Recently I was reminded of the expression that says that if you take everything away from a rich person and give it to a poor person, eventually the rich will be rich again and the poor will get poor again. If you’ve never heard it, the reasoning behind it is that the rich person will have the intellectual savvy and focus to make/save money again, while the poor person, never very apt at saving or money management, is likely to satisfy their every whim without thinking of the future, thus losing their fortune as easily as they got it.
Well, I am now in a position where I feel like I have been stripped from my cushy disposable income, and I’ll have to figure out “how to get rich again.” Here’s how we’re managing, and I hope this post helps someone out there figure things out as well.
Up until a few weeks ago I had no real concept of what it was like to pinch pennies. My husband and I have always lived comfortably under our means so that we could afford to have weekend getaways, or to buy little things we wanted, or to be really generous when it came to birthday gifts for our family. Now that we are expecting our first child, we have been awoken from our financial comfort with a big bucket of cold water right on our heads. Not only are babies expensive (diapers, food, clothing, daycare), but they also cause a loss in income (unpaid months of maternity leave). I don’t know about other new parents out there, but we certainly don’t swim in an excess of $2000 every month, so we basically will not be able to afford full-time daycare if our finances stay the way they are.
Cue our intellectual savvy and focus to make/save money.
The first thing we had to do was to take a close look at our ins and outs: where does our money go every month and what could we live without? The analysis was easy to pull, since we’ve spent hours upon hours over the past several years tracking all of our expenses on Microsoft Money (or Quicken, whatever the cheapest license is). Our results were:
- Eating out
- Gifts
- Parking
I thought “Ok, no way will we be cutting down on these things. After all, I don’t cook every night (screw that!), I don’t bring food from home to work every day (Brian hates left overs, and considers daily $25 lunches at the Cheesecake Factory his “social” time). And how to avoid paying $27/day in parking (or $15/day at the least in Boston) if Brian is not a morning person and getting up early to catch the train is out of the question? Also, I’m 8 months pregnant! I’m not about to give up my cushy $4/day parking at the station in order to walk 15 min each morning to the closest station. No way. And what about gifts? We love our family and we are the only ones that have well-paying jobs. We feel it’s our duty to share our good fortune with people we love.”
There had to be another way! All of these items seemed impossible to bring down! We had great reasons not to touch those expenses.
It took a big revelation to get our motivation going: WE CANNOT AFFORD DAYCARE. Literally… we have NO MONEY for daycare. If we didn’t address this now, we’d be in a far deeper hole later. I guess it was time to get our little hineys in gear.
The first thing I did, as kitchen manager, was to make sure we planned our dinner meals for the week, and go food shopping with a specific list the weekend before. Brian may not like left overs, but I could just as easily make an additional meal at night to bring it to work with me. If I didn’t have food to bring to work, I’d stick to the cafeteria’s $4.50 chicken sandwiches. By reducing my lunches to $5 a couple of days a week, I managed to save on the usual daily $9-$15 lunches I used to have. Monthly savings = $9 x 5 days minus $5 x 2 days = $35 x 4 weeks= $140. Even my husband jumped on the saving wagon: he didn’t give up the social lunches that meant so much to his work/life balance, but he started choosing appetizer-size meals (if you’ve ever eaten at the Cheesecake Factory, you know portions are huge anyway) and started ordering (free) water instead of his usual coke. Including tip, his meals went from $25 to $11. All other days of the week he’d get the $5 burger or tuna fish sandwich at the cafeteria/food court. Monthly savings = $25 x 3 days + $9 x 2 days minus ($11 x 3 days + $5 x 2 days) = $50 x 4 weeks = $200.
What about dinners? We used to spend money on groceries in addition to eating out 3 nights a week, PLUS every meal on weekends was dine-out. That added up to about $50 on weeknights + $70 on weekends (on average) = $120 x 4 weeks = $480/month. Now we only eat out one night a week ($17) and a couple fast food meals on weekends ($20). Monthly savings = $480 minus ($37 x 4 weeks) = $332.
Assume groceries stay the same: I used to buy everything full price at the supermarket, but now I shop a lot smarter! So I get more for less.
Speaking of groceries, I had to accept my shortcomings and ignorance and knock on a friend’s door to leverage her strengths and help me sharpen my conscious-shopping skills. My friend was not only gracious enough to show me everything I needed to know about thrifty grocery shopping, but she was also SO EXCITED to show me. [Moral of the story: People love helping others on things they are good at – use them! Don’t be shy to ask!]. Here are some tips I’ll be taking away from our “private lesson”:
- Shop from your pantry first. In other words, get ideas for the week’s meals from stuff you already have and build the menu around it. This cuts down on buying every ingredient on every recipe.
- Make your menu for the week and write a list of stuff you need to buy. Remember to keep in mind nights you know you won’t be eating at home, and plan for weekend meals!
- Need to buy cleaning supplies, bathroom items, cereal or dry/canned goods? Buy these at a discount store (Walmart, Target, Costco, BJs). NEVER buy these at the supermarket. That’s where they getcha!
- Go online to the supermarket websites to find out which store is running sales on items on your list. If none are, you may want to revise your list based on items that are on sale that week. For example, if you were planning to make a chicken dinner, but pork is on sale, make it a pork chop night!
- Once you figure out which store near you will give you the biggest bang for your buck, go there and shop. STICK TO YOUR LIST! No exceptions!!!
Back to our savings plan: I plan on not spending more than I usually did on groceries. Maybe I’ll spend even less now that I’m actually giving it some thought!
Next, gifts. That’s a tough one and I’ll admit that we haven’t completely figured it out yet. What happens very often is that someone in the family will come up with an expensive gift idea for a birthday and everybody has to pitch in. Since the economy went south, we usually end up paying for 50% of the gift, even though it’s supposed to be split 5 ways. Most recently, we’ve just implicitly agreed on a maximum expense of $50 per gift (July is going to HURT – so many bdays!). I can’t say this is a vast improvement, but at least it’s a limit. I’ll let you know how this turned out later.
About parking: we actually found quite the ingenious solution to this one! Turns out that there are two sweet spots around Brian’s work building in Cambridge: one whole row where there is free parking any time, but fills up by 7:30 am, and another that opens at 10 am and is free all day long after that. Since Brian can’t help but sleep until he’s done, and the train is “supposed to” adjust to HIS schedule, he tends to miss the train quite a lot. So he continues to drive to work. He makes it there by 9 am and parks in front of his building, which is 1 hr parking. When 10 am starts approaching, he moves his car to the free slots. Boom: free parking! Monthly savings = $27 x 2 days + $15 x 2 days = $84 x 4 weeks = $336.
As for me, well, I should really remain active through pregnancy. Since I don’t have a regular workout routine, walking for 15 min every morning is actually good for me. So, no more $4/day parking for me. Monthly savings = $4 x 5 days x 4 weeks = $80.
We didn’t just have to make these adjustments, though. We also got rid of little luxuries that we just couldn’t afford any longer: no more piano lessons ($160/month), no more gym membership ($45/month), no more frivolous online purchases ($150/month).
So, what’s our monthly savings tally?
| Eating out | $472 |
| Gifts | ? (TBA) |
| Parking | $416 |
| Piano | $160 |
| Gym | $45 |
| Purchases | $150 |
| TOTAL | $1243 |
Woo hoo! We’re almost there!
One more thing I have been doing is sell my books online. I have made about $300 in two weeks, which is incredible considering Brian just wanted to donate them, and I still got plenty more to go! One thing that really helped was getting a LOT of books from a friend who was planning on donating them anyway. $$$Ca-chin$$$
I also went to the bank and got (free) sleeves to roll up my own change. You could dump your change into a CoinStar machine, but it will take anywhere from 8-10% commission on your total. I rolled up $80 this week and I’ll get to keep every penny! Just need to go to the bank and deposit it!
So, there you have it. We have found great comfort in frugality and we are a little bit richer for it, even though our main sources of income have stayed exactly the same.
Sorry, I know it was a long one! Thanks for reading this far!
We keep on truckin’!
ina
Photo Credit: http://today.msnbc.msn.com/id/28381108/ns/today-money/t/readers-share-money-resolutions/