Budget Out of Control? Time to “Get a Grip”

 It’s easy to spiral into out-of-control spending. By the end of the month, your checking account is on fumes and you are struggling to meet the basics. If this sounds familiar, here are some key strategies to take charge, get back on track, and sleep much better at night.

Get a Budget

You have to know where your money is going every month. If you are like most, your debit and charge cards are your main methods of buying things. 

It’s time to pull up the last month of those account statements. Once you do, go through each item and place it into a category – rent/mortgage, utility bills, charge card payments, personal loans, insurances, food, clothing, personal items, phone, entertainment, subscriptions, etc. Your categories may be different from others. And some of your categories may have sub-categories. Food, for example, may include groceries, work lunches, eating out, takeout, etc. It’s important that you break these down and total each sub-category.

Now that you know where your money is going, you can take a look at where and how you can cut it. Here are the most common categories.

Food

There are a ton of ways to cut here. 

Use Coupons: Sign up for coupon offers at the grocery stores you commonly use. Review those before you do your meal planning for each week. Plan meals that use these coupons.

Meal Plan: If you shop weekly, plan the entire menu for the week. Include meals but also any snack items you normally buy.

Make a List: Never enter a grocery store without a list. Stick to that list and don’t be swayed by impulse buys. It’s hard, but once you make a habit, it’s easier. Include cleaning supplies and other items you normally buy (toilet paper, paper towels, bags and wraps, etc.)

Never Shop When Hungry: You’ve heard this before. You indeed spend more.

Buy Generic: Whenever possible, try the generic brands. The savings add up over time.

Take Lunch to Work: It’s easy to hit a nearby eatery for lunch – that deli sandwich, that amazing salad, etc. But take a look at how much you are spending here. Commit to brown-bagging it and resist the temptation from co-workers to hit those pricey places. Need an excuse? Tell them you are dieting.

Stop Eating Out: If this is a social occasion for you, find alternatives. For example, host a potluck with your friends at your place and have a game of binge-watching night. And beer, wine, etc. can be BYOB. See where you fit in – the average household spends over $3000 /year eating out.

Housing

So, here’s an area with lots of conditions and personal circumstances. If you have a family and a house with a mortgage, your options are more limited. If you are single and rent or own, you have more. But there are options for both.

Refinance Your Mortgage if it makes sense and you can get a lower interest rate.

Take a Home Equity Loan. This makes sense if you have a lot of credit card/personal loan debt at high-interest rates. This comes with a caveat – a commitment to ditch those cards, perhaps keeping just one with a reasonable credit limit that you can handle.

Move to a Less Expensive Place. If you’re mobile, this can mean big savings.

Take a Roommate. Sharing rent, utilities, and home entertainment expenses will give you lots of spare funds to work on your other outstanding and long-term debt. If you are currently single and on a dating app like Hily, who are you developing a relationship with? Have you met in person? Do you share the same values? This may be a source for an eventual roommate.

Move in with Family: This is ideal and shouldn’t be long-term. But if you are drowning in debt, it may be a good option while you dig yourself out.

Living Expenses

What costs can you cut? This is an individual matter, but there are some things that everyone can do.

Cut Your Heating and Cooling Costs. Lower the heat and wear more layers of clothing instead. Turn that furnace down during the day while you are gone and at night when you can “blanket up.” In the heat of summer, keep that thermostat at a warmer temp and wear less clothing. If you are doing strenuous house cleaning, use cold clothes to cool down and take a cool shower afterward.

Learn when to use energy-consuming appliances like the dishwasher, washer, and dryer. Many utility companies now charge more when you use these during peak hours. And don’t run the dishwasher or washer until they are full.

If your place is poorly insulated, like cheap windows that allow cold air in, get plastic on the outside of them.

Unplug all Devices When Not in Use. It’s called “vampire power.” When you keep your charger cords and devices plugged in, they use a small amount of power. While this seems like a minimal expense, you need to cut everything possible.

Get Energy-Efficient Lightbulbs. Yes, they make a difference. And while you’re at it, turn off the lights when you leave a room.

Debt/Bills/Subscriptions

Credit Card Debt: Consider the following options

• Go it yourself. Get a plan. Pay off the smallest one while making minimum payments on the others. Then, move up to the next and put the previous payment on that one. Or, if it makes more sense, start with the one that has the highest interest rate and move down.
• Consider a bill consolidation loan. If you’re not fully maxed out and you have paid all of your bills on time, you may qualify for such a loan. Put all your debt in that new loan with only one payment a month. This works only if you ditch your credit cards, saving only one for emergencies.
• Negotiate with your creditors. Sometimes, you may be successful at getting your interest rate reduced and, on occasion, the total amount of debt. Threaten to cancel your card and transfer the balance to a competitor. They will listen. Some services can do this for you but there is a fee that comes with that. And you will surrender all of your credit cards.
• Cancel subscriptions that you don’t have to have. You can always re-subscribe later on. This doesn’t include just magazines. Do you really have to have that monthly gourmet coffee, cosmetics, or vitamins? No. You can do better shopping locally.
• If you have a gym membership and you don’t go often, dump it. You can find exercise programs all over the Internet. Buy some cheap weights and other equipment and do it at home. Get a buddy to do it with you if it will keep you motivated.
• Look into consolidating your student loans for a lower interest rate.

Transportation

Cutting expenses in this category involves getting to and from work. If you are driving yourself, you are wasting money contributing to environmental issues. 

Take Public if Good. If you have a good public transport system, use it. You’ll save a bundle on gas, parking, and even car insurance.

Carpool. If you are not doing this, start now.

Buy Only What You Need: If you’ve been someone who needs to have a car that impresses others, stop it right now. Trade it in for a smaller gas-efficient one. Get over your ego here.

Can You Downgrade to One Car? Many couples cannot, but it’s worth considering.

Don’t Neglect Maintenance and Tires: Ignoring these issues will cost more in the end. Budget for oil changes and other routine maintenance. 

Entertainment

This can take a chunk out of your budget – especially if you are subscribing to a high-end cable TV service. Shop around and buy only what you reasonably need. There are plenty of streaming services that are a lot cheaper than cable.

Stop going out for expensive entertainment – dinner, in-theater movies, and clubs. Do more socializing with get-togethers at your place.

Do your own grooming. Yes, you can hit the salon often, but you can also do much of this at home. You have nail file and polish. If you need to cut expenses, this is a good place to start.

Clothing

How much are you spending on clothing and accessories? Are you a bit of an impulse buyer? With many, this becomes a big monthly expense. Here are some tips that will cut those costs.

Shop Secondhand: Resale shops have become big business – they’re all over the place. Use them when you need some “new” clothes, purses, etc.

Stop Going to Malls: You may like browsing just to get out. Big mistake. You’ll be tempted for sure. Take a walk or a bike ride or go to the library instead.

Think of Ways to Stretch What You Have: Make a game out of it. What can you switch out to get a new look? Barring that, how many pairs of jeans or pants do you need? Minimize those and find different tops at resale shops.

Stop buying Online: It’s too easy. Force yourself to go to resale shops in person to purchase what you need.

Swap With a Friend: If you have a friend or two and you are the same size, get together every so often bringing items you don’t wear anymore. Swap them out.

Some General Ground Rules

All of these tips do work. Choose the ones that relate to you and get going. Here are a few general rules to follow if you are serious about getting yourself back on track. 

Separate the Needs from the Wants

You need food; you need your medicine; you need to pay your rent/mortgage. You need to pay your utility bills and your credit card payments. And you need to pay for your insurance.

You want to eat out; you want new clothes; you want entertainment; you want those things you think you “deserve;” and you want to keep up with “appearances,” often called “lifestyle creep.” These are the things you place in the pile of what can and should be cut.

Once you separate out the “wants,” you know where you will need to cut. 

Get Your Partner on Board

Whether you are in a relationship or married, you cannot do this alone. Then you are making all of the sacrifices and they are not – a major cause of resentment.  Be open and honest, lay it all out, and tell them they have to commit to cutting expenses too.

Pretend You Make Less Than You Do

This can be fun. When you get paid, take 10% away and put it somewhere else. Even if you have to give it to a friend or relative to hold it for you, do it. Now you are going to put your budget on 90% of your income. Make the cuts you need to live within that budget. 

The Wrap Up

This is a long article, to be sure. But study it carefully. If you are struggling, you have to take control of your money, and you need to do it sooner rather than later. Become a frugal person, make the cuts you know you can, and see the results begin to show. You can do this!