The "B" Word... Budget

A few years ago, I created a full spreadsheet budget. This baby has everything down to formulas for income to expense ratio (a truly scary experience when you realize what that is.) Every year I faithfully sit down and figure changes to the budget while trying to tweak it to get the optimal debt repayment plan. And then life happens... the gift you've got to pick up... the dish you're supposed to bring to the potluck but unexpectedly ran out of a crucial ingredient... the long distance drive that brought the gas tank down to empty.

My budgets never give me enough elbow room to deal with the little things. As a result, my progress on debt repayment is more like two steps forward and one step back. Tonight I took two very big steps forward. I cut up all of my credit cards. I haven't abused them like I did when I started this mess, but I still fall back on them when my budget didn't make it. I just solved that problem with a couple of snips. That safety net doesn't exist anymore. The second step was evaluating just how short my budget really is. I figured out that I need to increase my income by $150 per month because I don't have any give until I can pay off two minor debts. Those two are my focus with a plan of taking them off the board in the next two weeks.

Moral of the story... BE REALISTIC.

Updates and Evaluations

I've been reevaluating my ability to save money and taking a hard look at my decisions. Its easy to say I'm paying off debt, but a completely different reality when I realized I was only partially committed. I'm happy to say that I've started to use public transportation and even walking to work. It's saving me at least $8 a day in parking. I've been working at packing my lunch and breakfast which is saving me $5 for breakfast and $12 for lunch. I'm making sure I get my money's worth out of my gym membership frequently making workout dates with friends rather than going out for dinner or coffee. Finally, I've picked up some side work on the weekends which is bringing in some much needed extra cash.

Take Advantage of Holiday Savings

Holidays are a great time to save money on groceries. Ham, pineapple, asparagus, strawberries, butter, breakfast sweets, eggs, and entertainment items, now is the time to push your grocery budget and stock up.

Unfortunately, I've never had any success freezing ham. It oozes water, becomes mushy and just doesn't freeze well. Instead, I'm looking for smaller portions to use in sandwiches, omelettes, casseroles, and soup. My favorite dish is an adapted spaghetti carbonara, a pasta with a parmesan, cream sauce, peas, and panchetta. Panchetta is an italian style bacon.

This is also the beginning of the growing season. California strawberries are at their best, big, juicy, and flavorful. Not only am I picking some up for breakfast and snacks, but I'm also getting some to freeze for smoothies later in the year. Stawberries also bring homemade jam to mind, but I admit I'd rather just eat them fresh.

Other items to think about picking up include:
For the freezer ~ butter. rolls, baked goods, and fish.
For next easter ~ baskets, easter grass, plastic eggs, and paper goods.

Improving Personal Finance Management

Over at No Credit Needed, NCN has posted questions for the Personal Finance Community to answer. If you could improve one area of your personal finance management, what would it be?Personally, my biggest challenge is to keep to my budget. I tend to get a bit overeager to pay off debt and don't always budget enough for daily expenses. When this happens I find that my snowflakes make their way to supplement my budget instead of going towards debt. It’s not a good cycle.

To help counter this problem, I save one dollar bills and change from purchases. The dollar bills get stashed in an envelope for the last few days before the next paycheck. The change gets saved in a glass jar. When I reach a certain level in the jar, I take it to the bank, cash it in, and put it towards credit card debt.

Updating the Budget for a New Year Can Be Full of Surprises

After a great wrap up to 2007, 2008 is looking more difficult to keep momentum. Last year I paid off two credit cards, one of which has been a thorn in my side for 5 years. This was a lesson on paying more than your minimum balance. This month I sent off the payment that officially brought my student loan debt below the $10,000 mark. Big Yeah!

The bad news, I keep reworking my budget, but I'm still seeing a $400 per month short fall. Part of it is that I'm putting away $200 per month into my Flexible Spending Account for medical savings. I'm looking at other ways to earn money rather than cut back on my savings or debt repayment plan. I'm even contemplating opening a new credit card to transfer the balance to a 0% interest rate. I don't really want to increase temptation, but it would be beneficial and keeps gnawing at the back of my brain.

In all of this planning the one thing that keeps coming up the biggest savings is not spending. I'm going to start keeping daily tally of money I can put towards debt at the bottom of each post. The one draw back is that I may need to dip into this savings to meet the short fall. I will include those expenses in the post as well.

Today, I spent $12 on groceries that will make lunches for the upcoming week as well as breakfast. I only have 1/2 tank of gas until the 31st, so I will need to make sure I don't take any unnecessary trips. My bills are paid for this month, but I wasn't able to save anything. Most of this is because I was on vacation and didn't work any overtime. It will be a challenge, but nothing too uncomfortable.

Spending Triggers - Do You Know How To Spot Your Triggers and Not Give In?

No Credit Needed has been running a series on 33 Days and 33 Ways to Reduce Debt and Save Money. His most recent post challenges us to identify our spending triggers.

As NCN points out in the post:
"If you are aware of your ’spending triggers’ you can
A) avoid situations where you might be tempted to overspend.
B) discuss your financial goals with your friends and family, so that they will be “on your side” (helping and not hurting).
C) be absolutely committed to living on a budget."

Personally, my biggest spending trigger is the need to spend time with others which usually entails a meal or beverages. Its amazing how much money is spent if I don't keep a stringent eye on this category. Anyone following this blog will attest that I have made this a subject of my monthly goals and it is usually the one that falls short.

So, when you are kicking a habit whether its smoking, eating, drinking, biting your nails, shopping, etc. the first rule of thumb is to know your trigger so you can take steps to prevent it. As an ex-smoker, I knew that I had to change where I had lunch since I usually had a few cigarettes when I finished eating. Instead, I brought lunch to work, saved money by packing my lunch and not smoking. In my efforts to kick my spending habit on meals, I am working on stocking my kitchen with appealing meals and making lunches ahead of time so I don't have to think about it in the morning before work.

Thanksgiving Is Only Two Weeks Away

We are entering what is considered one of the most stressful times of the year. Expectations are high, time is short, and finances are stretching, so how do you prepare? My family is working on redefining expectations while working together to discover what is truly important to each of us. It still gets a bit stressful. My great aunt has been the hostess for many holidays, but we are working on transferring the responsibility and workload to my mom and I. I've hosted a couple of Thanksgiving feasts, but this year will be at my mom's. We will also invite a few people that don't have a place to go for the holiday. Rather than expect her to take care of everything, the meal will be shared between a number of family members and friends. Mom will take care of the turkey and gravy. I usually get potatoes and rolls. My great aunt is in charge of pie (her specialty!) There are certain traditions we keep, but we also switch things up a bit to try new ideas and keep things fresh.

So how do we take advantage of Thanksgiving, switch it up, and utilize it for our frugal lifestyle?Use my family as an example and share the cost by asking family members to bring a dish or two. The bonus is you also get to share in the leftovers.

November and December see the most sales in the grocery stores because the competition is high to lure our grocery budgets out of our pockets. I tend to save more left over grocery money in September and October to prepare for two months ripe with stock up opportunities, specifically baking supplies and cuts of meat and poultry that lends itself to frugal meals that stretch to multiple meals. No Credit Needed has posted an example of a grocery store price book he uses to track bargains.

Take advantage of Thanksgiving leftovers to really stretch you grocery budget. Start planning the menu now so you know how much to put aside for which meal. Don't feel like you have to finish the whole turkey in three days. Freeze portions for later use.

Keep an eye on the stock market and search for bargains there too. While the fall is a great season for good returns (minus that black monday thing of course), its the move to cut loses before the end of the year tax deadline that is where to find the deals.

Costco - Land of Opportunity or Budget Buster?

I have the unique responsibility in my office to be in charge of the Costco run. My office is fairly generous because it supplies things like butter, cream cheese, brownies, and other items that help employees prepare lunch. I try to plan my trips and limit my purchases. Living on my own, its not easy to stockpile, but with some careful planning, I can take advantage of deals I find.

I buy prepackaged chicken breasts to keep in the freezer. It may not be the most economical way to buy chicken, but the convenience of cooking two up and keeping them in the fridge for a week of meals is invaluable.

Prepackaged meals are usually high in fat and calories not to mention more expensive than cooking from scratch, but if the choice of dining out or throwing something in the microwave it may be worth the purchase. I keep a few easy comfort foods in the freezer to prevent unnecessary fast food temptation at bay.

Solid Pack Canned Tuna is a good staple to have around for sandwiches, salads, and casseroles. Solid Pack may be appear to be more expensive, but its better quality and more cost effective if purchased on sale. I try not to spend more than $1.00 per can.

Chips are inexpensive and I can divide the bag out into convenient snack packs using sandwich bags.

Don't fall for the huge packaging. If you aren't going to use the item within a year, it may be a waste of space. One way to help fight this excess is to go shopping with friends, co-workers, or family members and splitting an item. While I don't need 12 cans of broth, I can easily store 6 and split a pack with a co-worker.

Check prices and cost per units. Just because Costco sells it doesn't mean its a bargain. Get familiar with the items you regularly purchase and don't be afraid to research items that look appealing. Impulse buys will kill a budget and many Costco purchases are made because you never know if the item will still be in stock on the next trip. Use the 24 hour rule. If you didn't plan on purchasing the item, don't. Go home and sleep on it.

Finally, take a set amount of cash with you. Don't take checks, credit, or debit cards. Its easy to justify a "few more dollars" if you have that possibility. Remind yourself you don't have to spend the whole amount either.

Dining Out on the Cheap

One of the first things to go when cutting expenses is dining out. It's expensive and is rarely a necessity. So what do you do when temptation strikes or you are meeting at a restaurant for a meeting? Plan and allow yourself a splurge every once in awhile.

While I was in college, I had a number of odd jobs, but the one I was at the longest was for a restaurant. Not only did it give me some great benefits like free soup and salads as well as 50% off any menu item, it also gave me a great education in food.

I learned about different wines and that the restaurant mark up is 100-200% on a bottle. Restaurants make the most profit off of wines by the glass. You can bring your own wine, but you will be charged a corkage fee so call ahead to find out how much. It can range from $10-$30 per bottle.

I also learned how to dine out on the cheap. I took full advantage of my discounts, but I also familiarized myself with all of the Happy Hour specials at the restaurants and bars around town. Sounds like a lot of bad bar food? Not at all. Many area restaurants offer a $1.95-$3.95 menus that include hamburgers, sushi, pasta, chicken Caesars, and hummus plates. The only requirement is buying a beverage for a minimum that is typically a soda pop or iced tea. (Free refills)

Another trick is to buy an appetizer instead of a main course. My friends and I have been known to make a meal of a side salad and split an appetizer. If we are feeling like treating ourselves, we may split a main course.

Finally, consider lunch instead of dinner. You can typically get the same menu but smaller portions for much better prices.

Doggie bags aren't just for the dogs. Ask for a box before you start your meal and take half of it home for another meal. Weight loss gurus have been recommending this for some time as a way to lose weight. It also is good for the budget. Restaurants justify increasing menu prices by giving you more food and larger plates. It gives the illusion of better value for the money. In fact, most people just waste the food by leaving it or they add to the growing weight problem by eating everything on their plate like we've been taught since childhood.

At the end of the day, don't deprive yourself a luxury now and then. Just plan wisely and make sure you enjoy every aspect of the experience.

What Advice Is Realistic for a 20-Something

An article caught my eye today on Yahoo!Finance that had been published in US News & World Report by Kimberly Palmer. In it Ramit Sethi, creator of the "I Will Teach You to Be Rich" blog discusses how most of the information out there on personal finance is written by "old, white men for old, white men," and too a point I may agree. (Maybe not quite so harshly.)

When I started reading about personal finance and investing I was 20 years old. My parents didn't sit me down and explain budgets, investing, or even shopping for groceries. Growing up, my mother had struggled as a single mom making ends meet. My father's frugality was often confused for being a cheapskate. He invested... with a full service broker and he collected as a business. Its interesting that there are two taboo topics that parents assume kids will learn, sex and personal finance. The sad thing is parents are often surprised when kids have difficulties tackling either one.

My mom helped me set up a savings account, but forgot to explain to me why earning a penny a month was beneficial. I couldn't see the big picture. I baffled my grandparents one year when I asked for stocks for Christmas. To their credit, I got 6 shares of Costco when it was at $12/share. That was the beginning, but there were a lot of bumps in the road to my education.

I agree with Famit Sethi, personal finance education is not one size fits all. Many books teach from the perspective of someone who has already graduated college, is married and possibly with family, and have a significant start on savings. They aren't taking into consideration purchasing the wardrobe for the new job, starting a discount / online brokerage account with a minimal amount to start, setting up a food pantry from scratch rather than relying on Taco Bell or McDonald's, or how to start out with the minimum and building your benefits as your budget allows.

My advice to someone starting out:
~ Do not rely on credit. It is a band-aid that will catch up to you quickly. Better to take your spare time, develop alternative means of income, and build your investment account. Get your shopping fix off of smart investment decisions.
~ Keep your roommates as long as you can. Not having to share a bathroom sounds like heaven, but all of the extra expenses will drain your budget quickly.
~ Take a cooking class and educate yourself on easy, healthy meals.
~ Cheap furniture is just that, CHEAP. Invest is better built pieces that will be around for a few years.
~ Challenge yourself with finding free meals served at community events. Combine entertainment and keep tabs on your grocery bill.
~ Don't get frustrated when your teller gives you funny looks. Make those deposits into your savings even if they are $5-$10. Its still a contribution to your savings.
~ Like cheap furniture, penny stocks are cheap for a reason. Make sure you research your investments before you jump into the world of Wall Street. That $3 stock won't look like such a bargain 5 years later when its still at $3.
~ 3-6 months of wages in an emergency fund is something to strive for but not a requirement. Don't be afraid to start small.
~ If someone tells you $500 isn't enough to do anything with. Walk away and don't believe them.
~ You are building your network everywhere. Make good first impressions to ensure future success.

The "Reduce A Bill" Challenge

Thanks to the inspiration of Working For Financial Freedom and Being Frugal, I am joining their challenge for October. Originally inspired by Being Frugal's ability to lower her grocery bill through determined coupon use and organization, Working For Financial Freedom has created the "Reduce A Bill" Challenge. The idea is to focus on one bill or budget area to lower. Working For Financial Freedom is going to line dry her laundry for the month of October.

While reading through some of the comments, I found a response from Heather who is going to do 10 No Spend days for the month. These are days where you spend absolutely no money. This sounds right up my alley since I find that there is always a dollar here or there that ends up getting spent. Even on my best day I tend to forget about paying for parking somewhere.

If you're interested in participating, check out either site and record your goal in the comment section. Don't forget to think about what you are going to use that money you have saved for. Personally, I'm working on that $1,000 emergency fund.

Holiday Season Challenge - Bulk Grocery Fund

During November and December, sales are popping up everywhere and not just at the malls. This is the time to stock up on groceries you will use throughout the year including baking items, turkey, roasts, dairy, entertainment foods, citrus, etc. Don't miss out on the savings. Start socking away some savings today to be able to take full advantage of those savings in the coming months.

It's Nice to Know Even Experts Get Frugal Frustration

How much is too much frugality? Like living a green lifestyle its not a one size fits all. Each of us needs to evaluate what we are willing to do to reach our goals in saving money, getting out of debt, or becoming more earth conscious.

Laura Rowley over at Yahoo!Finance struggles with her husband on whether or not to take a brown bag to work in this week's article "Some Thoughts for Your Pennies." While assessing what is important and what isn't important her husband believes that buying his lunch during the week is not only an important part of building relationships with clients, but is also a big networking tool on the days he doesn't have a client lunch. Laura Rowley points out that at $8 per day this is a waste of resources, but much of our choices are based on priorities. She has finally conceded not to bother him about the subject. (btw, for anyone wondering what the big deal is for spending only $8 per day... that's $2,080 per year that could be directed towards debt or savings.)

Laura Rowley advises not to underestimate the power of the penny. Little changes throughout our budgets can reap big rewards. If you can save $.28/day that is a little over $100 per year. If you calculate David Bach's Latte factor, going without one $4.50 Latte per day is equivalent to saving $1642.50 per year. In my case, going without one $.50 can of Coke per day is equivalent to $182.50 per year.

Are you asking yourself yet why I included becoming more earth conscious in evaluating what we are willing to do to increase our savings and eliminate debt? The answer is simple. On many levels taking a bit of advice on being earth friendly will also be budget friendly. Changing out normal incandescent bulbs to compact fluorescent bulbs will save money every month as will changing out shower heads to water saving, low flow heads and placing a plastic bottle filled with water in your toilet tank. Each of these steps will save you a few cents with each use, but the savings adds up in no time. For more information on saving money and being earth conscious, check out the New American Dream website.

Saving Money On Prescriptions

While I was picking up my prescription for allergy medication, I was behind a guy who was probably about 20 years old. He's obviously one of those lucky souls that hasn't had to budget for prescriptions before because he got three months of refills and balked at the cost of about $100.00. After he left, I made a smart comment to the pharmacy assistant that he was lucky not to know what some prescriptions cost. I then paid the nice man $40 for the co-pay for one month of my prescription. Medication is about as exciting to purchase as a vacuum cleaner. You know you have to pay for it, but you really don't want to.

The following is a list of suggestions for keeping those medical costs to a minimum:

• Use ExpressScripts. You can get 3 months of refills for the cost of only 2 co-pays and its delivered to your door. (Its also a publicly traded company and no, I don't own it.)
• If you can, consider generics. Just like everything else, do you really need to pay for the name?
• Take care of yourself. Eating right, drinking water, getting plenty of exercise, keeping control of stress, and having regular check-ups will help save money it the long run.
• Many over the counter medications were once prescriptions. I try to keep my costs down by supplementing with these over the counter medications for part of the year. Make sure you check with your doctor before changing any medications.
• If your company offers a Flexible Spending Account for medical expenses, take advantage of it and budget in your co-pays. This will save you taxes that add up over the year.

Goal Progress

Today I made $4.00 selling back a DVD. That makes it a grand total of $6.50 so far this week. I did spend money today because a group of friends and I went out to dinner. Before you give me too hard of a time, I only spent $11.00 for the entire dinner and I took home leftovers for lunch tomorrow. Luckily, my friends are trying to save money as well. Tomorrow night the Food Bank has teamed up with Regal Cinemas for the "Cans Film Festival." For three cans of food you can support the food bank, get free admission to a movie and a free popcorn. Now that's a good deal!

Have you put together your list of free activities in your community yet?

Holiday Season Challenge - Evaluate Your List

Okay, so you've figured out everyone you need to buy for this holiday season, but did you really need to include your dog groomer and third cousin you only met once? Take a good look at your list. How many people listed on it are there because you feel like you have to? How many people are you going to spend more than you'd like because you feel like you have to? Take the challenge and simplify. You'd be amazed how many people on your list will be happy to just spend time with you catching up.

Taking Advantage of Opportunities

Are you taking advantage of every opportunity that is available to you? I ask this because as someone that works very closely with the benefits department of the company I work for, I'm amazed at how many employees are not taking full advantage of benefits. Most people think of benefits as paid time off, health insurance (medical/dental/vision), and 401k which they are, but don't undervalue other benefits as well.

Tomorrow I have the opportunity to attend a industry trade show were they bring in speakers from all over. Kendra Todd from HGTV's My House Is Worth What? and author of "Risk and Grow Rich: How to Make Millions in Real Estate," will be the keynote speaker. I'll have the opportunity to network with other professionals and make connections with vendors that I can do business with. Another perk worth mentioning is the free breakfast and lunch, year supply of free pens, and other goodies. If I'm really lucky I may even win one of the free prizes they will be giving out tomorrow. Many of our employees choose not to go because they think its boring. Personally, I don't think they are looking at the big picture.

My challenge to you is to make the effort to take advantage of every benefit your employer has to offer. If you don't understand what it is, ask questions. 99% of the new employees at my company do not take advantage of the Flexible Spending Account because it sounds too difficult and they may loose money if they don't budget carefully. That a 14-34% savings depending on the tax bracket that they are missing out on.

Not sure what to look for? Here's a list of benefits to start with:

• 401k - Many companies offer a company match, make sure you are contributing the maximum match amount
• Flexible Spending Account - A medical savings account that takes money out of your paycheck pre-tax dollars and saves it in a separate account. As you incur medical expenses, you submit receipts for reimbursement.
• Company Match on Charitable Donations - Maximize your donations to your favorite charity by finding out if your company matches it.
• Education Reimbursement - Many companies don't even require you to take courses in your field of work. Keep your computer skills up to date. Learn new marketing skills. Take a class that will help with your personal life as well as your professional life.
• Public Transportation Reimbursement - Does your company pay you to take the bus/train? Save money by not paying for parking, gas, tolls, etc.
• Mileage / Expense Reimbursement - Don't put off turning in expense and mileage reports. Make that money work for you by snow flaking it towards your debt or emergency fund.

Breaking the Habit of Eating Out Through Menu Planning

Now that the sticker shock of taking on a new debt by buying a car has taken hold, I have been looking at my debt reduction plan, expenses, and potential avenues for additional income to help keep me on my path to debt repayment.

I don't have to spend hours crunching numbers in order to figure out that I can easily spend less on my food budget with a little planning. I was easily spending $400+ per month on dining out. That's about $250 per month added to my credit card since I typically would only budget $200 for all food. I can say that this lifestyle ended about 6 months ago, but there is still room for improvement.

Taking the time to plan a menu will help to not only stick with my budget, but also cut back on the amount of food that goes bad before I have a chance to eat it. For instance, I know that tomorrow I will need to cook some chicken breasts for dinner so that I can use the leftover to make a sandwich for lunch on Wednesday. I took two out of the freezer and put them in the fridge last night so they will thaw in time. When I sat down to make out a menu this last weekend I looked for ideas that would incorporate the chicken and came up with a few ideas including:

• Chicken Quesadillas - sliced chicken and cheese grilled in a tortilla with salsa and sour cream.
• Chicken and Couscous - sliced chicken cooked with couscous, broth, broccoli, and mushrooms. It also makes for great leftovers for lunch
• Chicken Bento - cooked rice with sliced chicken, broccoli, mushrooms, carrots, and teriyaki sauce.
• Chicken and Sun dried Tomato Pasta - sliced chicken with mushrooms, sun dried and fresh tomatoes, peas, Parmesan, and a touch of white sauce (butter, wine, cream or sour cream)

None of these ideas take a lot of time or energy to make. Having precooked chicken breast is a great staple to use for throwing together simple and healthy menus. Make sure that you make extra to freeze for later meals or take for lunch.

Boggled by Budgets - How do you fit a square peg into a round hole?

Nothing stresses a person out like trying to put together a budget. A friend of mine has her heart set on a cute little condo. I helped her to put together some preliminary numbers in a budget which came up to a shortfall. It is always interesting to go through each category and decide what is important and where there is space for adjustments. My challenge personally has always been in trying to work it too tightly. I feel like if I just give up a bit more, I can pay that debt off quicker. The problem is I don’t give myself that buffer and it ends up creating more problems. In looking over her numbers I could see that she was lacking in an emergency fund as well. One of my goals is to establish $1000 for an emergency fund. (Anyone who is a fan of Dave Ramsey will recognize that as an important first step.) Key Bank has been running a special that if you do two electronic deposits of at least $100 each they will give you a free ipod nano. My problem up to now with using my savings account is that it is linked with my checking account, which makes it too easy to dip into.

While running her numbers, I kept working on fitting the Expenses into the Income. There is a significant difference if she purchases this condo. I think she does have the ability to do it, but she will have to make some lifestyle changes. She is already restricting her meals out and she had decided to give up her Dish and high speed internet access. My question is when do we get to the place where we have to stop trimming. I mean, lets be realistic. You can’t budget out food or shelter, but just how low can you go. This is where the frugal game gets played.