Wednesday, January 11, 2017

Evaluating the Budget at the Beginning of the Year

These roses have nothing to do with this topic, but I wanted to show them to you,
 anyway. I cut both of these in early December, just before the cold weather began.

I do this, without fail, every year, in the first week of January. Sometimes, it brings good news. Sometimes, it illuminates areas where I need to work harder. And sometimes it shows me that life can be full of storms.

One afternoon last week, I sat down with our budgets. Evaluating the budget requires a couple of hours. I look at each category, and check to see if we put aside enough money every month to cover each of the bills for their category. Then I make adjustments to the dollar amount in the various categories, according to their need.

I value this activity for a couple of reasons. After a month of holiday splurges, inspecting the budget refocuses my thoughts on sensible spending. And it serves as a reminder for those areas that I had planned on seeking to reduce spending. It's also a motivational tool. It shows me where we are doing this whole budget thing very right. I like to give myself a pat on the back, an "atta girl", for working so hard, year round, to squeeze a little more buying power out of every dollar. And then, of course, it serves as a tool for determining how much we need to adjust our tax withholding for the new year.

At the end of the afternoon, I have reset our new budget for the year, made changes to tax withholding and established new savings and preparedness goals for our budget.

So, how'd we do this year?

Most of the categories in our budget will remain unchanged, as we are on target with our setting aside funds for those areas.

In electricity, we have been slightly over-saving. Yay! I was able to cut that area down, by a few dollars per month, in 2017.

Our emergency savings, which would be used in the case of job loss, continues to grow, monthly. I never let a month lapse without putting something into that fund, even if it's only $3. $3 each month, for one year, results in $36. In 10 years, that $3 per month results in $360. While I try to put more into that fund, I don't consider $3 to be trivial. We began this particular savings fund in 2008. You all remember how unstable everything felt in 2008 and 2009, right? That was the impetus for this savings fund.

Heating -- we're doing well, as winter unfolds. We are spending a little into the surplus, set aside the previous year. We will hopefully end this heating season with another surplus.

For 2017, I have a new goal for our heating budget. We will attempt to set aside enough in savings to cover a complete winter's heating, in advance of the coming winter. In normal years, we have some surplus, monies put aside in the warmer months, combined with our monthly allocation in every month of the year. What I am working towards is a surplus that is large enough going into the heating season, with or without monthly allocations during the heating season, to feasibly pay all of our heating for one season.

This surplus heating budget will function much like our stockpile of groceries. It will cover us, in the event of a job loss or severe financial circumstances. Heat and food are the two recurring expenses which are vital to survival. (Our home is paid for. Otherwise, housing would be the third recurring expense, vital to survival.) So, we will set aside a small amount extra, each month, from now until November, and see how we do. Much will depend on how cold of a winter this one proves to be.

The main area in which I have been wanting to reduce some of our spending is the non-food grocery and household expenses, things like hygiene items, cleaning supplies, lightbulbs, batteries, postage stamps, kitchen items like plastic wrap and aluminum foil. You know that I don't buy a whole lot of those items, anyway. But I have been meaning to work at finding less expensive alternatives to the products that I already purchase. This goal pops up every single January. I hate that we spend so much on this category. Item by item, I am slowly (very slowly) finding new ways to buy the same or similar products.

A year ago, I discovered Cash & Carry's store brand of freezer bags. They're a better quality than Dollar Tree's freezer bags, so they can be reused a few times, each. And they're cheaper. Automatic dish detergent is another product on my list. I was close to being out of the Dollar Tree stuff, and our local DT store and their online store were out of stock of what I had been using from them. So, last month, I bought a box of Kroger dish detergent powder, using my Senior Discount. I paid less per ounce for the Kroger stuff (compared to Sun brand at DT). I'll see how it performs later this month.

I have significantly reduced my use of postage stamps, by using online, phone and auto-payment plans for everything from tuition payments to the garbage pickup service. It's only a little bit of savings. But several little bits add up to one large bit, over time.

So, the non-food grocery and household expenses category is one of my areas of focus, for this coming year. If I can just shave $5 off per month, that will be a savings of $60 per year, and I'll feel like I'm making strides in this area.

We have a few shuffles in the budget, as well, like moving monthly allocations out of savings for travel, and into savings for education expenses. And removing a savings for a new water heater entirely from the budget, and putting that money into savings for a new furnace.

That's about the short of my budget evaluations last week. Do you take time each year to go over your budget from the past year and reset the new year's budget? Does doing so help motivate you to stay the course? What areas of your budget have you been doing well in, and in which areas do you want to make some improvements?

22 comments:

  1. Yes, I do this! I joke that I have an inner budget nerd because part of me finds this, dare I say, fun. I actually spent some time working on this while sitting in a camp chair with a pretty view on our fall camping trip in October. First I plan the "General Budget" for the year, known regular occurring expenses and savings, as well as planned amounts for groceries, pets, etc... . Then, I plan out the whole year, four pay dates per page, in my notebook I use as a planner (with a loose interpretation of the bullet method). For each pay date and amount, I figure out exactly how much comes out for what and write that down. So if there's "extra" left aside from the bills, I know it gets saved for x,y, and z and isn't truly extra that I might be tempted to spend. Or if a particular check is tight, I know I can only spend maybe $40 of my grocery budget that week but have a larger chunk of it at the next paycheck. For the individual payday amounts, I try to keep two to four paydates ahead. If I get too far ahead, I have to do too much changing later if say, a child gets braces, or something like that. I don't know if this makes much sense to someone else when written down like this, but it's working for me so I'm sticking with it. Took me a long time to get to this method, which I've now used a couple of years. It really helps me to see exactly what is allotted to what category from each individual check.

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    1. Hi Cat,
      I'm so glad you said that, because as far as my "work" stuff goes, budgeting is the more "fun" stuff for me! Inner budget nerd, yep, got that, too.

      Yes, I understand your method (makes sense). I plan one month at a time, but the amounts per month in each category are relatively the same, resulting in minor adjustments which I can make pretty quickly, each month.

      You make a good point, about how budgeting every spending category prevents the thought that, "hey, I paid the bills, and there's extra leftover, whoopee, I can go spend!" I make out our budget with the past month's income, and I allocate every single penny of the income, to something. So there's never extra leftover, in my mind.

      Thanks for your comments, Cat. Have a great day!

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  2. I am obsessed with number crunching, and keep track of as much data as I can via spreadsheets on my laptop. I also have a couple of paper and pen data worksheets that I keep on a daily basis, since before computer age, which I still find helpful since it allows me to record every penny down as it happens, serving as a contemporaneous journal from which spreadsheets are created. I use this handwritten list to reconcile our credit card statements as well. I'm sure there are less labor intensive ways to accomplish this like using downloads and software programs but I like the old paper and pencil method still, since I can quickly record notes to myself and all sorts of other miscellaneous data that I couldn't quickly write down if I depended on an entirely virtual input. Like Cat said, if it has been working for years, I keep it lol

    I find that I use this old school paper and pencil list to not only do the monthly and yearly recaps, but to also motivate me on a daily basis, especially before a shopping trip to see if I should be extra mindful of unfrugal tendencies. I can go on spending binges of sorts that are reigned in when I do the number crunching after some recent spending numbers are posted to spreadsheets.

    This year and on, we have a very ambitious commitment to help our grandson through college, and to be fair to our other grandchildren, we'll be doing this well into our senility. We're fine with this for reasons I can't explain here. That's why these budget spreadsheets play a vital role in keeping us on track and seeing our wishes come true.

    Have a wonderful Wednesday!!

    YHF

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    1. Hi YHF,
      My budgets are all notebook style. And as it's been said, "if it ain't broke, why fix it?"

      I began keeping detailed spending notebooks and budgets years ago as a way to show myself (and my husband) how tight income really was. When you go from being single and having your relatively low income appear to stretch really far, to then having a family, but also a modestly larger income, it can feel like there should be more money to spread around, after the bills are paid. But all those extra people and the expenses they incur, really eat up the income. My husband doesn't do anything at all with the budgets, and I"m sure he wonders where "all his hard-earned money" is going. But 5 people, a house, vehicle, planning for retirement, college, etc, really chew through an income.

      My father helped all of my kids out with college funds, before he passed, and I wish to do the same for any grandchildren we'll have. My husband and I have really appreciated what my father set aside. University tuition is so expensive. It isn't just the tuition, but there are a bazillion fees each term, and the books/supplies, oh man. It's super expensive and without incurring huge student loans, paying for college for one's kids is a challenge. So, I very much understand your wish to help your grandchildren with their college expenses.

      How old is your oldest grandson? Does he have any ideas of what he might want to study, yet? Or where he would want to go? I'll just put this out there, but I lived with my grandparents for a year and a half while I was in college. They were both very supportive of my education, and gave me a good place to be while I was in school. Just saying, if your grandson wants to be out of his parents' house (as most young adults do), but finds a local university he would enjoy, I don't know if living with you and your husband would be an option, but it worked very well for me. Of course, I was slightly older at this point, in my 20s, and mature, not into partying. So that may have made me easier to live with.

      Anyway, I hope you're having a good day, YHF!

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    2. Our grandson graduated over a year ago (remember the money lei?) I inadvertently called the oldest of our son's three boys the "oldest" a few days ago. I thought I should have wrote another reply to correct that slip, but thought no one cared really or needed more info that was off topic lol

      Our grandson was undecided about going to college right after high school, worked for awhile, and now feels more motivated to return to school. He has the potential to do really well, having taken a couple advanced placement college courses while in high school, and is such an avid reader, but I think he needs more time than most kids to find himself. He's one of those Myers Briggs personality types that take a very long time to discover their passion and calling, hopefully by 25yo, though I've read some articles mentioning 30yo. I know without a doubt he will succeed once he knows what his career goals are. He's an abstract thinker like I am, so we get into a lot of fun discussions and debates (we're both identical types in the same intuition/thinking/feekling/sensing function order but in opposite intoversion-extroversion directions). I hate to see his parents lose patience in supporting his ambiguous and ever changing career goals, so if some financial support will steady the ship, that's where we can help. We live so far away from any colleges, so living with us is not an option.

      YHF

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    3. Thank you for sharing what your father and your grandparents did to help with college expenses. Sometimes, it seems with the prevalence of student loans these days, the responsibility to fund college education falls on the student, sometimes more than the parent even. I don't like that one bit, and think it will put unfair burden on the next generation. Leaving a college fund for each grandchild is a good idea, and one we will consider hopefully in the future. But I like the challenge of saving daily with our grandson in mind, so we'll do that for now.

      YHF

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    4. Hi YHF, well then you and your husband can be the people in your grandson's life who "get" his need for time to figure this out. Parents are sometimes too close to the situation to be understanding, when a child chooses an alternate path from what the parent's believe is the "best" way. And yes, now I remember the graduation lei. Thanks for the reminder.

      For our kids, financing college has been 3-pronged. Grandparents, parents and the kids all helped fund the educations. I want all three to come out on the other side with as little in debt as possible, because it's so hard to pay those off, especially if a young person choose a less-lucrative career path. My father put in some, my husband and I put in some, and now the kids all worked through the college years and put in some for the education. I do think the kids helping with some of the costs, in the process (not just loans) helps with them understanding personal financial responsibility. My daughters will mention working on their budgets, and how they can't afford to do many of the typical social things college kids do, like go out for food, daily, or buy lots of clothes at the mall. I think this experience has helped them mature with their views on money. But I could also see them not pursuing to the fullest, all of their most hoped for dreams, if they knew they would have to pay for every bit of their university costs. So it's a balance.

      Have a good one, YHF!

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    5. Yes, good point about finding the right balance between no skin, some skin and perhaps too much skin in the game where immediate, short term responsibilities reign. At minimum wage as college students, too much time spent at work can be dollar foolish in terms of long term gain.

      Also sorry for the misspelling in my first reply, there it should have been "rein", not "reigned"

      I find there are almost endless tweaks to being more frugal. Several areas I want to focus on. Exploring the cost of dehydrated vs fresh on items we sparingly use, like white mushrooms and celery. Even learning how to dehydrate our own in the hot summer months. I'm going back to Costco today to buy more uncooked tortilla wraps because there is a $3.50 Ibotta discount. Long dated refrigerator life on the wraps, so I can make instant cheap burrito meals to freeze using our leftovers. Everything tastes great in a burrito including kim chee. This morning I wrapped our leftover eggs and ham slices and made two burritos for the freezer. Otherwise we may have been tempted to overeat.

      YHF

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  3. I also am keen to reduce any/all areas of my household budget as I transition to retirement income, although I have added one income stream and am currently seeking full-time employment (really for insurance coverage, socialization, keeping busy, etc). I am living off of my projected retirement, which I hope to have officially settled (left a message with the state dept to snail mail me the paperwork as my printer is not working at the moment)for March 1. Meanwhile, I was lucky to be placed on leave since May, and have been receiving my full-time wages, which I reduced in expenditure to mimic, to the best of my projections, what my retirement income will be. Meanwhile, I always take a hard look at finances once a month, but especially come January as I prepare for taxes, and June. It has always fallen this way for me. As far as the taxables listed above, here are some suggestions/thoughts:
    -can you at home kids pick up the cost of their own personal care items? Mine have been expected to since the age of 18, DD has covered her make up, perfume since 16.
    -bulk of our H & BA are bought on sale, with coupons
    -cleaning products can be made at home for pennies compared to buying them premade with harsh chemicals. I aim to start with the natural stuff before resorting to the nastier stuff. I recently attacked my icky rental oven and am pleased with the results after several attempts. I am phasing out the chemicals and seem to have the following:
    1-windex (to be replaced with HM version)
    2-bathroom cleaner (my version of the Dawn-vinegar mix is 1 part LA's awesome dish soap plus 2 parts white vinegar)
    3-Tilex for mildew/mold (to be replaced with bleach)
    4-spray pledge(to be replaced with lemon oil on a flannel rag)
    5-all purpose cleaner, safe for marble/granite: Dr's Bronner's castille soap
    6-Murphy's oil soap for cleaning wood (going to phase out and just use Dr Bronner's)
    7-Comet cleanser, Bar Keeper's friend(going to use up, return to baking soda and/or Bon Ami)
    8-paper towels-completely replaced with rags years ago, I also keep hanging terrycloth towels at the sink and the range. For what little frying I do, I use saved paper bags
    9-swiffer paper refills (using up, will replace with soft rag stuffed onto Swiffer broom, and using my O Cedar dry mop with 2 washable, microfiber/cloth heads-it was given to me, my only investment is the second cloth head to have one in the wash, one to use)
    -Dishwashing supplies: I use LA's awesome dish soap, Sun powder dishwasher soap, white vinegar as a rinse agent (tried using nothing, I needed to use something), nylon DT scrubbies that I cut into 1/2's, DT "sos" pads, an old toothbrush, cloth kitchen dishrags/washcloths (changed daily)
    -Laundry: whatever detergent is on sale for $5 or less a 50 oz jug. I have also used LA's awesome detergent with good results. I prefer liquid softener for towels, but will return to vinegar when it's gone. I also have several boxes of fabric softener sheets to use up. Most of my laundry is hung up to dry, so this takes me some time to do. Bleach for whites but I also have some LA's awesome "oxy" to use. I like LA's awesome orange degreaser as a stain treater, I also have some Fels Naptha bars.
    -Food storage: I am trying to get away from plastics. Used birthday monies to add to my Pyrex. I also am known to tote Pyrex to work for reheating as I prefer not to heat up plastic. I reuse foil over and over but am trying to find a solution for this. I have a few stockpiled, larger width rolls. Plastic wrap-I have invested in Bees wraps, which I do like. Waxed paper is often used for sandwiches should I not have any plastic/waxed cereal or food bags to upycle. Freezer storage is a concern. I don't want to freeze my Pyrex, taking it out of service, so I reuse never held any meat bags as often as I can. I've whittled this down quite a bit (the taxables budget), hope this helps.

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    1. Hi Carol,
      Wow, that's some list! Thank you. For my kids, I provide shampoo, soap, deodorant, toothpaste, toothbrushes, fem. hygiene. My daughters have bought their own make-up, clothing, perfume, etc, since they were 18. I often give those things as gifts for birthdays, though. My son gets a bottle of body wash in his Christmas stocking every year, and clothing items as gifts for birthday/Christmas. We buy most of the supplies that I listed above, at Dollar Tree, or on sale/clearance/w coupons. I am always looking for better ways to buy any of that stuff. DT carries some fem products that we like (panty liners), and that are half the price of grocery store, for quantity, but other fem products I can get cheaper than DT, at Fred Meyer, using Senior discount, and buying store brand.

      I need to really go over every single purchase that I make in that category, and see if there would be a cheaper way to obtain each, or a better way to make each stretch further.

      I'll have another big laundry detergent expense, again, soon, as I am over halfway through the 2nd of 2 large buckets that I bought on sale at Cash & Carry, last spring. I can always use homemade liquid glop for laundry soap, while I wait for a good sale, again.

      The other thing, I think we have large stocks of some of these sort of items. Maybe it's time to gather them all up and see if we can get everything used, saving some money in the process by not buying what we already have.

      So much to think about. Have a great day, Carol!

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  4. Well, you all put me to shame. I've never been the numbers person--my husband does that. Over the years I've pestered him to go through every line item. He does that for me at times. He just has a good sense of numbers overall, whereas I don't. I always think he must be as in the dark as I am, but he's not. He just "gets" it. So I've learned to trust him & God & not nag.

    I do keep very close track of what's going out & to where. I do my best to make his income stretch. Neither my husband nor I give in to impulse buys very often (in fact, he almost never buys anything). We don't have "hobbies," so no money is leaked there.

    I stock up when something is a good buy. I haven't bought laundry detergent in a couple of years. I used to only buy it when I could get it for $1 a bottle. But the coupon glory days are over & I am nearing the end of my stockpile.

    And as you said, Lili, people in the family have needs and those needs cost money. Even with thrift stores, buying clothes can add up (and our Value Village recently closed :(

    And I echo those above who say they'd like to be in a position to help their adult children & grandchildren someday.

    I am thankful that my husband's company has a matching retirement 401K and that his grandmother started college accounts for some of our kids. My daughter's cosmetology school was paid with that money. God has been very good to us. Melissa

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    1. Hi Melissa,
      I think, so long as the general workload is balanced between spouses, that whoever has the talent or desire for any particular task, should do it. So, your husband is the one with this interest, it makes sense that he should do it. And it's not like you don't already have a lot on your plate -- with everything you do with your large family, and I mean everything! You're one busy woman.

      I agree, God has been very good to all of us!

      Have a great day, Melissa!

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  5. Hi Lili,
    Love your blog! Could you (if you're interested) do a post on how you keep track of your budget? Do you simply keep receipts and add them up at the end of the month? maybe you could include an example of your notebook budget? Sorry if this question is so "beginner" I would like to know how to start... Thanks for everything you put into your blog. Renee

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    1. Hi Renee,
      Thank you. I've talked a little about how I budget, but I may have never done a complete post on it. I touched a bit on my notebook "system", in a comment, a while back. It's in the comments' section, in response to a question by Cat, in this post:

      http://www.creativesavv.com/2017/01/evaluating-budget-at-beginning-of-year.html

      I'll make time to put together a better post on this, though, soon.

      For receipts, I try to enter them in my notebook, on their category line, as I get them. In really busy periods, I find a central place to put them all, until I can log them. I ask for receipts every place I go, even for getting gas for the car, or a cup of coffee at $tarbuck$ (they don't give a receipt at ours, unless I ask). If I loan money to one of my kids, I record that, too. But I can give you a better look at how I set up the page and work each page. I'll do that soon.

      Thanks for asking, Renee. Have a great day!

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    2. Thank you so much! Renee

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  6. Gathering up your health and beauty products to use up could be an interesting exercise. I have just gathered up all of the cleaning products that we moved from our old house. There I had them located in several different places for ease of use. Here, things are configured differently and I am going to try to store them in mostly one place. I have a table piled high of cleaning stuff to be sorted right now. Hopefully, I can consolidate a lot of it. If not, I think I'll see if the local food pantry can use some of these things.

    As far as budgeting, we won't be doing a detailed budget until we sell the old house and our expenses settle down.

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    1. Hi live and learn,
      The issue I've had with some of our stash of hygiene and cleaning supplies is there was a reason I didn't finish it all off, usually that I didn't like how it worked. But, I know, I've got to put some discipline into this and finish all of those containers. Good idea to donate that stuff to a shelter or pantry. If your pantry won't take it, try a women's shelter. Many women's shelters help young women get set up in small apartments, with things like used furniture, dishes and cleaning/hygiene supplies.

      Have a great day, live and learn!

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    2. Or offer it up on freecycle

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  7. This is such a good post, Lili. I too have gone over the budget although just for the month of January, which is always a tight month for me as I have extra dded auto expenses this month like car license plate renewal, auto insurance, and yearly auto insurance membership fees. It all adds up you know. One way we ended up saving on non grocery expenses was to make the switch from disposable pads to cloth pads. That one thing has saved me so much month over the past two years. It has been a huge savings and help to our budget.

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    1. Hi Belinda,
      Oh yes, having a tight month right after the holidays can be hard. But at least this tight month is during the school year, and not mid-summer, when you don't have teaching jobs. But I can feel for you.

      So, I don't broadcast this info, but I did use homemade pads for a few years when my youngest were small. And you're right it did save a lot of money. But, shhhh, this is just between you and me. (ha ha) Seriously, cloth pads are better from a rash standpoint. They were so much better on my skin. Feminine hygiene supplies are so overpriced, for what they are. And with three females in the house, they get expensive.

      Okay, weird and mildly uncomfortable topic. Anyway, have a wonderful evening, Belinda!

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  8. Our budget is tight. I am trying to reduce the grocery
    budget. I have been doing well. If I make things that
    sound a little fancier. We don't seem to feel deprived.
    I made a fancy chicken dish the other night because I had the capers from a discount store. I am really trying hard to prevent waist. I have ajusted the amount I cook at once. I now just make enough for dinner left overs for lunch and freeze 2 portions for an easy freezer meal for when don't have the energy or time to cook. I have started making food for Sunday
    after church on Saturday night. We were eating out after church a few times and that needed to stop. I have been making breakfast tacos, sammys or boiled eggs for Kristi to eat on the way to work and this
    has also saved her from eating a meal bar in the morning. We have been able to cut the electric bill
    hoping we will continue savings in this area. I also am trying to sort out some things to sell to add to
    our E R fund every little bit helps and it also frees
    up space. I am prayerful about finding some other ways
    to bring in some income.
    Thank you for the great topic and various ideas about spending and saving.
    Have a great day,
    Patti

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    1. Hi Patti,
      Wow, you hit upon several great insights. Cooking nicer meals is a good method for preventing deprivation. And it doesn't need to break the budget to do so. And making Sunday's lunch on Saturday is an excellent strategy to keep your eating at home. As is making breakfasts that Kristi can take with her in the mornings. I've been keeping boiled eggs in the fridge, mostly for myself, so that I will eat a high protein breakfast in the morning, instead of just starches. I don't always have the time to "cook" an egg, so having them already boiled is a time-saver, and probably an energy- saver, in that I'm boiling an entire pot of eggs at one time, then eating them cold, on subsequent days. You are doing a great job of curtailing excess spending. And the fact that you're prayerful about your finances is yet another fantastic insight.

      I know that you sew. Have you ever sewn items to sell on Etsy? Or at flea markets/swap meets? I don't now if you have the time for this, or the inclination. Best of luck with this.

      I hope your day is off to a great start, Patti!

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