Tuesday, July 23, 2013

When you REALLY NEED to cut expenses, where do you start?

It doesn't look so bleak!!!

But to answer the question, "where do you start to make cuts"  .  .  .

My thinking -- look everywhere. There are a couple of exceptions, but for the most part, no budget category is sacred.

I have to qualify that statement, there are a couple of categories that I do feel are sacred, for both faith and humanitarian reasons. Our tithing is non-negotiable, in our minds. It's just something we do, right off the top. Giving to charitable causes also remains in our budget. For example, we sponsor a little boy in Columbia. I could never put my happiness ahead of his need. He has so little, compared to us here in such a wealthy country. We also support our local food bank. Again, because some folks have so little, when we have so much. No one in my house is in danger of missing a meal. That can't be said for many households in our area. And taxes. Ya gotta give to Caesar what is Caesar's. Tax evasion, even when you don't agree with what your government does with your taxes, is wrong and unscriptural. But a citizen always has the right to protest with their vote, by writing to their leaders, and by organizing peaceful coalitions for change.

So, back to the budget? Where to make cuts?

I prefer to cut across the board, rather than eliminating one category altogether. First of all, I think we free up more money this way. But second, we tend to feel less deprived if all categories remain active, to some extent, rather than an arbitrary decision of say, "vacation is cancelled! Prepare for a life of misery!"

Utilities and services


  • Electricity -- my goal is to reduce our electric consumption by 20%. We've already been implementing some changes around here.
  • Natural gas (heat and water) -- reduce by 20%
  • Water and sewer -- reduce by 5% (we're already fairly conservative with water use, but one can always try harder)
  • Garbage/recycling collection -- one of those categories that I'm not sure we could improve on. We pay $13 to put out 1 can a month. The cost to drive/dump this trash to the landfill would cost about the same. As we consume less, however, we may find that we have less to dump at all. So maybe in the long-run that will be a charge we can reduce.     I collect our aluminum cans separately from the rest of the recyclables. I take them to a nearby center for money. I will look into taking our glass recyclables in with our aluminum, to see if they pay for them, as well -- that could gain us a tiny bit of money.
  • Internet and phone -- no cable and have no interest in cable. But the internet is great, and we're in luck. My son pays for the internet. It's a bundled plan, both internet and phone. Our part of the bill, the phone, is $30/month. I will scour that bill, though, and check for charges that could be dropped.

Totally necessary, and not terribly flexible, but we will try, as we can, to reduce

  • Medical/dental copays -- this will automatically go down when the braces come off my daughters' teeth. $20 every 8 weeks -- gone! We still have a payment for the retainers. But if they take care of them, and don't lose or break one, then the retainer fee will be a one-time thing.   My husband will have good medical coverage at his job, but we still need to find new insurance for my daughters and myself. My husband doesn't want to add us, as his dependents, to his work insurance. Depending on what we find, our copays/co-insurance could go up considerably and we'll need to put aside more for this category.
  • Auto/Home insurance, licensing and registrations -- we will delay our daughters taking their learner's permit test for a few more months, until the Christmas holidays, when they would have time to actually practice driving. And we'll delay the actual license until either they can pay for their part in the insurance or we have the resources to pay for it.  We are thinking of selling our second car. Our insurance is up in October and registration in November. We'll time dumping that car, to avoid those fees. And I'll be shopping around for better insurance rates for both auto and home.
  • Savings for retirement and future plans (in addition to 401K contributions) -- if we have to we'll cut this back by 25%


Flexible, but necessary


  • Groceries -- reduce by $40 per month (this will be tough, but it's just the kind of challenge that I like and that I have almost complete control over as I am the only one who ever grocery shops)
  • Non-food household supplies (this includes cleaning supplies, hygiene items, bath tissue, postage and paper supplies, etc) -- not sure we can reduce here much, but after the braces come off my daughters next month, we won't be going through as many toothbrushes. Braces eat up toothbrushes rapidly. And I'll try to become a better shopper for the rest of the items. My goal is to shave about $5/month from this budget.
  • Clothing/hair and grooming -- reduce by $10 per month. For the most part, we've maintained a low budget for these areas, but my husband and I have had the occasional professional hair care visit. We'll reduce those to the bare minimum, or if needed, those can become holiday gifts to each other, or from kids to us. My son pays for his own barber visits, and my daughters' long hair is maintained by me. I am in need of really good, supportive and attractive shoes for possible work for myself. I have nothing in my closet that I could be on my feet all day in, and still look nice. Sneakers just wouldn't cut it for most of the jobs I'm considering.
  • Home and car repairs -- some repairs just should not be put off or ignored. But I do think we can do much of the stuff we have hired out in the past. My husband rented a chain saw and took out 3 overgrown trees/shrubs back in the spring, for a huge savings over what the tree guy wanted. The improvements we do hire out/save for will likely be things that we consider capital improvements or investments which will pay for themselves (such as a fireplace insert or wood-burning stove for the living room).   One expense we will continue to hire out is pest control. We live in an area littered with carpenter ants. Our house had a problem with them a while back. We go with a minimal treatment program (once a quarter), and feel this is worth the money.   Car repairs we need to continue saving for, as they come up unexpectedly and almost always need attention right away. The budget will remain the same in this category.
  • Gas for the cars -- this will automatically go down as I am no longer driving daughters 20 miles to and from school each day, and the once/month orthodontist visits, 20 miles to the north of us, are almost a thing of the past (2 more to go, then just check-ups from time to time). My two daughters now hitch a ride with their father to the bus stop, for work and school. The reduction in this category is planned for $50/month.
  • Contributions to daughters' education -- reduce by $1000 per year/girl (they each will contribute additional amounts, now that they both are employed with well-paying first jobs -- $12/hour, that's almost $3/hr over minimum wage here). I'll be updating FAFSA, as well, and hopefully we'll qualify for additional amounts in grants.


Unnecessary and totally flexible, but make life enjoyable

  • Gifts -- reduce by 50% (this doesn't mean we won't give gifts. It just means we'll have to be more creative, thoughtful and resourceful.) Already to a good start in this area.
  • Eating out, entertainment, excursions -- reduce by 50% (I'm very disappointed in restaurant meals in the budget category. Mostly, it's just filler junk, with little nutritional value, and often makes me sick. But excursions can be a lot of fun and cheap, such as visiting the pumpkin farms, or going to the Bavarian village to the east, or an early morning at the beach.)
  • Landscape/Design/Home -- reduce by 20%. I had wanted a new chair for the family room, but I think I will re-upholster one we have instead. I had saved several hundred dollars towards buying a new chair. After the cost of supplies to re-upholster the chair, I could re-allocate that saved money towards something else in the house. And I'll have to discipline myself not to buy any more ornamental plants!
  • Savings for vacations -- we have a family vacation planned for the end of summer, beginning of fall. We've been planning this for years, literally. This is a just-before-university-begins family vacation. Some elements are already paid-for and non-refundable/non-transferable. So, do we cut our losses and cancel the trip? Or do we go on the trip anyways, but make it as budget (but fun) as possible? This is a Disney vacation. Everyone knows that those can be spendy. But they don't need to be terribly so. We've decided to go anyways. I've cut that budget by 10%. Not much, but it's something. This vacation, even as a Disney one, has been planned as a budget-version Disneyland trip. The area we'll be able to save the most, over what we had planned, is on meals. We had already planned for cheap accommodations and travel to/from. Vacations are important to us, so even under tight finances, we'll continue to save for time away, just maybe not so much. Even shaving one day off of a trip can mean a huge savings, but we still get a fun time away. And if ever there was ever a time to use rewards points, now is it! Overall savings for vacations category -- reduce by 20%.

As you can see, most categories are more flexible than you'd think. I haven't even really slashed many categories. I'll cut more as we need. Fortunately, we have had a 30-day advance notice of a reduction (at first we thought it was 2 weeks, but later discovered it was 30 days) giving us time to think and prioritize.

These cuts look do-able. And they get us about half-way to making up the income loss. Now to find ways to meet these goals. Can you tell that I'm a goal-setter?

Our situation will require a two-pronged approach, both cuts to spending and increasing income. We're both seeking ways to boost our income. We are looking to find a balance between spending less and earning more. There are times when just earning more comes at the expense of quality family life. Or cutting back to a bare bones budget makes us too miserable. I'll continue to post the ways we implement ways that both cut spending and increase income.

I just keep repeating, "we can do this! We CAN do this!"

25 comments:

  1. I will interested in seeing how you cut your electricity consumption since you already do things like change the light bulbs to fit different times of the year.

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    1. Hi live and learn,
      I know. 20% is actually a big cut for electricity use. But I'm tackling each area one at a time, and I've found several things that we can do right now to reduce electricity.The proof will be in the pudding as they say. I have checked the meter and will continue monitoring it to see if we're making progress, as I don't expect a bill for another month (we're billed every other month on electricity).

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  2. Check with the girls' college. Often, medical insurance is a charge include with the college bill. If already on a medical plan, usually the parents, the student has to apply to get that fee waived! A small secret-but it's about $500 here at the local colleges. Also, be sure to have the girls take advantage of the college medical clinic. When DD was away at a state school and had a sinus infection, she was out of pocket $7 and they keep basic RX's right there in a pharmacy at the clinic. Perfect. Complete physicals, sometimes well woman exams can also be arranged. there still would be how to get coverage for you. COBRA would apply but is normally very expensive. By law, they have to offer it to your DH.
    HTH

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    1. Hi Carol,
      Thanks for this information. I checked the website just now. Insurance is rolled into the dorm fee for on-campus students. But they do have an insurance plan available for purchase for students. This could be an option for us, for them at least. (Plus it can be purchased quarter by quarter.)

      And they also had a listing of healthcare services and their fees. All kinds of services are offered, including immunizations, physicals, women's annuals, and illness care. It's good to know that those services are available. This did remind me to get them in for immunizations on our current insurance before it runs out. There is soooo much to get done!

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    2. Most likely, the school medical ins plan will be the cheapest. Can't hurt to do your homework, esp. since you still need ins for yourself. go with a catastrophic plan with a high deductable, and set aside "mom's insurance" money in a separate line item within the household budget. When you do see a MD, ask for a cash discount.
      : )

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    3. Thanks, Carol. I appreciate all your info.

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    4. I made appointments for tomorrow to get our immunizations up to date before the insurance runs out. It's free right now for us. The girls needed a couple each for their medical forms for university, and I take care of small children weekly and should really get the whooping cough vaccine again. Whooping cough is on the rise in Washington state. Several cases each winter, right in our own county.

      So, all this discussion about medical insurance got me to take care of something pronto!

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  3. Forgot to add: check with your local hospital (esp in October) for well women's exams and mammograms on discount and/or free. take advantage of community clinics, visiting nurses for exams as well. Here, in Ct, they charge on a sliding fee scale. HTH

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  4. If anyone can do this, you can!

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    1. HI Kris,
      Thanks for the vote of confidence. I have my shaky moments, though. This morning I was feeling so overwhelmed by needing to do so many things all at once. I just wanted to cry. I had chocolate instead ; )
      But I am encouraged. So many people have given me valuable information, and much needed support. Thank you to all of you!

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  5. Ha! It's the sequester, Lili style! Across the board budget cuts!

    In terms of buying health insurance, the entire landscape is about to change radically in a few months when the new healthcare bill kicks in. Most of the states will have their exchanges set up by October, and you'll have a whole host of new and better choices for buying an individual plan.

    Colorado's exchange won't be operational until then, but they've already posted sample rates from different companies and it looks like my rates will go down, plus I'll get better coverage. In addition to that, I'll qualify for the government tax credit which will make it even more affordable.

    Anyhow, you might want to do some research on the new system and see how it does or doesn't apply to your situation. You may be surprised, because for a family of your size the income level is actually quite high for receiving at least some tax credit. Plus, the new plans are required to cover a whole host of preventative stuff that old plans were not, which can reduce the out of pocket costs even further - it certainly will in my case.

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    1. Hi Cat,
      Thanks. Yeah, As I was checking individual companies, there were notes that come Oct. 1, new plan info will be available. I am hoping that our insurance costs can be reduced in the new year. I haven't found any sample rates yet. But I'll keep looking around. My head is spinning with all the information it is having to take in. But at least I have a little more time on this.
      Thanks for your info.

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  6. If I were to take a drastic income cut I'm not sure where I would look to cut expenses. I have only three bills. The cell phone I pay once a year ($120), rent, and the internet. The only place I have to work with would be food. I do pay more for my food by shopping the farmers market and only purchasing organic foods.

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    1. Hi Lois,
      Some budgets just don't have much wiggle room. But if you had to find extra money, I'm sure you could do it!

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  7. You certainly can do this - you have the right attitude for sure. Regarding car insurance & home insurance the easiest way to save is to increase deductible but understand by doing that you need to be able to put out the deductible if there is a claim. You do not need to wait until renewal to do so - might be worth a call to your insurance agent. I know if we had a drastic cut in pay we would unload our 2nd vehicle like you are thinking about. I think it is great that the kids help contribute/save for their own education. They will value it so much more and be very careful in their choices. Keep positive - you will get through this!

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    1. Hi Cheapchick,
      Thanks for the reminder. I'll check our deductibles. I know we raised them a while back,but I'll have to check to see how high they are.
      Thanks for the encouragement!

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  8. hi lili,
    wish you luck!
    bear hugs and love regina

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    1. Thank you, Regina! I appreciate your good wishes.

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  9. A couple of thoughts:
    If you're not already doing it, consider community college for your girls. In two years, they will have a skill that they can work their way thru 4 year university with. Credits usually transfer (check with 4-yr before enrolling). Cost is usually about 1/4 the price of University. You get a good resume, job experience AND save money. I learned this the hard way. Got my 4 year degree, then went back to Community college to learn a trade. If I had known then what I know now . . .

    Consider buying an old clunker car. You only have to pay liability insurance that way. Saves thousands a year.

    Contact Disney and see if they'd like a well-read blogger to review any free products for them : )

    (I have friends who recently went to Disney & said it would have been cheaper to visit a foreign country as a family. Personally, I'd prefer the international trip for a fun-before-college treat - but maybe that's just me)

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    1. Hi Anna,
      I can appreciate your suggestions -- thanks! There are so many variables in a family's finances, and so many places to look for savings. That in itself is an encouragement to me.

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  10. Just wanted to say that I am thinking of you. Glad you keep a cake in the freezer!
    If your girls were going to a private university you would definitely want to write a letter to the financial aid office as well as updating your FAFSA.

    Also, most private schools offer free tuition to children of employees. I worked in higher ed and many employees returned to work after SAHM to get free tuition. They were great employees too!!

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    1. Hi Jen,
      Thanks for that info. I'll check out my daughters' university and see what they offer children of employees. That could be a huge savings.

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  11. Good luck with it all Lili - I know you and your family will be able to manage well. You must be relieved that your girls got jobs and can look after their own expenses now.

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    1. Hi Economies,
      Thanks. You're right, there is some relief that with jobs, now, they don't need to come to me for money. But as a parent, I can't help but feel badly about it all. I know, it's better for them, to be responsible for many of their own needs, but I just want to do as much as I can for them, always.

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I'm so glad that you stopped by today. Please comment, and let me know what you're thinking.