Looking Back at Our First Cash Only Christmas

I guess I didn’t really know how it would go, but this Christmas came and went just as quickly as the others before it. However, the big difference this year is that Christmas won’t be lingering in the form of credit card debt or budget regret. I can’t even begin to express how good that feels!

We didn’t plan all year long and we didn’t start saving last Christmas, but we did sit down in November and make a plan for Christmas- and we stuck to that plan. We took a portion of the money that would have gone toward extra debt payments in December and budgeted $800 for Christmas. That included gifts for everyone on our list, cost of food for hosting Christmas dinner at our house, and a little extra padding for unexpected expenses. I am happy to report that we came in under budget, by about $90.

This is the first Christmas I can remember that we didn’t use a credit card and didn’t over spend. Working with a budget for every person on our list was quite liberating. It made it easy to decide what to buy for someone- if we planned to only spend $25 on someone we wanted to make sure we got the best value we could for the money.

What to do if you took on debt to pay for Christmas this year:

If you had to use credit cards to pay for Christmas this year, don’t beat yourself up over it now. Recognize the mistakes you made and take action TODAY to prepare for next Christmas and to be ready to handle it with cash. If you don’t have one yet, open a savings account for Christmas. Call it your ‘Christmas Fund‘ and only use the money for Christmas. Decide now how much you need to spend for next Christmas and divide that total by 11 or 12 (decide if you want to count this month or start in January or whatever). The best advice is to set up an automatic transfer each month for your monthly Christmas Fund contribution so that you won’t even have to think about it. Personally, I don’t like to set up automatic payments or transfers for non-essentials so I will manually move the money each month- decide what works for you here and what you can safely commit to doing.

An example– I opened our Christmas Fund yesterday (with ING Direct) and funded it with $50. I chose $50 because I always start my new ING savings accounts with $50 (no particular reason for that). We have decided to budget $1,000 for next Christmas, which leaves $950 to save from January through November (11 months = $86.36 per month). That’s it! Next Christmas is taken care of! Of course I need to make that transfer a part of my monthly budget, but we can afford it so that won’t be a problem. So whatever your budget may be for next Christmas, decide it now, plan for it now, and get started TODAY! I promise you won’t regret it.

Remember, by preparing for next Christmas now, not only are you taking control of your money and making it work for you, but you are reversing the damaging effects of interest that you would be paying to a credit card company and actually earning interest all year long on your savings account. Compound interest working against you is the enemy of financial freedom and wealth. Compound interest working for you is your greatest ally in changing your financial future and becoming wealthy. This distinction is probably the greatest difference between the poor and the wealthy- don’t let this be another year that you move in the wrong direction.

Best of luck and Merry (cash) Christmas!  🙂

How To Save Money On Food At Work

Recently, I posted about my poor budgeting and spending at work. Now I would like to share some tips on how to reduce spending on food at work and what I have done to save about $100 a month compared to my old ways.

Skip Starbucks and drink coffee at work– a lot of offices have coffee available for free. If so, that is obviously a great chance to save some money. I don’t have that option at my office so I bought a Senseo coffee machine and brew my own coffee at my desk. The Senseo machine is about $60, but you could pay for that by skipping lattes for a month. Admittedly, you could get a less expensive coffee maker, but the Senseo does not require filters and is easy to clean up. I think it payed for itself very quickly for me. The Senseo doesn’t brew the greatest coffee, but it’s not bad and for less than $0.50 per cup it gets the job done. Whatever your substitute, the goal is to cut out the $4 lattes.

Brown bag it– again, an obvious solution, but if you haven’t tried it you will truly be amazed at how much money you can save by doing this. My favorite ‘brown bag’ lunch is leftovers from dinner, preferably pasta or something easy to heat up in the microwave at work. Another easy option is sandwiches, which can even be made the night before to save time in the morning. I also keep an emergency stash of Hot Pockets (Lean Pockets) for days that I don’t feel like preparing anything or days that I forget to bring food (I keep some in the freezer at work). A lot of these options depend on having a refrigerator at work, so hopefully that is possible for you. If not, your variety may be limited a bit, but perhaps an insulated travel bag with an ice pack would get the job done. Even if you have to go out and buy something, it will quickly pay for itself.

Keep snacks and favorite drinks at the office– I’m trying to cut snacks and sodas out of my diet as much as possible, but if I am going to indulge, I don’t want to pay the prices at the vending machine. Your money goes so much farther on these items at the grocery store, so stock up on the things you like, but don’t let yourself go crazy with it. For example, I try to allow myself either one cup of coffee or one diet soda per day at work. Sometimes I’ll skip one or the other for the whole week. My desire is to avoid becoming dependent on these drinks and form a habit that could get pricey. Some of my coworkers will go through four or more sodas per day, and buy them at vending machines- paying a huge premium over the grocery store. The other part of this tip is to replace the foods you like with low calorie options- I try to go for some Baked Lays or the new Nabisco 100 Calorie snacks. I’m not going for perfection here, just trying to make the best choices I can while I’m away from home.

Drink water– most offices have a water cooler, which makes this so easy (and free). I don’t have that option at work- only a drinking fountain. I’m not thrilled with drinking tap water, and even less thrilled with the germs that may be floating around it, but I just bring a bottle of water to work each day and refill it. I’m really tempted to bring in a gallon of purified water each day, if for nothing else than to avoid the germs around the fountain, but I haven’t bothered yet and I’ve survived on the tap water so far. 🙂

Tell your coworkers you’ll never eat with them again! Okay, that’s a joke, but you definitely can’t make it a habit to eat out every day if you want to save money on your lunches. If saving money isn’t important to you or the camaraderie is worth more, then by all means go for it. I work with programmers, who tend to be a quiet bunch, so we are fine with going out to lunch together every couple of weeks or so. That works for us and makes it easy on the budget. If going out to lunch can somehow better your career or help you get ahead (maybe going to lunch with the boss) then I would consider it money well spent, you’ll just have to look for other areas to cut back.

A typical month in the past would have seen me spend about $80 – $100 eating out at work (that’s after I had kicked the latte habit). There is nothing inherently wrong with spending some money on lunch. However, for myself I found that I was often just picking up something convenient and fast and eating it at my desk in a hurry. There just wasn’t a good reason to spend $5 – $10 to do that when I could bring food from home about a fourth of the cost and get the same result. If your office goes out to lunch and you want to be part of the culture then make that part of your budget and have fun. At the very least, I think everyone can benefit by spending less on coffee and skipping the vending machines. I practice all of these tips and it has made a big difference in my budget. Good luck!

Wasting Money On Food At Work

When I totaled my weekly budget summary on Sunday I noticed that I had spent about $22 eating out at work over the past week. I only had one ‘real’ meal that week when I went to lunch with some coworkers, but that was only about $7 anyway. I dug into the numbers and realized that a bagel here, some coffee there, and a few snacks had all added up quite quickly.

$22 is probably a lot less money than I would have spent in a typical week eating at work just a few months ago (actually probably less than I would have spent on coffee alone in one week), but now that I’m committed to my budget, and paying every extra dollar I can find toward debt, the total really jumps out at me. I need to focus this week and keep the cash in my wallet. So far I’m two for two on days not spending any money while at work. This post will hopefully keep me accountable for the next three days.  🙂

How I Saved $432 On Groceries Last Month

I posted earlier this month about my seemingly out of control spending on groceries. Now that we have reached the end of the month, I have some nice progress to report.

Quick review- in August, for two people, we spent $628.26 on groceries. To be clear, that was just groceries. No eating out, no fast food, and no household items. Seems like way too much money to me.

Now the good news- for the month of September, we managed to spend only $195.83. How did we do that? I’m not sure if I know exactly what made the difference, maybe we just got lucky, but I will try to share all the details I can think of now.

My first trip to the grocery store this month was very different than it used to be. I actually have fun shopping for groceries and because I like to cook I tend to spend a lot of time looking for specific, hard-to-find items that I may have seen on a cooking show or heard recommended somewhere- almost like a kid in a candy store, but with produce and spices.  🙂   This time, I didn’t allow myself to do that. I stuck with the list I had prepared and I didn’t always look for the ‘best’ items. I spent quite a lot of time comparing prices across different brands and doing some quick math to figure out what was the best deal per unit. I also brought an envelope full of coupons and made sure to use them all (can’t tell you how many times I’ve brought coupons with me and simply forgot to use them).

I saw results right away after taking this new approach. The bill was much lower than I had expected for the amount of food that I purchased. I also made sure to pick up items that I knew could go a long way for little expense (bags of rice and beans for example).

The other change I made was to focus on eating what was already at home. Yeah, that probably sounds obvious, but I would always go out and buy more food when I already had a lot to eat at home and this often led to me throwing away a lot of food.

That’s about it really. All it took was some effort. Instead of just walking through the grocery store with only a vague idea of what I needed, and grabbing what looked good along the way, I planned ahead, I stuck to my plan, and I really labored over every extra penny I had to spend. For example, we wanted a little Mac and Cheese (not healthy and the stuff in the box is really awful compared to home-made in my opinion but my wife likes it). First I looked at the Kraft brand, it was $0.99 per box. Then I found some generic brand for about $0.70 per box. I thought I had found a winner until I looked a little further down the shelf…and there it was! The cheapest of the cheap, $0.33 per box for Mac and Cheese. That’s a huge price difference and there is very little taste difference, if any.

Ultimately, if I want to lose weight, I can’t afford to be eating cheap food that is loaded with empty carbohydrates and lots of sodium. I really want to explore how to prepare my own foods at home, make them as healthy as I can, and do that while still spending less money. In my mind, I have always equated eating healthy with spending a lot of money on groceries, but I suspect that isn’t really true. Look for more on that some day. For now, I will take the $432 saved on groceries and throw it at the debt snowball.

How Much Stuff Do We Need?

DVDs, CDs, video games, books…how much is enough? I have a feeling that if I could undo every purchase I’ve made in these categories I might be debt free today. Maybe that’s a bit of a stretch, but there is no doubt I’ve burned a lot of money on this stuff. I’ve spent some time over the last couple of weeks going through what I own and figuring out what I can get rid of. If I am brutally honest with myself, I could get rid of all of this stuff- I don’t NEED any of it. If I lost my income and had to figure out how to survive none of this stuff would help- unless I built a shelter out of DVDs and burned books for heat and light. 🙂

Ultimately, there needs to be a balance here. We do need (lowercase need) a few items for entertainment and it is hard to argue with the value of a good book. The problem is our rabid consumerism culture drives us to always buy more and more stuff. If you buy a DVD and watch it 10 times, I’d say it’s a pretty good value. However, if you watch it once or never, what good does it do to have it on your shelf? Is a DVD collection some mark of pride or satisfaction? I imagine that it could be for some people, but it really shouldn’t be. I think the other problem inherent with large collections of ‘stuff’ is that we naturally must put less value in each individual item that we own. If you own 4 DVDs, there is probably a good chance you really like those 4 and you will watch them over and over. If you own 50, how many of those DVDs do you really like? Could you possibly name all 50 that you own? If not, what is the point? What if you could go back in time and turn 40 of those DVDs into $400 that was sitting in the bank right now or being paid toward your debt? I know which I would rather choose, though I probably would have made the wrong choice not too long ago.

So…what is the point of this little rant? I’m trying to practice what I preach and spend some time cleaning out my collections of stuff. Currently, I am spending a lot of time listing things on Ebay and preparing some boxes of things that wouldn’t sell for very much to take to a local used book store to cash in. I have literally found so much stuff that this is going to take at least a couple of weeks, but look for a report later this month on how much cash I’ve turned this junk into and what I will do with the money.