Friday, October 21, 2011

breaking the habit

I've been experiencing a really introspective couple of months.

The first week of September my husband and I embarked on a new and very strict budgeting plan for our family and our future. A little helpful info: we are the only ones in our generation of family and most of our friends who live on a single income. It is a good income, but after taxes, 401K contributions, and insurance premiums (which are all deducted from Hubs' base pay), it's actually a fairly modest amount of money for this part of the world. And we are very avid news-watchers and we pay a lot of attention to what is happening in the world and our country. Both Hubs and I have developed a healthy fear of "the future" and feel it very, very important to save as much as we can, or at least avoid debt at all costs. We are working diligently to pay down our student loans (I know, again with those g-d student loans), and have begun paying extra on our mortgage each month to shorten the payoff time and reduce total interest paid over the life of the loan (we believe we will cut off 7 years with the small additional amount we are paying).

Anyway, our new plan centers around a little whiteboard that hangs on the fridge. We went over our spending with a fine-tooth comb to find out exactly how much we "spend" per week (dividing things like the yearly total electric, gas, mortgage, etc by 52), then subtracted all the relatively unchangeable ones from our weekly net income. What was left was our groceries-household supplies-medical-and-discretionary amount. It is a pretty small amount!

So on the whiteboard we have two columns. One is "discretionary" and each week it starts with a set dollar amount that we chose based on what we think we spend on un-categorized "stuff" like copays, PTA membership, school pictures, haircuts, etc. - things that change, ebb, and flow and are not the same week to week. This is also the column for take-out pizzas, starbucks drive-thru runs, etc. The other column is straight-up groceries. And that number is also pretty small...less than $100 per week for our family of 4.

Some people might think $100 is a lot. But if you break it down and think about it, that's $25 per family member for 7 days. Break it down further and it's $3.57 per person per day. Seriously, right? That is not a lot of money living in America in 2011.

Each time either of us spends money, it is written on the board and subtracted from that original number. At the end of the week we cheer ourselves if there's anything left, accept it if it is $0, and vow to do better if we've gone into the negative. Occasionally it happens...we had a week with a couple of medical copays that took a big chunk of column A, and that's ok. We have a little cushion in savings to deal with it. That is not the problem.

The real problem, it turns out, is breaking the habit of unconsciously spending. I was chatting with a friend about finances, in general terms, a few months ago and I stated that it wasn't the nickel-and-dime stuff that was harming our finances, it was big things like surgical copays (often several per year anywhere from $500-$1000 each), and surprise repairs needed on our 10 year old car. And to an extent that is true, but it is also the smaller spending. It is the Target run, that evil, evil thing we all do where we go in for contact solution and come out with $50 worth of stuff. We ALL do it, we can't seem to help it, and you just know Target corporate loves us for it.

It's also definitely the coffee drive-thru, the McDonald's run when I just can't face making lunch, the take-out pizza, and yes, the spontaneous yarn purchases, even though they are "cheap" craft store yarns.

When you create a system of obvious responsibility, like Hubs and I have with our little whiteboard, you start to understand your spending habits quite a bit. For example, I have long been in the habit of constantly monitoring the cupboards and fridge, and immediately replacing things either when they run out or just before. No interruption of service here, nosirree. Things are pretty constantly stocked in our house. Now, we keep a pretty simple fridge and pantry. I have friends with entire closets and several basement shelves PACKED with foods they'll probably never use, because they don't shop with lists, or whatever. I've gone shopping with one girlfriend who basically just wanders the aisles, never sure of what her family really needs, so she always overbuys. We're not like that. I use a list and coupons and try to only buy what we'll actually use. Interestingly, this friend and I both eye each other with total awe. Neither of us can fathom doing it the other way.

But the thing is, with the constant replenishing, I never had a real handle on what I spent. I thought I knew, but it turns out I was waaaaaaayyyy off. Now that I am writing it down and subtracting it each time I shop, I am pretty shocked at what I was spending.

It has changed the way I work in the kitchen, and also the way I approach all my shopping. Turns out I have a bad, bad spending habit that needs to be broken. I would go so far as to call it an addiction. I can feel it, it is painful, breaking it is difficult beyond belief. But it's working, slowly but surely. It's only been about 7 weeks but I'm adjusting my attitude. All my son's long underwear still fits from last year, so despite how adorable this year's designs are (at Target, naturally), only Daughter got a set because she actually needed them. AJ will make do with his size 3T until he actually outgrows them. Daughter's drawers are overflowing with clothes, and she does not really need anything right now. So I will stay away from the racks, I will quit plotting and planning what I want to make for her. Homemade stuff is not a moneysaver if the children don't actually need the stuff.

I was browsing at Joann's this week because of those midnight madness coupons, but I just couldn't find anything I wanted to buy. Seriously, this is a major thing for me. I stared at the yarns, I fondled the fabrics, I perused the notions...but no, I just kept thinking about my husband at his desk, the whiteboard on the fridge, the retirement savings we want to have, the house we want to pay off....and as I held the skeins of yarn in my hand thinking how cute AJ would look in a sweater made from it, I realized that first of all, he doesn't need any more sweaters as he has several, and second, every time I put a homemade wool sweater on him these days, he cries and says, "take it off!" So I put the yarn back.

Lifespan being what it is these days, and Lord willing we meet that number, Hubs and I (and all of us) will need to make enough money in the first two-thirds of our lives to support us in the last third. Think about that...if you want to retire in your early 60s and have a nice lifestyle, you have to earn and save all that money NOW.

Take-out pizzas are not worth screwing up our retirement. Starbucks is definitely not worth screwing up our retirement. Hoarding yarn is not worth screwing up our retirement.

That doesn't mean "never shop." It doesn't mean "never buy anything ever." For us it just means "evaluate this purchasing decision really carefully in light of our goals." Sometimes a take-out pizza is a great thing. Sometimes going out for coffee with your friend or spouse is just what you need. And if my kid needs a new sweater I'm definitely going to be all over it, making something warm and lovely with wool purchased using coupons.

And right now it means taking a beautiful, crusty loaf of wheat bread out of the oven, which will be served with our dinner of Farmer's Breakfast to use up leftover ham, the potatoes that are about to start sprouting, the eggs that were on sale this week, and the little bit of cheddar that's left. I wanted to go to the supermarket this morning, but that column is at $0, and I know I can make it until Sunday with what's on hand. Now I just have to make it a habit.


Staci said...

What a perfectly timed post! Thank you! We budget and I have a decent handle on what we're spending, but we've been following the Dave Ramsey cash method (not super closely, but in theory) which has helped. But oh! The idea of having to write on a board that my husband could see every time I spent some of my "blow money"?! I get a chill just thinking about it. I'd admit that I, too, am addicted to spending. I may have to give the public board a try, because we need to crack down. Thanks for sharing your system.

Jenn said...

Love this! Thank you for your honesty! We are living on one income for the first time this year and it is tough. We are doing fine, but I am trying very hard not to make things we don't need, as much as that new fabric is adorable! I am planning on asking for joann/knitpicks gift cards for xmas (or cash) so that I can use that 'money' to make things my kids do need.

Shari said...

Oh wow! Great post. I think I'm doing so great, making laundry soap, dishwasher soap and hair rinse for myself and yet I conveniently ignore those starbucks and McD's run cause I like to justify they are needed. Cause I'm tired, or don't have time to make lunch in between appointments, which I know is a crock and I've been shushing that voice in my head that is screaming about the wasted money. I wish I was brave enough to put up a white board and write down every single purchase. Kudos to you!

Liz said...

I am totally addicted to groceries - it is so hard. I bulk shop at Sam's, but it seems like I could still spend $400 every month there PLUS expirable items like milk and bread. Definitely need to fix that.

Karen said...

Hmmm. I like that white board idea. Love these thoughts and ideas.

Staci said...

I thought of your post this weekend. My daughter asked for chicken nuggets and chili cheese fries for her bday dinner, so I went to the store and bought frozen nuggets and fries. I spent $5.50 for more chicken nuggets and fried than my family could eat in a meal, while we'd have spent $15 to do the same at McDs (although that would have gotten me a big fountain coke, too... but I digress). Anyway, it struck me that while I avoid buying convenience foods like that at the grocery store for the most part, I might do well to keep a few more of those things on hand if it would keep me from hitting the drive thru once in a while.

So, not a huge point to this. Mostly just saying that your post has me thinking. Thanks again for sharing your thoughts and tactics.

kate said...

Thanks for the nice comments, girls! I must point out that this is not always easy or fun...there are days when I want to throw the whiteboard marker across the room, but I think that means it's working (?) kind of like kicking cigarettes or booze. It really hurts at first until you can work it out of your system!

Staci, I don't like to buy a lot of convenience/junk food either, but having a bag of nuggets and those smiley face potato things has saved me from the McD's drive-thru more than once, and yep, you bet it is more economical.