Search Results for: budget

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

October 3, 2011 By MelissaB 10 Comments

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.

On 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

Evaluate the True Price of Dining Out to Save Money

August 31, 2011 By MelissaB 14 Comments

Our culture seems to be one that is centered around dining out. When you are younger, you meet friends at a restaurant for a night out and to chat. As you get older and have a family, you may go out to eat because time is short between working, raising a family, helping with homework, and doing housework, among other things. Some people are extreme and eat out for every meal because they do not like to cook or have not learned to cook. This is so commonplace in the American culture, that we don’t often question these expenses. Instead of just assuming that going out to eat or grabbing take out is a necessity, evaluate the cost of your restaurant purchase.

It has been a stressful day, and you would like nothing more than a night off from the kitchen. You decide to buy take out for your family of 4 and spend $25. True, you did buy yourself a night out of the kitchen by avoiding cooking and washing the dishes that you would use. Yet, ask yourself, would you have paid $25 to hire someone to come to your kitchen for an hour that night, make a meal and do the few dishes that you used? No? Well, that is essentially what you did by picking up take out.

I use this way of thinking frequently now to save myself from spending money eating out. My family ate out by habit until I started evaluating the true cost. I recently quit my job and have been doing freelance work from home. Several of my smaller jobs each pay $20 a month. Recently, I wanted to go out for sushi, which is a weakness not only of mine, but of my husband and kids. When our family of 5 goes out for sushi, it typically runs us $55 to $60. I asked myself if one meal of sushi was worth doing 3 additional small jobs to recoup the $60? Although the jobs do not take much time weekly, I would have to do the three jobs for a month to recoup the money spent on sushi. Was it worth it? No. We did not go out that night.

The idea of evaluating life energy for consumption is not new. It was the subject of the book, Your Money or Your Life by Joe Dominguez and Vicki Robins. The overall principal is to look at the amount of time and money it would take to recoup an expense. I try to use this in my life normally, but I find it especially effective when considering the often inflated price of dining out. Take the sushi dinner for $60—my family’s weekly grocery budget is $100. Is that one meal worth half a week’s groceries? Definitely not.

I am not saying we shouldn’t go out. My family still enjoys going out, but I am suggesting we should stop thinking of dining out as something routine and to be done daily or several times a week. Instead, think of dining out as a treat and something to be planned and enjoyed.

photo credit: dslrninja

5 Creative Ways to Save

August 17, 2011 By MelissaB 17 Comments

Common financial advice is to pay yourself first; set aside your own savings before you pay any bills. Yet, what happens if you don’t have enough money to pay yourself first? What if you can’t set aside $100 or more each month? How can you continue to save for your goals whether they are establishing a $1,000 emergency fund as Dave Ramsey recommends, saving for a replacement car so you can avoid a car loan, saving for a down payment on a home or simply saving for a vacation?

My husband and I are temporarily in a tight financial situation; he is finishing his Ph.D. and I am staying home to take care of our three children while doing freelance work at night. While I expect our financial situation to improve in a few months when my husband graduates, we are now in the situation where we have little to save, yet we would like to begin to save for a down payment for a house. We have found unusual, creative ways to save. Utilizing these methods won’t get us to our 20% home down payment, but they offer a great way to start saving, and we will add to the savings when our income increases. If you are trying to save more, try some of these strategies:

Save all of the $5 bills that you get. You are at the grocery store and you buy $33.22 worth of groceries; for your two twenties you give the cashier, you get back one single and one $5 bill. Put that $5 bill into savings. My husband and I have been doing this since June 1, and already, in less than three months, we have saved $175. That is a savings rate of approximately $60 a month. More importantly, that is $60 we didn’t think we had to save. Sometimes it is painful to put that money aside, but in the long term, it is worth it. Of course, this method works best if you routinely pay in cash.
Save all of your change. This is a similar strategy to the $5 bill strategy, but it is a little less painful because you will be saving less overall. However, your savings will still add up quickly. My husband and I used this method a few years ago to save for a weekend vacation. We saved $300 in a year’s time.
Save one dollar a day. Another blogger I read was told at her wedding that she and her husband should save one dollar a day. She and her husband did just that, and at their 10 year wedding anniversary, they had $3,650 saved, which they used on a 4 day second honeymoon. Talk about a painless way to save, but what a great reward at the end.
Save the money you would have spent on an impulse purchase. Do you really want a pop when you are checking out at the grocery store, but you resist the urge? If so, take the $1.59 you would have spent and put it in your savings account. You would have wasted it on an unhealthy, impulse purchase; why not instead use it to your benefit and put it in your savings account?
Have $5 or 10 automatically withdrawn from your pay check. Even if money is very tight, you can probably sacrifice $5 a week. If that is the case, arrange to have the equivalent of $5 a week automatically withdrawn from your paycheck and placed in your savings account. Over the course of a year, you will have saved between $260 and $520.

Of course, there are many ways to save when on a tight budget; you just need to get creative with how you do it. Also, don’t worry that the saving method you choose is not adding up quickly enough. Saving something is much better than saving nothing, and once you become disciplined to save money regularly, as your income increases, you can save more.

photo credit: Carly Jane1