to help you stay out of the woods of ever getting into trouble again? I thought it might be nice to have one thread where everyone lists some ideas that way we have a lot of things to think about all in one thread!
Some things we have started doing:
1) We are earning more income. This isn't always possible for everyone, but it really was extended unemployment and underemployment that got us into this mess, so the increase in income is helping quite a bit. I have a very good idea of what we need as a BARE minimum to get by, as well as what my prefferred number is to be comfortable and start to build a solid financial future.
2) Detailed budgeting. Back in Oct, when my husband got his new job (that really doubled his income), I started making a budget. First, I took the last 3 months worth of spending, categorized, added it up and got an avg monthly $ spent in each of the major categories. I was ASTOUNDED (and very embarassed) by how much money we spent on food (and other stupid stuff). I was immediately able to find areas to cut back. I tried a semi loose budgeting system for a while, but kept very close track of spending - at least weekly - and my husband and I would talk about how we did that week, etc. (another major problem for us had been lack of communication. I have always handled all the financial stuff, which is fine, but he wasn't in the loop as much as he should have been. Now, every Friday we sit down for 15 min or so and talk about it, and it's not a stressful thing at all anymore). January, I started a detailed budget. I devised a budget category for everything I anticipated spending that month and have been filling in every week how we are doing. We had a number of unexpected expenses, but we are hovering close to budget. Keeping a very close eye on what we are spending has really reduced how much we spend unnecessarily.
(if anyone is interested in seeing my budgets, I have them in an excel spreadsheet. PM me and I'll send you a sample)
3) The creation of the "Fun $" category. We have both felt kind of "deprived" for a while, having to watch every penny, and I think honestly, when we had more money to spend, we automatically spent it because we were feeling so deprived. I finally put in a "fun money" category. We each get a set amount of cash at the beginning of the month (him $190: $140 for cigs
and $50 for other, me $60 for whatever). This means that we each have a little bit of "blow on whatever" money each month, but we take it in cash, and once it's gone it's gone. This way we have some freedom, but it is contained. Jan was our first shot at it, and it went well. My food budget is also inclusive of about $100/month for eating out so we don't have to completely reduce that. As I get better at budgeting and predicting our spending, the budget categories will be more detailed. I need an "entertainment" category for example for movies or shows... but I need to know better what my expenses will be when we move before I can get too crazy.
4) Automatic w/drawl to savings account each month. "Pay yourself first". We are going to work hard at building an e-fund so that we will have something to fall back on if the car breaks down, someone gets laid off, etc. As soon as the bk is discharged, I'm going to open an ING money market savings account, which will take an automatic withdrawl from my checking acct each month and send it to savings, and their accounts make pretty good interest rates for secure, liquid savings about 4-5% or so.
5) meal planning each week, grocery shopping once a week using the sale flier for meal planning and list making and no more "quick trips" for something I forgot. If we don't have it, we have to make do till next Sat. Also, we do shop at costco for many things, not necessarily because it's cheaper (though some things are), but mainly for convenience. I only have to buy toilet paper 4 times a year for example. But, it's easy to blow $$ in costco. So, I make a list of what we need, set a cash budget, bring ONLY that much cash with me, and keep a running total in my head of what we have spent as we are going through the store. It's way too easy to get to the check out and say, "$300?! $300 on WHAT?". The cash only system has really tightened our spending there.
6) NEVER AGAIN will I lease another car. Never more than one car payment at a time. never a car payment over $250-$300/month. If that means we buy used vehicles forever, that's fine.
7) credit cards will never be used as an "in case of emergency" again. That's what the e-fund is for.
8) Housing will never be more than 20-25% of our net pay. I won't be house poor again.
9) setting long term financial goals. We want a certain amount in an e-fund. We want to be able to purchase a house in 3-4 years, which means we will need a substantial downpayment. We need to purchase more extensive term life policies than what we have through our jobs just in case to help protect our daughter. We want to have another child someday. College savings. We want to aggressively contribute to our retirement funds, because we are sadly behind in that area especially given our ages (35 and 30 and we have basically nothing). Now that we have the debt wiped clean (other than student loans) and we are *finally* making a comfortable wage it's time to get going on these long term goals. Keeping these in mind and watching the balances grow really helps us reduce unnecessary spending on stuff we just don't need. I feel like I'm finally ready to start planning for the future instead of just trying to survive in the here and now.
What are your tricks/lifestyle adjustments?
Some things we have started doing:
1) We are earning more income. This isn't always possible for everyone, but it really was extended unemployment and underemployment that got us into this mess, so the increase in income is helping quite a bit. I have a very good idea of what we need as a BARE minimum to get by, as well as what my prefferred number is to be comfortable and start to build a solid financial future.
2) Detailed budgeting. Back in Oct, when my husband got his new job (that really doubled his income), I started making a budget. First, I took the last 3 months worth of spending, categorized, added it up and got an avg monthly $ spent in each of the major categories. I was ASTOUNDED (and very embarassed) by how much money we spent on food (and other stupid stuff). I was immediately able to find areas to cut back. I tried a semi loose budgeting system for a while, but kept very close track of spending - at least weekly - and my husband and I would talk about how we did that week, etc. (another major problem for us had been lack of communication. I have always handled all the financial stuff, which is fine, but he wasn't in the loop as much as he should have been. Now, every Friday we sit down for 15 min or so and talk about it, and it's not a stressful thing at all anymore). January, I started a detailed budget. I devised a budget category for everything I anticipated spending that month and have been filling in every week how we are doing. We had a number of unexpected expenses, but we are hovering close to budget. Keeping a very close eye on what we are spending has really reduced how much we spend unnecessarily.
(if anyone is interested in seeing my budgets, I have them in an excel spreadsheet. PM me and I'll send you a sample)
3) The creation of the "Fun $" category. We have both felt kind of "deprived" for a while, having to watch every penny, and I think honestly, when we had more money to spend, we automatically spent it because we were feeling so deprived. I finally put in a "fun money" category. We each get a set amount of cash at the beginning of the month (him $190: $140 for cigs
and $50 for other, me $60 for whatever). This means that we each have a little bit of "blow on whatever" money each month, but we take it in cash, and once it's gone it's gone. This way we have some freedom, but it is contained. Jan was our first shot at it, and it went well. My food budget is also inclusive of about $100/month for eating out so we don't have to completely reduce that. As I get better at budgeting and predicting our spending, the budget categories will be more detailed. I need an "entertainment" category for example for movies or shows... but I need to know better what my expenses will be when we move before I can get too crazy.4) Automatic w/drawl to savings account each month. "Pay yourself first". We are going to work hard at building an e-fund so that we will have something to fall back on if the car breaks down, someone gets laid off, etc. As soon as the bk is discharged, I'm going to open an ING money market savings account, which will take an automatic withdrawl from my checking acct each month and send it to savings, and their accounts make pretty good interest rates for secure, liquid savings about 4-5% or so.
5) meal planning each week, grocery shopping once a week using the sale flier for meal planning and list making and no more "quick trips" for something I forgot. If we don't have it, we have to make do till next Sat. Also, we do shop at costco for many things, not necessarily because it's cheaper (though some things are), but mainly for convenience. I only have to buy toilet paper 4 times a year for example. But, it's easy to blow $$ in costco. So, I make a list of what we need, set a cash budget, bring ONLY that much cash with me, and keep a running total in my head of what we have spent as we are going through the store. It's way too easy to get to the check out and say, "$300?! $300 on WHAT?". The cash only system has really tightened our spending there.
6) NEVER AGAIN will I lease another car. Never more than one car payment at a time. never a car payment over $250-$300/month. If that means we buy used vehicles forever, that's fine.
7) credit cards will never be used as an "in case of emergency" again. That's what the e-fund is for.
8) Housing will never be more than 20-25% of our net pay. I won't be house poor again.
9) setting long term financial goals. We want a certain amount in an e-fund. We want to be able to purchase a house in 3-4 years, which means we will need a substantial downpayment. We need to purchase more extensive term life policies than what we have through our jobs just in case to help protect our daughter. We want to have another child someday. College savings. We want to aggressively contribute to our retirement funds, because we are sadly behind in that area especially given our ages (35 and 30 and we have basically nothing
). Now that we have the debt wiped clean (other than student loans) and we are *finally* making a comfortable wage it's time to get going on these long term goals. Keeping these in mind and watching the balances grow really helps us reduce unnecessary spending on stuff we just don't need. I feel like I'm finally ready to start planning for the future instead of just trying to survive in the here and now. What are your tricks/lifestyle adjustments?
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