Our friend R who lives in Champaign recently blogged that one of the things she will miss about living in the small town is being able to live more modestly. I know what she means. Materialism is one of the things I worried about too when we first moved back into the Bay Area.
Actually, in part to deal with this challenge, since the beginning of this year I have been monitoring our family expenses more closely. So far, Charlie and I have been blessed to live pretty comfortably but I know that with a possible home purchase down the road and Noah’s educational expenses someday, it’s not too early to start cultivating better habits.
So I downloaded one of the free budgeting templates from MS Office and set up a tentative budget based on Larry Burkett’s recommendations. Then I tracked our cash flow for each month to see if our spending lines up with our values.
For those who are not familiar with Larry Burkett’s writing on personal finance, basically, his suggestions are:
- Save up to buy major purchases (i.e. homes, cars, vacations). Make major purchases (i.e. cars, home) based on only what you can afford on a single income [because many times people buy homes or live a lifestyle that depend on two incomes and get into trouble when one spouse wants to stay home after the birth of a child]
- Wait 30 days to make major purchases and do comparison shopping while you wait [because most of the time you will forget about the purchase and if you don’t after 30 days at least you’ll know you got a good deal on the item]
- Set aside budget for “everything” that you think you’ll need to spend on, including clothing, eating out, and even money you spend while on vacation
The few things that I noticed immediately were:
- We spend a lot more each month than we think. Even though Charlie and live pretty modestly by most and not just Silicon Valley standards (we rent a home, we drive old cars that are fully paid for and pay off our credit card balances every month) our total spending at the end of each month (including rent, saving for future travel, etc.) is mind-boggling.
- Small things add up. Just eating out once a week with our small group adds up to about $80 – $100 extra per month. $10 – $20/week is somewhat insignificant but $80 – 100 a month is certainly noticeable.
- Delaying gratification is tough for “necessary” purchases. Per Larry Burkett’s advice, I started a list of major purchases (my definition of “major” is any non-perishable goods over $100) that we need to “save” towards. On it are things like “$30/month ($360 total) for church retreat,” a bread maker, and Noah’s car seat. However, sometimes circumstances come up and either you can’t wait to purchase the item (like a replacement crib mattress for Noah) or a deal comes up that is too hard to pass by (like the 8QT Staub Dutch oven that was on sale for 45% OFF at SmartBargains this week). Of course, what we deem “necessary” might be considered “extra” by others. If you have a long “to buy” list like us then you might need to plan on making purchases every month, which we seem to end up doing.
So needless to say, it has been difficult to live within a strict budget. And when Charlie sees how much time it takes for me to track and calculate everything (only to find that we’ve gone over the budget), he questions whether the exercise is worth the effort. But I really do see the benefit of doing this.
First, by setting up a comprehensive budget that includes categories like savings and donations to charity, we are making sure that we are putting money towards the things we care about. Second, when we set limits on discretionary categories like “clothing” and “entertainment” we are (okay, maybe more me) then compelled to be disciplined with our spending. As much as I hate it, when I see that the balance in the line for “Clothing – Jenny” is low, I just don’t browse through my favorite online shops even when I know there’s a sale going on. On the other hand, when there is money to be spent (like in April), then I can spend it (on a pedicure that I’ve been wanting for some time) guilt free. Yay!
So back to the title of this post – how and what did we spend $500 on?
Well, the first $100 was for the Ergo Baby Carrier that I’ve been wanting for some time (i.e. a few months, which passes the 30-day rule) because the Baby Bjorn carrier we have (which was a hand-me-down so there’s no money wasted here) hurt our shoulders/backs after a while. According to my research, the Ergo Baby Carrier is now the most popular carrier especially for those who want less back strain. And since I tracked the prices over several months and with different vendors, I know we got a decent* deal.
*We probably could have saved more money by buying it off craigslist or from an out-of-area vendor but 1) I wanted to make sure we got the latest model 2) we want to help support local stores or else there won’t be any B&M stores left to try on anything!
Then we stopped by Costco and spent another $200 on a water filtering system for our kitchen sink. This item was actually not in my “major purchase list” but considering how much water we drink each day and improvement of the water quality over using Britta filters, Charlie and I decided it was okay to just make the purchase.
Another $40 was spent on buying 100 “forever” first-class stamps issued by the USPS. It might take a while to use up all the stamps but the bundle was discounted $2 and would save us the hassle of buying 1 and 2 cent stamps in the future to keep up with each price adjustment.
Next, $150 was spent on things like bulk packages of chicken and beef (enough for the next 2 months), beverages, bread, etc. I know, that’s a lot of money on groceries but we’re talking about pounds and pounds of meat at $2 – $4 a pound each. Okay, so the beverages aren’t cheap but Charlie needs his Gordon Biersch/Henry Weinhard Root Beers for those “tough” work days. The way he explains it, every bottle he has at home is money “saved” ^_^
Lastly, we spent $10 on a large All-toppings pizza for dinner.
So is this excessive living? I don’t think so.
Could we have cut back or waited on some of these purchases? Maybe.
Like I said, I’ve been eying the Ergo Baby Carrier for months and the sooner we get it the sooner we start enjoying the benefits. That’s the thing with baby items. Unless you know for sure that you won’t end up buying it in the future, otherwise, it always pays to buy the object sooner so you can get more use out of it.
All in all, we might always live slightly over our set budget but I know that we are spending more conscientiously these days.
Now, if only someone will tell me the price of the next “cheaper” iphone so I can put that on our “major purchases” list ^_^
*This is how I’m hoping to carry Noah in the Ergo Baby Carrier. [Photo: Ergo Baby]