How to Slash a Budget That’s Already a Skeleton

Over the years I’ve read various accounts of people who have made remarkable progress, either in savings goals or debt payment, by tracking spending and cutting hundreds (or thousands) of dollars from the monthly budget.

What if your spending is lean already?  Either by choice, or by circumstance, some of us don’t have $150 cable and phone bills, or biweekly dinners out, or a clothes shopping habit– all line items that are often the first to go.  In my case it’s been a little of both.  I haven’t necessarily felt desire for a new-off-the-lot car or cable tv or purses; those things just aren’t part of my lifestyle.  My income vs. expenses, however, has also ensured there’s not a big discretionary spending number to tempt me.

So how in the world do I go about trimming where there is no fat?  And how do I decide how far I can go?  If it were only up to me and the goal is to save as much as possible, I’d be selling everything including my house and car and moving into a small apartment blocks away from my workplace.  I’ve thought about that last bit a LOT over the past year, especially since our current housing market made my neighborhood very profitable for sellers.

I’m not the only person who calls this place home, though, and I’ve gone without a car before and found it miserable and defeating rather than liberating.  My body does not appreciate wind chill!  Those two things are currently not part of the plan.

we vote against moving houses!

 

 

For me the answer has been to regularly reevaluate my spending categories in relationship to my values.

How often do you review your finances? If you don’t, start! Start by tracking every single penny you spend – most of us are pretty darn surprised by the amount we don’t notice sneaking out of our bank accounts.

If you normally review your finances biweekly when you get paid, for example, schedule time to really sit down and look at your spending. Two years ago my only debt was student loans and a mortgage, and I thought I was doing pretty good in the budgeting department.  At that time Netflix wasn’t needed in the summer when I wanted to play outside so I’d suspend my account, but heck yes it was “necessary in the winter” when hot chocolate and blankets were calling my name. Our phones were prepaid and had been about $35 each per month for a few years. This seemed like a great deal compared to my iPhone using coworkers and friends. I bought food at the farmer’s market and co-ops, and it was budgeted so I didn’t pay much attention to the overall number. We ate simply at home, and went out to eat 4-5 times a year, so it didn’t occur to me I could make an impactful change to that budget line.

 

In the past year, however, I’ve come to detest every penny of debt I owe and am committed to paying it off as soon as possible, then keep right on socking that money away for financial independence and retirement. The first couple of times I looked at my spending, I couldn’t see a single thing to cut.

I spent a lot of my dog-walking time last fall thinking about what my ideal life looks like, and how my ideal spending would match those values. If you had unlimited financial resources right now, what would your day to day life look like? If you can’t envision a life different from now (I’ve been there!), take a look at the Frugalwoods’ Uber Frugal Month Challenge – stripping your finances to only the bare essentials will reveal your true needs versus wants.

The next time I sat down to study my spending through the eyes of my Future Self, there suddenly were line items that positively jumped out at me.

Changes I made that weekend in October, that seemed impossible in September:

  • I cancelled Netflix – I realized that mindlessly watching videos is not part of my ideal day, and any rare insomnia-induced tv watching could easily be filled by free streaming services. $10.77/month * 12 months = $129.24 annual savings
  • I reduced my kiddo’s phone plan since he now had consistent wifi access – my plan was previously changed, bringing our total to under $40/month for two smartphones. 2015 phone plan $74/month – new phone plan $35/month average = $39 savings/month * 12 months = $468 annual savings
  • I switched auto insurance and paid six months in full for $349 – my previous monthly charge was $132, so 20 minutes of internet research netted me a 56% price reduction! $132/month – $58/month = $74 savings/month * 12 months = $888 annual savings
  • I started shopping at Aldi as my “first” stop, then supplemented at the co-op.  By the end of the month, Aldi was first, followed by a local grocery store. I was never a good price-watcher, so it has taken the last five months to have a good understanding of where my dollars are best spent (and it’s still a work in progress). Average spent Oct-Nov 2016 $480 – average spent Oct-Nov $320 = $160 savings * 12 months = $1920 annual savings (and this was before I became a strict meal planner and Uber-Frugaled my grocery bill!).
  • I decided I was no longer going to eat out just to eat away from home. Social gatherings are ok, but luckily for my budget these are maybe once a month and tend to be coffee or happy hour. Figure 5 * $40 tab = $200 estimated annual savings.
  • I decided I was no longer going to purchase coffee for consumption outside my home.  Assume 3 coffees/month ranging from $2-$6 = $150 estimated annual savings.

Just these quick, done-in-a-day changes will add up to $3755.24 of savings this year alone!

 

I save money by insourcing shower cleaning to this guy

Four months later and I don’t miss Netflix (my coworkers and I have easily found other things to talk about!), I can’t believe I didn’t check car insurance rates at least every six months, and the last time I went to the co-op I was shocked at the price of tea. It doesn’t even cross my mind to go to the cafeteria at work because I’ve already prepared my meals for the week. Coffee was the hardest habit to break emotionally, but being prepared and bringing a thermos has prevented backsliding. My new normal is already normal.

 

The key to ongoing savings is to evaluate categories regularly.  

A few years ago I had a back injury (muscle). I wasn’t allowed to do any weightlifting that put compressive force on my spine – which for me meant the only heavy lift I was doing was bench press. It took about a year for me to cancel my gym membership. If I was in the practice of sitting down with myself and my Future Self, looking at what we valued at that moment and in the future, I would have easily seen that powerlifting was not part of my life at the moment and could have cut that expense much earlier.

At the time I cut the gym membership primarily because I wasn’t using the gym as often, but I also was conscious of saving that money. I’d been vaguely kicking around the idea of socking away loads of money into savings. But instead, I took that “savings” and transferred that spending to another category: I started going to the salon more frequently, and had a stylist who loved to play with color and short cuts, necessitating even more frequent salon visits. Again, if I routinely examined my budget categories I would have realized that my “money saving” gym membership cancellation inadvertently led to even more spending!

 

Moving forward I think I’m in a really good place to be able to assess my finances against my true values. The last few years were all about deciding what those values are – I’m glad I took the time to experiment with being a girly salon girl but looking back the upkeep was a drag, and I wear a hat for work anyway. Win for my low-maintenance tomboy self, win for my wallet! Now….what else can I cut starting in April….

 

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Frugalwoods’ Uber Frugal Month Challenge

Part 1 of my Challenge homework helped me work through the mental and emotional aspects of my financial goals.

Today I get into the nitty gritty!

Step 2 per the Frugalwoods’ challenge guideline post:  Review Spending.  I review my spending a few times a week through YouNeedaBudget — I love the clean look of the software and have figured out over the years how best to use it for my particular habits and needs.  I am not yet at a point that I can forgo a budget so YNAB has been invaluable.  I’ll post December’s spending (it was a lot, eek) after I close out the year in not-so-frugal style.

Step 3: Categorize Expenses 

Monthly fixed expenses

My health insurance is payroll deducted along with my retirement contributions.

My water usage is higher in the summer while my gas/electric are higher in the winter.  Internet is by far the cheapest and most reliable (I’m very lucky to live in a neighborhood with fiber optic).  Cell phones include pay-for-usage data which we rarely need.  Debt payments include student loans, an auto loan, and a boatload of medical bills.

Monthly average spent through 2016

Bicycles were newly acquired in 2016 so the spending from here on out should be less.  Groceries include household items such as toiletries and kitchen doodads as well as all food.  My spending includes all the cafeteria breakfasts and drive through coffees I mindlessly indulged in for the first ten months of the year!  Vacation was a life-changing trip that my now-adult kiddo and I will both always cherish so I’m ok with those choices even though I still have considerable debt.  Kiddo categories include all of his spending:  on his car, school expenses, food, clothing, entertainment and so on.

Step 4 — What can I eliminate entirely?

  1. salon visits — my eyebrows will take over the world!
  2. alcohol for home consumption (currently $20-30/month)
  3. bath/grooming products other than bar soap, toothpaste/floss
  4. DRIVING when I’m not on call
  5. Things I eliminated in November 2016: buying meals at work, buying coffee out just to buy coffee, going to shows (music), Netflix (it ended two days before the Gilmore Girls reboot and I didn’t restart my account!), driving without combining errands, any clothing that wasn’t directly related to winter biking necessities, haircuts for the kiddo, and mindlessly shopping at spendy food stores without making a meal plan for the week.

Step 5 — Substitutions

  1. salon: I’ve been waxing my eyebrows, not prettily, but good enough for all the men I know and most of the women 😉  NO HAIRCUTS will be easier than it sounds because my head is covered at work and this time of year is covered everywhere else outside my house as well.
  2. alcohol: Tea instead of wine.  I loooooove my wine, in the winter especially, but it will be good to take a longer break than the weekdays I usually take ‘off’.  I’ve noticed this last year that wine consumption affected my bicycling if I was doing a long ride the next day, so I’ll have to evaluate this line item for a number of reasons at the end of the challenge.
  3. grooming products: I have a shampoo bar that should last me the whole year (I use it every couple of weeks; otherwise I just use water).  Once my current lotion runs out I’m going back to straight coconut oil because it works much, much better.  I mostly use lavender oil instead of deodorant so my deodorant will last all year (it definitely took several months for my body to acclimate to this! but was a huge benefit while bikepacking for ten days last July).
  4. no driving: This will be a major mental challenge for me!! I do drive on days I’m on call because my response time would be too long if I was called back on my way home.  I’ve been bicycling to the transit station but during our week of subzero temps I happened to be on call every day so I haven’t actually ridden below 0F yet.  In the spirit of No Driving, I will forego my shop-on-the-way-home rule and will only drive straight to work and straight home, and otherwise bicycling for commuting and errands.
  5. My previous cuts will continue.  I’m getting better at meal planning and am looking forward to a month without food-centric holidays to see if my spending estimation is on track.

Step 6 — Reduce Spending

I have been pretty good about making my lunches for the week ahead, and I eat the same thing for breakfast every day, but I could automate more of my meals.  I have health issues that require skipping many of the economical meals I lived on in past years, but I am confident I can keep my grocery bill lower than before.

I turned my thermostat down to 60 in November and came home to the dog and cat snuggled up on the couch several days in a row (they are not usually that friendly).  I’ve since settled at 68.  My house is smallish and well situated to take advantage of passive solar warming when I’m home.  I moved my bedroom from the coldest room in the house to upstairs where it’s toasty, saving me from using the oil-filled heater as often as I have in years past.

Step 7 — Insource

For my Christmas gift, my kiddo is going to teach me how to change my own oil.  I adore my car shop, but routine maintenance is, well, routine.  I’ve learned how to clean and lubricate my bike, which is even more important in salty road season.

Step 8 — Examine Your Habits

I plan to look up my utility usage and see if things like lowering the thermostat a little more will make a measurable difference.  Most of my spending impulse habits have been mitigated by making cuts in November, and things just not being an option (like buying coffee out just to get coffee) is definitely working.  I do need to start bringing more snacks to work so I’m not as hungry and cold by the time I’ve biked home.

Step 9 — Plan Ahead

Meal planning is by far the biggest impact on my week.  I do need to be a little better about having snacks on hand both at work and during my commute.  I’m starting to get the hang of eating before heading out for social events.  YNAB has helped me plan ahead for occasional expenses.

Step 10 — Buy Used or Cheap

I don’t foresee needing to buy anything in January but I’m no stranger to thrifting.  I’ve started keeping my receipts and snapping photos of prices at stores so I have a better idea of what’s really worth getting at Costco (McCann’s Irish steel cut oats at the moment!).

Step 11 — Banish Excuses

Done!

Bonus step — Say Yes

As outlined in my previous post, I’m making a conscious, intentional effort to say Yes to the good things in my life this year, especially when those choices involve people I care about.  This means I likely will spend money a few times this month — post-bike-ride libations, snowshoeing, and probably the first theater movie I’ve seen in a few years.  My newly formed frugal muscles will keep these things to one beer and fries (rather than a few and a meal), snowshoe rental but bringing my own coffee and snacks (rather than eating out before and after), and Star Wars at a theater that lets us bring in coffee cups (I don’t need snacks but I do need a warm beverage lest I fall asleep.  Even during Star Wars).

This also means that tonight I’m saying yes to reflecting on my year and making plans instead of spending money at a show; I said yes to going to the mall with my kiddo today but ate beforehand (AND avoided getting coffee even though my brain was quite insistent); I said yes to buying board games that are at this very moment being enjoyed across the table from me; and I said yes to staying overnight in a hotel when I take my kiddo back to school so that we can spend time together the following day.

I’m looking forward to the coming year, and I’m excited it’s starting off on a frugal foot!

Happy New Year!

 

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