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Monday, January 09, 2012

Simplifying my money

Now this is a hard one, and I'm going to be honest here... I'm still not done thinking this through or doing the work.

At the end of every year, I'm usually depressed because it seems like we've worked so hard, and have so little show for it financially. Over the past few months, I've read a lot of books and articles about money and finances, and the one thing that keeps bothering me is that our income is on the high end in comparison to what they're talking about. Don't get me wrong. We're not rich (by America's standards). But I look at our current lifestyle, and I realized that even though we make twice as much as we did when we first got married, we're pretty much living the same way. I remember thinking, "wow, if we could only make X amount of dollars, we'd be able to do all these things." I realized, as I was reading one of those finance things, that we DO make X amount of dollars. But we're no closer to those dreams than we were then.

Which led me back to thinking about simplifying. I know so many people who make more money than we do who also live similarly to us. Where does their money go? I've been observing, trying to figure it out, and I see all the piddly stuff they spend on. Which led me to thinking about all the piddly stuff I spend on.

And of course, as I look back at my stuff simplify plan, I realize that I really don't need to spend a lot of the money I spend money on.

I also realized that I don't have a plan for both my spending and my goals. This year, I set a goal of paying off some of our debt, saving a certain amount of money, and paying for our family to go on vacation. I told hubby about my goals, and he looked at me funny. I know what he was thinking. Each year, we say that we're going to reduce debt, save money, and maybe go on vacation, but we never quantify it. And, frankly, we never do anything about it. So he looked at me and asked if I had a plan.

Well, I do have a plan. Sort of. Here's what it looks like so far.

Just to make the math easier, let's pretend that I want to have an extra $2400 in savings by the end of the year, reduce our debt by $2400,  and our vacation will cost $1200. Well, that gives me a starting off point for how I'm going to get there.

I'll need $200 each month to put in savings, $200 each month to go toward debt, and $100 each month to go toward our vacation. Wow, that's $500! I don't know about you, but I know I don't have an extra $500!

Okay, so how do I find that money? For starters, we are ditching Comcast and going with other providers for cable, internet, and phone. Based on what hubby has found, we'll be paying about $75 less than what we were paying.

So, $425 to go. We eat out about twice a week. I know, terrible! But we're so busy with activities that it's hard to plan meals. If I put something in the crockpot for grab and go for one of those nights, that saves us about $30 a week. So, another $120 savings.

Now I'm down to $305 needed. We have gym memberships that we really don't use as much as we should. Hubby never goes, and I don't go enough to make it worth the money. Cancel that, and we have another $50 in savings. I switched web hosts, saving me $15 a month. We're down to needing an extra $230 a month.

Which leads me to the question I've been asking about everything I buy lately... Do I really NEED this?

Maybe it's wishful thinking, but I honestly think that if I apply that question to everything I buy (including stuff at the grocery store), I think I can come close to saving that $230. In fact, if I compare that item, even if it's only a cup of Starbucks (which I very rarely do), to do I want that item or do I want to go on vacation, I think I'll be putting away a lot more things. If I don't buy my daughter the cute dress I saw on sale because I think she'll love it, not only will it be one less thing cluttering up her room, but it'll be that much more money going toward my vacation.

And, with the time I'm saving by not overextending myself, I can sit down more often to do things like work on our budget, track our spending, and *gasp* pay better attention to when bills are due. Because that's another place where I can save money. I spend about $50 a month on late fees. Not because I don't have the money or things are tight, but because I forget to pay the bill on time. I can't tell you how many times I've paid a late fee for being one day late.

This year, instead of just reading finance books and thinking it's a good idea, I'm actually going to put some of those principles into practice.

That's the start of my plan. Have you thought about what you'd like to do to improve your finances this year?


Jana said...

This is something I've been working on for the past few years, too. I did really well for a while and then...I don't know, my life changed and so did my spending habits. I have GOT to retrain myself, though, because if I didn't spend so frivilously, I'd actually have a TON (well, by my standards)of money left to throw at my savings.I've got my plan, too. So here's to both of us getting it done this year! :-)

Danica/Dream said...

AMEN Jana!!I think spending has to be a conscious decision every time we take out the wallet, because it's really easy to slip.Good luck this year! Keep me posted on how it goes!

EditorTanya said...

Dream --A suggestion for the bill-paying and late fees. We do all of our bill-paying electronically through online banking and when the bill comes in we post-date a payment to payday (but before the due date) and on that day it's automatically paid. SUPER easy and once you get in the habit, you don't pay late fees any longer. Hope that helps! :)

Danica/Dream said...

Thanks for the tip Tanya!