Search Results for: budget

Should You Create Sinking Funds Before You’re Debt Free?

October 21, 2019 By MelissaB 1 Comment

You have debt. A lot of debt. And now you want to pay it off, IMMEDIATELY! You’re fired up. You’ve read financial blogs, read debt payoff gurus books, and you’re setting up your budget. Should you create sinking funds before your debt free or put all of your money toward debt repayment?

What Are Sinking Funds?

If you’re new to budgeting, sinking funds are money you put aside for irregular expenses you know will come up during the year. Let’s say you spend $1,000 each Christmas, so you decide, in January, to set aside $83 a month in your Christmas sinking fund. When December rolls around, you have all of the money you need to pay for your Christmas gifts debt free.

Create Sinking Funds Before You Pay Off Debt? — Photo by Eugene Zhyvchik on Unsplash

The Argument Against Sinking Funds

Some argue that you shouldn’t set up sinking funds until you’re debt free. What is the point of putting $83 aside for Christmas when you’re paying 15% interest on your credit card? That $83 each month would be better served if you applied it to your credit card and reduced the balance and therefore the amount you’re paying in interest. You’ll get out of debt more quickly this way.

The Flaw With This Kind of Thinking

There is one major flaw with this kind of thinking. What will you do when you need to actually pay one of these irregular expenses?

I live in Arizona, and six months of the year, my air conditioner runs night and day. During those months, my electric bill ranges from $225 to $275, depending on how warm it is outside. Then there are about two months a year in flux when the electric is $125 to $175, and, in the winter, for four months, my electric settles down to $80 a month.

My budget can’t handle such big fluctuations in our electric bill, so every month, I set aside $150 for electric. When summer comes, I have a large sinking fund to help me pay for those hot months when the electric bill will be much higher than $150.

If I didn’t have a sinking fund, how would I pay for the high electric bill in July?

A Happy Compromise

I encourage everyone to set up sinking funds, even if you do have lots of debt. Part of getting out of debt (and staying out of debt) is changing your attitude toward money. What’s the use of putting all of your money on your debt if you have a $1,500 car repair, no money set aside, and you have to charge it and go further back in debt again? That’s not a budget roller coaster I want to be on.

But there is a compromise; if you have extra in the sinking fund after the event is over, apply that money to debt. For instance, let’s go back to the sinking fund of $1,000 at Christmas. Let’s say you’re conservative, shop the deals, and only end up spending $750 on Christmas presents. Great! Take that leftover $250 and apply it to debt. Then, in January start saving for the sinking fund again.

If you’re paying down debt, make sure to create and fund sinking funds. You won’t be sorry, and you’ll be changing your attitude toward money so when you get out of debt, you stay out of debt.

Do you create and fund sinking funds each month? If not, how do you handle it when large, unplanned or irregular expenses come up?

Save on Groceries by Limiting Junk Food

October 14, 2019 By MelissaB 1 Comment

Almost all kids love to eat junk food, and if they have unlimited access to it, they can plow through a surprising amount of it in very little time. This is especially true if your kids are teenagers. However, you can save on groceries by limiting junk food.

limit junk food — photo courtesy of idpinthat.com

Some people do this by simply not buying junk food. Instead, they give their kids regular meals and fruits or veggies for snacks. While this is the healthiest way to feed your kids, they may feel deprived if they don’t get some of the fun snacks that their peers get.

However, there are several strategies you can use to give your kids the snacks that they want without compromising their health or your grocery budget.

Will Work for Snacks

Recently, I learned this ingenious trick from an experienced mom. She has created a win-win situation for herself and her kids. Each time a child completes a chore, he earns a ticket. He can then use the ticket to buy snacks from mom that he enjoys such as granola bars, chips, cookies, Popsicles, etc. Once he runs out of tickets for the week, he doesn’t get these types of snacks anymore. Instead mom will give him fruit or veggies for snacks, no tickets required.

Using this technique, the kids are happy because they have some control over how many snacks they get, and mom has noticed that the snacks are lasting a lot longer in her house.

No More When They’re Gone

Another mom buys a set amount of junk food treats a week for her family to eat. When they’re gone, she doesn’t buy anymore until the next grocery shopping trip. If kids eat all the treats in one day, they have to wait six more days until the next grocery trip.

Lock Up Junk Food

Some parents have even taken the extreme route of locking up treats so that the kids don’t eat all of the stash. This is more likely to work if your kids are younger and are used to this type of system.

Hide Them Away

A similar, though less extreme, practice is when parents hide away goodies. Then, they can slowly bring them out so the kids get treats little by little. This was the technique that my mom used. She had a friend who worked at Hostess, and she could get us treats at a steep discount. My mom would buy two cases and hide them, bringing them out slowly for lunches. For many kids, out of sight means out of mind.

Make Homemade Treats

Another idea is to make homemade treats like granola bars, brownies, cookies, etc. While these taste good and are often healthier than the pre-made counterparts, kids may still feel slighted if all of their friends are eating packaged junk food. A way to avoid this is to give them some prepackaged junk food and supplement with homemade treats.

There’s nothing wrong with giving your kids a little junk food, but if they’re devouring it the minute you bring it home, you may want to save on groceries by limiting junk food consumption in your home.

Is junk food killing your grocery budget? If so, which of these strategies do you use, or do you have a different technique to keep your kids happy and your budget in line?

4 Easy Ways to Slash Your Grocery Bill

October 7, 2019 By MelissaB Leave a Comment

Is it just me, or does it seem to you, too, that your grocery money doesn’t stretch as far these days? We’re on a tight grocery budget, and every week, I feel like I’m getting less and less for my money. Since my family wants to eat, especially the three growing kids that eat a lot, I’ve found 4 easy ways to slash the grocery bill despite the rising cost of food, no coupons required.

4 Ways to Slash the Grocery Bill — Photo via idpinthat.com

Find Good Recipe Resources

The first of the 4 easy ways to slash the grocery bill happens before I even set foot in the grocery store. I start by choosing my meals for the week at some of my favorite frugal recipe sites. I love Budget Bytes, Struggle Meals, and $5 Dinners. When I choose recipes from one of these sites, I know I’ll be preparing food for my family that is healthy and low cost.

4 ways to cut the grocery budget — Photo via idpinthat.com

Substitutions Are Key

Another way to save money is to freely make substitutions to a recipe based on what you have on hand. This week, we’re having navy bean soup in the slow cooker. The original recipe called for ham, but at $6 per thick slice of ham, that wasn’t in the budget. Instead, I found Polish sausage on sale for $3.50 a pound. That will be going in the soup instead of ham.

By making substitutions based on what you have on hand and what is on a sale, you can make your grocery dollars stretch further.

Shred Food Yourself

Buying food that is already shredded is convenient, but you can save a lot of money by shredding the food yourself. A head of cabbage might only cost $1, but buying a bag of shredded cabbage costs $1.50. I’d estimate that the bag contains about ½ of a head of cabbage, so I’m paying an additional $2 just for the convenience of not shredding the cabbage myself. Since I have a food processor with a shred blade, I don’t feel the need to pay the extra money when shredding the cabbage would only add about 5 minutes to my food prep time.

Likewise, cheese as well as chicken, especially when bought in bulk, is much cheaper if you shred it yourself at home.

Buy in Bulk When on Sale

Finally, make buying in bulk a habit. When an item that you use frequently goes on sale or is on clearance, stock up. This summer, salad dressing was on clearance for .99 a bottle. I bought 10 bottles, so we won’t need to buy salad dressing for the next few months.

Likewise, I only buy the crackers we like when they go on sale Buy One, Get Two free. This sale runs two to three times a year, so I buy enough to get us through until the next sale.

By buying in bulk when items are on sale, I’m able to pay the lowest grocery price possible for the items we eat.

Sometimes, saving money at the grocery store just requires a mental shift and the development of new habits. Make these small changes, and you’ll see your grocery bill drop.

Have you noticed the price of groceries increasing recently? What strategies do you use to keep your grocery bill in check?