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It's a lot easier to get motivated to make small spending changes when you see the annual cost.
Don't even let me get started on the annual cost of smoking!
By Louise, the Frugal Yankee
Cable is one this I won't do without and I'd rather watch CNN, MSNBC, etc on the TV. I can't see watching TV on a computer screen. I cut in other ways in order to pay for this luxury.
This one works great! Hubby pointed out that he saw big fluctuations from month to month on our grocery spending. I've decided that $400 should be enough for a month of groceries.
On the first of each month, I go to my favorite grocery store and purchase a gift card for $300. I also buy gift cards for other stores (pharmacy, Target, Walmart) which will equal $100. So at the end of the month the tally should only be $400.
Take out any credit cards or checks from your purse/wallet and only have the gift card as an option to spend money. This forces you to only spend as much as the amount on the gift card. You could also divide your gift cards so the amount is what you need on a weekly basis and only take "this week's card.
If you think you may over spend or go to a store that you haven't bought a gift card, write ONE check, and put in the To: section the Store/Vendor name. That will limit you from wandering into different stores and buying impulsively. Leave all other checks and gift cards at home.
It works because you cannot spend over your budget and you can't buy anything from another store impulsively. If you must have a certain thing from a certain store, put one check in your wallet with the name of the store already filled out. If you have only gift card, you must add up the cost of the groceries or perhaps "put things back". I usually count, rounding most prices "up" instead of down. Not having enough $ at the register might be make you feel embarrassed so you will probably stick to your list.
This can be used for gasoline or other specialty stores. Most stores have some type of gift card available.
By Bella Swan from Forks, WA
That is just a great idea. We have a store (or a few stores) where you get 20 cents off a gallon of gas for every $50 you spend. So, I could buy $50 gift cards, get 20 cents off for gas and have the gift cards to buy groceries. Thanks for the heads up. I hope you win.
Know what you have cash in your checking account for the month. Without a credit card for dentist, doctor and monthly emergencies for the kids, I never was able to budget cash for those emergencies. So, it was either pay partial on a phone, electric or food bill or every time I got a raise, even if only amounting to $5.00 a month after the increase in health insurance and/or taxes, the extra went into savings.
Never get used to extra money or raises, on a daily basis. Put it into a bank, different from your checking account if your tempted to easily transfer every month into daily living. Make it difficult to reach, but readily available for that cash deserving emergency.
Once the media and economists would recommend having a $1000 reserve in your saving for these emergencies (even with credit cards) but I was never able to accumulate much more than $200 or $300 hundred dollars before the dental or appliance breakdown occurred. But, a refund from taxes or a pay raise, got me through a lot of those daily crisis that had to be paid cash.
Buying my first home was the best investment I ever made. But, my objective was different than many young people today. My desire was for the girls to live in a neighborhood and have a stable environment, even though I had recently divorced. At the time, GI Loans were assumable and I had exactly $4000 dollars after the divorce, to save or spend. But, it would be without child support and wasn't much, even by housing prices in the 70's. So I searched for weeks and house hunted for sale by owners, looking for a assumable loan.
I didn't have a job, didn't have credit and didn't know much of anything, but knew I could babysit, clean houses, work as a waitress whatever as long as it was honest, and was close to a college or night school. So, the house was strictly a matter of neighborhood normalcy, price and conditions of purchase. I found it in a visually dull, nondescript, fixer upper. Assumable, 4% GI Loan (1973) and need of paint, carpet and numerous other things I thought I could do. Same monthly payment as the apartment the girls and I were living in, in another city at the time.
Sometimes ignorance is bliss because things I couldn't fix did go wrong. The heater, the swamp cooler, the roof caved in years later while my company went on a wild cat strike. But, when things were disastrous, friends and neighbors came to the rescue with help and advice, that taught me how to do things and also that God helps those who help themselves.
I found a good job, worked part time jobs, and painted and fixed. Later I sold at a profit and had the house built that happened to end up at a 17% interest rate, while I was only making $7.00 a hour. That house payment almost killed me, but more part time work, cooking economically, heating with wood, the daughters going to work in high school while doing a team sport at the same time, and just saying no! To all the things the other kids had, or that I dearly wanted to give to compete with the Jones or feel like I was being a "good mother", ultimately showed me that what the girls and I gained in our relationship. Their independence, common sense and maturity was worth far more than the gifts, toys and events that many young parents think they must provide or have for themselves.
The amount of saving each month on these issues went from small to large, but could be gauged by the amount of cash left over for allowances or school lunches for the girls. Often, near to tears, it didn't seem like I could make it another month or go another day, without some relief from the poverty that I felt. I knew I had a job, I always found some other work for extra cash, and miracles happened all the time.
When the roof caved in, my elderly neighbor said her son did roofs. He would take payments, she said. So, I suspect she paid him for the new roof, and I paid her $25 a month for 3 years before she said that he said it was paid off. I gave my last dollar for coffee and lunch for the remaining two week period of the month to a young mother who had driven her 2 month old baby out in the winter, to sit and check out her husbands whereabouts, one night, and run out of gas. The dollar went to get her home with gas in the car. Two days later, my mother, who was also single mother, sent my daughter a $5.00 birthday gift. Sorry, Mom, but the birthday gift was a $3.00 birthday party and two dollars for me to eat.
By Leslie from Albuquerque, New Mexico
Editor's Note: Because Leslie's essay is longer than our usual submissions, we are publishing it in 6 sections. We will post the next section soon. Here are the previously posted sections:
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Credit for medical/dental bills. When I had my last root canal (@ $1000!) I found through dentist that there was a plan called Care Credit which I could get to finance my medical & dental bills. It certainly saved us, as the dentists don't accept partial payment anymore & my condition was dire, as I had had an abscess, which can be life-threatening. Also, by shopping around for an endodentist, I found one who was actually several hundred dollars cheaper than my initial estimate. So, even with interest, I still think I saved $ on my root canal. (Why didn't I pull the tooth? It just causes further problems down the line, as teeth move, & get looser & you have to have bridges & dentures & all that!) P.S. Subscribe to your local "groupon" & other similar sites like Bloomspot for deals on dental cleanings & so on, if you don't have dental ins.
I pay bills by direct debit/check. Then I get my monthly allotment for groceries, gas, etc. in cash which I have in an envelope in my purse. After each purchase I put the receipts back in the envelope with the balance of my cash.
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I am not new here, but I have a problem. I don't know how to hold on to money. I get paid bi-weekly and am trying to payoff some very old debts to get my credit back together.
How do you go about taking care of that? By the next day, I don't even have enough to buy a soda. I don't have the large responsibility of paying the bills. My dh does that.
I need to know how to start having money from week to week. I owe a lot. I would like to get a new car by summer. I can't even open a checking account because I am in collections with the banks. Will someone please help me with maybe a basic budget or using the old fashion envelope method. I need to get back on track by summer because I won't have a income coming in for two months because of the type of work I do. I am sorry for the long question. Help.
By malmal from Boston
Here is a very helpful article on budgeting:
It comes from one of my favorite websites:
One of the best places to save money is in your food budget. This site has a menu that will feed 4 to 6 people for $70.00 a week, and it comes complete with a shopping list, recipes and an action plan:
You can go to your local Consumer Credit Counseling. It is a free service. They help you organize all of your bills, contact all of your creditors, and help you with a budget plan. The monthly budget worksheets are very helpful. If you feel "out of control" with the situation, they will help you back to a feeling of order and control. I used this service many years ago and it was a life saver.
Every time you want to spend that nickel in your pocket, tell someone who have trusted and is in on the deal. Like a drug addict, you have to change your life style. Even the smallest whim you need to learn to say no to it. With each sucessful time, you build on courage to do it again. Get sloppy and it is as if a drunk took another drink.
I have a similar pay schedule with my work, so budgeting is a major part of my life, here are some concrete things I do:
1. Decide how much money you need to save a month, take that amount out of your paycheck first. Act like that amount doesn't even exist, straight to savings before you buy stuff. You can start with a couple hundred from each check and work your way up.
2. Limit how much you spend on groceries and misc items each Week. Cut coupons, buy only what you absolutely need, give up: soda, chips, ice cream, coffee, and other snack foods. Tell yourself you will only spend $100 this week on food/necessities. Buy store brands and what is on sale.
3. Stay away from stores unless absolutely necessary, the less time you browsing, the less you spend.
4. Look at how much you spend on cable each month. We really cut down on our entertainment expenses by switching to Netflix and quitting cable. Literally $1000's of $$ each year.
It is hard to start, but once you get into the habit it become second nature.
I too live on a very tight budget, I was Active Military but was medically retired and now live on about $900 a month. By the time I pay "my" bills I have only enough for gas money and am unable to help my husband pay things like the utilities and I too am i collections with a few places and have credit cards to pay on (one of which I only owe less than $200 :)) Honestly I suck at saving money so anything that I want saved I always give to my husband and he puts it in his account and so far that has worked as far as savings but I still never have 'extra money' for me.
I would like to know if anyone is using the old fashion method of budgeting using envelopes. I don't know how to set them up and what items to put on them. I thought this would help me control my spending and start paying on my debt and stop living from check to check. I have not even enough money to buy a cup of coffee. I never have money. I get paid on thursday and by friday I am broke. Help me please.
Malmal from Boston
One of the best paybacks on the envelope system (assuming you keep the envelopes under lock and key so nobody can help themselves) is that if you have money left over in the grocery and gas envies, you can put it in savings! I love the feeling that we have a little something for emergencies. Most financial advisors recommend 3-6 months income, in case of disaster. Another good thing is that you get a solid idea of how much you actually have to spend. Sometimes we overspend because payday seems so rich!
I don't use the actual envelopes. I just write budget on paper and keep track of spending. But I thought you might use this "jump-start" on a budget. Don't spend any money for one week(or longer if you can). Eat food you already have. Pack lunch for work. (It's OK to plan the week before, like making sure there is gas in the car,etc.) It's easier than it sounds and at the end of the week you will have saved almost a whole week's paycheck. I have actually done this, paying only bills due, and not buying anything that wasn't Absolutely Necessary. Thinking that you only have to do it for one week - not the rest of your life -helps. And you'll be proud of yourself after. And pretty soon you'll be ready to do it again.
The envelope system works great. The key is not to borrow from one to another. Update the "budgeted" amount every 3 months. Whatever money is left in an envelope after bill paid divide in two, put 1/2 in the bank and have fun with the other 1/2. I personally think the system give you a sense of accomplishment!
When we were living on a VERY tight budget, we used this system and it really helped. We kept our envelopes standing up in a shoebox, but like somebody else mentioned, you might want to keep it under lock and key for safety's sake.
We went through past bills to determine what were recurrent expenses (those were usually very close to the same amount each month) and made those envelopes out first, writing the amount to be put into the envelope on the outside: Tithing, rent/mortgage, power, natural gas, water, trash, phone, car fuel, car insurance, renter's insurance/homeowner's insurance. Then we started fleshing out the "other stuff" that comes up that is also important to consider, or could be less predictable/more flexible: haircuts, postage, food, car maintenance/repairs, home maintenance/repairs, emergency, clothing, savings, gifts, entertainment.
We figured out how much our varying insurances cost each year, and divided that number by the number of paychecks coming in, and put that amount in the envelope so that the funds would be ready when the bill arrived. We did the same thing with home maintenance/repairs, car maintenance/repairs, gifts, clothing, postage (we always spent more on this around the holidays and to send birthday/mother's day/father's day cards to our parents). We even figured out how many haircuts my husband and I would each need throughout the year, and divided that up too!
When we took money from the envelope, we put in a slip of paper noting how much we took out. When we had money to return to the envelope (such as after a haircut or grocery shopping), we put in the receipt for funds spent, and noted on the slip of paper how much we had spent, how much was returned to the envelope, and what the new balance in the envelope was.
Our process may sound a bit over the top, but it really helped us to figure all this out so that expenses didn't "sneak up on us" and blow our budget. It also make us really accountable for where every single penny went.
When we got paid, we went to the bank with a list of how we needed to have our money broken down. We would give the teller a list of how many twenties, tens, fives and ones (and even quarters, dimes, and nickels!) we needed so that we could divvy up the money exactly as we needed it.
As we planned our budget together, we realized that entertainment might mean we would invite other couples over for popcorn, lemonade and board games instead of going out to eat or see a movie. We realized that it would be better if we did our own oil changes instead of taking the car to the mechanic. We realized that we needed to prepare our meals from scratch instead of using as much prepared foods. We cut out soda. We set some limits on how much we were willing to spend for birthday and Christmas gifts for our family. It made us think hard about how much we really needed in the way of clothing.
When my husband was in the military, our medical and dental coverage wasn't something we needed to make budget envelopes for, but now that he's no longer in the service, that's something that we have to budget for so that we can meet our co-pays when we need to see the doctor or fill a prescription.
Someone else mentioned being able to limit expenses for a week to build up some funds to help to get this process going. We found it helpful to get a month's worth of funds built up so that the instant a bill came in, we could pay it right away, and not have to wait until the next time the envelope received a deposit from the paycheck. It feels so great to be able to pay your bill the same day it comes!
It takes thoughtful and careful planning in order to stretch each penny to cover the necessities. You have to think creatively to find ways to "make do" when funds are tight. Learning these habits early will be a blessing to you for the rest of your life.
These stories take me back...to 1964, my husband made , brought home $50 a week. Our rent was $50. a month...I was allotted $10 per week for groceries, I knew the price of everything and only bought that. I put $12.50 a week in the envelope for the monthly rent, everything included in those days. We had one other very small bill and other than that we had nothing left most of the time. We did not even get chips, soda, etc.
Fortunately, not long after he got a better paying job and things got better.
Can you get a part time job in addition? Maybe you could get a better paying job. Sometimes that is possible and certainly would help.
Things will get better for you, mainly because you are TRYING to do something about your situation.
When our children were born, in the 70s we used this system but I
didnt know there was a name for it. I did it this way so I was sure
to have the bill money. Sometimes somehow I would end up with $5
extra. I was so happy to be able to save that. I had one extra envelope labeled extra money. Even if there was .25 extra it went in
there. In those days my husband earned $4.50 an hr. Our rent was
$125 a month. I would buy a roast and cut it in thirds to get 3
meals worth. A pound of hamburger was 2 meals.. etc etc. We had to stretch as far as we could.. we drank kool-aid so we had milk for the baby.. milk was .88 a gallon. And like another poster,
I knew the price of everything and only bought exactly what was needed. Gas was .28 a gallon an my husband being a smoker his
$5 a week allowance didn't last tho his cigs were .33 a pk. Funny now to think how we would always get $1 worth of gas and it lasted most of the week. I remember a station in town saying
*you know one day gas will be $1 a gallon*.. I would just twirl my eyes and think .. yah right. But somehow we survived. And I might add we never ever even thought of borrowing money from anyone.
One reason I love this site is because there are always posts
that take me back to yesteryear. Its so hard for young people these days. We help our children as much as we can.. we are always reminded that if someone had helped us maybe life would have
been somewhat easier. Thanks for the memories.
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I am a recent college grad and looking for tips on how to set up a budget. I work as a waitress, so my imcome varies, and a large portion of it is cash. I am a responsible person and haven't had many money problems, but feel like I need to get better control over my finances. Any advice on bill paying, budgeting, etc. would be greatly appreciated.
Samantha from Davis, CA
You need to have 3 accounts: