In terms of budgeting, there is no single approach or technique that works for everyone. We are all in completely unique situations, in different stages of life, in varied geographies and social strata.
The purpose in writing this post is simply to “put pen to paper” with everything we have done over the years to tackle our own finances. We had big wins, unexpected challenges and failures of course. Along the way, we collected small tips and tricks that are easy to implement. In addition, we delve into the bigger financial decisions that shaped our goals.
Household Hacks for Cost Savings
Your expenses are a reflection of your priorities. Hard to hear? Probably, but when you think about how you spend your money, you are in fact deciding what is important to you. Taking a moment to consciously choose instead of just doing what you have always done, may keep you from overspending but also reaffirm your chosen priorities.
Take Advantage of the Freezer
Bulk Up When Budgeting For Proteins
We learned a very long time ago that if we couldn’t wait for something to thaw, we would end up eating out. We both worked very stressful jobs and were just plain worn out at the end of the day. The time to thaw, prep, cook, eat and then do dishes was just too overwhelming as a young couple with two kids. We decided to take on our take-out budget by making home cooking a little easier on ourselves.
Immediately, we started to pay attention to sales at the grocery store on the staples we used all the time, but especially chicken and ground beef. When we saw those sales we would stock up significantly. In this way, we reduced our monthly expenses for our proteins by nearly half almost immediately, dropping by about $60 to $80 per month. It was far more if you considered, we ate out far less.
Next, we needed to figure out how to date and store those items efficiently. Initially, it wasn’t easy to manage without an extra freezer. We ended up buying a good quality freezer bag brand instead of using cheaper ones. Freezer burn would ruin our stock from time to time.
It was also important to portion out proteins in an amount for a typical meal. Now, what you may not guess is the true key to our success was flattening and filleting the chicken breasts! We also flattened out the ground beef portions by the way. Why? Packages thaw sooooo much faster AND we can literally count how many meals are in the freezer without guessing.
Freeze Fruits To Enjoy Year Round
While strawberries are the symbol of summer, wouldn’t it be great to have them all year? It would certainly be nice to be able to buy fruits at seasonal prices and with the freshness we all love year round. Unfortunately, my favorites can be pricey off season.
Also, while I am a fan of so many different fruits, I certainly get tired of shopping, prepping and repeating that process every few days. I decided long ago, I didn’t have the time or patience. Consequently, I developed a different approach. On top of that, in 2020, pandemic shortages also limited what was available in the stores and when items were available.
Build a Little Prep Into Your Week
Being a fan of smoothies, I love to use a variety of fruits and other ingredients. As a result, I have also become a fan prepping a portion of my fruit every week for the freezer. It makes it so easy to stock up on seasonal items at great prices but yet have them long after the season is over.
- Prep and clean fruits.
- Cut into sizes appropriate for blending.
- Let them dry completely before freezing.
- Put together a mix of the fruits for your smoothies into small containers.
- Set aside single fruit options into small portions as well.
The result is a ready-to-go smoothie variety that only needs juice, maybe a fresh banana or some yogurt. All these items make healthy living just a little easier.
You can do the same for many vegetables as well since the concept is just buy when on sale, portion out according to your needs, and enjoy the convenience.
Confessions of a Former Crazy Couponer
I will admit, when finances were especially tight, I resorted to a little extreme couponing to get by. It was necessary at the time but the process did trigger my anxiety and perpetuate some OCD tendencies. It became a job I REALLY didn’t enjoy!
These days, it is much easier to find sales and clip coupons. So much is available through apps that I can almost totally ditch clipping coupons altogether. In fact, most grocery chains have their own apps so you can virtually clip their best deals.
- Check out the digital circular in the app.
- “Clip” the deals you want to take advantage of that week.
- Show your phone to the cashier.
A Few Tips To Maximize Coupon Savings
- Your savings should deduct from your total automatically. Just double check everything went as expected. Sometimes there are glitches and the cashier may have to do some overrides.
- Keep your eyes open at the store. Not every sale is advertised.
- Make sure to have certain types of coupons on hand (usually found on the internet or in the local paper) for things like toothbrushes, toothpaste, shampoo and more. My favorite brands in the grocery store on sale occasionally, usually in large bins. Combine that sale with a readily available coupon. Voila! I don’t think I have paid for a toothbrush in almost ten years!
Meal Planning Is Crucial To Budgeting
Now, to be clear, meal planning is is not exactly the most inspirational process. After all, it has to be done over and over. On top of that, rarely is everyone happy all the time with your choices. If you tackle it head on and develop a system, it can be much easier however.
I use a meal plan to avoid ordering out (expensive relatively) when everyone is hungry at dinner time and impatient. If we all know what is planned, we can all pitch in. It also gets done much more quickly and with far fewer complaints. In addition, you can stretch ingredients across several meals so there is also far less waste.
One of contributors actually developed a system using Trello, which is free for personal use and linked here, to develop her own meal plan system. You can also link to the meal planning post here if you want to to see what it is all about.
The Starbucks Trap
I may have an achilles heal which has challenged my budgeting skills periodically. Coffee and particularly, Starbucks, has always been a trouble spot. After years of traveling on business, I developed a taste for the chain since it was the same whether in Hong Kong, Australia or San Diego.
Before the advent of their app, I tended to overspend because I wasn’t able to keep track of purchases while on the go. Now, I just load my app once a month with what I want to set aside in the budget. When it’s gone, it’s gone and I just stick to my cup of joe from home.
An added benefit is the rewards. I periodically take advantage of collected stars to get a free latte or treat. I regularly purchase gift cards for a thank you or gift, especially during the holidays. Those stars add up quickly which is a nice bonus during all the holiday shopping.
Budgeting Doesn’t Mean Never Going Out
While it may be wishful thinking, we can all sacrifice for a goal, the reality is that it is simply not sustainable. Never grabbing an ice cream with kids is just not thinkable, right? I want better for them (and myself) than when I grew up. So making the most of your time out is paramount and I would argue, a major motivator when you are going through the daily grind.
Think about it. If someone has a goal that is only attainable at a thirty year mark, what motivates you in the short term? If you take a moment to assess the little things that bring you joy, surely those are worth the effort of being thrifty all week. My motivation is dessert out with the kids or a happy hour with the girls. My husband loves to watch Saturday night fights or ride our beach cruisers along the ocean. We’re actually very motivated by simple pleasures.
For most of our marriage, my husband and I enjoyed friends and backyard barbecues and all but sometimes we just wanted a Saturday nap. Yep, I said it, when the were young, we were exhausted all the time so a nap on the weekend was pure bliss! To this day, we even look forward to vacations with that in mind. Weird, but true.
Budgeting and Your Bills
The bills are one area that really is a way to impact the monthly budget immediately. While some of these tips may require a lifestyle change, others are incredibly easy and available to you right now on the budgeting journey.
Take Advantage of Tech Advances in Your Budgeting Journey
We may have mentioned California is expensive but it is also reasonably tech ready. If you really need to cut down on household expenses, consider stepping up your tech game.
What do I mean by looking into tech? There are so many new ways of getting the services you need, especially if you are streaming your entertainment. In just the most recent couple of years, all the standard cable channels now offer some variety of streaming for their most popular shows or news outlets.
The Age of Streaming Can Be a Budgeting Dream or a Nightmare
So how do you take advantage of this new streaming era?
First, invest in a high speed cable service instead of paying for cable television in addition to your internet. In our case, the cost savings is almost $130 per month. We are planning to eliminate the cable tv service once the kids have left home for college and after pandemic lockdowns are a thing of the past.
Alternatively, if you are single or moving regularly, you could even rely on your wireless services for a hot spot to eliminate the cost of internet as well. That would be an additional savings of $25 to $75 per month. Several friends who travel take advantage of this option.
Critical Considerations
- Keep in mind, savings will vary depending on your area and availability of services.
- Remember that unlimited data would have to be a part of your wireless or internet package. This can cost more than standard or more limited services.
- Do your research and find out if your carrier or providers are top notch. Paying a little more for the best will save you so much frustration down the road. Don’t commit unless you know the service is up to the task!
- Finally, you will need newer generation devices (mobile phones, tablets, laptops, desktops) all in very good condition. The reality is that newer generation devices pack way more punch and bang for your buck. They handle the extra load of processing and data storage required these days.
Subscriptions or Memberships and Budgeting
Now, every budgeting app warns of unused subscriptions as a source of unnecessary expenses. There are even separate apps to identify these culprits. Some credit card companies are even beginning to offer these services now too.
The subscription trap is real, so pick wisely and eliminate any that simply are not critical.
- You can also consider the annual rate, instead of the monthly rate, which is usually cheaper if available.
- Share plans within the family. We do this with Netflix and the Disney/ESPN+/Hulu Bundle (both $13/month), Amazon Prime ($128 per year) and even a local brewery discount card. Believe me, with two kids in college now, it saves us a ton of cash every month to share. Cell plans can sometimes be cheaper with a family plan, especially if you need unlimited data. A membership to AAA or Costco is definitely a way to save as a family.
- Eliminate the wine of the month or cheese or whatever. You can find amazing blogs with suggestions for special occasions or treats for yourself available at the stores for far less. For example, while Omaha Steaks seemed great, a gift from a family member. When I found how much they spent I was shocked.
Address Automobiles Right Away When Budgeting
Save With Car Insurance
In California, and in many other places, cars are an absolute necessity. Even with the availability of companies like Uber or improving transit systems, it’s just not realistic to think a working adult can go without a vehicle. We have been a two car family since the day we were married. With both of us working, with different schedules, and sharing responsibility for children, it was always a necessary expense.
Potential Cost Savings with Insurance
- If your car is paid off, you are only required to have liability insurance (in California). This could save you hundreds of dollars every month. The risk is that if you are at fault in an accident, you will be responsible for your own repairs or medical expenses.
- Review your insurance mileage. If you are driving far less than in the past (maybe you are suddenly working from home for example) you may be eligible for a reduced rate.
- Also, as you develop a clean driving record, shop around when your renewal is up. Include your insurance carrier in that process in case they have new discount programs you may not be aware of.
Swap Out Your Ride for Cash
One consideration that worked great for us was trading in that newer model vehicle for something reliable but perhaps a little older. This may seem easy but a lot of our image of success gets wrapped up in material possessions. It’s not a judgment, simply observation. We want the best we can afford, right? I’ll admit, I really loved driving a BMW into the office with a Starbucks in hand for awhile. I did have to shift my mindset honestly.
So how did we translate the idea into real cost savings and even extra cash? We got the cash from the sale of the fancy car (my beloved “Beemer”), set aside a portion for a practical car (an older minivan), and put the difference into our savings.
Lower Insurance Costs
Now, our car insurance expense went way down as did maintenance costs. The difference for maintenance and insurance added up to about $2,500 per year.
We also pocketed about $5,500 net from the swap which went into our savings and ultimately our mortgage principal (more on that later in the post).
Ultimately, we had more options with the practical vehicle for our lifestyle with a fixer upper home and raising a family. The minivan could be used for the shorter commutes as well as beach trips with the kids. The extra space was also handy as we did home improvement projects around the house and headed to Home Depot most weekends.
Budgeting and Your Mortgage
The biggest expense we all face is housing whether rent or mortgage typically. If you have a mortgage, you may be shocked how much of your monthly payment goes to interest. Remember that feeling as a teenager, when you figured out who FICA was on your paycheck? It’s shocking how much of our hard earned cash we give to bankers each and every month!
One of the challenges living in California is obviously the cost of living, particularly housing. In Southern California, the median home price hovers around $630,000 in Los Angeles and $570,000 in San Diego. The below example shows how your payments are applied for a typical San Diego purchase.
- Good Credit Score | 720 to 739
- 10% Down | $57,000
- 30 Year Fixed Rate 3.25%
- Overall Monthly Payment $3,368
- PMI, Mortgage Insurance $252
- Home Insurance $200
- Property Taxes $684
- Principal & Interest $2,233 (37% to 61% applied to Principal)
The Big Picture on the Cost of a Mortgage
Over the life of the loan (360 Months) you will pay $290,739 in interest on that loan. In addition, only about 37% of your payment goes to the principal each month. By the middle of the loan period (month # 180), it can be about 61% being applied to your principal.
Now, if you can afford a 15 Year Fixed loan, you can reduce the overall amount of interest paid over the life of the loan by a little more than half, partly because the rate will likely be lower. The monthly payments are far steeper so this option often carries monthly sticker shock. The 15 Year plan usually isn’t affordable on a monthly basis for first time howe owners.
You will hear over and over that you should pay extra toward your mortgage principal. This is true! The point of all our budgeting was to free up up extra money to do just this. We are on track to have the house paid off within 16 years and not the scheduled thirty years on the loan. We are wrapping up our loan by the close of 2020.
Retirement Is An Extreme Budgeting Exercise
The Age Factor We DON’T Want To Acknowledge
As you age, you face additional challenges physically and socially. Beyond the obvious physical aspect of slowing down, the usual aches and pains, there is the aspect of mental health to consider. Being forgetful or unsure is a consideration but also socialization with friends and family becomes quite important.
There is a certain reality we recognized with our grandparents and parents about the aging process. In our families, they were of the generations that subscribed to the traditional retirement cycle of stopping work in their sixties or seventies. Their idea of retirement was playing more golf or tennis, being more involved with their church or community organizations and a few more vacations each year.
A Different Retirement
Our idea of retirement was a little bit different. We wanted to indulge in much more rigorous activities. We have worked so hard, for so long and given so much to our kids that we did actually miss out on experiences we want to explore in our next life chapter. Some of those activities are perhaps not advisable in your seventies. Swimming with whale sharks comes to mind immediately! (Below picture is NOT us but hoping to replace it someday with our own “selfie”)
In addition, some family members passed away before retirement unexpectedly so we have a slightly left of center mindset where we do NOT want to wait too long.
The result? We decided retirement in our fifties was a happier number for us. Still young enough but far enough along to be financially ready for the next chapter. Consequently, we addressed the primary obstacle to that goal, our mortgage.
Budgeting For Retirement
Our Goal for Retirement
In considering retirement, we knew we just couldn’t travel and continue to provide for kids or grandkids the way we wanted with a massive mortgage hanging over our heads.
We took drastic action and made addressing our mortgage a priority. This meant sacrifice, significant sacrifice. This is one reason why budgeting has been such a huge priority over the years. We wanted to live a full life and yet still wanted to pay off the house by our retirement date.
A Simple Budgeting Plan That Worked For Us
- Trade in our expensive cars for more economical choices.
- Adjust our household expenses, bills and vacation plans.
- Pay off both cars with savings from reduced expenses.
- Reduce insurance by only having liability on the oldest vehicle.
- Take each tax return and apply a portion to our mortgage every year.
- We were lucky to have some inheritance from our parents which significantly sped up the process. Anytime, we had unexpected funds, we applied them to our mortgage principal.
A Few Final Thoughts on Budgeting
Whether you want to retire early or simply save cash every month, we hope some of these tips inspire you to make some changes. We will continue to add far more detail on saving money in support of a lifestyle with less stress, less grind and more quality experiences.
With a kaleidoscope of lifestyles and a plethora of experiences, you may have even more ideas and perspectives on budgeting. Feel to add your thoughts in the comments. We may even add them into the post (with a link to your post if you are a blogger) or share them via social media.
Our retirement journey is beginning its new chapter soon so don’t be surprised if you see a lot more travel posts!
These are great tips! I found that tracking expenses was a great way to see which spendings I can cut on. We used to have two cable TV at home but I convinced my mom to cut one since she wasn’t really watching upstairs where the other cable was. Credit cards cause the biggest dent on my finances so I’m cutting down by cutting some cards and using reward points as cash rebate.
Great point, I use the cash rebate for the credit card all the time. Tracking expenses is super critical but I haven’t found an app I like so just downloading from the bank and the credit card to excel for now.The family didn’t realize how much we spent on take out until I showed them in the spreadsheet. Thank you for reading our post and posting a comment!
Meal prepping is the key for me, as food expenses cover the biggest part.
Meal planning or prepping is a major factor in reducing our take out budget. We took down that restaurant category by hundreds every month! Behind the scenes, we use a glass door in our kitchen and dry erase markers. We mark each evening with what’s for dinner as well as who is cooking (because of the ‘Rona two kids doing college from home this year). How much do you think you save from meal prepping?