Recessionista Diaries: Budget Living

I already know – living on a budget is absolutely no fun! But, especially in these economic times, it’s so necessary. I’m going to link you to a great article about how to create a monthly budget. I’m not going to walk you through all the nitty-gritty because, well, that’s boring and I’m the opposite of boring. But, I will give you a few tips and tricks to help you stick to your budget and ways that you can save a few pennies here and there. I’ve been budgeting since I’ve been on my own. However, I’ve pulled back the reigns even tighter since the recession hit ya girl! So trust me, I feel your pain.

First, visit this website (http://financialplan.about.com/od/budgetingyourmoney/ht/createbudget.htm) to get a basic idea on how to create a budget. Now that you’ve got a basic idea of what you’re going to do, let’s get started.

Track every bit of money you spend for two weeks. I know that this sounds incredibly tedious and painful. And, I can’t lie, I will be slightly annoying. But, I promise it will be so worth it. I know that I’m a member of the “no cash” club. I rarely keep more than $10 – 20 on me at a time. If even that much! I have no problem swiping my debit card for everything from gas, to coffee, to a newspaper. When you start adding up your receipts ever day, you’ll see exactly where your money goes. What I found was that I spent an ungodly amount on fancy coffees and impulse purchases (like gum, a cute necklace at a store, magazines, etc.). None of it was very much individually, but it started to add up over two weeks.

Once you know what you’re spending money on, you can cut back. Since I knew I wasn’t going to give up my impulse buys totally, I figured out other ways to get what I wanted/needed. I switched from a thrice-weekly medium Café Caramel Mocha to a regular brew with Hazelnut creamer. I finally broke down and listened to C-Murder and got subscriptions to my fave magazines instead of buying them off the rack.

Think about it; for one year of InStyle I paid $27 (and got a free subscription for a friend). InStyle costs over $4 on the shelves. So for a years worth I was paying more than $50! Multiply that by 5 (yes, I love my magazines). If each magazine averages $25 for a year’s subscription (lots are less) then I’m paying $125 compared to $240. Think about how you can save money? DVD rentals at blockbuster? Buying gum in bulk versus at the check-out? When you know what you’re spending on, you’ll know how you can start saving.

Negotiate. Listen, everybody is trying to cut back these days. And there are tons of ways to do it. One is to negotiate. Everything from credit card fees, to gym memberships. You can even negotiate your gas or electric bill depending on your carrier. I did! My carrier has a thing called “budget billing.” You pay a fixed amount every month for a year. I believe the amount is the average of your last 3 months of usage. I set mine up in the winter so it’s probably a bit on the high side. At the end of the year, if you over paid, then you get a refund. If you underpaid you get a bill. Most of us should break even or get a refund when it’s all said and done. In the summer, my bill is typically half of what it is in the winter. So, all that overpaying in the summer will pay off. But in the winter, you aren’t stuck with unreasonably high bills.

Do you have any services that you can work with? You should check them out and see. Another great place to try this is the gym. A few days after I resigned my gym contract, they offered a special for $19.99/month and personal training for $9.97/month. Well lookey here! My bill is $30/month. I asked them to switch me, and they did. It’s the same price, but now I’m getting to work with a trainer. We start in June (wish me luck!). Or, if your company has a gym facility (and it’s not overly crowded like ours) ditch the membership all together and work out there or outside.

Switch (or at least threaten to). OK – you might think this is a bit low, but whatever. Do you know what happens when you call your cell phone company at the end of your contract and threaten to switch? They give you some deal that is entirely too good to be true! It’s how I managed to get unlimited mobile to mobile minutes AND evenings starting at 7pm before they were options (well cheap ones anyway) with Sprint (note, I don’t have them anymore). I called them, pitched a bit of a fit (rightfully so, they were billing me bogus charges) and they offered to add those features for free. I’m not suggesting you pitch a fit, but I suggest you call your service provider and ask what they can do to keep a loyal customer? This also works for some cable companies.

And, speaking of cable, Downgrade. OK, I’m the absolute last person that should talk about downgrading cable. I’ve got DVR, movie channels, On Demand and the triple play package. However, in June – the fun is over. I originally got the DVR and movie channels because they were trying to keep my business. So they were free. But after that, the fun is over. So what’s a girl to do? Well I’ve priced things out and it looks like I’ll be switching carriers. I’m going to only have cable and internet (because really, when was the last time I used my home phone?) and I’ll be giving up my movie channels. I won’t give up DVR (can’t live without it!) but even with those cutbacks, I’ll save $70/month. Can you afford to give up HBO? I’m just saying . . .

Use a cash only system. My dad always told me that I should only use the cash I have. So he warned me against getting a credit card. But I did. I got two. And, I went a little crazy. Just a little. Not a lot. But I’m paying for going crazy 3 years ago. Boo hiss. After that I decided to work on a cash system. If I don’t have the money for it, I don’t get it. Plain and simple. From ordering pizza to that new tattoo I really, really want to get. I even went so far as to freeze my credit cards. Literally. In the freezer. I’d really have to want something B-A-D to use them, lol. Of course, I could use them for emergencies. However, I like to use cash for that as well. My car is costing me a pretty penny this week – and it feels pretty good to be able to pay for it. Now, granted, it may put a damper on some upcoming travel and party plans, but in the grand scheme of things, I think it’s better this way. If you can afford to use a cash system you should. It will hurt a bit at first, but it feels good to know that you’re spending money you truly have.

Pay yourself, then your bills, then have fun. When I say pay yourself, I don’t mean go shopping and buy that new Prada you’ve been coveting. I mean pay your 401(k), your savings and your Stock Purchase Plan (if you have one) first. If you never see the money, you won’t miss it. And, if you’re church going, a lot of churches let you also pay your tithes. You can set this up to come right out when you get your paycheck deposited. If you never knew it was there, you can’t possibly know what it’s like to have it in your pocket. And, on that note, if you aren’t paying into a 401(k) or IRA account, start . . . NOW! Like stop reading and go do the paperwork. And we’re back. After you paid yourself, take care of your bills. You should know exactly what they’ll be because they should be fixed. Then, divvy out any money you need for essentials like gas, groceries, etc. Then you can use the rest for the fun stuff!

Well kids, I hope you’ve enjoyed this little lesson on budgeting. And just think, if you follow these tips, when the recession is over, you’ll be in better shape than ever! Next week, we’ll chat about shameless money saving tricks and tips. I’ve got tons. I’m pretty shameless, ha ha. So, do you have any budget tips or advice? If you do, share below.

Signed,
Recessionista Chic Barbie

~ by countryclubbarbie on May 7, 2009.