Saturday, March 12, 2011
Baby Step #2: Make Cuts To The Budget
Hopefully you have all been working on your budgets and spending logs. You have been working hard and have found some areas where you can reduce your spending. You have reviewed your spending log and cut out unnecessary spending. You have put some type of budget plan in place. Remember start small. This budget will be revised and revised again. If you have not started your budget, I encourage you to read here and here.
Once you have your budget, hopefully you are working on a cash basis only for your groceries. Let me just say here that your grocery budget, for most people, is the easiest to trim of most categories in the House Hold budget. You can make meatless meals, drink H2o, cut & use coupons. Grow a garden. Shop lost leader sales. This is where the store actually takes a loss on some of their advertised sale items. Their goal is to get you into the store so you will spend more than you plan to. Shopping just lost leaders will save you money.
Next you need to find areas in your budget where you can reduce, cancel, or just plain do without. When you have a mountain of debt, can't pay your bills on time, and are living paycheck to paycheck, these are serious signs that your financial stability is in question. Our culture has the mind set that luxuries have now become the new necessities. You need to take a hard look at what you need versus what you think you need.
Two of the first areas that we cut out were Cable and Cell phones. We were fortunate that our Cell phone contract only had a few months to go, when we decided to cut them from our budget. The cell phone is a perfect example to share with you. When we first got the phones (We each had one) the bill was supposed to be 65.00/mo on the Family Talk Plan, with a 2 year contract. However the bill was never 65.00/mo. Some months it was over $100.00!! We couldn't afford the cell phones, but we kept them anyway. It would be embarrassing to say we didn't have cell phones. Or at least that's what we thought... We were without cell phones for three years. We now have a prepaid Tracfone which we got about 1 1/2 years ago. My Father In Law purchased the phone because He wanted to assure he could locate us if needed. At the time my Mother In Law was quite ill,... and has since passed away. We have kept the Tracfone, but if things got too tight , it would be the first to go. Cell phones are certainly convenient, and some may say a necessity in today's world, but we survived without them. The truth was We couldn't afford them.
The next item to get cut in our early budget, was the cable. This was by far the hardest for my husband. He LOVES sports. He very much missed the games he could only get on the cable stations. But, we did the hard thing...... we cut cable from our budget. We were without cable for about 2 years. We now have basic cable because we have a bundle package with our Phone & Internet, for a much better rate than we could get separately.
As I have mentioned before, the Third tough thing we did was get rid of our second car. We did this a little backwards, though. We had a Jeep Cherokee that was paid for and a Chevy Venture Mini Van. We sold the paid for Jeep, and went down to the Mini Van. My husband works 1 hour from where we live and a reliable vehicle is a must. In retrospect, we should have gotten rid of the car payment vehicle, and put a few hundred dollars into the paid off vehicle. Oh well, I told you all this is a journey.........
Getting out of debt takes hard work and sacrifice. I cannot stress this point enough. There is no simple answer. No one exercise will immediately turn your financial picture around. It will take baby steps. Learning new strategies, building new skills, making do and doing without. I remember reading somewhere in our early journey towards becoming debt free, that a Snowman is built one snowflake at a time... I have never forgotten that. We paid our credit card debt off One At A Time. Today we have NO Credit Card Debit!!
I would be a miss not to mention the incredible mercy God showed to us. I am so thankful for His goodness to us. It has been a long road, but He has guided and sustained us every step of the way!
It is my prayer, for those reading, that you too are taking baby steps......to big dreams!
Stay tuned for next weeks Step 3: The Emergency Fund