I’ve Paid For This Twice Already…

Archive for the ‘budget’ Category

Our mortgage is still more than 80% of our home’s value (and a higher percentage every day it seems, as the value of our home plummets, but that’s another story) so we’re required by our lender to have an escrow account through them to pay our homeowner’s insurance and property taxes.  This isn’t a big deal, except that I’d rather handle the money myself, but I am patient enough to wait until we get our mortgage paid down to the appropriate level.

In the past two years since we’ve owned our home, we’ve had our monthly payment adjusted upwards twice from its origin due to projected escrow shortages.  There is a minimum balance required in our escrow account, and if our property taxes or homeowner’s insurance is higher than the bank expects, the minimum balance drops too low and then we have to put more money in (which is what raises our monthly payment).  It has never been a huge upward increase in our payment, but it has so far always been up.

So this year when I got the annual letter from the mortgage holder, I was less than excited.  But when I opened it, my tune changed immediately.  Not only does our monthly payment go down for the next year by $43.66, we also got a check for $996.86 because we have too much in our escrow account.  Our property taxes have gone down by over $500, which is where the escrow overage came from (the good side benefit of lower property values, I guess).

We discussed what to do with the unexpected windfall, both the check and the monthly mortgage decrease, and we’ll be putting both towards my student loan.  So this month I’ll be paying $1496.86 towards the student loan, and every month after until it is gone I’ll bump the minimum we pay up by $43.66.  We discussed the idea of putting it towards our mortgage principal since it came from the mortgage company, but decided we’d rather keep concentrating on that last non-mortgage debt and make it go away as fast as possible.

Sometimes the readjustment letter has good news, after all.

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I’ve had a lot of questions lately pop into my inbox from new readers that found this site searching for frugality topics out of necessity, not necessarily desire.  With the economic climate in the US such as it is, sometimes people are making the choice to be frugal as self preservation, not as a desired lifestyle choice.

And I can completely relate to that.  Although I enjoy trying to be frugal with what I have and find ways to cut or eliminate expenses, it wasn’t always this way.  I never had super-extravagant tastes, but I did like to spend money on myself, and not always for things I needed.  Becoming a more frugal person has been a very eye-opening experience, and has taught me a lot about myself, but hasn’t always been easy.

The problem with any radical changes is that they tend not to last.  If a person tries to go from spending money freely and without any forethought, directly to spending only on a strict and controlled budget, that is a recipe for disaster.  You might stop spending money for a few days, or a week, but sooner rather than later you “slip”, and once you slip it is easier and easier to go back to your old habits.

Small steps are the key.  Here are some ideas for a few small steps to take to ease into a world of frugality - which to me is not about spending as little as possible, but instead about being self-aware about the choices we make with our finances and the effect they have over both the long and short term.

Date night can be a walk in the park.  Literally.

If you have kids, which I do, having a date night with your spouse doesn’t have to be an extravagant affair.  My spouse and I recently went on our first date night in quite a while, and honestly, it was fun just to hang out and not have kids pulling us in 16 directions.  Plan your date night with an eye to the atmosphere and not just something expensive.  A picnic in the park can be as fun (or more) than a fancy dinner out.  The second-run movie theater can be a great alternative to the newest releases.  And if you do have kids, trading babysitting with a friend can keep you from breaking the bank on child care.

Cutting coupons doesn’t have to be all or nothing.

Coupons are a great way to lower your grocery (or other) bills.  But you don’t have to spend hours and hours finding the best deals.  ease into using coupons.  Start with just scanning the Sunday coupon offerings and picking out things you were already going to buy anyway.  As you become more comfortable with the process, you can branch out.

Spotting the right sale is like a beat the bank game show.

I scan circulars for sport, I admit it.  I like to try and beat the advertising at its own game.  It is all a matter of mindset.  If you think something is drudgery - it will be.  Inject a little fun.  Have a contest with yourself to get the best deal (or a better deal than last time).  You might like it!

What has to go first - what needs to go next - what’s left is negotiable.

Changing everything today may not be possible.  Take a realistic look at your finances.  How much needs to be cut back?  Prioritize.   If you need to eliminate $150 from your monthly budget, start by cutting $150 of your spending, not $500.  Work your way up bit by bit instead of all at once, and the road will be easier to stick to for the long term.

Looking at the world through a frugal lens does take some work, but ultimately can be very rewarding.   Looking at frugality as a task to be enjoyed, and ultimately as taking control over your financial life, can provide needed encouragement to keep on the path to a better financial future even when that road seems steep.

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My spouse and I don’t often argue about money anymore.  But it wasn’t always this way.  Back when we first were married and merged our finances, we would quite often have minor disagreements that sometimes turned into full blown wars over how we spent (or didn’t spend) our money.  The underlying cause was of course a lack of communication about the reasons behind our differing positions, but it wasn’t because we didn’t talk.  We both assumed the other was aware of things that they really weren’t, and based our arguments from that position instead of really getting down into the underlying financial realities.

Once we started talking about the actual facts of our situation, instead of making assumptions that were incorrect, we became a team in handling our finances instead of adversaries.  This is the process we took to get there.

Make Sure Everyone’s Aware of the Actual Situation

I was (and still am) the primary handler of the day to day finances.  I paid all the bills, so I had a much better idea than my spouse of how much money came in and went out and how they related to each other.  I assumed he was as aware as I was, but he wasn’t.  Most of our arguments stemmed from that simple fact - our expenses and our income were very close to the same, but since he didn’t realize that, he wanted to spend more money on non-essentials than we really could afford.  Once I drew up an income/expenses sheet (with a list of our monthly expenses and how that compared to our monthly income, broken down into types) and explained it all to him, he was much more in tune with our financial reality and much more willing to put off or forego a non-essential expense - and much more on board with working towards becoming more financially stable.

Compromise is the Name of the Game

Sticking to your position with no room for discussion rarely ends well.  You may have to, depending on what your situation is, but there is usually some room for compromise.   Try not to react immediately in the negative to the other’s position.  Listen, reflect, and figure out a middle ground you can meet in.  Maybe you want to have the ability to spend how you choose.  Maybe your partner does.  And maybe there isn’t really any flexibility in the budget to allow you to spend.  You may have to start with a tiny bit of flexibility, like $5 a week (or even less, we’ve done it!) and as you work towards improving your financial position, slowly increase the flexibility.  Things only get better if you accept reality and work from there.

Long Term Goals Vs Short Term Realities

Understanding what you are working towards is important.  Saying “I want an allowance to spend how I want” or “We can’t spend money on anything until things get better” might be valid points, but working short term realities into a long term scenario shows why what happens now is important for the future.  Be specific - try to avoid things like “until it gets better” or “I want to spend what I want”.  Draw up a detailed plan for how what you are doing now with your money will improve the future, and also how you can get to a place where both of you are having some of your needs (to spend or to save) met.  Specific benchmarks such as certain income, savings, or debt reduction milestones can work wonders for motivation and get you on the same page.

Getting to a place of agreement about money management may not always be easy, but if both people are willing to listen and do the work, it can be done.  Working together towards your common goal is a much smoother ride than working at cross-purposes.  Put yourself in your partner’s shoes and then start opening those lines of communication today.

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When setting a financial goal, whether it is to pay off debt, save an emergency fund, save for another objective, or anything else that takes an extended timeline, changes in what you are currently doing, financially, will usually have to be made.  Be it adjusting a budget, creating a budget in the first place, or simply figuring out what you take in and spend, a reallocation of your current funds is in order.  But how to find the money to start working towards those goals?  Here is my three step process to seriously looking at the big-picture items in my spending (generally recurring bills and other like items) and finding where I can squeeze a little extra to go elsewhere.

Try to reduce expenses without eliminating desired services

My first step is not to cut anything classified as a want and not a need, but generally try to reduce the costs of both wants and needs.  This can be as simple as making a call to your telephone or cable or insurance company to insure that you have the best rate for the coverage that you desire (and are not paying for services you do not use) or as complex as refinancing a mortgage or other adjustable rate loan.  Examine every recurring expense in your household and make sure that you are paying what the service is worth, not what you are being charged.  Reductions here can keep your quality of life the same while increasing the flexibility of your budget.

Determine what remaining services are wanted vs needed

Maybe shaving some of the excess ff your already existing costs wasn’t enough to have the flexibility to meet the new goal. Once you’ve got the best prices available for the services you have, it is time to take a good look at what you want vs what you need.  This is different for everyone.  For some, our high-speed internet would be a want, but for us, it is a need since my spouse is required to have 24/7 internet access for his job.  But there are definitely items in our budget that are a want vs a need.   Figure out what in your list of expenses are a must, and what is a luxury.

Prioritize wants and act accordingly

I am not saying one should cut every “want” 100%, but prioritize.  There are definitely things that are less painful to eliminate than others.  Figure out what you can do without - you might after a few months wonder why you thought you needed it!  As long as the goal you are trying to accomplish is more important to you than whatever you’re eliminating, the pain is worth the effort.  Keep your eye on the prize!

Not everything needs to be cut to the bare bone to work towards a goal.  But if you examine where you are, and where you want to be, it might be clearer than you think what things you’d rather give up so you can meet another, more important goal.  Just don’t forget to keep having a little fun.  Frugally. 

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It is finally spring here in the midwest, and although I am not counting out another cold snap coming through, we can go outside most days now to play, and spring fever is in the air.  I’ve been doing my traditional “switch over the season’s clothes” in my children’s closets, and I’ve found that they have both outgrown a vast amount of their clothing in the past few months, and there is some shopping on my horizon, unless I want to do laundry every single day or send them out half-clothed.  Since my kids are 2 and 4, this wasn’t a big surprise to me, but I’m still not going to run out to the closest department store and empty my wallet to fill their closets.  here are some of the things I do, year round, to make the seasonal clothing crunch less painful for all of us.

1.  Shop ahead a season.  This isn’t something you can do if you need the item right now, but you can still be shopping right now for next season.  Right now is when clothes for winter (and some spring) are being clearanced, so keep an eye on the clearance racks of your favorite stores and stock up for next year.  Part of my process this spring was taking out all the clothes I’d bought last year on clearance for spring and summer this year.  made the list of “must-haves” much shorter than it could have been.  I’ll be keeping my eyes peeled for winter PJs for my son for next year, something he’s in short supply of now.

2.  Make a list, as detailed as possible.  I have been guilty too many times in the past of buying something just because it was a bargain and I thought my kids would need it, only to find when I got home that i already had enough of whatever that item was.  So I make lists.  As I put the winter clothes away, I make lists of what is needed for next winter.  As I take the spring and summer clothes out and do an inventory, I make lists of what is missing.  We need a lot of socks, and my son needs 2-3 pais of jeans.  So I won’t buy him t-shirts (which he has plenty of) instead, I make a list.

3.  Orchestrate a trade with friends or family if possible.  Sometimes you know someone that has kids who are a little older or bigger than yous that you might be able to trade clothing with.  I have a friend who has kids the same age as mine, but the girl is the older one and the boy is the younger, so we’ve been able to trade a lot of her outgrown girl clothes for our outgrown boy clothes.  Subsequently, my daughter needs very little this year, if anything at all.  Except shoes.

4.  Hit up local consignment stores and other gently used options.  I am a huge fan of Goodwill for this, but it varies by locality and area.  If you have places that sell gently used clothing, check them out.  It might be overpriced, but you might find some bargains too.

5.  Plan out trips to yard sales carefully.  I love going to yard sales but with the hit and miss nature, the gas to drive to them, and the time spent, it isn’t always worth it.  When I decide to hit up the yard sales, I plan my yard sale trips to be when there are a number of them in a close location (we have neighborhood association yard sales here which work well) and in affluent yet child-friendly areas of our city where I’ll get the most bang for my buck.   I make an event out of it, and spend saturday morning walking about the neighborhood I’ve chosen browsing the goods.

6.  Clearance racks can still be your friend this season, too.  Some things get classified as a certain season but really, are multi-season.  My son needs jeans.  I can find jeans on clearance they were selling in the winter that will work just as well for spring and fall as well.

7.  Look for sales and other discounts.  Sometimes, you need things that you can’t easily get used.  Both my kids need socks.  Socks are not a frequent used find (because well, they get *used*, and not gently.)  So I watch the local department stores and shoe stores for clearance sales, seasonal sales, or just… sales.  I’ve been fortunate to get a lot of great socks for my kids at the price I’d pay for cheap offbrand socks (or less) by paying attention.

Adding to anyone’s wardrobe doesn’t have to break the bank.  I mostly shop for my kids, because my spouse and I don’t tend to grow as quickly , but I’ve used a number of these strategies to add to my husband’s work wardrobe as well.  With planning and perseverence, clothes shopping doesn’t have to break the bank.

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