Budgeting and Hard Decisions

Budgeting

When you have a growing list of things you want to buy and do, finding the funds is often a constant pursuit. I know how much comes in. I know how much is spent on fixed(ish) things like the mortgage, electric, insurance, cell phones, etc.  I budget a certain amount for food and household items. And then there is the ‘other’ category.

Even writing it makes it seem like a black hole of money. That catch-all category where expenses get put when you don’t want to classify them, are trying to justify the expense or reason that it’s not really an ongoing expense. The other category for me is one of those very large groups of all kinds of random expenses that impact the budget but at the time seem insignificant. It’s the aggregate that is the shocker.

The other category is like going to the dollar store and getting to the checkout and realizing you’ve just spent $50. At the dollar store. On stuff that only costs a dollar. And you think, ‘What did I buy?’. And you reason with yourself that it’s just a dollar. When it’s really $50. And you shake your imaginary fist at the marketing geniuses who have convinced us to think that no matter what we buy our brain says ‘It’s just a dollar.’

So when looking for places you can cut in your budget, one of the first places to look is in that abyss of ‘Other’. Even if they’re uncategorized, just putting them in a category with it’s own description, all by itself, at least it will be there to see. Breaking out all the categories often helps give insight into how much the subcategories really cost.

Instead of ‘Utilities’, break it out.  Look to see what your gas, water, electricity and phone bills are individually. It was because I do this that I caught large increases in our water bill during the summer last year. Sure, I reasoned that we were using more water for landscaping and such but it was so much more that it didn’t make sense. Especially when I found out we had the main sprinklers off. Naturally, I’m not shutting off the water to the house. But it alerted me to what might be a problem. Part of it was that I had been washing a bit more, but as it persisted a few months I began to question is maybe something was wrong. And there was. One of our underground landscaping pipes had come apart. A relatively easy fix, but I’d never have even gone searching for it if I wasn’t focused of narrow categories.

It got me thinking though, where to cut. What are things in the budget I could cut so that I could better save for a cool new bag for my camera or new luggage or for a calling and data plan that will work should be make our trip to Europe this year. One of the first places many people go are to the ‘luxury’ expenses such as cable, cell phones and dining out.

Yes, cutting the luxury expenses is one place to start. But, you need to know what YOUR luxury expenses are. Yours may be different than mine. Cable (well, satellite) is not a luxury for us. CycleGuy and I have discussed this at great length and while we have pared down and made significant changes, giving up cable is not something we’re willing to do. It makes me stay on top of any price changes are out there though. I still have a landline. My grandmother and marketers call it. I could get my grandmother to change. It would take some time, but she’d pick it up quickly. Problem is that my internet and security system have connection to my phone line. It makes me more beholden to the utility, which I hate. I’m working on it though!

Here are 5 tips to help you with your budgeting so you can feel that you’re not the only one making these hard decisions.

1. Identify your luxury expenses

2. Separate out the ‘other’ expenses into real categories

3. Watch for big variances in your usually fixed or almost fixed bills

4. Evaluate by yourself or discuss with your partner about eliminating or reducing rate plans

5. Always leave in a category for “fun”. You must budget in money to do those things you enjoy.

You don’t need a fancy spreadsheet or computer program to create your budget or monitor your expense. The hardest part is actually doing it and keeping track of where the money is going. But once you know where your money is going you can make more informed decision about what gets cut or what is a must stay.

For me, knowing where my money goes has made me a better consumer over the past years. With plastic being so readily used for purchases (regardless of debit or credit), it’s easy to lose track of where the money goes. You don’t ever really see it. Which makes it more challenging. If you’re thinking you want to buy something or go somewhere, consider what your luxury items are and how you can cut spending on some categories so you can make room for your ‘Someday’!

Sara

Needs vs. Wants

Needs and Wants

When it comes to funding all these somedays I have, I really wish I was independently wealthy. It sure would make it easier to go out and do or buy some of the things I want. But the reality is that I am not independently wealthy. I have to plan and save for these things.

There are so many temptations out there. All these daily deal sites that want me to buy their deal because, well, it’s a deal! I could save a lot of money if only I would buy something from them. And sure, many of these are truly great deals. For instance, I love books and so does BabyGirl. So when Groupon had the recent Barnes & Noble deal I got in on it.  I wanted it. I was saving 50%!

But did I need it.  Need it as in it is required for my daily living. I didn’t need to buy the Groupon deal. I wanted to. I wanted to save money that I knew I would end up having to spend. And it’s not often that a deal for a bookstore comes up. Clearly a want, not a need. And, sure I don’t need an iPhone. But because it makes doing business and keep connected with CycleGuy, I have one. For me, the convenience factor is a tradeoff with the cost factor.

I need heat and electricity and internet and food and gas for the car. But I don’t need to go out to eat when I know that it is cheaper and often more healthful to eat at home. Dining out is definitely a want. For me and my family. And even though heat is a need, I’ve decided that with an extra blanket and sweater I could avoid turning the heat on. I need to be comfortable in my home and I’ve found a way to do that without having to turn on the heat. It’s not for everyone, but it works for me an my family.

Budgeting is one way to look at Needs and Wants, and so is finding balance in your life.

We need clothing. We don’t need high-end couture fashion. It’s a matter of choice as to how need is defined when it comes to clothes. For some families, it’s acceptable to purchase pre-owned items. For others, thrift and consignment stores don’t even enter the picture. It’s another example of how need is defined differently for each family.

My friend Heather, whom you met yesterday if you read my Budget Date Night guest post, started a No Spend Month program for the month of February. Heather is already very frugal. She’s a work at home mom to three girls and her husband works in the tech field as well as at home doing the back-end work for Heather’s many websites. With 3 kids, all of whom have food allergies, she’s keenly aware of how wants and needs vary from family to family. Her food budget is seen as high by some, although she has to account for special foods that often don’t go on sale or have coupons. Safe foods are a need for every family. It’s just that for some family those safe foods are very expensive.

In talking with friends and looking at my family budget from last year, I realized that CycleGuy and I have a pretty good grasp on our family budget and overall spending. His living in another state makes things a bit more challenging. For example, coming back to Phoenix is a need for him. And while I miss him dearly, sometimes I see it as a want (especially when I see the airfare). I’ve examined some of my wants and reevaluated them so that we can fit his travel into our budget. We need to make it work for our family.

Schooling is another big category that is part want and part need. Again, it’s a very personal choice for a family to choose private school and say it is a need. Many may disagree, but none of this is for other people to judge. I choose to homeschool. With that comes different expenses and costs than if BabyGirl went to public school. We also see violin and french lessons as a need for her education. The money must come from somewhere, though.

It’s easy to say everything is a need. What it comes down to though is making hard choices. I’m not a music fanatic. CycleGuy is. For me new music from iTunes is a want. For him it’s a need. So we need to come together and find a balance. Heather talks about this, too. Which makes me feel good, because I know it’s not something I deal with alone.

Most, if not all, the things on my Someday List are wants. I’d have to look really closely to find a true need. It doesn’t mean they aren’t important. Each and every one is meaningful in some way to me. But a girl can’t live on needs alone!

Have you taken a close look at where you spend your money? What are your needs and wants?

Sara

Free Downloadable Savings Tracker for 2010

New to couponing?  A veteran couponer who wants to track your savings?  Start the year off with this very cool, easy to use Excel Savings Tracker that you can download for free with compliments of The Coupon Project.  The spreadsheet is all ready to go.  All you have to do is enter the information from your receipts and you’re on your way to achieving your spending and savings goals for 2010.

Sara