I know a lot of people who are struggling, whether it's due to the recession or just plain lack of knowledge about how to handle money.
I want to share a little about what we do to keep our cost of living down without resorting to extreme measures. Occasionally we still have months where anything that can go wrong will go wrong and crap! Christmas is next week! and we have to get creative to stretch our dollars, but for the most part I would say we are "comfortable". Your definition of comfortable may be different. Mine is not having to sell my nail clippings for canned tuna. Yours might be 3 cars and a speedboat. If your comfortable involves using regular unleaded gas instead of premium to save money, then this post is not for you. Go read Forbes and count your hundreds instead.
Let's start with the B-word: budget.
I try to keep it simple. I don't plan out every little expense. Instead I generalize. For example, toiletries are included in grocery money, since I buy them in the same trip.
Start with what you make per paycheck. If you are like most people, payday comes twice a month. Our budget is separated into 1st of the month pay and bills, and 15th of the month pay and bills.
If you are paid on an hourly wage, it's best to budget with the least you usually make.That way you have enough to pay for priorities in lean times and wiggle room for extras when you get a pay bump or overtime.
I'll use the numbers in my own budget. Some may gasp at this, but the way I see it, Josh is in the Army, so if you know his rank all it takes is a quick Google search to find out how much bacon he brings in. May as well be honest.
Okay, starting on the 1st of the month:
Seems simple enough, right?
*I include Josh's haircuts in our budget because he has to keep his hair regulation for work. If you have similar expenses be sure to include them in your main budget. It doesn't go away just because you don't put it on paper.
You may be thinking, whoa, $150 left over? How do you survive?!
Or, $150!! Gimme some of that!
What is left over is for random expenses like McDonald's if I burn, ahem, don't feel like making, dinner, if Josh needs something for work, etc. Anything left over at the end of the pay period goes directly into savings and we start fresh each payday.
The 15th of the month budget looks like this:
The end of the month is when we make "big" purchases (anything over $50 is a big purchase).
Any money left over is put into savings on the 1st and we start the next month fresh.
I pay whatever bills are due within a pay period on payday. That way I can relax because I know it's taken care of.
Some bills I pay a couple weeks early because paying them on the 1st on top of our rent is simply not possible.
For example, our utilities are due on the 4th and 7th and my school loan payment is due on the 7th. By paying them 2 weeks early, I am able to use money from the 15th rather than us living off of ramen noodles on the 1st and then on Applebee's take-out on the 15th. My digestive system needs more balance than that.
A few ways we save money:
-Virgin Mobile phones: We both have smart phones with unlimited data and messaging and 300 minutes for $38 each per month. You pay full price for the phones but in the long run the phone pays for itself and then some. We save minutes by utilizing free services like Skype to video chat with family and friends.
-No cable: Instead we have Hulu plus and Instant Netflix, each 7.99 a month. The combination of the two provides us with our current and past favorites. Occasionally there will be a show that Hulu doesn't have and we are too impatient to wait a million years for Netflix to get, so we buy a season pass on iTunes. For $30 a season we get Mad Men and The Walking Dead.
- No credit cards: This is a biggie. I know, you've been taught that you need to build credit, you need cash in emergencies, etc, etc. From personal experience, this simply isn't true. We have excellent credit simply from paying loans and bills early or on time, in full. We also have one less bill to worry about and there's no risk of any regrettable purchases "because it was on sale". We keep enough money in savings for true emergencies like a flat tire or unexpected expenses. Aim to have $1000 or $500 (depending on your income level) in emergency savings that you only touch IN EMERGENCIES. Josh occasionally has to remind me that Target sales do not qualify as emergencies and I have to remind him that brand new video games are not a matter of life and death.
- If we really need something, we save and save and buy it in full. The exception to this for us is Josh's man-car. If it were up to me we would be a one car family with no car payment, and for awhile we were, but Josh is in love with his car. We got a great deal on it and make maximum payments to pay it off quicker. He's just lucky his "pretty please I NEED it" face is cute. But if my car breaks down he agrees to sell his and we will get a good 4-door whatever instead. Compromise.
- Coupons! I load or print every relevant coupon I can find when doing my grocery list. I sign up for free samples which usually come with great coupons. If I ever get around to subscribing to the Sunday paper I suppose I'd save more. Right now I just keep coupons with me and try to match them with a sale.
-Clearance, secondhand and DIY: Hello, DIY Christmas Tree! I raid the clearance section all the time. BUT. I only buy things that I will actually use/need. I used to be really bad about bringing home piles of random crap but now I give myself a dollar limit of $10 a month. That way I only buy truly awesome deals and only things we actually will use.
-Going chemical-free: As crunchy granola as it may be, cleaning with baking soda, vinegar, and essential oils is more about cost to me. Once I learned that I could get an even better clean with just a little prep and mixing AND I can make it smell however I please AND it costs a fraction of what I usually spend, I jumped right on the green bandwagon. (I have a whole board dedicated to DIY, chemical-free type things over on my Pinterest. It's called "Why Didn't I Think Of That").
That's how this mama does finance. What are your favorite money maximizing tips?