Ways to Cut Spending

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Now that you've sat down and created a budget, does it really work for your family? Or are there areas where you spend too much still? Are there areas where, on paper, it works, but in practice you are spending beyond what you've budgeted? It's hard, but there are definitely ways to cut spending, which is necessary sometimes.

First, you probably can't cut spending in your major areas, like housing, insurance, etc. There are ways, but they are much more involved than cutting in your non-essential areas. Let's discuss them briefly.

Housing -- You have a few options here. You can simply move to a smaller/cheaper place, if you are in a position where you can afford to move and downsizing is an option (it wasn't for us, with a growing family). You can also refinance your home to get a lower interest rate. Typically, though, you just have to deal with it.

Insurance -- You can shop around for different companies who may give you a better deal, or, if you have different companies, get all your insurance (home, car, health, life, etc.) with the same company to get a discount.

Health care -- There's not much you can do here, necessarily, if there are services you MUST have. We'll discuss this in another post because it is a rather involved subject.

Now, on to the non-essential or variable categories. There are a LOT of ways to cut spending here! Let's talk about a few.

Phone/Cable/Internet -- Do you have any or all of these? Do you use them? Is there a way to get a better deal by signing up for a bundle discount with another company? Can you get rid of your land line altogether? Can you get rid of cable or premium movie channels? Get a slower internet package (not suggesting dial up, but maybe slower cable connection)? At one point we had all of these services and were paying $120/month for them. We now only have internet (we didn't use the phone and cable isn't really necessary) and are paying only $55/month. We even discussed not having internet, but at the time I was doing freelance writing and making a lot more than $55 a month, so it was more than worth it to keep it. None of these services are necessary, though! If you're struggling for money, get rid of your internet AND your computer and just use the library for awhile.

Cell phones -- These days, everyone wants an awesome phone, and an awesome plan. We have free phones and the most basic plan. We also get a discount through Ben's work. This makes our phones only about $60/month, which is less than half of what a lot of people pay (this covers three phones). Our contract is actually up, and if we sign another two-year contract and don't get new phones, they'll just give us $150. As much as new phones are cool, ours are fine. We'll actually get money by holding off! It's also possible to trade in your phones for lower-end models (which work just fine) and reduce your service plans to minimum levels. No internet access, no texting, low minutes. Make your calls after 7 PM (or whenever free nights start) and just use your internet at home. Of course, again, if you cannot afford it, you can NOT have a cell phone. But, you really should have either a cell phone OR a land line, whichever is cheaper.

Entertainment -- How much do you really spend on entertainment each month? Going out to eat, going to the movies, buying new video games or DVDs, etc.? If you're like most, it's quite a lot. Do you really need a date every weekend? Are you paying a babysitter? Try having "dates" at other couples' houses, and you can all bring something to eat to share, and a DVD to watch or a game to play from your own collections. Or, trade babysitting so you can go out. Or better yet, trade babysitting and send your kids to someone else's house so you can be home alone for a couple hours! Remember quiet time? I don't. :) If you must go out, limit yourself to once a month and choose cheaper events, or even free events, like local outdoor concerts in the summer, or museums (some are free) in the winter. Really, you can cut this budget a lot! We always trade babysitting with friends and plan carefully for big nights out. We went out for our anniversary and spent only about $25 on dinner, and another night (just a couple weeks ago), Ben took me to a Ben Folds concert, which was $50 for both of us. But these are generally pretty rare. The last time we went out before that was our first anniversary over two years ago!

Food "Entertainment" -- This is such a big spending category for so many people, I thought I'd address it separately. A lot of people don't think twice about swinging by Starbucks for their morning coffee, or grabbing a Diet Coke from McDonald's on the way home, or picking up dinner at Wendy's, or getting snacks out of the vending machine at work, or going out to lunch everyday. But this can add up BIG TIME. I heard someone say today that when she added it all up, she was spending $56 a month on Diet Coke, just from McDonald's! Starbucks every weekday morning will run you about $120/month (assuming $5 per drink). That is a lot! My suggestion is to cut ALL of this out and save these for an additional treat. If you budget, say, $20 a month for these things, you can choose to get a latte, say, every Friday, as your end-of-the-week celebration. Better yet, learn to make what you like at home and take it with you, which will save a LOT of money. We've beene experimenting with homemade potato chips and fries lately. They are yummy and healthy and lots cheaper than a fast food place. You can do the same with coffee, and your daily lunches too. Ben's been taking a bowl of soup to work for a couple years now. It costs us around $2, if that, per bowl. That's a lot better than $10 to go out, or eat in the cafeteria, and we know it's healthy. (If you're interested, he eats my Mexican chicken soup EVERYDAY because he loves it...he doesn't want anything different for lunch, it's been that soup for two years or more. I'll post that recipe sometime.) This is a HUGE category for savings for most people, so look carefully at how you are spending this money, especially if you pay cash for it. If you use debit or credit, go back and add it up: you might be surprised!

Groceries -- This isn't really non-essential, of course, because you have to eat. But what you buy makes a huge difference. If you buy a lot of processed or pre-packaged foods, that will run up your grocery bill quite a lot. Obviously I don't encourage anyone to buy processed foods for health reasons, but it's easy to want to buy organic versions sometimes. It's convenient to buy the pre-cut fruit, veggie trays, organic chicken nuggets, etc. But this is unnecessary and adds a lot of money. Buy all your stuff minimally processed and do it yourself: wash and cut your own fruits and veggies. Dry your own in the oven or a dehydrator (I asked for one for Christmas!), make your own breads and crackers, mix your own salad dressing, etc. You should also buy in bulk whenever you can. We got a GREAT deal on organic, grass-fed beef because we bought 200 lbs. at a time. You can get an even better deal by buying half a cow, if you like steaks (we don't). Average price would be $4/lb of meat, including the steaks, which can cost up to $16/lb in a grocery store. Shop local stores or farmer's markets in season. Write a meal plan and then make up a grocery list, and try to stick to it as much as possible. Don't forget to include all meals and snacks, though, or you'll end up dashing off to the store a few more times and buying the more expensive stuff. I know I do! And don't forget to eat before you go (and feed your kids, and possibly bring a snack along for them) so you're not tempted to buy something ready-to-eat while you're there. By making cheaper (yet still healthy) meals, I was able to slash our grocery budget from $250 every two weeks to around $175 every two weeks, sometimes less. It CAN be done, even eating mostly organic!

Clothing -- Don't buy clothes if you don't have to (adults!). If you have kids, shop out of season, shop clearance racks, shop resale stores, shop Craig's list, shop garage sales, trade clothes with your friends. Some people like to give me the argument that they need to go to brand-name stores and pay $10 for a shirt or pair of PJs because "they're really good quality, they last forever." Guess what? Your kid won't wear them long enough for that to matter. And they'll probably get them all stained and who knows what while they are wearing them. Just go to Good Will and get each item for $1.50 (or less, if on sale! I got a bunch for $1/each a couple weeks ago). Buy shoes at Good Will too ($2/pair) or Walmart ($10/pair) if you must have them new. No, your kids do not need to go to Stride Rite and get professionally measured and perfectly fitted for a pair of shoes they'll wear for four months.

Baby items -- Beg, borrow, and steal (just kidding about the last one). Trade with your friends whose kids are slightly different ages from yours. We got a Jumperoo, swing, and exersaucer free this way. Shop Craig's list. Your baby doesn't care how many babies have used it before him or her. Your baby does not need a million toys and items anyway. Bekah's dresser was one my parents picked up at a garage sale for $10 for ME in the 80s...(dating myself here). It was free to us. Daniel's was one we got in a huge set of furniture from an aging family member for $200 (that includes kitchen table, full bedroom set, grandfather clock, and a few other nice items). Never pay full price or buy new!! The exceptions, OF COURSE, being car seats, cribs, or anything where there is a safety issue, and always check recalls if you do decide to buy used.

Baby food -- Personally, I breastfeed my kids, so that's effectively free (except that I'm starving all the time! Formula costs anywhere from $1200 - $3600 a year). I make all their food too. I'll discuss all my reasons why later, when Daniel's getting ready to start solids (he's 4 months, but we won't be starting for a few months yet, until at least 8 months). But I never buy baby cereals, jarred baby food, or baby snack foods. In addition to not being great nutrition, it doesn't taste like real food, and it is expensive!! We'll discuss this in more detail later, but suffice it to say, you don't need all that fancy stuff. Between breastfeeding, cloth diapering ($200 vs. $2000 - $2500 for disposables, birth to potty training), and not buying baby food, there's pretty much no baby stuff I buy in a typical grocery store. I'm not sure how many parents can say that!

Look carefully at your budget and see where you can save. I guarantee there are places! If you have questions, please feel free to post them. In some of these areas, there's really a lot more to say and I'll post on them more later.

Have you made a budget yet? Were you surprised by how much you spent in any area?