Years ago I used to smoke off and on till I finally decided to quit. A friend asked me how I went through the process of quitting and my reply was “Simple, I just stopped buying them.”
It is a new year and a new attempt at getting the household finances in order. Our old budget could be most easily described as the In&Out budget, if it came in then it went out. Our new budget is better known as The Austerity Plan 2.0.
The Austerity Budget has its roots back in January 2015 when my wife and I tried to reorganize our finances and trim out all of the fat. We did pretty good for about the first five months till two separate but tangentially connected events.
First, we bought a pop up camper. Flush with all the new found mad cash we were seeing we splurged on the camper which began to eat in the savings we were putting away.
Second, my wife got a case of the shingles. Ultimately we determined that the shingels were related to the fact that our house was a disaster area, and we were trying to juggle keeping a house in order with two young boys while each holding down a full time job. So we consulted the spreadsheet and, at least according to it, once you took in to account daycare and the fact we ate out four times a week she was contributing about an extra $100 a month to the bottom line.
So in August she quit her job. But the discipline we had mastered the first few months of the year had flown out the window and by the end of December we ended the month with $3 in the checking account.
January rolled around and it was time to try again. We realized that the secret to budgeting didn’t lie in fancy software it was simply the determination to not spend the money no matter how convincing the argument seems.
And thus, Austerity Budget 2.0 was formed.
I’d like to say that this is some super secret thing that only I have found out and will share with you for three easy payments of $19.95. But in all honesty it is pretty straight forward.
Open up Google Spreadsheets and on a new page enter in the amount of money you bring home in a month. Below that enter in a line for each of your regularly reoccurring bills. Subtract this from your monthly salary. If this number is positive congratulations you are already on the path to financial freedom.
Ok next figure out a grocery ammount for two grocery trips a month. Add this to your sheet (this will be important in a moment). Do some quick math to figure out how much gas you need for your commute and put that on the sheet. One last round of subtraction and bask in the glow that in all the money you will be saving from this point forward.
The secret to the Austerity Budget is if it isn’t on that list of items you don’t spend it. Done. Finito.
Well…….ok here are a few more things to consider.
Food is by and large the single largest variable line item you are going to have that you also can also control. We noticed that at our worst my wife was hitting up the grocery store two or three times a week only buying the provisions needed for the next 48 hours.
This is a habit that you have to break. She now gives herself two shopping trips a month and that’s it. The advantage here is that she is now able to plan multiple meals in advance and take advantage of bulk buying. She does allow for one emergency grocery run to cover milk and eggs that we may have ran out of, but my guess is in another month that will be a thing of the past.
We’ve done a few other things too, dropping cable TV added an extra $80 right back to the bottom line. I called around and got new car insurance because my old company had tacked on $10 and $20 increases over the course of 10 years that they were now double what my new rate was.
But, the reality is that it gets back to the “don’t spend it”. The temptation seeing positive cash will be huge. A dinner out sounds great, but suddenly turns in to $50 to $80 that with good grocery planning could have covered a week.
There are other things we’ve done too, I’ve dropped all beer buying, and my wife has stopped buying bread, instead buying 25lb bags of flour at Costco and baking bread ever couple of days. This is awesome, we get fresh baked bread at all times at a cost of pennies.
Now I will admit that part of the reason this works is that we’ve got a homemaker instead of a second income. But as she is fond of saying “I have more time than money so I need to use it wisely.”
Right now we are ending month #2 and we are actually in a better position this February than we were last year, and that was back when we had two incomes not just one. So we press forward smug in the fact that we are finally cash flow positive in the savings account.