Beating Broke

Personal Finance from the Broke Perspective

Have a No Spend Month This Fall to Save for Holiday Gifts

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Have you ever watched your family open up Christmas gifts while mentally calculating how much each gift cost and comparing that against the amount you have in your checking?  Have you dreaded opening the bills in January because you know the credit card statement from holiday shopping will be coming soon and you do not have the money to pay the balance in full?
When my husband and I were newly married and dirt poor, we carefully planned our Christmas purchases to fit within our meager budget.  We didn’t buy many gifts, but the ones we bought were well thought out.  When we went to visit my mom over the holidays, she kept telling us about all of the presents she had bought for us.  There were so many under the tree!  Because we are the only people to buy gifts for my mom because my dad has passed, we started feeling guilty about the few presents we bought her.  Noticing that her bathroom towels were worn, we went out Christmas Eve night and bought her an entire set of 6 new bath towels including hand towels and washcloths with money we did not have.  Then we bought her some jewelry.  We charged everything knowing we didn’t have the money to pay.

50mm HBWOn Christmas morning, she delighted in her presents.  When we opened ours, we were in for a surprise.  She too had bought a few well thought out gifts for us.  But all those extra gifts we found under the tree?  They were leftover t-shirts from a conference some of the professors had hosted at the university where she works.  She bought them for a $1 each.  Each time I or my husband opened another one of those presents that contained a t-shirt, I felt sick.  We had put ourselves in debt to try to make sure our presents were equal to hers, but she had stuck to her financial budget by giving us “filler” presents.  There had been no need to buy those extra gifts on Christmas Eve. . .

We worked like crazy selling off things in our apartment such as textbooks we no longer used so that we could pay off those credit cards used to buy the extra gifts.  On our meager salary, it took us until March.  Thankfully, we have learned our lesson.

If you don’t want to spend the months after Christmas worrying how you will pay off the new debt you just acquired, consider having a no spend month now.  We still have nearly three months until Christmas.  Pick a month such as October or November to drastically reduce your spending.

If you normally spend $1000 a month on groceries, gas, entertainment, eating out, toiletries, etc., decide how much you want to cut that amount.  Maybe you will decide that in October you will only spend $500 a month.  To make up the difference, perhaps you won’t eat out or you will eat from the pantry to use up those groceries that have been on the shelf for awhile.  Maybe you will do something for free as a family rather than catching the latest movie.

By reducing your spending for just 4 weeks, you will be able to come up with a good amount for your holiday gift giving.  If you normally spend $1000, but only spend $500 of that in October, you now have $500 saved for holiday gift buying.  Yes, you sacrifice now, but it will be well worth it when you know that every present under the tree has been paid for.  Best of all, there is no reason to dread the bills in January.  Isn’t that a great way to start the new year?

photo credit: kevin dooley

Ways to Save with Banking and Recurring Payments

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If you are new to saving money and cutting expenses, you may search the internet where you will find such tips as “Skip your daily coffee fix” and “Buy store brand foods instead of name brand foods.”  While this advice is good, it only offers a superficial way to cut expenses.  You may need to look beyond this generic advice to find other ways to trim costs.  My family is in this situation currently; our income does not add up to the equivalent of our expenses.  Not only are we making less than we spend, we are not able to add to our savings.  This situation is temporary, until my husband finishes his post-doc, but obviously it is not sustainable for the two years he will be in a post-doc position.  Here are some of the extra ways we have found to trim our budget:

-Stop writing checks.  We have automated our bill paying online.  At first I was resistant to do this, but when I added up how much I was spending on checks ($38.12 for a year’s worth) and stamps ($52.80 a year) for a total of $90.92, I decided to do it.  I can’t eliminate all check usage, but automating our bills has reduced our check usage by 3/4s, which will save because I won’t have to buy checks as frequently.

607 - Money Whirlpool - Texture-Cancel automatic payments for services you no longer use.  One downside of automating payments online is that you may stop using a service and yet forget to stop the auto payment.  I recently closed an eBay store that I had.  As part of my eBay business, I had automated payments to a template service (that basically made my auctions look prettier by putting a design in the background) at $12 a month and to a selling newsletter for $8 a month.  I was annoyed when, a month after I closed the eBay store, I discovered I was still billed the $20.  I forgot to cancel the subscriptions.

You may find that some companies make it difficult to cancel online subscriptions.  (Remember the old Friends episode where Chandler wants to cancel his gym membership, and every time he tries he is instead convinced to stay?)  While it may be very easy to sign up for recurrent payments on your credit card, when cancelling you may need to call the company and listen to them try to upsell you.  Persist because it is not worth paying monthly for a service you are no longer using.

-Change to online bank statements.  My bank recently began charging $3.00 per month for paper statements.  That adds up to $36 per year per account.  Because I have 3 accounts with them, it adds up to $108 a year wasted.  Yes, I prefer to have physical copies of my statement, but not at a cost of $108 a year.

-Consider changing banks if the fees get too high.  Last January, my bank started charging me $9.99 per month for my eBay business checking account.  That is $119.88 a year just for the joy of banking with them.  I have since cancelled the account.  I am now in the market for a new business account for my writing and blogging service, and you can bet I won’t be going with my current bank, and I’ll be looking at well reviewed banks that maybe have good new account promos.

There are plenty of ways to save money if you look carefully.  These are just a few ways you can save at your bank and online, but they clearly add up.  Making these small changes has saved my family $230 a year!

What other ways do you use to save money?

photo credit: Patrick Hoesly

Ways to Save When Back-to-School Shopping

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After the long days of summer, many parents look forward to their children’s return to school.  Unfortunately, preparing for the return to school often includes a large financial outlay for back to school supplies and clothes.  However, there are several strategies you can employ to limit how much you have to spend.

Back to School Supplies

-In late July, try to obtain your child’s back to school supply list from the school.  Scour the ads for great deals and look at sites like A Full Cup to learn which items you can get for free.  It may take several weeks for all of the items on your child’s list to go on sale, which is why you want to start shopping in late July.  I employed this strategy last year and got all of my son’s school supplies for $12, and I bought extra to give at Christmas too.

glue army-Keep in mind that stores such as Staples, Office Depot and Office Max have a price matching policy.   If you find a lower price at a competitor’s store, bring in the ad, and the store you are shopping at will match the price.  You can save gas by taking advantage of this policy, but beware that most have a 7 to 14 day window for the competitor’s price, and a few stores exclude prices advertised on websites.

-When you can obtain items for free, try to buy more than you need.  Then, if your child runs out of some of the supplies mid-school year, you won’t have to pay full price to buy more.  You can just shop in your supply you got for free.

Back to School Clothing

-Before going out to shop for clothes, first go through your child’s closet to see what clothing they already have that still fits and is in good condition.  Make a list of items and colors so you can look for matching pieces when shopping.

-Check out stores like Once Upon a Child.  They often have new designer clothes for 1/3 to ½ the retail cost.

-Buy on eBay.  Many people list their children’s gently worn clothes on eBay, and you can find many auctions in late July and August.  To make sure you get a good deal, read the description thoroughly.  A good seller should specify how worn the clothes are and any flaws in the clothing.  To make sure you are dealing with a good seller, check their feedback.  It should be 100% positive.  I never buy from a seller with lower than 98% positive feedback.  Also, the more feedback a seller has, the more experienced they are.  Finally, feel free to ask questions about the clothing before you bid on it.  Consider buying several auctions from one seller who combines shipping to save on shipping costs.

-Check out Craigslist.  People often list their children’s clothes for sale and when they are having garage sales.  You probably don’t want to buy all of your children’s clothes used, but you can find some high quality clothing at a fraction of the cost by considering used clothing markets.

-Buy mix and match clothing.  Try to buy 3 to 4 pairs of pants and 5 to 6 shirts that can be interchanged.  This dramatically extends the variety of outfits your child can wear.

-Stagger your buying.  Buy some lightweight fall clothes early in the season, and buy sweaters and warmer clothes later in the fall.  This can help you distribute the money that you spend over a few months.  Wait for seasonal sales such as Columbus Day.  Also, the stores frequently reduce the fall merchandise to make way for the winter items; try to buy more clothes when they are on clearance.

The average American spends $600 on back to school shopping.  You can reduce that amount by half or more by following some of these strategies.  If you take the time to plan ahead and wait for the sales, you can dramatically cut your back-to-school expenses.  Happy frugal shopping!

photo credit: me and the sysop