My Money Blog

Cut your budget by $100

A few months ago, I read an article about cutting your monthly budget by 10%. I'd link to it, but I can't seem to remember where I read it. Anyway, it didn't give many specifics or strategies, it just talked about how it would only take little changes to make this happen. I have looking at this for months, and I think this is crazy. 10% doesn't seem like that much, but when you have already been cutting just to get by, 10% seems impossible.

So, instead, we have decided to set a short-term goal of shrinking our monthly expenses by $100. Putting that extra money towards paying off debt would sure go a long way, and $100 seems like a much more manageable goal. Here are some ideas we have bounced around:

Bundle communication costs - television, phone, internet... Everywhere you turn someone is selling those as a package now, and I am starting to think it would be a good idea. I actually have been making phone calls and I considering this. All TV options seem to bring the same channels into your house, so why not go with the cheapest?

Find ways to cut electricity costs - Every little bit counts, even if you only knock off $10 or so a month. I talked about that a few weeks ago here.

Change your cell phone plan - Again, $10 here, $10 there, might add up to $100 at the end. Cut out the text messaging. I am not into text messages anyway. My cell phone bill is already pretty low, so this might now work for me.

Get your medicine at the grocery store pharmacy - I thought these stories selling $4 generic medicines, or free antibiotics were aimed at retired folks, but we got my daughter's antibiotic for free at Publix (a grocery store) a few weeks ago! That was pretty exciting, and saved us $10 or $15 over our normal co-pay. Why pay for something when someone else has it for free?

I am determined to lower our expenses by $100 per month - which is seeming more and more like an easily-attainable goal. I'll let you know how it turns out. If you have any thoughts or ideas, please share in the comment section.

Who's Gonna Bail Me Out?

I have been glued to the TV and internet over the last few days, watching the Congressional circus attempt to deal with our country's financial crisis. I am not an economist or financial expert, just a middle-class citizen trying to figure out my own financial problems. While I am not going to pretend to fully understand what has happened, or what is going to happen, I did have a few thoughts:

I know everyone is saying that if no action is taken, then we are all in trouble (part of me thinks it is our elected officials being dramatic a few weeks before an election), but aren't there other, better ways to protect the average citizen. For example, my net worth is a negative number right now, and a decent portion of my debt belongs to one of the big banks who appear to be in trouble. Why not send me a portion of the $700 billion, instead of bailing out the big banks. It is my tax money anyway. Do you realize that assuming there are 150 million tax payers (that is a guess), they could send each of us $4,667. I like that plan much better.

Why are politicians using the economy as a political football. How about this idea? Lock them all in a room, and just tell us the results - yes you passed a plan, no you didn't, etc... Don't make speeches. These people make a lot of money, worked all weekend, and got nothing done. If I collected my pay check, and got nothing done, I would probably be fired. Maybe this is why everyone came out today and blamed everyone else.

I bought my house after home prices started to decline, and at the time, I thought I got a good deal. My home is worth about $80,000 less now than a year ago. The companies being bailed out are the ones who caused this mess. So, I am paying for a lot of money for a mortgage that is much more than my home is worth. I didn't do anything wrong. Meanwhile, the banks that are losing money because of their poor judgement and decisions are being rescued. It just doesn't make sense.

This whole "bail out" is just a band aid. There is no such thing as an easy way out. Most of that realize that every day as we work to earn a living, try to stretch our budgets, and are held responsible for our own financial decisions, good or bad. I have a hard time believing throwing money at the problem will fix it, but then again, I am not an expert.

Making Extra Money for Teachers

My wife and I are both teachers - and teachers, especially in the state of Florida, do not make much. I enjoy my job, and I like to think that I am good at it, but sometimes I wonder if I had realized how poorly teaching pays, would I still have done it? I am sure many teachers feel this way - and I am not sure how our government can expect a quality education system while underpaying teachers. This, however, is not the point. There are some things you can't control, so instead, we have been looking for ways to bring some extra income into our house.

This may not be earth-shattering information, but here are some ways to make some extra money that we have considered:

Tutoring - this is the first obvious idea for teachers. Why not make money doing what you are trained to do? I really can't justify taking time away from my kids to work for minimum wage at the local grocery store - but tutoring often pays a decent rate ($20 or $25 per hour in my area). I am a music teacher, so I am looking into teaching music lessons, which pay pretty well. It takes some time to get clients, but I am starting to look. I used to tutor more often, but had to start from scratch when I moved.

Writing - Most teachers develop plenty of their own materials for their classes - worksheets, tests, presentations, lesson plans, etc... Why not try and make a little money of the work you have already done? It is a little harder to make real money this way - but if no extra work is required, then why not? I have sent some of the things I have written to publishers, and one of them is actually being published! You never know unless you ask. Not sure where to look or who to ask? Try googling for companies that publish educational materials in your subject area.

I have plenty of stuff that has been turned down - that's okay. I am going to set up a website where teachers can have my stuff for free - I am then going to place some google Adsense ads on the site, and will hopefully make a few bucks that way. If you don't know what adsense is, or how it works - google it - their are plenty of blogs explaining how it works.

My wife got a job writing for a curriculum company - she saw an ad online for a company looking for teaching to write for them, gave them a call and they hired her. Her income is based on royalties from the sales of her work. She works on it for a few months, and will collect money for years. Not a bad deal.

Extra Work at School - Sponsor a club, teach after school, take on extra responsibilities... There are so many things for teachers to do at school besides teaching extra classes. I have taken on extra supervision responsibilities after school, sponsored clubs, taught an extra class, anything I can find. It all adds up - the only way to find out is to ask someone, I ask my principal. I even volunteer to work for events for outside organizations who rent my school after hours. They have to have a school employee there, so why not me? It pays time and a half!

These are not the only ideas, this is just what we have thought about. There are plenty of other things, too. If you have any ideas, please share in the comments!

Saving Money on Entertainment

One of things we are doing to help our budget is finding ways to save money in every category. Sometimes it is hard to make changes to one aspect of your budget that will lead to significant savings. However, by making smaller to changes to several budget items could add up quickly.

The last things we allocate money for on each budget is entertainment. It is nice to use a little money for this, because we like to take our kids places, and sometimes, if we have the time and money, my wife and I like to go out and unwind after a long week of work. Here are some things we do to save money on entertainment:

Family Movie night at home - We started watching a movie as a family on Friday nights. My daughter is just turning three, so we watch little kid movies (Disney, Dora, etc...). The movie doesn't cost anything - my daughter has gotten plenty of kiddie DVD's as gifts, or we borrow one from family (who live nearby). My daughter loves popcorn, so we make some. Total cost is about a dollar.

Have "Date Night" during the day. - A lot of other married people we know plan a night each week or every couple of weeks for "date night." We used to do this too, but with two little kids, sometimes we are too tired at night. We have started going out during the day, and it turned out to be a great idea. Instead of going to dinner then a movie, we go to lunch then a movie. Lunch costs about half as much as dinner, and the movies cost much less during the day, half as much at some theaters.

Get a DVR. - I know this sounds backwards - saving money by paying for an additional monthly service. For about $5 a month, we can record anything we want, and then keep it for as long as we want, and watch it whenever we want. Whenever we see a movie we want to see on TV, we DVR it, or a TV show we like, we DVR it... We have a pretty good library of movies and shows. No need to rent anything. Money well spent.

Theme Parks - We live in Central Florida, the theme park capital of the world. While this is not cheap, some parks have special offers for Florida residents. Some people may get discounts through their employers. One of the greatest things we have discovered since moving here is that Sea World gives all teachers a free annual pass. This is great because my wife and I are both teachers. All you need is your certificate, most recent pay stub, and photo ID. Kids under three are free too, so right now, my whole family goes for free!! Soon, once my oldest daughter turns three, she will need to pay, but even then, it is less than $100 for an annual pass. She loves Sea World, which is a great place for young kids.

A couple of times a year, Universal Studios also gives free passes for teachers. Even if you don't have a discount through your employer, both Sea World and Universal have great deals on annual passes. I haven't mentioned Disney, because their passes are expensive. We love Disney, but that is something we save up for.

Plan around your meals. - Sometimes the most expensive part of going out with your family is meals. We try to plan around our meals - eating breakfast at home, and making sure we are back at lunch time. Sometime we will bring snacks with us.

Look for free events. - There are so many things to do with young kids that don't cost a dime: going to the park, story time at the library or bookstore, going to the beach, watching a parade, etc... If you live near a college or university, check their website for free concerts or performances. With so much to do for free, why spend money when you don't have to?

If you have any money-saving tips, please share by leaving a comment!

Carnival of Personal Finance #170

I am new to blogging, and recently learned about blog carnivals, and stumbles upon the Carnival of Personal Finance. My article about saving money on the electric bill was included in this week's edition of the carnival, which can be found here:

Carnival of Personal Finance #170

There are tons of great articles listed there, go check them out!

When the Numbers Don't Add Up

We spent some time this weekend setting up our second budget since we starting using them, and this one doesn't seem to add up as well! We seem to be about $200 short of what we would like to have to meet our needs for the next two weeks. This doesn't include any extras, just our mortgage, daycare, groceries, and gas. We are also trying to come up with enough for a nice birthday party for our daughter. We are committed to not using credit anymore, so we are looking for ways to make our income work. Here are some of the strategies we are trying:

Stretching our Grocery Dollars - We budgeted $120 for two weeks of groceries, because that number was perfect for the last two weeks. That is $60 per week - my wife went grocery shopping today armed with coupons and a store circular, and did very well. She spent $42, but used $38 of coupons and discounts. I was very surprised when she showed me the receipt. She got a lot of the buy one, get one free sales, so we actually have enough of some things for two weeks. We lowered our grocery budget by $20 afterwards, so that is a start.

Use Less Gas - Sounds easy, right? We budgeted $150, and have already used $120. Fortunately we live close enough to our jobs that we can sometimes go 2 weeks without filling up. Some days we will use one car, some days carpool, whatever it takes, but we will make what is in our tanks last (I hope). That helps us save another $30.

Well, we don't have much included in this budget, and we can't lower our daycare costs or our mortgage, so we can't decrease our spending any further. That still leaves us $150 behind, and we are desperate not to charge any more. The only logical solution is to come up with $150 more. The only thing I can think of is to turn to Ebay - I have some old stuff laying around that I don't use anymore - an IPOD (I replaced it a year ago), a mini-disc recorder/player, and some baby things we were looking to sell anyway. These things add up to right around $150, so I will list them tomorrow. I will post an update with the results, and I will look for some more things to sell... We haven't charged in two weeks, and we don't want to do it anymore!

I am pretty sure this will not be a regular problem - like I said last week, our first couple of paychecks of the school year are usually a little smaller.

Success!

Our first budget period ended yesterday, and it was a big success! We managed to stay within our limits for each category, and most important, did not swipe a credit card to pay for anything. We even ended up with an extra $150 that went unspent during the two weeks, which is a new thing for us. That $150 will go completely towards our debt snowball - which we are starting now.

We budgeted $120 towards groceries, and only used $110 - this was in large part due to good planning by my wife. For the first week of groceries, we only spent about $60, and saved $40 with store promotions, coupons, and competitor's coupons, so we were able to easily get everything we needed to get.

We started our next budget today, which this time around has to include our mortgage payment. We paid the majority of our monthly bills on the last pay cycle, so we are in pretty good shape. We should even have enough money to throw our daughter a nice birthday party (she is turning 3).

A nice side-effect of our budget success is that for the first time in a while, I feel good about our finances, and not the usual stress that comes with the monthly bills!

Saving Money on My Electric Bill

One of the things I noticed when working on the first budget was how much money we are spending on electricity. My electric bill for last month was about $280! That is more than double the amount we budgeted for groceries, so it is time to figure out ways to make that number a little smaller. Here are some strategies my family is going to try in an effort to reduce our electricity bill:

Adjust the thermostat.

I am guessing one of the biggest reasons the bill was so high was our use of the air conditioning. I like it cold, sometime too cold! At night, we lower the air to 70 degrees (it used to be 68), and then we raise it during the day. I am fortunate enough to have a programmable thermostat in my house. I have it set to go up to 73 about an hour before we wake up, and then 78 after we leave for the day. It goes back down to 73 about an hour before we get home, and 70 at 8:00pm.

First, we are going to raise each setting by one degree. So at night it will be set to 71, and then 79 while we are at work. I am also raising it an hour earlier in the morning, and turning it down an hour later at night. We will see how this works.

Keep the blinds closed during the day.

Keeping light out will keep the temperature down inside, and will probably make the air-conditioner work less. We aren't home during the day anyway, so we might as well keep the blinds closed. In the winter, it may be wise to do the opposite.

Replace light bulbs with compact fluorescent light bulbs.

While it's probably not going to make the dent in my bill that the thermostat will, everything I have read leads me to believe that it will help. When we bought our house, we decided that whenever a bulb dies we will replace it with a fluorescent one. So, we have been buying them when they go on sale all along. We check the hardware store circulars each week, and every now and then their are some pretty good sales.

It's only been a few days but the one thing I have noticed is that these bulbs give off much less heat. Maybe this will help with the air conditioning as well.

Turn the lights off when leaving the room.

Duh.

Charge the cell phone in other places.

I am not sure how much of a dent this will make, I am still looking around online to see if anyone has studied this. For now though, I will charge it in my car.

Here are some other things I saw online about saving money on electricity:

http://www.howisavemoney.net/save-money/5-tips-save-money-electricity/

I'll add more as I see them...

We'll see at the end of this month how much this helps. If you have any other ideas, please share in the comments!

Our First Budget

A couple of weeks ago, my wife and I sat down to make our first real budget. Now, we've tried to stick to a budget before, but it was completely unrealistic, and we had no real goals in mind when working on it. The result was a meaningless piece of paper that we looked at on the first day of the month and never really looked at again.

You have to be completely committed to sticking to a budget, otherwise it will not work. Maybe this isn't true for everyone, but it is for us. Each night we talk about where we are in our budget: how much we have spent and how much we have left. We still have three days left on this budget period, and we have run out of money in certain categories, so we will not spend another penny. Here is how we came up with our budget.

First, we had to determine the time period for each budget. We get paid every two weeks, both on the same day. So each budget has to go for two weeks. This presents challenges because most bills occur monthly, and our pay comes at different times of the month each month. Some months we get paid twice, and occasionally, we get paid three times. I am sure in the months where get paid three times, we will save the extra money for the summer, or pay extra on our debts.

Next, we had to prioritize our bills and needs. We will not use credit cards to pay for anything anymore, so the total of our budget cannot exceed our pay. This was particularly challenging this time because our paychecks in the county we teach in are smaller for the first check. Here is what we came up with:

1. Necessities: Utilities, Water, Phone, Groceries (Food), housing
This are things we need to have and can't be sacrificed. We listed these first to make sure they were covered.

2. Mortgage Payment

3. Daycare
While this is not a life necessity, it is necessary for my wife and I to work.

4. Debt: Credit Cards, Car Payments, Student Loans, etc...
If you fall behind, the debts snowball. We make sure at least the minimum is always paid.

5. Savings
You may think it is odd that this is down this low - but it doesn't make sense to put money away while you are paying interest on your debts. My savings account might earn .5%, but I am paying 22.9% on a furniture loan. Right now, we are only saving for the holidays (so we don't have to charge gifts) and our emergency fund.

6. Luxuries: Cable, Cell Phone, Entertainment, etc...
These are nice but not necessary.

7. Other
This is where everything else goes. My daughter's birthday is coming up, so we added in a line item for gifts. The priority here will vary.

This is obviously not a concrete formula, just a nice starting place. Once we set our priorities, the budget wasn't too hard! We had to figure out which bills would be due soon that would be covered by this paycheck. This time, we are paying everything except our mortgage, which isn't due until after our next paycheck (so our next budget will be centered around our mortgage). We did have to make some sacrifices though...

We will not be eating out much anymore - it is easier to eat in anyway with two young kids. Plus we will save on gas.

We are going to try and stretch our gas so we don't spend as much on it - this might mean combining trips and doing more shopping online. That won't be so bad.

We are going to be clipping more coupons for groceries. We are also going to find ways to stretch our grocery dollars more (that is a topic for another day).

This seems easy enough. After trimming in some places, we even had a little left to pay extra on debt - which is going to be a priority for us until our debt is gone.

It turns out we should be able to cover all of our bills and expenses with our income - so the fact that have this much debt means we have been overspending for years. I wish we had taken our money more serious earlier on. We have about three days left on this budget, so I will post then and let you know how we did!

Our Plan of Attack

So now the we have decided to improve our financial situation, it is time to come up with a plan of attack. Here are our long-term goals for our financial situation:

1. Eliminate all non-mortgage debt.
We sat down to work on our budget, and I am shocked about how much we pay towards debt each month, even by just paying the minimum. I am guessing a third of our net income is going towards debts other than our mortgage. That makes me feel a little sick, and that is probably a good thing (feeling sick, not the debt...).

2. Set up college savings accounts for our kids
I would really like to be prepared for when my girls go to college. Fortunately, the are so young that I have plenty of time to do this. However, it doesn't make much sense for me to do this now... Why put money into an account that is currently earning 5% interest when I could pay off a credit card that is costing me 15% interest. I also would like to help my kids by helping them not take out student loans.

3. Contribute more towards our retirement.
We already have some retirement accounts, including a decent pension plan from the state of Florida. I would like to save more, but again, this doesn't make much sense until I have paid off my debt.

4. Pay off my mortgage.
This is a long way away, but it is a nice goal.

Now that my goals are set, it is time for a plan of attack. Like I said, I have read a lot about other peoples' financial stories, and have learned a lot from listening to Dave Ramsey. I am going to go into more detail about how I am paying down my debt on a later post, but I do have some basic strategies in place. My wife and I sat down, and came up with some pretty basic, common-sense short-term goals:

1. Create a budget, and stick to it.
We have just finished our first one, and learned a whole lot about where our money goes (and it's not pretty). Teachers have to be creative when making a budget because of our pay schedules - although I am sure you can say that about a lot of people/jobs. I am going to post this weekend about how we did our budget.

2. Stop using our credit cards.
The only way to do this is to stick to the budget and follow the next goal.

3. Make more money than we spend.
Easier said than done!! When we first made our budget, we actually had more in it then income. Our income will go up in a few weeks, our first check of the school year is a little smaller than the others. So, needless to say, we had to make some tough choices, but we did it.

4. Find ways to increase our income.
This is also not easy. Getting a normal second job can be hard for a teacher to do, because of all of the extra after-hours work we have. So we are looking for ways to pick up some extra income, and we have actually found some! I will post about that later on. At this point, however, any extra income will be devoted to extra payments on our debt.

5. Do all of this, without it affecting our kids.
This may be the most difficult. Our biggest rule we made when trimming our budget was not trimming anything that would affect the girls - we also will not sacrifice the quality time we spend with them. Any efforts to make extra money are usually done after bed time.

I'll spend some time in the next week sharing some of our strategies and ideas... If you have any tips for us, please share in the comments!