Wednesday, September 29, 2010

How we are Saving Money

I posted a few months ago about some of the steps that we are taking to save some money. We were living beyond our means and running out of savings while doing so. In June we started budgeting each month, but it was getting impossible. Each month we found that there was more month than money. 11-13 weeks ago we started Financial Peace University via Dave Ramsey and seriously buckled down, holding a weekly budget meeting. We decided to buy the homestudy kit (a cool 200 dollars later) simply because we couldn't find a class within 15 miles of us at a convenient time. Although the homestudy kit was expensive and huge investment for us poor people, I like being able to watch in my living room and the ability to keep the materials.
So far, things are working out much better. Dave introduced a budget sheet that he calls the "allocated spending sheet." It's hard to explain and it looks complicated, but it's an absolute lifesaver. Every month, we spend every single cent before it comes in on this allocated spending sheet. It makes budgeting SO much easier for us. In fact, we haven't had to tap into our savings yet (knock on wood) and we've actually managed to contribute a few hundred dollars to it.
We don't owe it all to Dave-- here's some of the other things that we're doing to help save money.
1. Looking at the "cost vs. want differential." We are not total lame-wads and we are going on a cruise for our one year anniversary-moon. However, because we're doing that, I can't buy as many clothes, we can't eat out, and we can't spend money at the bar this month. For me, a one week anniversary cruise far outweighs a weekly meal at the local chain restaurant. So in this case, the differential is huge. I'll stay at home every weekend for 3 months if it means that I can spend a week in the Caribbean.
2. We are lucky because we really do have a blast with each other. Our ideal Friday night isn't at the bar anymore. Instead, we love to watch Survivor on the DVR, drink a few miller lites, pop some popcorn and play a board game. Last weekend it was monopoly. Most weekends it's RACKO or UNO (it's hard to find 2 person couples games but we enjoy those three).
3. I meal plan. I've already touched on this before (so I won't go into detail) but it helps so much. I plan my meals out at least 2 weeks in advance and can shop for them at least two weeks in advance when certain items are on sale.
3. We cut our grocery costs down to 250 dollars per month. There are only two of us, yet we were spending almost 500 dollars at the grocery store every month. It was ridiculous. We eat just as well now- but we're smarter about it. On the first of every month I withdraw 250 bucks from our checking account and only pay cash for groceries. It averages out to about 60 dollars per week- but some weeks I spend a little more and some weeks I spend a little less. Once we run out of cash, we're out of luck and have to get creative and eat from the pantry (this hasn't happened yet-- it's a lot easier to live on less than you'd think).
5. We allow ourselves 200 dollars per month for the bar, restaurant and entertainment and we only use cash for this as well. This is not much AT ALL and usually equals out to one fun event per week. This has been the hardest part, because we could easily spend 500 bucks a month on entertainment. Thankfully, we usually hit up happy hours or use coupons but still-- this has been the hardest for us so far.
6. More cash only spending- this time at the "Marts." We allow 50 bucks per month at Target, Walmart, etc. Every time I walked into Target I'd leave 100 dollars poorer. Now that I ONLY use cash, I spend so much less. In fact, we're here at September 29th and we still have 10 dollars left in our "Marts" cash account. That NEVER would have happened if we were using our debit cards.
That's what is working for us so far. The parts that we are having the hardest time with are gas expenses and entertainment. We are sometimes invited places and will say yes despite not having the money to do so. Plus, gas varies each month and is unpredictable. I hope to get these in order soon as well.
I don't want to live like this forever, but at least until we pay off our debt, cars etc.
What strategies do you use that have helped? Got any additional ideas for us?


Ashley said...

I loved your tips! I'm trying to pay off my credit cards before I graduate and I think I need to write out a budget!

The Sadlon Family said...

Don't really have any advice to give, but I will steal from you.
This is our "year of being poor".
Things are so much different now that we are down to one income. I'm actually grateful for it though because it is really teaching us what we can live without and as we emerge from "poor" status we will be able to be much smarter about what we do with our money.
We were spending like fools before.
Toughing it out for a year is totally worth it.
Great tips!

The Kings said...

We do kinda of the same thing as far as a budget goes. I have a spread sheet where I put down every single thing we spend money on because we charge it all so we get the points and cash back. We take the "not household bills" money, subtract what we want to save and divide the rest by 2, so we spend our own money essentially. This is the first month we have done our "own" budgeted money and it actually worked out AWESOME and we saved FINALLY!!!!

Erica said...

We did FPU right before we got married and it really helped. We stuck tight to Dave's worksheets for about a year and have now loosened up (on purpose). It's hard to keep up with the budget and J has developed his own that works super well for us. We also dabbled with using too.

I was exactly the same way with the "marts" and now I only allow myself to go if I need 2 or more items and never more than once per week.

Nice work with Dave! I'm really happy that he's working out for you. Congratulations!

Anonymous said...

These are great tips and I am happy it is working out for you. I have been very careful with my spending too and I am about to buckle down hard soon. Congratulations!

Dancy said...

Great post with really helpful tips. I do the same thing with money. You're less likely to spend it if you have actual dollars in your hand as opposed to just swiping that card.

Can't wait to see pics from the cruise! :)

Pretty Personal Gifts said...

These are some really great ideas. I can't go near Target. $200 EVERY time even if I only need "one thing". Forget it. I'm banned until further notice. I hope you have fun on your cruise!

Unknown said...

These are some fabulous tips! We're under some financial stress right now and we haven't really figured out how to get started with spending less...these are really helpful!! Thanks Ash!