Now, after nearly 30 years, we still keep a budget and very
much believe in them. It has helped keep us on the straight and narrow when it
comes to spending our hard-earned dollars. However, creating a budget is easy;
living by it is another matter. For those of you fortunate enough to have
relatively good salaries, sticking to a budget may not be difficult at all.
However, for those that struggle daily with having enough money to live on,
living by a budget may be extremely difficult. For that reason, we now present
some ideas on how to cut your household expenditures.
First and foremost, whatever you do, DO NOT look to the
federal government for an example of how to run your household. Our leaders
have gone bonkers over the last 50 years and are about to drive our entire
country into bankruptcy. Did you know that our national debt has now exceeded
$15 trillion and that it is projected to increase by about $1.1 trillion in
fiscal year 2012 alone. Because of this debt, we spend almost $500 billion a
year in interest. Yet, revenues are only expected to be about $2.6 trillion.
Let’s scale these numbers down to the average household in the US and see what
they look like.
Household income:
$50,000
Total existing debt:
$288,462
Additional debt for 2012:
$21,154
Interest to pay in 2012:
$9,615
Can you imagine being in a situation where you are spending
almost 20% of your income just to cover the interest on your debt? Perhaps you
can. If you are young and just getting started on your career, you could be in
debt this much because of a mortgage and car loans. But keep in mind these are
loans you are working to pay off without incurring additional debt (unless you
are going wild with the credit cards). But what if you only paid the interest
on your debt, never paying anything on the principle. Then, on top of that, you
buy new $20,000 cars every year and start making interest payments on them
also. This is what the federal government is essentially doing. It is
completely unsustainable. The party has to end at some point, hopefully without
too much of a hangover. Therefore, we have decided to help you cut your
spending should you find yourself in a situation where this is necessary.
The first thing to think about is the absolute essentials of
life. These are normally considered to be food and shelter.
Yes, you need a dwelling place. But do you need one as
expensive as the one you have? If you
find yourself hating that dream home you own because the cost of the mortgage,
taxes, insurance, and upkeep are eating into your lifestyle, it may be time for
a change. We like having a DREAM LIFE more than having a DREAM HOME. Of course,
it may still be difficult to part with the home, so the first thing to do is to
see if you can reduce the mortgage payments by refinancing. You have to be
careful here because closing costs can be so high as to negate any benefits of
a lower interest. Also, you may find yourself in a situation where the value of
your home is less than the amount you owe. But if the overall housing market is
depressed in your area, it could still be feasible to greatly reduce your cost
of home ownership by selling your existing home at a loss and buying a much
lower cost home. Because there are so many factors affecting cost, it is a good
idea to consult with a real estate professional about your options.
I have mentioned the cost of food in previous posts. This is
the one area that our family tends to have the most problems since we enjoy
eating out so much. One of the reasons we shy away from home meals is the time
it takes to prepare them and clean up afterwards. We have a fairly busy
lifestyle and don’t like taking that big a chunk out of our leisure time. Sure,
we could just heat up a can of soup, but we like variety. Some foods simply
take time to prepare.
One thing that helps us to eat at home more is planning a
week in advance what we will have each night. This allows us to purchase what
we are lacking ahead of time and have everything ready to go each evening
rather than having to make a run to the grocery store on the spur of the
moment. Also, we can plan easier meals for busy nights and more elaborate meals
for free nights. If, however, you are on a really tight food budget, planning
ahead will be only one step in your savings plan. You may also have to greatly
cut back on more expensive food items such as steak, or at least concentrate on
the cheaper cuts. We have discovered that even fresh fruit can be expensive
because many times the fruit is not good or it spoils before we have time to
finish it. Canned and frozen items are better choices for longer term storage.
You might want to start couponing. It’s also a good idea to
look for deals on more expensive food items that can be frozen. We buy a large
quantity of meat when on sale, vacuum seal it, and put it in the freezer. But
if push comes to shove, you may regrettably have to cut out eating some foods
that you really like. Better that than going broke.
Another area that can be problematic is the purchasing of
technology items. Just look around. Big screen TVs (now with 3D!), stereos,
Blu-ray players, cable service, satellite service, computers, laptops,
printers, tablets, wireless phones, cell phones, iPods, iMacs, iPhones, iPads,
iThis, and iThat. Temptation is all about. Our household consists of tech
geeks, liking all these new gadgets. Yet, when you think about it, are they
really necessary. No, they are not!
If you find yourself spending thousands of dollars you do not have on
technology, STOP IT! This is an intervention. Look seriously at what you are
spending on these items and scale back to only what your budget allows. You
might also consider selling some of your existing stuff on eBay. We’ve got a
Nintendo Wii and accessories waiting to be sold right now. Anyone interested?
Only those who can afford it need apply.
Look for more savings tips in the next post.
