I had a few miniscule drops of energy left after putting the kids to bed this evening so I thought I’d search the blogging world for frugal tips (yes, I know, totally nerdy Friday night behavior, go ahead point and laugh). I found some fantastic new blogs that I can’t wait to spend more time with and I found a ridiculous one as well. I came across a blog all about a person’s “frugal life” and I had to laugh. Then I realized that I am a frugal snob. The author of the “frugal life” I will call it had a Christmas list that involved her 15 year old daughter getting some $300 ipod thing and her husband wanted some matching animal skin belt and boots that together cost well over $700! I can’t find the darned blog now so I can’t quote the exact price on the man clothes but I had to laugh. Then she snapped a photo of a great shopping trip where she utilized sales and coupons and got a whole load of crap for only $42.50. Her shopping spree included several packages of cookies, boxes of cereal, dozens of oozy type lip gloss and many other “stuffs” that would never even be purchased in my home regardless of price. Soon after reading that blog I stumbled upon these posts and I just KNOW the author this blog would also be laughing at that lady right along with me because he despises stuff I think even more than I do. Oh us frugal snobs could have great party making fun of those frugal-wanna-bes. For my imaginary frugal snob party there would have to be carpooling involved to save on gas and what would we serve? Certainly all of us would all drink water. Oh man, what I have become?
Here are some goodies I found:
http://poorerthanyou.com/
http://www.thesimpledollar.com/
http://www.bloggingawaydebt.com/ (mostly b/c anyone that LOVES Amy Dacyczyn’s book the Tightwad Gazette like I do ought to come to my frugal snob party)
http://livingthecheaplife.net/
Showing posts with label Budgeting 101. Show all posts
Showing posts with label Budgeting 101. Show all posts
Friday, December 5, 2008
Saturday, November 29, 2008
Budget Book Review
Money for Life: Budgeting Success and Financial Fitness in Just 12 Weeks by Steven B. Smith
I like to pick up budgeting ideas from wherever I can find them. I suppose I am searching for a magic solution that will make us rich overnight. All the books I have read so far just tell me to do what I already do with perserverance over time.
I found the title of this book on some other blog that I can’t recall. I picked it up at the library (aren’t libraries great) and had a chance to read most of it. I was surprised to see that someone had written a whole book on the envelope system that I have been using for almost 2 years. But this guy took the envelope system to an new level by creating software to streamline what I sit down in my word document and do manually. Not only does the software add and subtract and total envelopes (my husband keeps telling me to make my system do that in excel but I don’t have the patience or time to figure it out) but he also has some online service or something that you pay for. The book comes with a disk and a free trial period. It seems counterintuitive to pay for something that you can do yourself when the whole point is to become financially successful by not spending unnecessary money, however, I can see where his program would benefit certain people who do not have the time perhaps or patience to deal with the details that my system does.
I liked his chart on debt reduction and the debt reduction roll down principle. Basically he suggests that you list your debts from left to right in order of highest interest to lowest with the balances and payments. As each balance is paid off you do not absorb the payment into your regular spending, but instead add that payment amount to the payment amount of the next highest interest debt until all the debt is gone. For instance (I can't seem to get the tabs or spacing right so I'll try to demonstrate):
20% Visa 3,000 Payment $50
7% Home Equity 12,000 Payment $75
5.75% Mortgage 170,00 Payment $1200
When Visa is paid off, add the $50 payment to the $75 Home Equity payment and pay $125 until the Home Equity is paid off. Then add the $125 to the $1200 mortgage payment and pay $1325 until the mortgage is paid off. When the mortgage is paid off put the $1325 into savings. Of course you want to maximize the payment you make to the highest interest rate debt to trickle it down.
There are some other simple things spelled out in the book that I also liked. I always wonder what we should be saving if we have debt that we are trying to eliminate. Should we put ALL of our money towards the debt and then when it is paid off start from zero? He suggested saving 10% of your income if possible until the debt is paid at which point you would put the payments that had gone toward debt elimination plus the 10% into savings.
The book was long and drawn out and presented in a rather lame manner. Maybe I thought that because of where I am coming from in my own budgeting process. Perhaps the story would be helpful for someone who has not yet budgeted. The book told a fictional story about a couple who was spending 10% more than they earn each month but because they were not budgeting or paying attention to what money was coming in and out. They had taken a home equity loan out to pay off credit cards but two years later they were back in the same credit card situation. Then the story tells of their meetings with a financial advisor who helped them get on an envelope system. I have never heard of a financial advisor that does that, but how nice would that be? The envelope budgeting system changes their lives and their marriage and trickles down to their parents and some other friends through word of mouth. They also have a friend, a single mom, who had been using the envelope system for several years and they run into a couple, millionaires, who had been using the system for 30 years. At the end of each chapter there are learned principles with instruction on how to apply the principles. There are charts that break down the budgeting system into very simple terms. That is probably the intention of the fictional characters, to try to explain the system in a way that everyone can understand it.
I skimmed a lot of pages about the characters and rolled my eyes quite a bit. The story made it sound like everyone they talked to about the envelope system thought it was just great and peachy and they ended up thinking that they should also do it. I have tried having these same conversations with friends that are struggling and that is not how it goes. I find that just the discussion stresses people out if they are in a financially bad place and do not budget and do not really have a grasp of what money is coming in and out. I have found that people resist this sort of budgeting at all costs which is why Americans are so in debt and in such a bad financial state. Mr. Smith threw in a lot of those scary statistics in his book that we keep hearing in the media to convince the reader that to be financially fit you have to do what others do not do. You have to be a little abnormal in a sense to find financial freedom and peace within. It is always reassuring to read that what you are doing is weird and abnormal but that it is the right thing to be doing. So for that I thank Mr. Smith.
I like to pick up budgeting ideas from wherever I can find them. I suppose I am searching for a magic solution that will make us rich overnight. All the books I have read so far just tell me to do what I already do with perserverance over time.
I found the title of this book on some other blog that I can’t recall. I picked it up at the library (aren’t libraries great) and had a chance to read most of it. I was surprised to see that someone had written a whole book on the envelope system that I have been using for almost 2 years. But this guy took the envelope system to an new level by creating software to streamline what I sit down in my word document and do manually. Not only does the software add and subtract and total envelopes (my husband keeps telling me to make my system do that in excel but I don’t have the patience or time to figure it out) but he also has some online service or something that you pay for. The book comes with a disk and a free trial period. It seems counterintuitive to pay for something that you can do yourself when the whole point is to become financially successful by not spending unnecessary money, however, I can see where his program would benefit certain people who do not have the time perhaps or patience to deal with the details that my system does.
I liked his chart on debt reduction and the debt reduction roll down principle. Basically he suggests that you list your debts from left to right in order of highest interest to lowest with the balances and payments. As each balance is paid off you do not absorb the payment into your regular spending, but instead add that payment amount to the payment amount of the next highest interest debt until all the debt is gone. For instance (I can't seem to get the tabs or spacing right so I'll try to demonstrate):
20% Visa 3,000 Payment $50
7% Home Equity 12,000 Payment $75
5.75% Mortgage 170,00 Payment $1200
When Visa is paid off, add the $50 payment to the $75 Home Equity payment and pay $125 until the Home Equity is paid off. Then add the $125 to the $1200 mortgage payment and pay $1325 until the mortgage is paid off. When the mortgage is paid off put the $1325 into savings. Of course you want to maximize the payment you make to the highest interest rate debt to trickle it down.
There are some other simple things spelled out in the book that I also liked. I always wonder what we should be saving if we have debt that we are trying to eliminate. Should we put ALL of our money towards the debt and then when it is paid off start from zero? He suggested saving 10% of your income if possible until the debt is paid at which point you would put the payments that had gone toward debt elimination plus the 10% into savings.
The book was long and drawn out and presented in a rather lame manner. Maybe I thought that because of where I am coming from in my own budgeting process. Perhaps the story would be helpful for someone who has not yet budgeted. The book told a fictional story about a couple who was spending 10% more than they earn each month but because they were not budgeting or paying attention to what money was coming in and out. They had taken a home equity loan out to pay off credit cards but two years later they were back in the same credit card situation. Then the story tells of their meetings with a financial advisor who helped them get on an envelope system. I have never heard of a financial advisor that does that, but how nice would that be? The envelope budgeting system changes their lives and their marriage and trickles down to their parents and some other friends through word of mouth. They also have a friend, a single mom, who had been using the envelope system for several years and they run into a couple, millionaires, who had been using the system for 30 years. At the end of each chapter there are learned principles with instruction on how to apply the principles. There are charts that break down the budgeting system into very simple terms. That is probably the intention of the fictional characters, to try to explain the system in a way that everyone can understand it.
I skimmed a lot of pages about the characters and rolled my eyes quite a bit. The story made it sound like everyone they talked to about the envelope system thought it was just great and peachy and they ended up thinking that they should also do it. I have tried having these same conversations with friends that are struggling and that is not how it goes. I find that just the discussion stresses people out if they are in a financially bad place and do not budget and do not really have a grasp of what money is coming in and out. I have found that people resist this sort of budgeting at all costs which is why Americans are so in debt and in such a bad financial state. Mr. Smith threw in a lot of those scary statistics in his book that we keep hearing in the media to convince the reader that to be financially fit you have to do what others do not do. You have to be a little abnormal in a sense to find financial freedom and peace within. It is always reassuring to read that what you are doing is weird and abnormal but that it is the right thing to be doing. So for that I thank Mr. Smith.
Saturday, November 1, 2008
Minimalist Preferences = True Frugal Life
Since entering this little blogging world I have spent a little time searching for other blogs that talk about frugal family life or money saving tips and such. This is one of my favorite topics so I am just sure that I will find some good ideas somewhere on-line. One theme seems to run through most all of the blogs that I have previewed thus far, how to spend less on stuff. I hate stuff. I don’t want stuff. I also despise shopping for stuff. So aside from buying necessites like deodorant, toothpaste, toilet paper and soap and such I do not give a rats arse if Walgreens has 20 deals right now on unnecessary things like anti-aging cream, which I don’t believe work, or disinfectant kitchen counter spray. Grocery savings coupons and tips usually include 50 cents off some RiceARoni mix or something similar. No, that is not saving. What would really be saving is buying bulk plain rice and adding your own herbs purchased at a country store at a deep discount. It would be cheaper AND healthier since the cheap version would contain less sodium and preservatives and who knows what other un-pronounceable ingredients. Instead of buying anti-aging cream I would prefer to read about how vegetable shortening or something that most households have on hand might be proven to have anti-aging effects when applied topically or how a mixture of distilled vinegar and water disinfects the same as expensive kitchen counter cleaners. Do you get what I’m saying? The way I like to save money is by truly NOT buying stuff vs. spending less on stuff. Making something out of nothing should be more appreciated than spending less on stuff for the sheer genious of it. I suppose this is why I like Amy Dacyczyn’s The Complete Tightwad Gazette so much. I believe the Gazette is out of print now but there are many money saving tips in there that a minimalist like me can appreciate. My hopes is to share money saving tips on this blog that involve a little more time perhaps and possibly a little more work but a lot less money and a lot less stuff.
I am certain that there are blogs out there that would appeal to my minimalist frugal preferences and when I find them I will be sure to add them to my blog list.
I am certain that there are blogs out there that would appeal to my minimalist frugal preferences and when I find them I will be sure to add them to my blog list.
Thursday, October 30, 2008
My favorite Day of the Month!
Today was it. It’s not my favorite day of the month just because it is pay day, although that helps, but it’s really more what pay day triggers for me that makes me happy. Today is:
1) Pay day which means budget allocation day & bill paying day (which used to be my LEAST favorite day before I budgeted)
2) The beginning of my two day monthly grocery shopping
3) Monthly grocery shopping means huge Sam’s shopping trip where I “play the game”
I won the game today by the way. I add everything up in my head as I go through Sam’s Club and have the kids help me remember numbers as we get distracted. The bigger the number and the closer I am to the total at check out the giddier I get. I often do a mid-month Sam’s Club run but it’s the first on of the month that is always a pricey run because I get all of my grocery items that will last throughout the month in one trip. For this trip I was really out of a lot of meats and I have committed to a shrimp dish for my Freezer Friends group so it was a big number. Being the dork that I am I really like to tell the cashier my estimate before the total is rung up. Today I said $332 and it came up at $329 and change and she said, “you won!”
My poor husband has to hear about this for a couple days at least. Now if I had guessed $329 he would be hearing about it for at least a week so he should be ok with just a couple days. He tries to be a good sport but really he just rolls his eyes and by the 10th time I tell him how superbly wonderful his wife is at budgeting and totaling groceries and such he’s had it and must ask me, “how much longer are you going to go on about it this time?”
So anyway, I also hit Walmart today and tomorrow hopefully I’ll hit Aldi’s and then Giant Eagle (compare to Stop & Shop, Piggly Wiggly or Krogers). I keep a price book which I will share at some point where I have compared prices of various items that I purchase on a regular basis. In general I have found that I get the most for my money buying bulk at Sam’s (even better than sale prices at Giant Eagle) and then the best bargains are found at Aldi’s and then Giant Eagle (especially with coupons which I am trying to be better at). So I shop the stores in that order, generally. So whatever I did not find at Sam’s will be bought at Aldi’s and whatever I don’t find at Aldi’s I get at Giant Eagle. That leaves me with nothing but produce runs at a much smaller local store, Heinen’s, which has wonderful produce and a great lunch meat that we like in our house ($5.99/lb or $4.99 on sale), milk runs at Aldi’s ($2.39-$2.69/gallon whole milk), and the bread outlet twice a month ($1.29 loaf or $1.03 on sale). Trader Joes is right by my gym and there are a few things I get there exclusively. It is easy for me to stop in at Trader Joes after the gym but it isn’t a regular monthly stop. It sounds like a lot of trips but I swear to you it isn’t. Before I monthly meal planned I felt like I was always running to the main store, Giant Eagle, and I was paying more than necessary if I had consolidated my trips to other stores and I would swear about the produce quality regularly.
My budget/”envelope system” has been in place for nearly a year and a half now and it feels so good to deposit little bits of money into my pretend envelopes and see goals get nearer and nearer each pay period. Budgeting the money for what we really need it for truly is a better feeling than going out and replacing our broken DVD player without having saved for it first or having a new sweater. I am a simple nerdy budget person and I love it! So happy budget day to any budgeters out there.
1) Pay day which means budget allocation day & bill paying day (which used to be my LEAST favorite day before I budgeted)
2) The beginning of my two day monthly grocery shopping
3) Monthly grocery shopping means huge Sam’s shopping trip where I “play the game”
I won the game today by the way. I add everything up in my head as I go through Sam’s Club and have the kids help me remember numbers as we get distracted. The bigger the number and the closer I am to the total at check out the giddier I get. I often do a mid-month Sam’s Club run but it’s the first on of the month that is always a pricey run because I get all of my grocery items that will last throughout the month in one trip. For this trip I was really out of a lot of meats and I have committed to a shrimp dish for my Freezer Friends group so it was a big number. Being the dork that I am I really like to tell the cashier my estimate before the total is rung up. Today I said $332 and it came up at $329 and change and she said, “you won!”
My poor husband has to hear about this for a couple days at least. Now if I had guessed $329 he would be hearing about it for at least a week so he should be ok with just a couple days. He tries to be a good sport but really he just rolls his eyes and by the 10th time I tell him how superbly wonderful his wife is at budgeting and totaling groceries and such he’s had it and must ask me, “how much longer are you going to go on about it this time?”
So anyway, I also hit Walmart today and tomorrow hopefully I’ll hit Aldi’s and then Giant Eagle (compare to Stop & Shop, Piggly Wiggly or Krogers). I keep a price book which I will share at some point where I have compared prices of various items that I purchase on a regular basis. In general I have found that I get the most for my money buying bulk at Sam’s (even better than sale prices at Giant Eagle) and then the best bargains are found at Aldi’s and then Giant Eagle (especially with coupons which I am trying to be better at). So I shop the stores in that order, generally. So whatever I did not find at Sam’s will be bought at Aldi’s and whatever I don’t find at Aldi’s I get at Giant Eagle. That leaves me with nothing but produce runs at a much smaller local store, Heinen’s, which has wonderful produce and a great lunch meat that we like in our house ($5.99/lb or $4.99 on sale), milk runs at Aldi’s ($2.39-$2.69/gallon whole milk), and the bread outlet twice a month ($1.29 loaf or $1.03 on sale). Trader Joes is right by my gym and there are a few things I get there exclusively. It is easy for me to stop in at Trader Joes after the gym but it isn’t a regular monthly stop. It sounds like a lot of trips but I swear to you it isn’t. Before I monthly meal planned I felt like I was always running to the main store, Giant Eagle, and I was paying more than necessary if I had consolidated my trips to other stores and I would swear about the produce quality regularly.
My budget/”envelope system” has been in place for nearly a year and a half now and it feels so good to deposit little bits of money into my pretend envelopes and see goals get nearer and nearer each pay period. Budgeting the money for what we really need it for truly is a better feeling than going out and replacing our broken DVD player without having saved for it first or having a new sweater. I am a simple nerdy budget person and I love it! So happy budget day to any budgeters out there.
Thursday, October 23, 2008
Bread Outlet Stores Rock!
Our household consists of a 6 year old, 4 year old, 18 month old, me and a husband who eats like a teenager. We go through exactly 1 loaf of bread each day. At our local supermarket a good brand name whole grain loaf costs around $2.69 not on sale (I’m sure that has increased like everything else since the last time I checked) and $1.99 when on sale. There are two different bread outlets in our area. One sells whole grain loaves for .89 each (up from .79 a year ago) and the local Pepperidge Farms outlet sells their loaves for $1.29 each. Pepperidge Farm has a “customer appreciation day” on a Saturday about once a month which offers a 20% discount bringing each loaf down to $1.03. Unfortunately the cheaper bread outlet (Schwebels) is a bit of a drive for me and when gas prices skyrocketed I could no longer justify the trip although I honestly never sat down and did the gas/mileage calculation. So let’s say I buy all my bread at the more expensive outlet and I can’t get there on the 20% discount day so I pay $1.29 per loaf. In one month I save $42. I know 42 bucks means different things to different people but that’s real money in this house. That’s $504 a year. Keep in mind that is a minimum savings. Occasionally when gas prices drop and I find the time or if we happen to be near the Schwebels outlet I always make sure I stop in and I also try to hit the 20% sale at Pepperidge Farms least every other month and I just know that the bread has to be closer to $2.89 at the grocer now.
$504 = > 1/2 a terrificly fabulous Christmas budget
More than enough to justify the occassional beer purchase on sale or at wholesale club.
More than enough to justify occassional wine purchases at Trader Joes.
More than enough to justify occassional soda purchase at Aldi's.
The list could go on . . . .
What allows me to fit a bread store run into my hectic three rug rat life is the less frequent grocery store trips that I make due to my monthly meal planning which would have to rank as the second biggest convenience that makes my family life easier and saves our household the most money. I feel a top 10 list coming on soon . . .
$504 = > 1/2 a terrificly fabulous Christmas budget
More than enough to justify the occassional beer purchase on sale or at wholesale club.
More than enough to justify occassional wine purchases at Trader Joes.
More than enough to justify occassional soda purchase at Aldi's.
The list could go on . . . .
What allows me to fit a bread store run into my hectic three rug rat life is the less frequent grocery store trips that I make due to my monthly meal planning which would have to rank as the second biggest convenience that makes my family life easier and saves our household the most money. I feel a top 10 list coming on soon . . .
Freezer Real Estate
Having substantial freezer real estate must be the number one ultimate convenience that makes my family life easier and saves our household the most money. Before I had an extra freezer in the basement I read up on the savings and preparedness a freezer can bring to one’s life so I put out word to everyone I knew that I was looking to buy a second hand freezer. Of course I didn’t want a very old one or it would suck the savings out of my electrical outlet. I am not a patient person but when I got serious about budgeting I knew that if I was patient I would come across a freezer for the right price. After 9 months of waiting I just happened to be at the right place at the right time and I snagged a 3 year old upright at a tag sale for $50! It has more than paid for itself just in the bread outlet loaves I have socked away in it over the last year and a half.
So, as ridiculous as it may seem to a non-freezer person I have three freezers now. I have a freezer attached to my fridge in my kitchen as most people do, I also have a side-by-side fridge & freezer in the basement that was in our kitchen when we bought our house and to keep it company I now have my $50 upright freezer down there also. With all the freezing I do it really is necessary for me to keep a freezer inventory list (yes I know I’m a dork but it makes me happy). Every three months I empty out each freezer, wipe out the freezers and quickly jot everything down as I put the items back. Some rearranging is always necessary of course but the job gets done rather quickly. Even after I sit down at my computer to update my word document I doubt I spend more than 20 minutes from start to finish if I hustle. The joy my freezer inventory brings me never ceases. I keep it on the back of one of my kitchen cupboards and I cross off things as I use them and I write in items on the blank spaces as I add to the freezers. When I sit down to make my monthly menus I make sure to incorporate the meats and dinners that I already have and save frozen dinners for the times they will be needed the most.
One of my favorite things to do that my freezer inventory list allows me to do is easily provide a meal to my mom friends who have just had a new baby. Friends who know me well know about my inventory so I think they enjoy it when either
before their due date or immediately after having the baby I rattle off all the meals that are already made in my freezer and they get to pick what sounds good to them. This also allows me to be the first one in someone’s house with a hot meal ready to go. I never thought I would be one of those “newborn baby sniffers” but being able to provide a meal to friends with a 2 day old kind of sucked me in.
So here is my latest inventory. I generally keep meats in my side-by-side freezer, meals and bread in the upright, breakfast items and fruits/veggies in the upstairs kitchen freezer.
So, as ridiculous as it may seem to a non-freezer person I have three freezers now. I have a freezer attached to my fridge in my kitchen as most people do, I also have a side-by-side fridge & freezer in the basement that was in our kitchen when we bought our house and to keep it company I now have my $50 upright freezer down there also. With all the freezing I do it really is necessary for me to keep a freezer inventory list (yes I know I’m a dork but it makes me happy). Every three months I empty out each freezer, wipe out the freezers and quickly jot everything down as I put the items back. Some rearranging is always necessary of course but the job gets done rather quickly. Even after I sit down at my computer to update my word document I doubt I spend more than 20 minutes from start to finish if I hustle. The joy my freezer inventory brings me never ceases. I keep it on the back of one of my kitchen cupboards and I cross off things as I use them and I write in items on the blank spaces as I add to the freezers. When I sit down to make my monthly menus I make sure to incorporate the meats and dinners that I already have and save frozen dinners for the times they will be needed the most.
One of my favorite things to do that my freezer inventory list allows me to do is easily provide a meal to my mom friends who have just had a new baby. Friends who know me well know about my inventory so I think they enjoy it when either
before their due date or immediately after having the baby I rattle off all the meals that are already made in my freezer and they get to pick what sounds good to them. This also allows me to be the first one in someone’s house with a hot meal ready to go. I never thought I would be one of those “newborn baby sniffers” but being able to provide a meal to friends with a 2 day old kind of sucked me in.
So here is my latest inventory. I generally keep meats in my side-by-side freezer, meals and bread in the upright, breakfast items and fruits/veggies in the upstairs kitchen freezer.
Tuesday, October 21, 2008
How Budgeting Can Be Fun!
I love to budget because I no longer stress about how I'm going to pay for things like pool passes or license plate renewals and such but I know I am a rare bird. Most people that hear "budget" used as a verb wince in pain. Here is a a way I recently starting really making my budget fun.
We have all heard financial savvy people spout off numbers with regard to our lackadaisical spending habits with quotes like this, "you know, if you took that $3 you spend on your daily coffee at Starbucks and put it in the bank every day instead for the next 5 years and let it grow you would have $1.2 million dollars by the time your retire." We all stop and nod and say "wow" while we clutch our Starbucks coffee so no one takes it away from us. My father recently said I would really have some extra cash once I get my youngest out of diapers. I agreed thinking that I really NEED that money for other things so I know that "extra cash" post diaper life isn't likely.
So I got to thinking about this diaper thing and how I could really put the savings to work when Dillon is out of diapers. So here's what I did. I created another category or "envelope" in my budget account (see "Sample Budget Jenn's way") and I called it "Things I Did Not Buy." In that envelope I am going to put all the things that I really really wanted and might have bought but for the fact that I was disciplined and my budget is too tight to justify. For instance, I really want a new sweater. I even shopped for a new sweater. Do I NEED a new sweater? No, I have other clothes, they are just few in number and I'm tired of them. Does my budget say that I can afford a new sweater? Well with only $45 in my clothing envelope and 3 kids that keep growing feet and a husband who often needs new work clothes, no I can not afford a sweater that I WANT but do not NEED at the moment. Sure, I could squeeze it out of my budget somehow if I really wanted to. I could get the sweater and leave only $10 in my clothing account and build it up again by cutting back on something else and I have done such dumb undisciplined things in the past.
Knowing that I have done this in the past and that I could make it work I went ahead and didn't buy it. Instead, I pretended I bought it and I took out $35 from my clothing envelope and put it in my "Things I Did Not Buy" envelope. Afterall, if I really needed to get that $35 back for clothing I could just take it back from my Things I Did Not Buy envelope. That got me to thinking of all the other things I often buy that I shouldn't. The next day I drove into my driveway and noticed that our yard needed to be mowed. I so very much wanted to call the neighbor boy to mow it because I knew my husband would be busy working over the weekend. But I didn't. Instead I took out the $20 from my Home Maintenance envelope and put it in my "Things I Did Not Buy" envelope. A week later I really really wanted mums at a garden center for $15. My husband asked if those flowers "were the kind that died and never came back" which was his way of gently telling me that it was not a smart purchase with my budgetary constraints. I went home and put the $15 from my Home Maintenance Envelope (I know it isn't maintenance but I have squeezed this kind of purchase from there before) and put it in my "Things I Did Not Buy" envelope. I quickly had $70 that I could live without. So my diaper plan is to save my receipts to find out exactly how much I spend on diapers per month and instead of absorbing it other places I'm going to put that money in my "Things I Did Not Buy" envelope and for every $100 I collect from myself I'm going to transfer it to a CD and watch the millions grow through to my retirement years. :) I am very motivated to potty train now but maybe 18 months old is a bit early.
We have all heard financial savvy people spout off numbers with regard to our lackadaisical spending habits with quotes like this, "you know, if you took that $3 you spend on your daily coffee at Starbucks and put it in the bank every day instead for the next 5 years and let it grow you would have $1.2 million dollars by the time your retire." We all stop and nod and say "wow" while we clutch our Starbucks coffee so no one takes it away from us. My father recently said I would really have some extra cash once I get my youngest out of diapers. I agreed thinking that I really NEED that money for other things so I know that "extra cash" post diaper life isn't likely.
So I got to thinking about this diaper thing and how I could really put the savings to work when Dillon is out of diapers. So here's what I did. I created another category or "envelope" in my budget account (see "Sample Budget Jenn's way") and I called it "Things I Did Not Buy." In that envelope I am going to put all the things that I really really wanted and might have bought but for the fact that I was disciplined and my budget is too tight to justify. For instance, I really want a new sweater. I even shopped for a new sweater. Do I NEED a new sweater? No, I have other clothes, they are just few in number and I'm tired of them. Does my budget say that I can afford a new sweater? Well with only $45 in my clothing envelope and 3 kids that keep growing feet and a husband who often needs new work clothes, no I can not afford a sweater that I WANT but do not NEED at the moment. Sure, I could squeeze it out of my budget somehow if I really wanted to. I could get the sweater and leave only $10 in my clothing account and build it up again by cutting back on something else and I have done such dumb undisciplined things in the past.
Knowing that I have done this in the past and that I could make it work I went ahead and didn't buy it. Instead, I pretended I bought it and I took out $35 from my clothing envelope and put it in my "Things I Did Not Buy" envelope. Afterall, if I really needed to get that $35 back for clothing I could just take it back from my Things I Did Not Buy envelope. That got me to thinking of all the other things I often buy that I shouldn't. The next day I drove into my driveway and noticed that our yard needed to be mowed. I so very much wanted to call the neighbor boy to mow it because I knew my husband would be busy working over the weekend. But I didn't. Instead I took out the $20 from my Home Maintenance envelope and put it in my "Things I Did Not Buy" envelope. A week later I really really wanted mums at a garden center for $15. My husband asked if those flowers "were the kind that died and never came back" which was his way of gently telling me that it was not a smart purchase with my budgetary constraints. I went home and put the $15 from my Home Maintenance Envelope (I know it isn't maintenance but I have squeezed this kind of purchase from there before) and put it in my "Things I Did Not Buy" envelope. I quickly had $70 that I could live without. So my diaper plan is to save my receipts to find out exactly how much I spend on diapers per month and instead of absorbing it other places I'm going to put that money in my "Things I Did Not Buy" envelope and for every $100 I collect from myself I'm going to transfer it to a CD and watch the millions grow through to my retirement years. :) I am very motivated to potty train now but maybe 18 months old is a bit early.
Monday, October 20, 2008
Sample Budget Jenn's Way
Ok, I have shared some pretty major menu planning and grocery shopping plans with you. None of this can be done without talking money and budget. A huge part of the menu/grocery planning is shopping less. The less you shop, the more time you have and the less money you spend because studies show that every trip you make into a store is another opportunity to spend money on things you do not need. Come on, we have all done it. We run into the store for three things but leave with three bags full. I think budgeting for groceries is an important and related topic to meal planning so here it goes.
The less money you have the more imperative it is to budget. For instance, if you have little incoming funds and you do not budget how do you pay for things like a $200 family pool pass for the summer? Or $150 for three kids playing soccer in the spring? What if your washing machine breaks unexpectedly? If you live paycheck to paycheck the only way to purchase these items is to reach for the credit card. I know because I used to do it.
Remember when we grew up and there were no credit cards? Many thrifty well planning mothers used the old fashioned "Envelope Budgeting System" which I still believe is the best way to approach a household budget. For instance, my friend Amy's mom and my wise mother-in-law used to put a specific amount of money in an Envelope labeled "Christmas" every pay starting in January and they never touched that money until they started their Christmas shopping (on a budget) in November. They knew that if they dipped into that envelope there would be no Christmas. They had other envelopes for many other things and tucked them away until the goal was met and the purchase was made or the bill was paid. What an awesome visual lesson Amy received from her mother. Amy still budgets and is my "go to" friend for my budgeting sound board. She can easily tell me how I don't "need" something that I just think I have to have. She is my confidant who knows my numbers and will tell me straight out when I can't afford something that I really really want but do not need. She really ought to start a budgeting business so if you are interested in her services I can hook you up with her.
More than one person has told me that they would be unable to buy all the groceries that I do at one time. I do not have a load of extra cash sitting around. I am not rich (well as far as money goes anyway). It is mere organization that allows me to do the grocery shopping and planning that I do. I can not seem to attach a word document to this blog so I have scanned in the pages of a "Sample Budget." Don't worry, I'm not using my real numbers or any one's real numbers but it is set up as close to a real life scenario as possible so that it can be examined and questioned and hopefully understood. Being the nerd that I am I came up with this system by conducting some research at my local library (see budgeting books that I have listed on the side) and by consulting a wise friend.
The less money you have the more imperative it is to budget. For instance, if you have little incoming funds and you do not budget how do you pay for things like a $200 family pool pass for the summer? Or $150 for three kids playing soccer in the spring? What if your washing machine breaks unexpectedly? If you live paycheck to paycheck the only way to purchase these items is to reach for the credit card. I know because I used to do it.
Remember when we grew up and there were no credit cards? Many thrifty well planning mothers used the old fashioned "Envelope Budgeting System" which I still believe is the best way to approach a household budget. For instance, my friend Amy's mom and my wise mother-in-law used to put a specific amount of money in an Envelope labeled "Christmas" every pay starting in January and they never touched that money until they started their Christmas shopping (on a budget) in November. They knew that if they dipped into that envelope there would be no Christmas. They had other envelopes for many other things and tucked them away until the goal was met and the purchase was made or the bill was paid. What an awesome visual lesson Amy received from her mother. Amy still budgets and is my "go to" friend for my budgeting sound board. She can easily tell me how I don't "need" something that I just think I have to have. She is my confidant who knows my numbers and will tell me straight out when I can't afford something that I really really want but do not need. She really ought to start a budgeting business so if you are interested in her services I can hook you up with her.
Fortunately we now have computers and debit cards to ensure that our "envelopes" do not get lost. So I have simply taken the old fashioned Envelope Budgeting System and put it on paper. I allocate every penny for every paycheck before the paycheck comes in. I have an "Idealish" allocation but for each individual paycheck I copy and paste the "Idealish" table and put in what actually happens because "ideal rarely happens" (advice taken from book author Dave Ramsey). A bill may be lower or higher than expected or there could be several unexpected things happen that affects my ideal plan. But starting with an Ideal and sticking as close to it as possible is the goal. I keep check registers for all my "envelopes." Basically the check registers are what I would write on the outside of my envelope to keep track of how much was in there if I was actually using envelopes. I keep my budgeted account money separate from my "primary account" (the account I use for groceries, gas, necessities, tithing) so that my groceries or other gas expenditures which occur very frequently do not mess up my "budgeted plan." I move money back and forth online with my bank as much as I need to in order to keep everything . . . in order.
I think this budgeting system is pretty simple but I can imagine that it may be confusing to someone the first time you are looking at it. What my system allows me to do, which could be a problem if I was not disciplined, is to be in the negative on my envelopes if necessary. So this is how I purchase so many groceries at the beginning of the month: I buy everything that will not go bad for an entire month on the 1st of the month. We get paid twice a month so let's say I budget $350 per paycheck for groceries. If I spend $500 the first of the month I'm still on budget because I know that when I get paid on the 15th I am not going to spend the allocated $350 since I already bought my meat, canned goods, dairy, etc. to last the month. So when I only spend $200 from the paycheck of the 15th it evens out. I also try to keep a little grocery "surplus" going because I want to be in a position to take advantage of a great sale or deal by stocking up on a nonperishable. This may become more clear if you look at my Grocery Surplus Envelope on page 3.
PS I'm adding this comment weeks after posting this, I realized that I forgot to put a "Savings" envelope on this sample budget. But hopefully you get the idea. You can create whatever "envelopes" you want.
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