It has been about three months since Jake at I Heart Budgets shed blood, sweat, and tears to create a budget for my family. I’ve tried to make and follow a budget before, but always got sidetracked and gave up. We also spent money without much forethought, so budgeting doesn’t really work in that scenario. For almost two years, we were on a no spending moratorium to pay off our credit card debt, not really a budget, but it worked. Now that we don’t have the debt, we want to make sure our old spending habits don’t creep back into our lifestyle. While we aren’t perfect, we are much improved, and I’ll share some observations about our new life on a budget. [Read more...]
If you are one of the millions of people who lives paycheck to paycheck, you might find yourself in the situation of having more days than dollars in the month. That can be a very scary feeling when you know that your bank account is empty, and there are still several days until you get paid. While panic might set in, if you take a minute to analyze the situation, it might not be as bad as you think. With some planning, I believe anyone can avoid the problem of running out of money at the end of the month.
If you know that you are completely broke and have more than a day until payday, organize what you need to buy. I like lists, so I would write down what you think will need money until the next payday. If the list includes food, gas to get to work, or rent/mortgage or bill payments, those are necessities. If the list includes a birthday gift, a promised dinner out with a friend, or some sort of apparel, those can be postponed or avoided. It might not be the most popular thing to do, but if your friend is truly a friend, he or she will understand that you don’t have the money to blow on eating out or buying a gift.
If you need to buy groceries, look in your pantry or refrigerator first. Most people have more than they think. It might mean eating leftovers or peanut butter and jelly sandwiches, but you can often get by with the supplies in your cupboards for several days. If you are out of gas, maybe you can carpool or take public transportation. Perhaps you could even get up early and walk or bike to work. Not every solution works for each situation, but if you get creative, there might be a way to avoid the gas station for another week. If a bill or rent/mortgage payment is due, call the landlord or company and ask if you can have a few extra days. You don’t want a late payment to ruin your credit score, but most utility or mortgage payments allow five days after the due date before a payment is considered late.
If you truly cannot find a way to postpone necessary payments, you might have to borrow from family or friends, use a credit card, or some sort of short term loan. I would use this as a worst case scenario that needs to be paid off as soon as you get a paycheck. Make it a priority, or you could find yourself in a vicious cycle of debt and/or ruin relationships with those you care about.
Once you’ve made it to the next payday, sit down and discover why you got into this situation in the first place. The only true way to get out of the cycle of living paycheck to paycheck is to find a way to spend less than you earn. You have to start tracking every penny you make and spend to see where the money is going. Are you spending money on things you don’t need and can’t afford like manicures or cable?
Next, you have to have a budget. This allows you to find ways to cut expenses or try to make more money so that you can start an emergency fund. With some money set aside, you don’t have to worry when things pop up to spoil the budget. Believe me, I know how hard it is to change when you are used to buying whatever you want, but by taking action and making positive changes, you won’t ever have to feel the worry of not having enough money at the end of the month.
The help avoid running out of money this month, you can enter the giveaway for $100 in PayPal cash or an Amazon gift card. This giveaway is sponsored by activehours.com, which is a new service designed to compete with Payday loans. They charge no fees or interest. While I still feel that changing spending behaviors is the better way to make a difference in the long term, this service seems better to me than any sort of a Payday loan, although I can’t say for sure as I haven’t used either.
As you may know, I am working very hard toward paying off debt and staying within a budget for the first time ever. We’ve been doing really well. We haven’t gone overboard with Christmas presents and have used rewards points, bartering, or baking for most of what we’ve done so far. However, I went out to lunch with a co worker this week and what I saw caused me to blow my Christmas budget.
First of all, since I don’t go out for lunch, I was terribly excited to get to go to my favorite lunch place, Once Upon a Sandwich. It was even better that I had to meet with my insurance biller to discuss end of the year details. It was a business lunch and didn’t cost me a thing. Our table was by a Christmas tree that had one lone ornament. The “ornament” was actually a piece of red construction paper cut out in the shape of a stocking. On it was written:
Boy Age 14
Fallen /DC or Graphic T-shirts Size M/L
The tree was for selecting a child to adopt for Christmas. This particular one was for children in foster care, and this was the last one remaining. I had originally planned on adopting a child for Christmas but had completely forgotten. We try to do this every year, and usually the child asks for some sort of toy, electronic, or gift card. I’ve never seen one who wanted T-shirts and jeans.
The restaurant owner saw me looking and said aloud the comment that I was thinking, “Can you believe all he asked for was clothes?” She then went on to tell me that she and her husband had been foster parents before adopting their daughter. She said kids show up with nothing, sometimes after being picked up from school and told they aren’t going home. The foster parents get money to buy necessities, but I’m sure the clothes aren’t the latest and greatest. I am actually against expensive, trendy clothes for the most part, but right then and there I was determined to find a DC or Fallen T-shirt, whatever the heck that was.
After searching my good friend Google, I found out that these are brands of skater clothes. Since I live in Tinyville, USA, there is only one store that sells those in our town, the local bike store. Ideally, when purchasing something specific like this, I would look online or go to TJ Maxx, but I only had a few days until the gifts were due, so shipping was out. TJ Maxx type stores are an hour’s drive, so that would take at least 4 gallons of gas and probably a stop for lunch or dinner. Plus, the forecasters are predicting up to a foot of snow this weekend We need snow, but I’m not planning a road trip during a winter storm.
I then did something that will make some of you cringe. I went to the bike shop and spent $70 on black, baggy shirts with designs that look like graffiti. I will also go to Wal-Mart and pick up some jeans and probably a gift card.
Will having the horrifically ugly latest style in clothes change this kid’s life in any sort of positive way? Probably not. Am I contributing to a societal problem by paying ridiculous prices for a logo that was likely made for $.37 in China? Yes, but if you are in foster care, that means your parents are either dead or unable or unwilling to care for you in a very basic way. There is likely no one around to help this kid develop any sort of sense of self worth to know that you don’t need expensive clothes to achieve happiness in life. If he can open this gift and feel like maybe he’s a little closer to being one of the cool kids for five minutes of his life, then I’d do it over again in a heartbeat.
Do you think there is ever a reason to pay for overpriced clothes? Should I have just gotten some shirts at Wal-Mart?
Also don’t forget that you can still enter for the chance to win $100
Today I’m terribly excited to be doing a blog swap with John from Frugal Rules. Don’t miss my post about being an advocate for your own health care over at his site, AND you still have time to enter the giveaway for $100.
Call me a nerd, but I love to budget! Budgeting can be an easy exercise when you know what your income is going to be from month to month. But, alas, not all people know what their paycheck will look like each time. This can be a common situation given the number of people in sales careers who depend heavily on commissions to make up the majority of their take-home pay. You could also be like me and be self-employed and have fluctuations in your monthly income. Either of these situations can make living by a budget difficult, but not impossible. So, please don’t allow the situation of irregular income be an excuse for you not to live with a budget. I’ve been able to live with a budget and not know what my monthly income will be for several years and with a few tips you can too.
Know What Your Expenses Are
The most vital thing to setting a budget with irregular income is to know your expenses. To be honest, it’s really an issue for anyone that wants to live with a budget, but for someone who doesn’t know what they’ll make next month this is of utmost importance. The easiest way to determine your expenses is to sit down with all of your bills and notate what each one is. You will then want to add in other expenses such as groceries or transportation costs. It is vital not to underestimate your expenses, especially for food costs as you don’t want to get to the end of the month and have no room in your budget for groceries.
Prioritize Your Expenses Within the Budget
Living with a budget requires discipline, one that can be felt more acutely for someone with irregular income. With that in mind, you need to prioritize your expenses. I am not talking about frivolous things here or your debts, but what it takes to keep your family going and the power on. Start out with groceries, mortgage/rent, utilities and transportation. These are the things that should be put out front and then you can deal with any debts like student loans or credit card debt. Now, some might rebuff and say this is ignoring your debt. Paying off debt is vital and I encourage it, but would you rather pay off your debt or have electricity? I know which I’d choose and setting the budget can help you see that.
What to do With Extra Money You Earn
Save it! Beyond that, look for other things that need to be taken care of but have been neglected. Being self-employed I love months where my wife and I bring in more than we need! The first thing I do is look at my budget to see what line items have been ignored or where not enough funds have been put towards. I see things like retirement, keeping a healthy Emergency Fund, Vacation Fund, entertainment, and really the list could go on. The key is to put a healthy chunk towards savings so that if you’re short the following month you have the cash to access to meet your minimum needs budget. This will allow you to smooth the rough edges that an irregular income can cause and keep you close to your budget.
Give Your Budget Time to Work
I will be the first to tell you that living with a budget and having irregular income can be an unholy matrimony. However, there is hope for the union. The key ingredient is discipline. That discipline can and does take time to develop. I know it did for us. Don’t give up after the first month. Give your budget a few months to work itself out, making minor adjustments as necessary. Once you set your budget, come back to it in a few months to see how you’re doing and if any changes are necessary. When you’re dealing with mainly fixed expenses, there’s likely little fluctuation to be had, but get in the practice of coming back to your budget on a regular interval to see how it might be improved.
Don’t let the excuse of unknown income keep you from having a budget. The difficulty and stress aside, it’s actually quite simple to budget with an irregular income. Do you have irregular income? What have you been able to use to help you live with a budget?
John is the founder of Frugal Rules, a finance blog that regularly discusses investing, budgeting, and frugal living. John is a father, husband, and veteran of the financial services industry who’s passionate about helping people find freedom through frugality. Visit him at frugalrules.com. You can follow John on Twitter @FrugalRules.
Kim’s comments: With owning my own business I have often had irregular income, and have used that as an excuse not to budget, but I’m on the straight and narrow now.
If you have read this blog with any sort of regularity, you know that I am trying extremely hard to curtail our grocery spending. I’ve made attempts before, but like tons of busy families, we shopped too much and often restocked the things we eat most rather than coming up with ways to use up existing food supplies. I finally found a way to make myself stay away from the store: By playing the Grocery Game at Canadian Budget Binder. I know I sound like a broken record, but by posting everything you buy, you become much more aware of what you are spending money on. I have noticed that we spend way too much on snacks and convenience foods. I’m convinced Mr. CBB could whip up a yummy, frugal recipe out of a turnip and saltine crackers, so it’s a hard act to follow. Recently I’ve discovered the idea of having a cooking marathon one day a month from Mandy at Money Master Mom and Catherine at Plunged in Debt. The idea is to cook like a fiend for one day so that you can take a cooking vacation for a few weeks. Also by having ready made meals in the freezer, you aren’t tempted to heat up a Hot Pocket or eat out. Even though I’m from the South, I’ve never envisioned myself as a cook. I actually admit being afraid of gravy, but I wanted to try and see if cooking once a month could help my grocery budget and give me more time in the evenings.
I actually cheated from the beginning. Unexpectedly, my husband and daughter left me alone for a evening to visit with some relatives. What to do with a solo evening, take a bath, read a book? Nope, I started cooking. I got my plan ready and cooked my chicken and chopped veggies for the next day’s big cook. I had gone to the store a day before, but all of the meat and some of the ingredients came out of my freezer and cabinets. Everything was ready for the big day. Wow, is this what the space shuttle astronauts felt like the day before a launch? Could I actually make a month’s worth of meals in one weekend? With fire department number on speed dial, I began cooking the next day.
Six hours later, I am proud to say, I had a fabulous assortment of delicious, nutritious, affordable meals ready to go in the freezer. In case you’re curious, I made
Lasagna enough for four meals
Cheesy Chicken Chowder enough for three meals
Barbeque Pork Tenderloin enough for two meals
Chicken and Veggie Casserole enough for four meals
Beef Taco Meat for at least three meals
Chicken Taco Meat for two meals
Ground Turkey Stir Fry for two meals
Chicken/Veggie/Tomato Sauce Stir Fry for three meals
Total of 23 meals.
We have been eating the freezer meals for about ten days now. I did not make enough for 30 days, but if we can eat these during the week, I can make breakfast for dinner, pasta, or something easy on the weekends. When each dish was ready to be frozen, I divided them into meal size portions and put them in plastic containers or freezer bags to go on the bottom shelf of our freezer. We decide the night before what we want and put it in the refrigerator for the next day. Heat it up at dinner time, and a salad, and voila! Everything has tasted great with no hint of freezer burn. The best thing, though, is no frantic discussions about what we can throw together for dinner in time to get all the evening stuff done to prepare for the next day. We heat, eat, and have minimal clean up.
I’m sure I won’t be this good every month, and there will probably be some Hot Pockets in our future, but I think monthly cooking is a great way to have homemade meals without rushing around at the end of the work day. I am looking for new recipes and hope to do this again in December. I won’t know the grocery budget total until the end of the month, but I think we will be under our limit because all that I need to buy will be milk, bread, and produce. If you want to save some time and money, I would highly recommend trying a monthly marathon cook. If I can do it, anyone can.
How often do you cook? Are Hot Pockets really that bad?