Welcome back! Ok, yesterday I found quite the leak (ok, so it was more of a crater) in our financial ship via dining out. After the realization of that trauma to our finances, I thought it might be wise to go back again to our 2012 statements and evaluate how much we spent on gas (for me. Rick pretty much only drives to and from work, so his gas budget is a non-negotiable) and how much we spent on groceries/personal items.
As I suspected, the number were much higher than what we had budgeted for in 2012.
My gas expenses for the year (keep in mind that I don’t work outside the home) were $2,456 or $205 a month
Our family grocery and personal item expenses (not including home improvements and clothing purchases) were $11,516, or $906 a month.
And these expenses don’t even include the items I paid cash for!
The biggest problem with these numbers is that they were over what we had budgeted for, by $55 a month for gas, and by over $200 a month for groceries. More major leaks in our financial ship. Well, at least we’ve proven that it’s not much use in having a budget if you’re not going to stick to it. 🙂
SO, I’ve come up with a list of 4 things that are absolutely crucial to getting out of debt, especially if you’re on a tight budget like we are:
1. Analyze your spending. You will never, ever find the financial leaks in your money if you don’t face the music about where you’ve spent in the past. We said “no” to SO many purchases last year, and our 2012 spending was much lower than in previous years. I know this just by memory. We didn’t say “no” to very much in the past, but last year we made a concerted effort to spend less, yet we were still hundreds of dollars over budget every month.
2. Track your spending. There’s nothing like tracking what you spend, when you spend it, to help motivate you to make better financial choices. Don’t let your money sneak away from you because you aren’t keeping tabs on it. Make a choice to track every dime you spend in 2013, and see how your finances change.
3. Use Cash. Better yet, use cash and the Dave Ramsey Envelope System. I’ll tell you one thing: the cash card is going to have a lock and chain on it in this family. It’s much too easy to turn a blind eye to your spending when you pull out that little piece of plastic instead of your hard-earned cash. And truth be told, I think retail America likes it that way.
4. Make a budget, and choose to stick with it. We know how hard this can be: we’re cutting our grocery budget (the one we were supposed to be living within) by nearly half compared to what we actually spent last year. And we’re cutting out entertainment monies almost completely, down from over $2,100 last year just in eating out alone!
Guys, we know this is hard, this budgeting and cutting back thing. But go back to your motivational list of whys, then sit back and imagine your life a year from now. What will it feel like to have your spending under control and have a financial peace plan that’s actually working and giving you results? What will it feel like to have even $5,000 or even $10,000 less in debt by the end of the year?
This is not about sacrifice, it’s about doing what you need to do to give your family the life they deserve – a life of financial peace. Good luck on your road to debt free, and Godspeed to you!
Gas and food are our constant battlegrounds against budgeting creep. I like mint because I can check it while waiting in line at the grocery, and it emails us if we go over budget!
Thanks for stopping by! Yes, I’ve heard people talk about Mint but haven’t actually been over there yet. Great tip – I’ll have to check it out!
Great points, Alan. In fact, we just opened a great rewards card, but we wanted to wait until we were sure that we knew the difference between needs and wants, and also until we were sure we had the discipline in us to stick with the program, using the card only for purchases that are in our budget, and the discipline to pay the card in full every month. Six months ago though, I would have never suggested using a credit card for people like us; we just weren’t disciplined enough at the time to not accumulate more debt with it. And I think that’s the danger of not paying cash. I think that for most people beginning a debt freedom program, cash is the way to go until you’ve conquered the first few months of setting and sticking to a budget. But that’s just me. 🙂
I take out the same amount every week for groceries, and entertainment (my only debt is my mortgage, and I can only overpay $5k per annum til the end of this year – I’m saving to refinance with a lump sum to put towards it) Seeing the cash dwindle in my wallet really helps. Anything ‘extra’ can still do on a cash card (ie not credit) or a credit card, but the incentive is not to do that. I also pay myself first (savings), then bills, then this spending stipend. Anything left over before the next pay goes straight into savings. Works better some weeks than others…
Sarah, sounds like you are on the right track here! The “pay yourself first” concept is one of my very favorites. We recently started doing that as well. I love too, that you’re putting anything leftover right into savings as well. You’ll have that mortgage paid off in no time!