation.*
#3
Posted 19 July 2012 - 02:00 PM
First and foremost, it was important to grab an annual calendar and plot out our pay dates and which months those pay dates affected. If you are paid monthly or semi monthly, this isn't very hard... but if you are weekly or bi-weekly you will find that things don't always line up nicely. Since we were both on a bi-weekly pay schedule, which luckily was on the same dates for both of us, it was necessary to plan this out.
What I decided to do was to plan for two paychecks a month. I did this because we were having a hard time with odd and end expenses and didn't seem to have it in us to save a little bit each check. Instead this leaves us with 2 "extra" checks a year, usually in late Fall and late Spring. We use this money to account for things like tag renewals, holidays, birthdays, vet visits, etc.
Now that I had the schedule mapped out and a dollar amount to work with, I could plan an accurate budget and begin trimming the fat.
ETA: One thought I forgot to mention - this put us on a 4 week schedule for recurring expenses instead of monthly.
What I decided to do was to plan for two paychecks a month. I did this because we were having a hard time with odd and end expenses and didn't seem to have it in us to save a little bit each check. Instead this leaves us with 2 "extra" checks a year, usually in late Fall and late Spring. We use this money to account for things like tag renewals, holidays, birthdays, vet visits, etc.
Now that I had the schedule mapped out and a dollar amount to work with, I could plan an accurate budget and begin trimming the fat.
ETA: One thought I forgot to mention - this put us on a 4 week schedule for recurring expenses instead of monthly.
Edited by road2freedom, 19 July 2012 - 02:03 PM.
#4
Posted 19 July 2012 - 02:34 PM
First up was food. For only two people we were spending up to $200 a week on groceries. We were buying unnecessary items and stuff to cook meals that we never actually cooked. Instead we would go out to for food constantly and what we bought would spoil. It was not uncommon for me to grab breakfast at work in the cafe, go out to lunch, and then we would go out to a restaurant for dinner throughout the week. If we did cook at home, we cooked for a family and neither of us likes leftovers. For dining, we would easily spend $300 a week. Not only did this contribute to our waste, it contributed to our waists as well. On top of this we had a membership to a big discount club and would stock up on things like paper products and garbage bags, but would also impulsively purchase other things as well. The average trip was about $200.
Since that time we've tried cooking at home more often. What we've found is that cooking is somewhat inexpensive if you minimize ingredients and stock the necessities, but for two people it's not always the cheapest option. The flip side of that is that cheap meals aren't necessarily healthy. We could make Spaghetti that would last a day or two for $12 or we could eat at Wendy's for $6, but that wasn't good for us. After much trial an error, here's where we are today.
Now we go to the store once a week and buy mostly fruit/veggies as snacks for the week, some essentials like dog food and personal care stuff, and then we plan to cook a single meal from which we are willing to eat leftovers. We cook on Sunday night and plan to have leftovers Monday, so we make sure we make enough for 2 meals for 2 people. This also makes our Monday's less hectic since dinner is already taken care of. Our weekly grocery bill now averages $70 without coupons or anything (I never really got into that. I will pick up sale items if its on our list but I won't deviate to save a buck or two).
What about the rest of the meals? Well, to be honest, we eat healthier and smarter.
For breakfast we both eat oatmeal. Not the instant stuff with tons of sugar, the old fashioned oats (we get the organic stuff since it's pretty cheap). Basically, take a half cup of oatmeal, some cinnamon, a sweetener (we use splenda, bought in bulk), and I use more water than recommended - a cup and a half. Microwave for 2.5 minutes and breakfast is served. If you want to get creative you can dice up some apples and throw that in there before you cook it. We started doing that but it was a bit of a pain to do in the morning. In any case, this is a very inexpensive, wholesome breakfast that literally costs a few bucks for the week for two people. I thought I would get tired of it but we've been doing it for about 2 years now.
For lunch, it varies. I choose to make lunch not really a meal, but two small snacks. We buy fiber bars in bulk (the Kellogs bars are great) and each have one a day. My wife prefers greek yogurt for the other part and I prefer these organic gluten-free chips that we also buy in bulk (huge bag for $6). So, for me two small snacks instead of a lunch, and for her a small lunch. It's cheaper, faster, and healthier.
For dinner, we eat at Subway a lot. Even with both people eating a foot long you can spend as little as $11. You have to be careful because it's very easy to build an unhealthy monstrosity and end up spending $20 on two people. These days we usually split a foot long and will each get a yogurt parfait and spend between $8-10 total, depending on the sub. I know this sounds a bit impractical, but in reality, there are millions of combinations at Subway and it's been working for us. We've found other inexpensive and healthy quick meals, like Panera and Pollo Tropical. We still go out to dinner occasionally but not nearly as often and we try not to splurge often. I do budget for all of these type of meals to make sure we get a bit of variation. Avoiding burnout is critical.
We currently spend $70/week on groceries, $80/week at subway or other restaurants, and about $120 every 4 weeks at the discount club. This reduced our expenses about $1480.
I know, I know, we were spending absurd amounts of money to begin with. We never really set out to spend that much. We just winged it in the first place and as we got busier and busier and paid less attention, it spiraled out of control. My job loss (which necessitated the BK) resulted in a new job that pays less, so unfortunately that ate up a bunch of this savings - no pun intended.
Since that time we've tried cooking at home more often. What we've found is that cooking is somewhat inexpensive if you minimize ingredients and stock the necessities, but for two people it's not always the cheapest option. The flip side of that is that cheap meals aren't necessarily healthy. We could make Spaghetti that would last a day or two for $12 or we could eat at Wendy's for $6, but that wasn't good for us. After much trial an error, here's where we are today.
Now we go to the store once a week and buy mostly fruit/veggies as snacks for the week, some essentials like dog food and personal care stuff, and then we plan to cook a single meal from which we are willing to eat leftovers. We cook on Sunday night and plan to have leftovers Monday, so we make sure we make enough for 2 meals for 2 people. This also makes our Monday's less hectic since dinner is already taken care of. Our weekly grocery bill now averages $70 without coupons or anything (I never really got into that. I will pick up sale items if its on our list but I won't deviate to save a buck or two).
What about the rest of the meals? Well, to be honest, we eat healthier and smarter.
For breakfast we both eat oatmeal. Not the instant stuff with tons of sugar, the old fashioned oats (we get the organic stuff since it's pretty cheap). Basically, take a half cup of oatmeal, some cinnamon, a sweetener (we use splenda, bought in bulk), and I use more water than recommended - a cup and a half. Microwave for 2.5 minutes and breakfast is served. If you want to get creative you can dice up some apples and throw that in there before you cook it. We started doing that but it was a bit of a pain to do in the morning. In any case, this is a very inexpensive, wholesome breakfast that literally costs a few bucks for the week for two people. I thought I would get tired of it but we've been doing it for about 2 years now.
For lunch, it varies. I choose to make lunch not really a meal, but two small snacks. We buy fiber bars in bulk (the Kellogs bars are great) and each have one a day. My wife prefers greek yogurt for the other part and I prefer these organic gluten-free chips that we also buy in bulk (huge bag for $6). So, for me two small snacks instead of a lunch, and for her a small lunch. It's cheaper, faster, and healthier.
For dinner, we eat at Subway a lot. Even with both people eating a foot long you can spend as little as $11. You have to be careful because it's very easy to build an unhealthy monstrosity and end up spending $20 on two people. These days we usually split a foot long and will each get a yogurt parfait and spend between $8-10 total, depending on the sub. I know this sounds a bit impractical, but in reality, there are millions of combinations at Subway and it's been working for us. We've found other inexpensive and healthy quick meals, like Panera and Pollo Tropical. We still go out to dinner occasionally but not nearly as often and we try not to splurge often. I do budget for all of these type of meals to make sure we get a bit of variation. Avoiding burnout is critical.
We currently spend $70/week on groceries, $80/week at subway or other restaurants, and about $120 every 4 weeks at the discount club. This reduced our expenses about $1480.
I know, I know, we were spending absurd amounts of money to begin with. We never really set out to spend that much. We just winged it in the first place and as we got busier and busier and paid less attention, it spiraled out of control. My job loss (which necessitated the BK) resulted in a new job that pays less, so unfortunately that ate up a bunch of this savings - no pun intended.
Edited by road2freedom, 19 July 2012 - 02:35 PM.
#5
Posted 19 July 2012 - 06:30 PM
Question. DH is the only one with income here; I stay at home and homeschool three kids. He gets paid weekly, on Thursdays. Looking at your 2 "extra" checks a year..... We have maybe four months in the year where we get a fifth check in the month. I usually try to mark those checks as savings, after we've paid for groceries and petrol for the car. Is there an advantage to using those for things like paying car insurance and tag renewals vs just dumping it into savings? The savings thing isn't really working for us. We usually end up spending it like it's a holiday for us. I wonder if I used those extra checks for more of a "bill" like paying the car insurance twice a year instead of monthly, if that would help since we're still working on self control...
Also, do you keep this calendar of yours out where both you and the wife can see it easily? I wonder sometimes if my way of writing things out in a small book that I keep in my desk is contributing to an out-of-sight, out-of-mind mentality.
Also, do you keep this calendar of yours out where both you and the wife can see it easily? I wonder sometimes if my way of writing things out in a small book that I keep in my desk is contributing to an out-of-sight, out-of-mind mentality.
First and foremost, it was important to grab an annual calendar and plot out our pay dates and which months those pay dates affected. If you are paid monthly or semi monthly, this isn't very hard... but if you are weekly or bi-weekly you will find that things don't always line up nicely. Since we were both on a bi-weekly pay schedule, which luckily was on the same dates for both of us, it was necessary to plan this out.
What I decided to do was to plan for two paychecks a month. I did this because we were having a hard time with odd and end expenses and didn't seem to have it in us to save a little bit each check. Instead this leaves us with 2 "extra" checks a year, usually in late Fall and late Spring. We use this money to account for things like tag renewals, holidays, birthdays, vet visits, etc.
Now that I had the schedule mapped out and a dollar amount to work with, I could plan an accurate budget and begin trimming the fat.
ETA: One thought I forgot to mention - this put us on a 4 week schedule for recurring expenses instead of monthly.
#6
Posted 19 July 2012 - 09:00 PM
Good question.
If you have a hard time saving that money, try maybe switching it around and saving a little bit from each check (which you might even be able to do through his direct deposit or with automatic transfers), and then use those "extra" checks to pay those expenses. That way you feel like you are spending it and still being productive with it. I know it sounds odd, but finding a way to compromise with yourself is a lot easier than changing behavior.
As for the calendar, yep, we both have a copy. What I do is print out one of those calendars that shows the year on on page. I highlight one color for the "first" check of the month, and another color for the "second". Then I use a third color to highlight the extra checks. I also double-check to make sure that my check dates give me enough time to pay the bills due in the first or second half of the month. If it's too close I'll shift around those extra checks to give us breathing room.
If you have a hard time saving that money, try maybe switching it around and saving a little bit from each check (which you might even be able to do through his direct deposit or with automatic transfers), and then use those "extra" checks to pay those expenses. That way you feel like you are spending it and still being productive with it. I know it sounds odd, but finding a way to compromise with yourself is a lot easier than changing behavior.
As for the calendar, yep, we both have a copy. What I do is print out one of those calendars that shows the year on on page. I highlight one color for the "first" check of the month, and another color for the "second". Then I use a third color to highlight the extra checks. I also double-check to make sure that my check dates give me enough time to pay the bills due in the first or second half of the month. If it's too close I'll shift around those extra checks to give us breathing room.
#7
Posted 19 July 2012 - 09:13 PM
So let's talk TV... We used to have cable. It wasn't even the top tier package through Comcast, but we did have some premium options and we were paying $150/month. My first solution was to go with DirecTV. Their promo option had us paying about $60 a month for the first year, which was fantastic. Then the honeymoon was over and the regular pricing kicked in. I was still getting some deals, like free HD, a free DVR, etc but I was paying $125/month. Between my ambition to cut costs and having frequent satellite interruption (even on a clear day) I decided to look into my alternatives.
After a bit of research I concluded that we would still get a fair amount of programming with digital broadcast alone. This would require an initial expense to purchase digital antennas. I found a decent option on Amazon (search "leaf") that had great reviews for about $35. I bought three of them, they paid for themselves within the first month of cancelling satellite.
I also looked into Hulu and Netflix. I had Netflix years ago and was not impressed so I decided to give Hulu Plus a shot ($7 monthly).
We also rent blu-ray movies from Redbox once a week for "movie night" ($7 monthly).
So we went from $150 to $125 to $14 a month for TV. TV is a pretty big part of our entertainment since we try to stay in a lot. Venturing out usually results in spending more. $14 is a great deal. Even if you got Netflix too, it's much cheaper than even the basic satellite package.
There are some caveats here. If you really love HD you will sacrifice a bit with digital broadcast. You also have fewer network options. Many shows can be found on Netflix and Hulu, but the shows I watched most (on FX) are no longer an option for me. That's a sacrifice I'm willing to make. My wife lost TLC. That was also a sacrifice I was willing to make.
After a bit of research I concluded that we would still get a fair amount of programming with digital broadcast alone. This would require an initial expense to purchase digital antennas. I found a decent option on Amazon (search "leaf") that had great reviews for about $35. I bought three of them, they paid for themselves within the first month of cancelling satellite.
I also looked into Hulu and Netflix. I had Netflix years ago and was not impressed so I decided to give Hulu Plus a shot ($7 monthly).
We also rent blu-ray movies from Redbox once a week for "movie night" ($7 monthly).
So we went from $150 to $125 to $14 a month for TV. TV is a pretty big part of our entertainment since we try to stay in a lot. Venturing out usually results in spending more. $14 is a great deal. Even if you got Netflix too, it's much cheaper than even the basic satellite package.
There are some caveats here. If you really love HD you will sacrifice a bit with digital broadcast. You also have fewer network options. Many shows can be found on Netflix and Hulu, but the shows I watched most (on FX) are no longer an option for me. That's a sacrifice I'm willing to make. My wife lost TLC. That was also a sacrifice I was willing to make.
Edited by road2freedom, 19 July 2012 - 09:14 PM.
#8
Posted 20 July 2012 - 08:30 AM
Insurance can be one of the easiest areas to save money. Being in Florida, our rates crept up over the years. We never filed a claim, but in the 8 years we had the home our rates with State Farm basically doubled. Auto slowly crept up too despite no claims. To make matters more frustrating, each time our policy would increase a couple of dollars, they would also charge a $1 service fee.... seriously?
The challenge for us is that most companies backed out of the Florida market for various reasons. When I tried to rate shop a few years back, the only option was a government-backed agency, and let's just say that wouldn't be my first choice for financial security. Plus, we had multiple policies, so if I was going to jump I wanted a place that could handle all three types of insurance we had and offer discounts. I had all but given up at this point...
Late last year I got some junk mail. I usually toss this stuff immediately but I noticed an insurance flyer from Florida Farm Bureau mentioning that they were recently expanded to cover this area and wanted to give me a quote. I did a little research and the ratings were decent and they had great reviews. So I called and asked a bunch of questions and was comfortable with proceeding. They returned a quote for the same coverage (actually slightly better for the life insurance) but much better rates. I'm providing approximate amounts below... I don't have the exact figures handy.
Home went from $1200 to about $650 (annual)
Auto went from $120 to $75 (monthly)
Life went from $26 to $24 (monthly)
So in total I saved almost $700 a year, or about $58/month.
The challenge for us is that most companies backed out of the Florida market for various reasons. When I tried to rate shop a few years back, the only option was a government-backed agency, and let's just say that wouldn't be my first choice for financial security. Plus, we had multiple policies, so if I was going to jump I wanted a place that could handle all three types of insurance we had and offer discounts. I had all but given up at this point...
Late last year I got some junk mail. I usually toss this stuff immediately but I noticed an insurance flyer from Florida Farm Bureau mentioning that they were recently expanded to cover this area and wanted to give me a quote. I did a little research and the ratings were decent and they had great reviews. So I called and asked a bunch of questions and was comfortable with proceeding. They returned a quote for the same coverage (actually slightly better for the life insurance) but much better rates. I'm providing approximate amounts below... I don't have the exact figures handy.
Home went from $1200 to about $650 (annual)
Auto went from $120 to $75 (monthly)
Life went from $26 to $24 (monthly)
So in total I saved almost $700 a year, or about $58/month.
#9
Posted 24 July 2012 - 01:48 PM
Car Payments... this time last year we had 2 vehicles... a sports car with a $700/mo payment and a SUV with a $650/mo payment. I could talk all day about what got us up to this point, but for now I'll just stick to the budget slashing part. What was critical to realize with these vehicles is that we were paying fairly high rates (I think 8% and 10% respectively) and had rolled in a lot of negative equity. My goal became to drop this monthly expense drastically while still providing reliable transportation.
So my first goal was to get one of the vehicles refinanced and I decided to work on the higher of the two loans. I managed to get my local CU to refi the car at 6.99% for 60 month, bringing the payment down to $437.
Then I realized I had to tackle some of the equity in both vehicles if we were going to get out from underneath them. I did just that over a period of 6 months. I didn't want to detract from the snowball plan for my wife's cards too much, but I managed to balance both goals during this time.
Once the car was close to the trade-in value, I started shopping around places that buy cars. My goal was to do without a second car altogether, so no need to trade in, but I also didn't want to deal with private buyers either. After trying a few places I found a place that was within reason. They purchased the vehicle and we became a 1 car family.
I have to be be completely honest - I didn't think I'd make it. I love cars. Always have. Not only was it something I enjoyed but it was also one of my main hobbies. I also didn't think we'd be coordinated enough to live with 1 vehicle. Fortunately my job situation, our schedules, and location proximity make the 1 vehicle thing possible. It's not always comfortable, especially on weekends if we have different plans in mind, but we make it work for the sake of our budget.
That left us with the SUV. It was about 4 years old at the time and I wanted to get that $650 payment down a bit. My plan was to trade it in and buy one of the smaller 4 cylinder SUVs or better yet - lease one. Unfortunately that didn't sit well and I had to admit if we were going to have 1 vehicle, we'd both be happy if it was a somewhat nice. So we ended up buying a new SUV that was suitable for us, made us feel like we weren't sacrificing too much, and still dropped the payments to $580.
We went from $1350/mo to $580/mo, for a savings of $770/mo. Our insurance also dropped (to the aforementioned $75/mo) so I won't count that again. But other things like maintenance and service costs also decreased. We may not always be able to do this with 1 vehicle but it should get us through our immediate goal to pay off the credit cards and pay down the house. Plus the vehicle has great reliability and good resale, giving us options in the future. I hope we can eventually get to the point where we drive it until the wheels fall off and/or pay cash for any new vehicles, but for now, reducing monthly expenses by almost $600 is a good start.
So my first goal was to get one of the vehicles refinanced and I decided to work on the higher of the two loans. I managed to get my local CU to refi the car at 6.99% for 60 month, bringing the payment down to $437.
Then I realized I had to tackle some of the equity in both vehicles if we were going to get out from underneath them. I did just that over a period of 6 months. I didn't want to detract from the snowball plan for my wife's cards too much, but I managed to balance both goals during this time.
Once the car was close to the trade-in value, I started shopping around places that buy cars. My goal was to do without a second car altogether, so no need to trade in, but I also didn't want to deal with private buyers either. After trying a few places I found a place that was within reason. They purchased the vehicle and we became a 1 car family.
I have to be be completely honest - I didn't think I'd make it. I love cars. Always have. Not only was it something I enjoyed but it was also one of my main hobbies. I also didn't think we'd be coordinated enough to live with 1 vehicle. Fortunately my job situation, our schedules, and location proximity make the 1 vehicle thing possible. It's not always comfortable, especially on weekends if we have different plans in mind, but we make it work for the sake of our budget.
That left us with the SUV. It was about 4 years old at the time and I wanted to get that $650 payment down a bit. My plan was to trade it in and buy one of the smaller 4 cylinder SUVs or better yet - lease one. Unfortunately that didn't sit well and I had to admit if we were going to have 1 vehicle, we'd both be happy if it was a somewhat nice. So we ended up buying a new SUV that was suitable for us, made us feel like we weren't sacrificing too much, and still dropped the payments to $580.
We went from $1350/mo to $580/mo, for a savings of $770/mo. Our insurance also dropped (to the aforementioned $75/mo) so I won't count that again. But other things like maintenance and service costs also decreased. We may not always be able to do this with 1 vehicle but it should get us through our immediate goal to pay off the credit cards and pay down the house. Plus the vehicle has great reliability and good resale, giving us options in the future. I hope we can eventually get to the point where we drive it until the wheels fall off and/or pay cash for any new vehicles, but for now, reducing monthly expenses by almost $600 is a good start.
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