It happens every tax season. We order a ton of take-out. After teaching all day then meeting with clients or working on tax returns, the last thing I want to do is spend an hour making dinner. Take-out is easy. We could pick it up on the way home or just have it delivered. It was easy but tough on the wallet. We would spend 100′s of dollars each month on take-out and delivery.
A few days ago, I realized that we had made it through tax season without ordering take-out, delivery or fast food. This seemed extraordinary to me, considering we really didn’t make this a goal. It just happened. But how did it happen?
Over the past few months, I have been much more flexible with meal planning. Rather than deciding exactly what we would have each night, I planned dinners for the week without assigning a day. I always made sure to have things on hand for quick dinners, like spaghetti, sandwiches, grilled cheese and tomato soup. I even stocked some frozen pizza in the freezer. On the weekends, I would make something more substantial, lasagna or a roast, which could serve as leftovers for dinner during the week. I kept salad fixings in the fridge so I could throw together a vegetable in a few minutes.
Each night, I would decide what we were going to have based on the amount of time and energy I wanted to spend in the kitchen. Sometimes, my husband would make spaghetti or pizza so I could keep working. When I had a little more time, I would make fried rice or ramen lo mein. On nights when I was all caught up and felt like cooking, I would get a bit more creative and make enchiladas or beef stroganoff. Usually those meals were made with leftover meat from a roast I made over the weekend which cut my cooking time dramatically.
Dinner doesn’t have to be a five-star gourmet meal. Think about what you are purchasing when you get take-out. It’s probably not the best thing for you. Think about quick things you could make at home. Spaghetti can be on the table in fifteen or twenty minutes. Grilled cheese in about ten. You can lay out a make-your-own sandwich bar in about five (just pull sandwich stuff out of the fridge and invite everyone to make their own). Don’t let your busy schedule keep you from saving on food.
I use a few very simple tools to help create and stay on budget. Before you can craft a budget, you need to know what your monthly bills are. Having a monthly bills list has made my life so much easier. In a quick snapshot, I know what needs to be paid and when.
Most of our bills are on automatic payment. The only bills I pay manually are the mortgage and home equity line. Since they are due a few days a part, I log on and schedule the payments at the same time. This keeps me from forgetting to pay one of them. The only reason the mortgage is not on autopay is because Bank of America would charge me $4.00 per month for the service. No thank you! The HELOC is paid manually because Bank of America would not let me set up a $300 per month payment. The minimum payment is based on the interest due and fluctuates each month. I wanted to pay $300 a month so we are at least paying a bit of principle down while working the debt snowball. It’s only about $30 a month, but it is something and makes it easier for me to budget. I hate making interest only payments.
When I create my 28 day budget, having a list of my monthly bills makes the task so much easier. I can quickly see if any of the monthly bills are not due in the next 28 days. If you are doing a budget on paper, this is especially helpful because you have all the amounts you need right there.
Each time we get paid, I use the monthly bills list to update my check register.
You can create a monthly bills list on paper, but I would recommend something like Excel or Google Spreadsheets. I have mine in Google Spreadsheets because I can access it anywhere, even my phone. I’m not tied to a particular computer so if I have a few minutes to work on the budget or update my check register, I can just pop it open. The other reason I like having the monthly bills list in an electronic format is I can’t lose it. I love paper all the time which is why I try not to generate any. Paper that comes into the house gets immediately scanned and shredded. An electronic copy also allows you to easily update the list as monthly bills change or you pay things off.
The first step in getting yourself organized is to create a monthly bills list. It just takes a few minutes but it will save you so much time each month.
When we paid off our credit card debt in 2012, we were elated. Paying off $70,000 was a major accomplishment for us. But we kept the cards.
What if there was a major emergency? How would we pay for it?
Then we got into the rewards trap. I loved my rewards card. We were paying it off every month and I was getting cash back. I used it for my business and felt like I was making money! We used the card more and more, justifying the use because we would get rewards. We put just about everything on the card and paid it off at the end of every month.
Until we didn’t. Almost one year to the day that we paid off our credit cards, we couldn’t pay the bill in full. I was crushed. We vowed to never get into credit card debt again but we did. After I paid as much as we could, there were only a few hundred dollars that we couldn’t pay off but it might as well have been $20,000.
That month we got back on a written budget after taking a year off. We stopped using the cards but we didn’t cancel them. In November 2013, I sent my husband a text message, “I’m canceling the card cards.” I thought he would object but he thought it was a good idea. He cancelled his cards as well.
It’s been five months and we have not regretted the decision. It has made our lives easier. No more mail from the credit card companies. No more special offers to tempt us to use the cards.
Some people think you must have a credit card, but I would argue that I can do anything with a debit card that you can do with a credit card. When we travel, we pay for the trip in advance, using a debit card. I can rent a car or a hotel room with a debit card. Yes, they will put a temporary hold on my account, but if I am so broke that I can’t afford the temporary hold, we shouldn’t be traveling. What if there is an emergency? That’s why we have an emergency fund.
We have switched our mindset. Our goal is to become payment free. Our goal is to pay for things with money we have saved. Cancelling our credit cards is probably one of the most important things we have done to work toward that goal.
When you think about canceling your credit cards, what comes to mind? What would you need to do to be comfortable without credit cards?
Most people want to make more money but most people are also afraid to ask for more money. I’m not saying you should rush into your boss’s office this second. You’ll need to do some homework first. There are a number of questions you need to answer.
Am I underpaid?
Some people truly are underpaid. Employers are not always good at keeping up with salary trends so you’ll need to do some homework. I love Salary.com for this. Make sure you look up your job title and location. If you are a help desk person in Kansas, don’t pull up salaries for a help desk person in California. Look in your local area. See what the average salary is. Are you there? If you are way above the average salary, make sure the job description is accurate. There are typically multiple levels for each job title. Once you have the right one, and you think you are not getting your fair wage, bring that with you to the meeting with your boss.
Are my accomplishments recognized?
Are you generating revenue or cutting costs for the company? Have you implemented efficiencies? Keep a list of your accomplishments and bring that list with you.
If I were in the boss’s chair, would I give me a raise?
Put yourself in the other chair. Would objective you give you a raise? Why? Make sure you have those reasons ready. The fact that you come to work everyday is probably not a good enough reason. Go back to your accomplishments.
Asking for a raise
When asking for more money, be gracious. Do not demand more money. If you are below average in salary, ask what you would need to do to get to that salary level. Sometimes, employers don’t know you are underpaid. I’ve known folks to just go in with that question and get a raise after the company confirms your data.
If your salary is inline with your position, ask what you would need to do to advance in the company. Maybe there are openings within the company. Ask if there are ways to develop the skill sets needed for those positions. Show that you are willing to learn and grow.
No matter what happens, be grateful for the opportunity. Thank the person for meeting with you and be genuine. You may not get an instant raise, but you have opened the door to possibilities. Most people in an organization want to help others succeed. Find a good leader and learn from him/her. If you work for a good organization, be a shining star. You will get noticed. If you don’t work for a good organization, it may be time to move on.
What are some tips that have worked for you in the past?
Some books I love on the subject of employment and finding the career of your dreams:
1. Not making a budget
Do you ever feel like you don’t know where you money is going? A budget can help you do that. The first time you make a budget, it’ll take you about an hour. Now my budget takes me about 10 minutes. Most things don’t change month-to-month so there is very little that changes each month. Once you work out the kinks, creating a new budget is pretty quick. Is financial security worth an hour a month? You could do your budget while watching TV.
2. Making a budget but not living by it
When you make a budget and stick it in a drawer, you might as well not make one at all. You just wasted 10 minutes of your life. Managing your budget doesn’t have to take long. I spend about 15 minutes per week updating my check register and paying bills that are not set up automatically. I have a spreadsheet set up in Google spreadsheets that I use as my check register so I can access it from anywhere.
3. Not having a goal
It’s extremely difficult to stay on budget if you don’t have a goal. Set a goal. It could get getting out of debt, saving an emergency fund, saving for retirement, saving for a car or a vacation. Whatever your goal is, get it down on paper. Put it on your wall. Keep that goal in the front of your mind. It makes it so much easier to stick to a plan.
4. Not working with your spouse
When we got married, the official said, “And now you are one.” We went from “his” and “hers” to “ours”. We made decisions together. If you can’t share common dreams and goals, how can you develop a plan to get there? Don’t start with the budget. Start by discussing what you want your life to look like. Once you agree on that, it’s easier to develop a plan to get there, together.
5. Planning for tomorrow when you can’t survive today
I see this all too often and it frustrates the crap out of me: people who are saving for retirement or purchasing company stock but can’t pay their bills. The argument I always get is “well I’ll need money for retirement!” You bet your life you will because you are going to need it to pay off all that debt you are accumulating today! If you take a few years off from retirement saving to get your mess cleaned up, you’ll easily be able to put 15% of your income into retirement each year. You’ll free up cash flow and end up with more money in the end. Don’t cut off your nose to spite your face!
6. Creating a budget so tight you go insane
This is often the one that kills budgeting for most people. The reason that people think budgets are restrictive, terrible, horrible, no good, very bad things is because they make their budgets that way. How do I know that? Because my husband and I did that when we first started. Our budget was so tight, after a few months we completely fell off the deep end and bought anything we could get our hands on. I’m talking stupid with zeros on it. Budget yourself some BLOW money. Remember that you make this budget. You can put what you want in it. Don’t build it the way I think you should or the way someone else thinks you should. You need to build your budget the you can live with it. The first goal is to track your money.
7. Trying to do too much at once
I mentioned goals earlier. Some people have lots of goals. Saving for retirement while trying to get out of debt and save for a new car, while also trying to buy a house will get you nowhere. Pick a goal. Stick with that goal until you accomplish it, then pick the next goal. Rinse, repeat as needed.
8. Trying to create a one-size-fits-every-month budget
When we first started budgeting, we thought we could make one budget and then reuse it every month. That did not work. Things change. Life changes. Budgets should to. I start with the previous budget and update it for the current month. I add in the actual utilities for the month and add any items that might come up in that particular month, like the quarterly water bill or semiannual auto insurance payments. There are also things like weddings, showers and birthdays that might need to be added to the budget. Budgets are also flexible. If something happens during the month, sit down with your budget and adjust it. Decide where the extra money will come from. Remember, this is YOUR budget.
9. Believing that the only way to work your budget is to decrease spending.
Jeff and I have cut our budget a lot. We don’t have cable TV. We keep the heat down. If I cut the grocery budget anymore, Jeff’s going to start an anti-vegetarian protest. We realized that if we want to pay things off faster, we needed to increase our income. We both have side businesses that bring in extra money. Think about what you can do to make some extra cash. Walk dogs, mow lawns, shovel snow, do repairs for folks. Think about the skills you have and see how you can apply them to make extra cash.
10. Believing that it can’t be done
When I asked readers the first word or phrase that came to mind when they heard the word “budget”, many people responded with various forms of hopelessness. I remember that feeling. I remember thinking we could never get out of debt. I remember thinking we would be broke forever. I remember thinking that payments were normal and someday they would just go away, that credit cards were a way of life. I also remember how it felt when we built our thousand dollar emergency fund. It was like a 2-ton weight had been lifted. We made a lot less money then and that was a huge accomplishment. Then we paid off the first credit card. It wasn’t huge but that little win helped propel us to where we are today. Will it be easy? Probably not. But when the stress of payments is stronger than your desire for stuff, you can get there. We still have a long way to go in our debt-free journey and it’s not always easy, but we have so much more peace now. The financial stress is gone. We have a plan and we live by it.
What mistakes did I miss? Add your own in the comments.