Beating Broke

Personal Finance from the Broke Perspective

Take a Challenge To Start the New Year Off Right

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If you would like to start 2012 on the right financial footing and want to do something that is attainable, consider taking a challenge.  Two of my favorite challenges are spending challenges and pantry challenges.  Take either or both of these challenges, and you will find extra money to do with what you please—to save for a new vehicle or home, to bulk up your emergency fund or to snowflake on your debt to get it paid off faster.

I have already spoken about the spending challenge, otherwise referred to as the No Spend Month as an excellent way to raise money for Christmas gifts, but it is also good to
do another time of the year.  Choose one month when you limit your spending for disposable items such as groceries, entertainment and gas by as much as 50% of what you typically spend.  You will find yourself being mindful of what you spend money on because there is very little money to spend.  If you normally spend $800 a month on groceries, entertainment and gas and you vow to slash that amount by half for one month, you now have an extra $400 available to meet your financial goals.  (I often have a no spend month in February.  The psychological boost of knowing it is the shortest month of the year makes it easier to stay the course.)

Save MoneyAnother challenge I try to take at least one month a year, but ideally two months a year, is a pantry challenge.  All of us have some extra items lurking in the cabinet.  I often buy ingredients for a certain recipe, but then if I don’t get a chance to make that recipe, I often still have the non-perishable items on the shelf a few months later.  With a pantry challenge, you try to use up what you have.  A common misconception is that you are not allowed to grocery shop at all.  That is not true.  Just like a spending challenge, you set a designated amount you want to spend.  Say you spend $600 a month to feed your family of five.  During a pantry challenge, you decide you will only spend $200 for the month.  That means you must try to make meals from ingredients you already have on hand.  This is a great way to not only save money but also to use up food that may be nearing its expiration date so it doesn’t go to waste.

If you would like a little extra money for your financial goals this year but you don’t have the time or inclination to work more hours, having a spending or pantry challenge may be the perfect solution to generating more money in a limited time frame.

Have you taken part in a challenge before?  Were you successful?

photo credit: 401K

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